SEATTLE'S TWO NEWSPAPERS FALL OUT OVER JOA

'Seattle Times' Could Become Sole Survivor

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SEATTLE (AdAge.com) -- The opening reception yesterday for the Newspaper Association of America's annual convention here took place just as news broke that a joint operating agreement between the city's two dailies had frayed to the point of potential dissolution, which could lead to one of the papers being shuttered.

The Seattle Times reported that independently owned Seattle Times Co. had reached an impasse with Hearst Newspapers, owners of the Seattle Post-Intelligencer. Its expected that the Times Co. will invoke a provision in the operating agreement that allows the Times to begin negotiations with Hearst to shut down the Post-Intelligencer because the daily has been through three consecutive unprofitable years. The provision the Times Co. is expected to invoke went into effect in 1999.

Could become stand-alone
If after 18 months no agreement is

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reached, the agreement ends and Hearst may operate the Post-Intelligencer as a stand-alone daily.

For its part, Hearst was expected to file a legal action against the Times Co. as early as yesterday.

The move is not entirely unexpected. According to the local weekly The Stranger, Times publisher Frank Blethen told staffers last fall the year would end unprofitably and that he would move to dissolve the agreement. Although the timing is unusual -- coming when the industry's leading executives are all in Seattle -- people familiar with the matter said it was merely that Hearst officials, planning trips to Seattle for the convention, had come to town to try to resolve the agreement issues immediately prior to the convention.

Few details
Evidently no resolution was in sight, although details on what stalemated the talks are decidedly scanty. At the convention's opening reception, which was sponsored by Advance Publications' Parade magazine, George Irish, Hearst Newspapers president, ducked inquiries about the talks, saying, "I'm here as a guest at a private party," before declining comment. Mr. Blethen, who under normal circumstances is reliably voluble, genially deflected questions on the matter, as did P. Anthony Ridder, chairman-CEO of Knight Ridder, which owns a minority stake in the Times Co.

The dustup promises to be a showdown between two opposing world views, pitting Hearst, one of the world's largest privately held media conglomerates, against the likes of Mr. Blethen, who is one of the industry's loudest voices against concentration of media ownership.

Knight Ridder
Complicating the picture is the presence of Knight Ridder, the industry's second largest publicly traded newspaper chain, which owns the substantial minority stake in the Times Co. Neither Mr. Blethen nor Mr. Ridder has been shy about expressing their displeasure at each other, but thus far neither party has shown a willingness to sell.

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