Tough Times Facing Seattle's Daily Papers

From yesterday's Editor and Publisher:

Hearst Corp., which is looking to unload its Seattle Post-Intelligencer, signaled it has no intention of buying its joint operating agreement (JOA) partner Seattle Times, or staying in the JOA if it decides to continue the P-I as an online-only paper.

In a letter to the Committee for a Two-Newspaper Town, Hearst Vice President and General Counsel Eve Burton disclosed the company did not make the final $1 million payment that would have preserved its right to buy the Seattle Times from its majority owners, the family-owned Blethen Corp. Hearst had made a $1 million payment each year for the past ten years to keep that "right of first purchase" agreed between the JOA partners in 1999.

The letter was first reported in the Times by business reporter Eric Pryne and in the P-I by reporter Dan Richman.

When Hearst put the P-I up for sale Jan. 9, it said it would close the newspaper if it could not find a buyer in 60 days, suggesting it could fold as early as next month.

In the Seattle JOA, the Seattle Times Co. runs all business, production and distribution operations. Hearst and the Times Co. split revenues or losses on a 60-40 percentage basis, with the Times Co. getting the larger share. In recent years they have shared losses. Hearst said its paper lost $14 million last year and was on track to lose more in 2009.

Separately, the Times kicked off talks with its 11 unions with the goal of reducing the payroll and benefits of their working members by 12%, Times Senior Vice President Alayne Fardella said in a memo sent to employees.

Fardella said top management including Times Co. Chairman and CEO Frank Blethen had spoken "candidly" about the paper's troubles.

"The overarching message was one of survival," Fardella said. "We are doing everything we can to get through this economic tsunami. ... Recently, unaffiliated employees participated in the pension accrual freeze and the furlough program. When those announcements were made in December, we indicated that we would be asking affiliated employees to also contribute. Yesterday's meeting was the beginning of that process. We are asking that each employee group contribute savings equal to approximately 12% of their payroll and benefits expense. Given the demands of our daily commitment to readers and advertisers, and the wide variety of functions we perform, the way in which each group achieves this target will vary."