The Seattle Post-Intelligencer has reported that its owner, the Hearst Corp., intends to disclose sometime next week when it will shut down the paper and end its joint operating agreement with the Seattle Times. But before it turns off the P-I's rotating globe and sends nearly everyone packing, Hearst may have to fill in some critical details about its plans with the U.S. Department of Justice'ês antitrust division. And that, in turn, could raise some roadblocks to Hearst'ês plans.
According to federal officials, Hearst must notify the Justice Department before it makes any substantive changes in the JOA. On its face, ending the 28-year-old agreement and closing the P-I would be significant alterations to the JOA. Converting the P-I to an e-paper might also fall into that category. So far, says Gina Talamona, a spokeswoman for the department'ês antitrust division, which oversees the JOA, Hearst hasn'êt contacted them about its plans.
"We are aware of the situation in Seattle and we are monitoring it," Talamona told Crosscut. "If there is a substantive change, they need to let us know." After that, she says, "it would be up to the antitrust division to decide whether we would need to investigate or take any action."
Last month when E.W. Scripps Co. shut down the Rocky Mountain News with just one day'ês notice — terminating the paper'ês JOA with the Denver Post &mdash Justice Department officials did not stand in the way. But Scripps warned the department in 2008 that the Rocky was losing money and it would be closed if no buyer could be found. When federal investigators looked into the Denver JOA, says Talamona, "they found the decision to close the Rocky was not inconsistent with federal antitrust laws and the Newspaper Preservation Act," the federal legislation passed in 1970 that exempts two competing papers in one city from most federal antitrust requirements.
Justice Department officials said they have received no filings at all related to the Seattle JOA since 2007, when Hearst and the Times settled their long-running legal dispute over the Times' efforts to end the JOA and shut down the P-I.
While there is nothing in the JOA language to prevent Hearst from halting the publication of the P-I on its own, once it has met federal guidelines for proving it is a failing newspaper without any prospective buyer, the agreement is less clear about replacing the print P-I with an electronic version. Numerous JOAs have been allowed to end in recent years, including the Denver JOA, but federal antitrust officials have never been called on to deal with a situation in which a JOA is terminated, but one paper lives on in an electronic mode. It also isn'êt clear whether the Times could challenge the dissolution of a JOA with such a result.
Under the Seattle JOA, the Times handles the P-I'ês advertising sales, along with printing and distributing the smaller paper. The papers split their total revenue, with the Times getting 60% and the P-I getting 40%. But if Hearst unilaterally ends the JOA and converts the P-I into an e-paper with its own ad-sales staff — turning the e-paper into a Times competitor instead of a collaborator — Times officials may balk and seek a continuation of the agreement, especially at a time when the Times is strapped for cash and already losing ad revenue. That could put the Times in the unlikely position of supporting the Seattle JOA after spending five years and millions of dollars trying to eliminate it.
A Times Co. spokeswoman declined comment on how the company will respond to Hearst, telling Crosscut, "Unfortunately it is a difficult time for us to comment on issues related to the JOA." Hearst also declined comment.
