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Thursday, June 30, 2005

Big Decision Today in Seattle Times v. Seattle P-I

Posted by on June 30 at 8:31 AM

The Washington State Supreme Court has indicated that it will issue a decision today in the long-running game of legal brinksmanship between The Seattle Times (owned by the Blethen family) and The Seattle Post-Intelligencer (owned by the Hearst Corporation).

The stakes in the case are potentially huge: Control over Seattle’s daily newspaper market. But the fight is essentially a contract dispute: Should The Seattle Times be allowed to pull out of a joint operating agreement that both companies agreed to long ago in an effort to keep two papers alive in this city?

If The Times is allowed to withdraw from the agreement, Hearst has said the P-I may go under. Today’s decision is not likely to completely settle the matter, but it will show which side has the upper hand, for the moment. Expect more legal action on other issues, particularly if the P-I loses today.

The actual question that the Supreme Court was asked to decide is this: Can The Seattle Times use the financial losses that it incurred in 2000 and 2001 as part of its justification for ending the joint operating agreement?

The agreement allows one party to withdraw from the agreement after suffering three years of losses in a row. However, The Times' losses in 2000 and 2001 were largely the result of a newspaper strike. The P-I/Hearst team has argued that those losses can't be used to end the agreement, because they arose out of extroardinary circumstances. If the P-I loses this argument, look for Hearst to go after The Times' claims of losses in 2002 next.