Arbitration was unlikely to end fight, Times says

The Seattle Times Co. said Wednesday it decided to settle its four-year legal fight with The Hearst Corp. in part because it was "fairly certain" the costly struggle would have dragged on even after a climactic binding-arbitration trial decided the matter.

The statement raised another question: Who would have pressed the fight?

"We really don't want to get into that," Times spokeswoman Jill Mackie said. "We want to focus on the future."

One answer, however, may be the Committee for a Two-Newspaper Town, a group not involved in the arbitration deal. It filed claims in 2003 against both The Times and Hearst, owner of the Seattle Post-Intelligencer, that still are in King County Superior Court.

The committee has little money, and pressing those claims could have been challenging. But "no court has ever examined the merits of our antitrust claim — and it's a very strong claim," Kathy George, one of the group's attorneys, said late Wednesday.

George also said she found The Times' statement "puzzling," since Hearst and The Times had agreed in advance to stop fighting each other and not appeal the arbitrator's decision.

The statement was included in a series of questions and answers about the settlement that The Times e-mailed to employees Wednesday.

The Times and P-I have been bound since 1983 by a joint-operating agreement (JOA). Under its terms, they maintain separate news operations, but The Times handles the business side for both in exchange for a bigger slice of the proceeds.

The court battle over the contract began in 2003, after The Times moved to trigger an escape clause that might have forced the P-I to close. Hearst sued in response.

The binding-arbitration hearing — a closed-door, private trial — was supposed to settle the dispute. Instead, as the hearing was about to convene Monday, the companies announced a settlement.

The Times agreed not to try to trigger the escape clause again until 2016. Hearst agreed to give up its claim to 32 percent of The Times' profits until 2083 if the P-I ever closes. The Times agreed to pay Hearst $24 million.

In explaining the decision, which many observers say favors Hearst, The Times said in its e-mail to employees that "... we were fairly certain that once the arbitration concluded, no matter the outcome, the legal wrangling would not have been over. We could not afford the cost, time, or distraction of continuing to be focused on legal matters. ... ."

The Committee for a Two-Newspaper Town's chief claim against the papers challenges the JOA provision — now eliminated — that would have awarded Hearst 32 percent of The Times' profits until 2083 if it closed the P-I.

The committee, whose goal is synonymous with its name, said the provision was an unconstitutional restraint of trade and a disincentive to continue publishing.

King County Superior Court Judge Greg Canova still is scheduled to hear arguments on that claim July 20.

Committee Co-Chair Anne Bremner said the group had just begun to review the new agreement between The Times and Hearst and would not decide whether to drop its claim until next week.

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