The Seattle Times and Seattle Post-Intelligencer settled their four-year legal struggle last April with a pact to continue their joint operating agreement (JOA) for at least another decade. But echoes of the fight continue to ricochet.
This week the state Office of the Attorney General disclosed a series of internal e-mails from the antitrust division related to the JOA battle. The e-mails, from 2006 and 2007, discuss the fact that the AG did not act on a request by a citizens' group, the Committee for a Two-Newspaper Town, to investigate whether the newspaper violated state antitrust laws while it managed the JOA. A subtext to that discussion is an allegation made by a former Times executive that suggests the newspaper may have violated state or federal antitrust laws while it managed the JOA.
In an April 2 e-mail this year, Tina Kondo, head of the attorney general's antitrust division, acknowledged that state investigators knew about a deposition by Steven Sparks in 2004 in which he claimed that that the Times violated the JOA. Sparks told federal and state antitrust investigators that under his direction the Times skewed circulation spending in the paper's favor to maintain dominance of the Seattle market.
Under the JOA, the Times handles printing, circulation, and marketing for the Times and the P-I. The agreement calls for the paper to spend equally on most non-news functions. By law, JOAs are usually exempt from most federal and state antitrust regulations. However, the Times Co. and Hearst, the P-I's owner, amended their JOA in 1999 without approval by federal antitrust regulators. Some critics wonder about the extent of the JOA's antitrust immunity under those circumstances.
Sparks, who was vice president for circulation from 1993 to 1997, told federal and state antitrust investigators that in addition to the Times favoring itself through management of the JOA, the company tricked Hearst into letting the bigger afternoon paper compete head-to-head with the P-I in the morning, a move that led to P-I circulation declines. Times officials later cited fading P-I circulation in an effort to shut down the P-I in 2003. Hearst sued the Times Co. to block that effort.
Sparks' allegations were publicly disclosed by Crosscut in April of this year, a week before the Times and P-I settled their dispute.
The Times has denied Sparks' allegations, saying it met "all of its contractual responsibilities" under the JOA. A Times spokesperson was not immediately available to comment on the newly released attorney general's e-mails.
The U.S. Department of Justice dropped its antitrust probe into the JOA in May 2005. In a statement at the time, federal investigators said they had not found evidence that the Times had engaged in conduct that was "likely to lead to monopolization of the Seattle newspaper market." The Justice Department declined to elaborate on the statement, which made no mention of Sparks' deposition.
In a memo shortly before the settlement was announced, Kondo told Attorney General Rob McKenna that an attorney on her staff may have sat in on Sparks' deposition and that her office had a transcript of the testimony. A separate copy of the document obtained by Crosscut lists "Washington Attorney General" at the top of each page.
Kondo's e-mail says that a Times reporter who was covering the story for the paper had asked why, given Sparks' testimony, the attorney general had not sued the Times under the antitrust provisions of the state's Consumer Protection Act. Kondo said she put off the question, telling the reporter she would have to check the deposition transcript and suggesting he contact the Justice Department.
Later, Kondo said in the e-mail, she confirmed that her office did have a copy of the deposition. "Bottom line," Kondo wrote to McKenna, "is that this may raise questions re why we didn't take action." Kondo suggested that the attorney general tell reporters that the state had been following the lead of federal investigators and had only one attorney assigned to the case when Sparks was deposed.
"If pressed," Kondo advised her boss, "say we simply didn't have the resources to pursue it separately."
Copies of the attorney general's internal correspondence were released to the Committee for a Two-Newspaper Town, which sued the attorney general's office in May for access to correspondence related to the JOA settlement. (The Times agreed to pay Hearst $24 million and allow the JOA to continue for at least 10 more years in return for Hearst dropping the lawsuit against the Times.) The committee made the AG's e-mails public after receiving them this week.
A spokesperson for the attorney general's office said that one of four antitrust attorneys had been assigned to the JOA probe. "The Department of Justice had a much larger group of attorneys working on this," she said. "If they couldn't find enough evidence to bring an antitrust case, Tina [Kondo] didn't think our one attorney could do it, either."
But Phil Talmadge, the committee's co-chairman, said the AG has more than 500 attorneys at its disposal. "It wouldn't have taken an amazingly large commitment of resources to look into this," Talmadge said. "They had the ability to do whatever they felt was important to do."
Talmadge, a former state senator and state Supreme Court justice, said he sponsored legislation in the state Senate in 1982 giving the attorney general's office subpoena power to follow up, without filing a lawsuit, on allegations like those made by Sparks.
"The attorney general's office is a political office," Talmadge said. "It doesn't surprise me that McKenna, who has talked about sunshine laws a great deal and received media attaboys for it, didn't want to lose those attaboys by aggressively investigating one of the state's major news organizations."
Talmadge said it was not likely the state's antitrust investigation into the Times' handling of the JOA would be reopened at this stage. "But this suggests a larger problem," he said. "Does this information give anyone a good feeling the AG's office would aggressively investigate similar allegations if they surfaced four or five years from now?"