Questions and answers on newspaper fight

Some questions and answers that address what the dispute was all about.

Q: First, who were the players?

A: On one side was The Seattle Times Co., owner of The Times and five smaller dailies in Eastern Washington and Maine. The Blethen family, which has owned the paper since 1896, controls 50.5 percent of the company's voting shares. Sacramento, Calif.-based newspaper chain McClatchy owns the other 49.5 percent.

On the other side, from New York: The Hearst Corp., owner of the Seattle Post-Intelligencer since 1921. The P-I is part of Hearst's empire of 12 dailies, eight weeklies, 30 TV and radio stations, more than three dozen U.S. and British magazines, and a wide-ranging collection of cable and Internet investments.

Q: What were the two companies fighting over?

A: In the narrowest sense, it was a contract dispute over the joint-operating agreement (JOA) linking the two newspapers since 1983. But each owner maintained it was really fighting for its newspaper's future.

Q: What is a JOA?

A: A partial exemption from federal antitrust laws, authorized by the Newspaper Preservation Act of 1970. That law allows competing newspapers -- with Justice Department approval -- to merge business operations under some condition. News operations remain separate.

In Seattle, The Times markets, prints and distributes both papers. In return, it gets 60 percent and Hearst 40 percent of what's left after The Times is compensated for the non-news costs of producing both newspapers.

Q: Have the papers made money under this arrangement?

A: For years, yes. But The Times maintained the JOA recently had become a money loser.

In 2003, after months of talks with Hearst, it moved to trigger an escape clause in the contract by notifying Hearst it had lost money in 2000, 2001 and 2002 under a formula spelled out in the JOA.

Under the contract, that three-year "loss notice" required the owners to negotiate a date to close the P-I within the next 18 months. Hearst, in return, would get 32 percent of the surviving Times' profits until 2083, when the JOA is scheduled to expire.

If the owners couldn't reach agreement on a P-I shutdown date, the contract says, the JOA would terminate and Hearst would get nothing from The Times. That agreement was reached today.

Hearst maintained that either option amounted to a P-I death sentence. In April 2003, it filed a lawsuit challenging the validity of The Times' loss notice.

Q: So was the P-I the victim and The Times the aggressor here?

A: That's how Hearst painted it. But Times Publisher Frank Blethen has said his newspaper is the real victim and that his family's control of it was at risk.

He has accused much-wealthier Hearst of intentionally keeping the P-I weak to undercut the JOA's profitability and force the Blethens to sell their majority stake in The Times. The expensive legal fight was part of that strategy, he said.

Should the Blethens sell, Hearst would be the most likely buyer. When The Times and Hearst amended the JOA in 1999 to allow The Times to switch from afternoon to morning publication, Hearst insisted on a side deal that gives it a right of first refusal if the Blethens ever put their shares on the market.

Q: What has happened since the lawsuit was filed?

A: The companies spent more than two years litigating just one of Hearst's claims -- that the losses The Times claimed for 2000 and 2001 were invalid because they resulted from an extraordinary event -- a strike.

Ultimately, the state Supreme Court ruled unanimously for The Times. But Hearst's other claims remained to be decided.

U.S. Sen. Patty Murray brought in former Sen. George Mitchell to mediate the dispute in private. Those talks failed. Meanwhile, The Times says, it continued to lose money under the JOA. It filed two more three-year loss notices, for 2002-2004 and 2003-2005.

The first big breakthrough came March 30, 2006, when the companies said they would resolve their differences through binding arbitration. The second came today, when the parties announced that they have settled.

Q: It's been more than a year since the arbitration agreement was announced. What has been going on since then?

A: The two sides were preparing their cases while also seeking to settle the dispute.

Q: How long was the arbitration hearing supposed to last?

A: Four weeks.

Q: Why was it postponed earlier this month?

A: Times President Kelly attributed the delay to "scheduling issues and complexity" but declined to provide details. Hearst offered no explanation.

The timing of the postponement struck many as suspicious. Lawsuits often are settled right before trial. Those suspicions were confirmed today when the two companies announced the agreement.

Eric Pryne: 206-464-2231 or epryne@seattletimes.com