Hearst Corp., saying it lost $14 million on the Post-Intelligencer in 2008 and expects the loss to grow this year, announced it is putting the paper up for sale and will shut it down if no buyer is found within 60 days.
Steven Swartz, the new president of Hearst Newspapers, told the P-I staff at a noon meeting in the paper’s newsroom that Hearst has no interest in acquiring The Seattle Times. The P-I and the Times have operated for the last 25 years under a joint operating agreement. The papers publish separately, with the Times Co. handling the printing, distribution and marketing for both. A spokeswoman for the U.S. Department of Justice’s antitrust division, which oversees the Seattle JOA, told Crosscut the department would have to approve any P-I shutdown. “We are aware of the news reports and we will continue to monitor the situation,” the Justice Department spokeswoman said.
Swartz said that in addition to any other P-I assets being put up for sale, Hearst would also include the paper's JOA agreement with the Seattle Times. He did not say what would happen to the JOA if the paper is not sold.
Hearst, which has owned the P-I since 1921, left open the option to continue to publish the P-I as a digital news service with a cut-down staff if the paper’s print edition shuts down. Hearst is developing a wireless e-paper technology that it has said it plans to begin field testing this year in Houston, San Francisco and, possibly, Seattle.
The P-I is far from the only print newspaper currently on the market. McClatchy, which owns 49.5 percent of the Seattle Times Co., has been trying to sell the Miami Herald and Scripps put the Rocky Mountain News up for sale late last year. Neither paper has found a buyer. The Seattle Times Co. is also trying to sell three dailies it owns in Maine, so far without success, although Maine Media Investment, a group of Maine-based bidders, has signed an agreement to buy the chain. The Times recently extended its deadline to complete the sale to the end of this month after the group said it had not completed its financing.
If the P-I does shut down some 200 staffers will lose their jobs. Liz Brown, administrative officer of the Pacific Northwest Newspaper Guild, which represents reporters and editors at the paper, said Hearst must give the union a 60-day notice before shutting the P-I. That notice would presumably come after Hearst has decided it cannot sell the paper.
Today’s announcement is the second time Hearst has put the P-I on the block. In 2004, during the legal struggle between Hearst and the Seattle Times Co. over the Times' effort to end the JOA and effectively shut the P-I, Hearst offered the paper for several months with no takers. The P-I operates from rented quarters with none of a newspaper’s traditional hardware such as presses, trucks, or street-sales boxes. The current offering of the paper would likely include only the P-I’s trademark rotating globe and, possibly, its union contract. The Guild’s Brown said Hearst is obligated under the contract to notify the union four weeks before making any layoffs or staff cuts.
Seattle Times Publisher Frank Blethen told his paper Thursday that he was "stunned" by news of Hearst's decision when it was first reported on KING/5. The Times released a statement by Blethen after today's announcement, calling the decision a "surprise." Blethen's statement repeated his position that the JOA has been responsible for much of the Times' losses and said the end of the agreement and the P-I "will enhance the chances that The Seattle Times can survive the recession even though our continued operation will require additional sacrifices by its employees and owners." Blethen also noted that the Times "has limited resources to ride out the recession."
A shutdown of the P-I could give the financially pressed Seattle Times some breathing room. The Times Co. has been scrambling to raise cash to stave off its bankers, who hold loans totaling at least $91 million. The Times had to borrow $24 million in 2007 to pay Hearst to settle its JOA legal dispute. The company recently signed over five acres of prime downtown real estate as collateral on its loans and Times labor executives have told union officials a decision to cut 150 jobs last month at the Seattle Times was mandated by the company’s lenders.
But just how much flexibility a P-I shutdown would give the Times isn’t clear. The P-I, with daily circulation of 117,572, and the Times, with daily circulation of 198,741, have an unusually small readership overlap, and advertising, which makes up about 80 percent of the Times revenue, is already jointly sold by the Times. Moreover, if Hearst ends the JOA and moves the P-I to a electronic paper the Times could end up competing with its former JOA partner, but without the expensive overhead of print publication that the Times will continue to carry.
Also unknown is what will happen to the JOA agreement if Hearst shuts down the P-I’s print paper but continues to publish online. The agreement, which was amended in 2007, now covers both print and online operations of both papers and conceivably could open the way for a continuation of an online partnership if the Times’ financial problems grow too burdensome and it elected to also shut down its print publishing operation. In a 2007 interview with Crosscut, shortly after settling the JOA fight with the Times Co., Kenneth Bronfin, president of Hearst Interactive Media, said Hearst might be interested in joining the Seattle Times, instead of competing with it, in an online e-paper venture.
Last September, Bronfin told The New York Times that Hearst hoped to begin distributing its newspaper content in an e-paper format in 2009. “We have a very strong interest in e-newspapers,” Bronfin told the Times. “We’re very anxious to get involved.”
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