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Publisher asks unions to back Times in fight

By Bill Richards
Special to The Seattle Times

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The publisher of The Seattle Times has asked two top national union officials to support The Times in its legal fight with the rival Hearst Corp., a struggle that industry experts say is likely to lead to the death of one of the city's daily newspapers.

In e-mails sent Wednesday to the heads of the Communications Workers of America and its affiliate, The Newspaper Guild, Publisher Frank Blethen called on the unions to back The Times in its battle over the joint-operating agreement (JOA) with Hearst, which owns the Seattle Post-Intelligencer.

He told them The Times is considering unspecified "deep cuts" because of declining revenues.

The Guild represents about 850 workers at both papers.

Meanwhile, some union members at The Times plan to press the local Guild tomorrow to cut off its support, including financial backing, for the Committee for a Two-Newspaper Town. A citizens group heavily backed by the newspaper union, it has sometimes sided with Hearst in the 18-month court case between the companies.

In March, a three-judge state Appeals Court panel reversed a lower-court decision and backed The Times in the court fight. Hearst has appealed to the state Supreme Court, which is expected to decide later this month whether to take the case.

The two newspaper companies are battling for control of the city's daily newspaper market, a fight industry experts say could boost the market value of the winner by some $500 million and kill off the loser.

Seattle Times Co. officials, led by Blethen, say the P-I's continuing circulation losses have been costly to their company. Under the JOA, the papers publish separate editions but divide their revenue — with 60 percent going to The Times and 40 percent to Hearst — after The Times is paid for printing, distributing and marketing both papers.

In April 2003, Blethen notified Hearst that The Times had recorded three consecutive years of losses under the JOA, from 2000 to 2002. That triggered a JOA provision requiring negotiations that could either end the agreement or shut one paper. Since then, Blethen has said The Times would settle for a renegotiated revenue split.

Hearst, one of the nation's largest media conglomerates, has contested the validity of The Times' loss claims in court, asking that the company be blocked from ending the JOA.
 
Blethen's plea for union support comes four years after the publisher and the newspaper union clashed bitterly during a 49-day strike in 2000 and 2001. The strike, which came during the height of the holiday season, cut sharply into The Times' advertising revenues. Times lawyers cited it as a prime reason for financial losses during those years.

In an e-mail to CWA President Mort Bahr, Blethen asked for the union's help in persuading the two-newspaper committee to drop out of the Hearst lawsuit. The group was granted intervenor status in the lawsuit in July 2003.

In a separate e-mail from Blethen to Guild President Linda Foley, the Times publisher warned that his family might be forced to sell its 50.5 percent stake in The Times Co.

Hearst has the right of first refusal on a sale, after agreeing in 1999 to pay the Blethen family $10 million over 10 years in return for the right.

Industry experts have estimated the family's share in The Seattle Times alone is worth more than $450 million. The company also owns seven smaller papers in Washington and Maine, as well as a printing company and real estate.

Should The Times be sold, Blethen said in his e-mail, "the family will be fine — far more than fine financially." It would emerge bruised psychologically, he said, "but without the headaches and heartaches of recent months."

The e-mails also asked the unions for public and private pressure on Hearst to drop its lawsuit.

The Washington, D.C., headquarters of both unions were shut yesterday for Veterans Day, and spokesmen could not be reached for comment. Times officials were not available, and Hearst officials could not be reached.

Employees at both papers differ over what role the committee should play in the dispute between the companies.

Some Times employees said yesterday they planned to question the union's support of the committee's legal position at the union's quarterly general membership meeting tomorrow.

David Heath, a Times reporter, said Blethen recently met with some Times employees active in the union to explain the company's financial situation. Heath said The Times expects to lose $12 million this year. Earlier projections had been for a $7.7 million loss.

"How long can the Blethens continue to back a money-losing business?" Heath said by e-mail yesterday. "This seems to be the bottom-line question for Hearst as well. And by siding with Hearst in court, I'm not convinced the committee is furthering the cause of having two viable newspapers in Seattle."

Another Times reporter, Susan Kelleher, said she expressed her concerns with union officials a year ago. Liz Brown, administrative officer of the Guild's local chapter, the Pacific Northwest Newspaper Guild, has invited her to raise the issue at tomorrow's meeting.

But P-I sports columnist Art Thiel, both a member of the union and the committee, said the committee was formed to preserve Seattle's two papers and deserved union support.

"The fundamental reason for a union to exist is jobs preservation," Thiel said. "Frank Blethen has been the instigator of the threat to a two-paper town. If Frank's threat goes away, the interests of the committee and the union are served."

While the Appeals Court ruling brushed aside much of the committee's argument that retaining two papers is a matter of public policy, the courts have not closed off further debate on the issue, which could cause the case to drag on for additional months.

"We've tried to steer a neutral course between The Times and P-I," said Phil Talmadge, co-chairman of the Committee for a Two-Newspaper Town. "We'll continue to remain an intervenor."

The Guild's Brown said yesterday that while she did get copies of Blethen's e-mails, the local had not received any pressure from its national parent unions on its support of the committee.

"We continue to believe that two newspapers are good for Seattle," Brown said. "We still support the committee's position as an intervenor."

Bill Richards is a freelance writer hired on a special contract by The Seattle Times to cover events involving the joint-operating agreement with the Seattle Post-Intelligencer. He can be reached at brichards@seattletimes.com.