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."

Seattle Times Bankruptcy Rumors Might Be Blessing In Disguise for PI

I've been blogging all week about the death of daily newspapers and how I'm firmly convinced Seattle can no longer be a two-paper town. The Seattle Post-Intelligencer is up for sale and if it isn't bought, Hearst has threatened to shut it down. In yet another twist, The Stranger's blog Slog is reporting The Seattle Times may be filing for bankruptcy soon:

On Wednesday, worries that the dominant Seattle daily may soon file for Chapter 11 bankruptcy protection crept out into the open when an administrator for the union that represents Times employees mentioned the possibility in an e-mail to union members.

"Within the Guild we have been preparing for a number of worst-case scenarios, including the possibility that the Times might enter the Chapter 11 bankruptcy process," wrote Liz Brown, administrator for the union, the Pacific Northwest Newspaper Guild.

Read the full article here.

Interesting, just yesterday I was saying that it's too bad it can't be the Seattle Times that's failing, rather than The Post-Intelligencer, but it turns out both papers may be failing! I think this only goes to hammer home the idea that Seattle cannot support two papers. And the survival of one may boil down to The Times waiting for The PI to fail, or investors buying The PI and hoping to outlast The Times. Either way, it's not a good time to be owning or buying a Seattle daily newspaper.