Hearst Turned Down Offers to Buy the Seattle P-I. Is There an Antitrust Issue Here?

By Sandeep Kaushik March 24, 2009

Hearst did field (and reject) offers from outside groups to take over the Seattle Post-Intelligencer and keep it going as a printed newspaper before the paper ceased print publication on March 17. So reports The Business Insider. Columnist Nicolas Carlson writes that, "a group of local investors offered to take over the P-I, assuming its debt and costs. They wanted to try and keep it running as a newspaper."

Who exactly is this mysterious group of investors?
Still a mystery, I'm afraid. I heard a fairly credible rumor a couple of weeks ago that there had been two efforts afoot to potentially take over the P-I. One supposedly involved a lawyer on Bainbridge Island who wanted federal help in keeping the P-I going, and had met with congressional staff in the delegation to explore the possibility. A perhaps more plausible effort supposedly involved an unnamed woman who was putting together an ownership group with the assistance of the Seattle office of Moss Adams LLC, an accounting and consulting firm that does mergers and acquisitions work. And as Eli Sanders reported on SLOG, in the P-I's last days a rumor flew around the newsroom that a group was trying to take over the P-I, possibly with the help of Seattle attorney (and P-I op-ed columnist) Chi-Dooh (Skip) Li.

I was pretty dismisive of all of this stuff at the time, and did not make much effort to run down these rumors. But given the Business Insider report, it looks like at least one group did eventually step forward, only to have their offer (which apparently did not involve them paying any money to Hearst for the right to run a money-losing paper) rejected by Hearst.

I know this all seems like old news, but attorney Kathy George of the Committee for a Two-Newspaper Town says there is a possibility that these stories could bring up some thorny legal issues regarding the the termination of the joint operating agreement between the two dailies. George cited the JOA "Termination and Settlement Agreement" negotiated between the Times Company and Hearst. It references a memo, dated March 3, from then-P-I publisher Roger Oglesby to Times Company president Carolyn Kelly, which seems to indicate that they were negotiating the shutdown of the P-I for at least several weeks prior to the paper's last (printed) day.

If Hearst and the Times Company were negotiating the end of the P-I as a printed newspaper at a time when Hearst was rejecting credible offers to take over the paper and keep it printing, might that constitute evidence of anti-competitive behavior in violation of federal antitrust laws? It might, according to George, though she stresses that CTNT also remains concerned about taking actions that could adversely affect the still very shaky viability of the Times: "CTNT's official reaction is this: We're taking a close look at the agreement with antitrust concerns in mind. But we're mindful of the need for the Seattle Times to survive."

Filed under
Show Comments