2 Seattle papers to ask for delay in committee's suit against them

The owners of Seattle's two daily newspapers said Friday they plan to ask a judge to delay a citizens committee's lawsuit against them until after a private arbitrator decides the companies' claims against each other.

The arbitration proceeding, which could decide whether the Seattle Post-Intelligencer closes, is a higher priority, said a lawyer for The Hearst Corp., the P-I's owner.

The Committee for a Two-Newspaper Town (CTNT) on Tuesday asked King County Superior Court Judge Greg Canova to strike down parts of a 1999 contract between Hearst and The Seattle Times Co.

Canova is scheduled to hear that motion April 6, a Friday. The following Monday the two companies are expected to kick off a high-stakes, closed-door hearing before arbitrator Larry Jordan that — depending on the outcome — could decide whether the P-I shuts down.

Hearst attorney Guy Michelson said in an e-mail that his client will ask Canova to delay all action on the committee's move until after Jordan rules. Jordan's decision, which both sides have agreed not to appeal, is expected by May 31.

"The timing of CTNT's motion has a significant adverse impact on our preparation for the arbitration hearing," Michelson said. "Because the continued existence of the P-I is at stake in the arbitration proceeding, preparation for the arbitration is our top priority."

The Times will join Hearst in asking for a delay, spokeswoman Jill Mackie said.

CTNT attorney Kathy George said postponement isn't warranted. "We never agreed that the newspapers should decide the P-I's fate in a private proceeding," she said.

The Times and P-I have been linked since 1983 by a joint operating agreement (JOA). The papers maintain separate, competing news operations, but The Times prints and handles the business side for both in return for a larger share of the proceeds.

Hearst filed a lawsuit against The Times in 2003, seeking to block a Times move to trigger an escape clause in the JOA that could force Hearst to close the P-I, terminate the contract, or both. New York-based Hearst said the P-I couldn't survive outside the JOA; The Times said it was losing money under the arrangement, and that its local owners might be forced to sell.

After Canova allowed CTNT to intervene in the lawsuit, the group filed a claim against both companies. It argued that a 1999 amendment to the JOA that allowed Hearst to close the P-I and collect 32 percent of The Times' profits was a disincentive to continue publishing and an unconstitutional restraint of trade.

The papers agreed last spring to settle their differences in binding arbitration but didn't include CTNT. Canova ruled last April that the committee could pursue its claims in court while arbitration proceeded.

But the committee, forced to regroup after losing the support of its largest backer, did nothing until Tuesday, when it filed its motion seeking a quick ruling on its restraint of trade claim.

Michelson said in an e-mail that if Hearst prevails in the arbitration, "CTNT's motion should be moot," since the P-I would survive.

But George said the committee fears Hearst and The Times could settle their dispute any time by agreeing to shut down the P-I and split the surviving Times' profits. "One of our goals is to head off that possibility," she said.

Hearst and The Times asked Canova last April to put CTNT's claims on hold until the arbitration concluded. He refused, saying that would effectively "deprive the intervenor of its right to litigate."

Eric Pryne: 206-464-2231 or epryne@seattletimes.com