Seattle Post-Intelligencer up for sale

Hearst Corp. put Seattle's oldest newspaper, the Seattle Post-Intelligencer, up for sale Friday, saying that if it can't find a buyer in the next 60 days, the paper will close or continue to exist only on the Internet.

"These options include a move to a digital-only operation with a greatly reduced staff, or a complete shutdown of all operations," Hearst, the P-I's parent company, said in a statement. "In no case will Hearst continue to publish the P-I in printed form following the conclusion of this process."

Hearst Newspaper Division President Steve Swartz broke the news in a meeting with newspaper employees.

The statement said Hearst is not considering buying The Seattle Times, the city's other daily paper, which has handled non-news functions for the P-I since 1983 under a federally approved joint operating agreement. Hearst has owned the P-I since 1921, and the paper has had operating losses since 2000, including $14 million last year.

The mood in the P-I newsroom was grim. Some staff members cried. Others were visibly shaken and angry.

"People are kind of depressed. There's some crying," said Candace Heckman, P-I breaking news editor who has worked at the paper since 2000.

Heckman told The Associated Press that Swartz was peppered with many questions by staffers but declined to say more.

"Our journalists continue to do a spectacular job of serving the people of Seattle, which has been our great privilege for the past 88 years," Swartz said in the written statement. "But our losses have reached an unacceptable level, so with great regret we are seeking a new owner for the P-I."

Chris Grygiel, an assistant city editor, said neither Swartz nor P-I executives took questions at the meeting. While the newspaper's Web site is strong, he said, the print edition has always been the flagship, and it's not clear how an Internet-only operation might work.

"Right now people are just trying to digest what happened," Grygiel told the AP. "No one knows what to make of it."

The news, first reported by Seattle's KING-TV on Thursday night, was stunning. Rumors of the P-I's imminent demise have surfaced repeatedly over the years, but the paper's footing seemed a little more solid after Hearst two years ago defeated an effort by The Times to dissolve the JOA.

Many industry analysts expected the P-I, backed by Hearst's deep pockets, to outlast The Times, controlled by the Blethen family. The Times, like newspapers around the country, has had severe financial troubles of its own and has cut 500 positions in the past year.

In Denver, E.W. Scripps Co. is entertaining offers for the Rocky Mountain News and the company's 50 percent stake in a joint operating agreement with The Denver Post, which is owned by William Dean Singleton's MediaNews Group Inc. Citing losses - Scripps has said it expected the News to lose $15 million in 2008 - it may close the News if there is no buyer by mid-January.

"We report on this stuff all the time, and everybody here knows this is a business and sometimes business decisions hurt," said David McCumber, the P-I's managing editor. "But even seeing colleagues and friends go through this at other papers doesn't prepare you for when it happens to a paper and to colleagues you love and admire and strive with every day."

In 1999, the JOA was modified to allow The Times to switch from afternoon to morning publication, directly competing with the P-I. Hearst began paying The Times $1 million a year for the right of first refusal should The Times be put up for sale.

The Times gave notice in 2003 that it was seeking to end the JOA, saying the agreement was no longer financially viable. Hearst sued to block The Times from doing so, and the matter was settled in April 2007, with Hearst paying The Times $25 million not to end the JOA before 2016.

As part of that settlement, The Times paid $49 million to settle Hearst's legal claims and to erase a provision of the JOA that called for Hearst to collect 32 percent of The Times' profits through 2083 should the P-I go out of business and leave The Times with a monopoly.

The Times did not immediately return calls seeking comment.

Gov. Chris Gregoire said she hoped the P-I would survive.

"To be perfectly honest with you, I'm in a state of shock," she said.

The P-I was founded as the Seattle Gazette in 1863 and has a weekday circulation of 117,000, according to the Audit Bureau of Circulations. The Times' circulation is about 199,000.

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AP writer Donna Gordon Blankinship contributed to this report.