Some speculate on future of P-I, purchase by Black

Could David Black save the P-I?

With a decision looming in four months that might spell the beginning of the end for the smaller of Seattle's two daily newspapers, some speculate Black could ride to the Post-Intelligencer's rescue.

He kept an endangered daily alive before under similar circumstances, they note, in Honolulu.

Liz Brown, administrative officer for the Pacific Northwest Newspaper Guild, said she mentioned the possibility to Don Kendall, who heads Black Press' new King County operations, at a meeting last month.

"I told him, 'You could save the day again,' " said Brown, whose union represents workers at both Seattle papers.

But Kendall said he's never discussed buying or printing the P-I with Black. What's more, he added, Seattle isn't Honolulu.

Here's the P-I's situation, and how Black conceivably could factor into it.

The P-I has pretty much been only a newsroom since 1983. That's when its owner, The Hearst Corp., entered into a federally sanctioned joint operating agreement (JOA) with The Seattle Times Co.

The Times prints, circulates and sells the advertising for both papers. In return, it gets most of the proceeds. But it has maintained in recent years that it is losing money under the arrangement and moved in 2003 to trigger an escape clause in the contract.

Hearst has said the P-I couldn't survive outside the JOA. It also says The Times' loss claims aren't valid.

After years of litigation, the companies agreed last spring to submit their dispute to binding arbitration. The arbitrator is scheduled to rule by May 31.

If The Times wins, the agreement calls for Hearst to shut down the P-I in six to 12 months. In return, it would get 32 percent of The Times' profits until 2083, when the JOA expires.

To comply with antitrust laws, however, the U.S. Justice Department or federal judges almost certainly would require Hearst to put the P-I up for sale before closing it. That's what happened in Hawaii in 2000.

The owner of the Honolulu Star-Bulletin had announced that, in return for a cash payout, it would close its paper and dissolve its JOA with the larger Honolulu Advertiser. After the courts stepped in, the Star-Bulletin was put up for sale

The Star-Bulletin then — like the P-I today — had no presses, no advertising sales force and no circulation network. "It was essentially a startup business," said Wayne Cahill of the Hawaii Newspaper Guild.

But Black stepped in when no one else in the industry would, buying the paper for $10,000 and building up the business and production end from scratch. Kendall, who headed Black's Hawaii operations at the time, says it wouldn't have happened if the company hadn't also been able to buy an Oahu weekly with presses that became the foundation for the Star-Bulletin's new printing operation.

In almost every other U.S. city, the dissolution of a JOA has meant the death of a paper. In Honolulu, the Star-Bulletin survives.

Black could do the same thing in Seattle, Brown and others say. The Times-Hearst arbitration agreement acknowledges Hearst could still collect its 32 percent of The Times' profits, even if it sells the P-I to a buyer willing to publish the paper outside the JOA.

Kendall said he doesn't know whether the Kent press Black acquired as part of the King County Journal Newspapers purchase is big enough to print the P-I. What's more, he said, he hasn't asked: "In this region, our focus is on community newspapers."

But others say it would be possible, perhaps by adding capacity at Kent and contracting out part of the press run.

"It's a business opportunity he [Black] might well be interested in," said Cahill, who once worked in The Times' circulation department.

The Seattle situation isn't identical to Honolulu's. For one, powerful political forces in Hawaii lined up to save the Star-Bulletin. That hasn't happened — at least not yet in Seattle.

Publishing the P-I would require a huge investment on Black's part, not just in equipment but in people, said John Morton, a leading national newspaper analyst.

"It would be a very daunting prospect," he said.