Less than two years ago, the Post-Intelligencer’s Joint Operating Agreement (JOA) with the Seattle Times was last renegotiated. At the time, everyone said (and most everyone thought) the P-I was saved for at least another decade.
What happened between then and now? Only the perfect storm of the media biz.
Retail advertisers, who’d once been the papers’ biggest supporters, moved to direct mail (especially supermarket chains), to the Web, and to cable channels—at least those retailers who were still in business (unlike many indie merchants and strip-mall chains) and still spending money to advertise (unlike car dealers).
And then there’s Craigslist.
The nationwide free-classifieds site essentially killed off newspapers’ other biggest means of support. The Times and P-I each once had 10 pages of want ads each Monday-Thursday. Now they’re lucky to have two.
Online readership of news sites has exploded, especially during this past election season; but online ad revenues have risen far more slowly.
Publishers tried to cut costs in big and small ways. As an example, the Seattle Times (which runs all the P-I‘s non-editorial functions under the JOA) cut back on distribution to outlying counties. This hurt the P-I more, because it traditionally had a more regional reach than the Times.
So now we’ve got two “failing newspapers,” with no assurance that the putative “survivor” (the Times) can turn its fiscal fortunes around with true monopoly status. The Times will have the same costs that both JOA papers had heretofore shared. The only savings will come from having only one product to print and distribute each morning instead of two. And the end of the JOA’s profit-sharing arrangement doesn’t matter if there are no profits to cease sharing.
Leaving this aspect of the discussion for now, let’s get back to our main topic, saving the P-I.
Right now, Hearst execs say they’ll choose one of three options, sometime in March:
1. Shutter the operation altogether;2. Keep it going as a (much more thinly-staffed) online entity; or
3. Sell it to a willing taker, if there is one.
Hearst is a very private, family-run enterprise. There’s no telling how they’ll act. They could turn down a healthy buyout offer and shut the place down if they simply want to.
So instead of trying to predict what they will do, let’s parse out what they might do.
Option 1 would be a relatively simple, quick move. Pay unionized staffers their severance packages. Invoke the death clause in the JOA. Settle any final monies owed by or to the Times. Donate the globe to MOHAI (which already has the pre-1970 P-I photo library).
It’s something a pubilcly held corporation might do to instantly revive its stock price.
Hearst isn’t publicly held.
And that specific part in the JOA’s original death clause you might recall, the part that would have paid Hearst a share of any Times profits even if the P-I dies? That was removed in the 2007 revision. A dead P-I isn’t worth more than a living one.
Option 2 would keep something of the P-I legacy and presence alive. Depending on how the lawyers work things out, it might be a JOA-ender, putting Hearst in full control of seattlepi.com’s destiny. (They’d have to hire their own ad sellers under this sub-scenario, but it’d be hard to sell fewer ads than the Times is doing these days on behalf of both papers.)
Option 3 would require a deep-pocketed ownership group (let’s not expect a single investor to try it) willing to shoulder the losses and perhaps wield the layoff axe while the reinventing goes on.
But such an ownership group could potentially keep a paper P-I going. And it might be willing to keep more P-I people on staff than a Hearst-owned online-only venture might. (I know, all these unknowns and hypotheticals…)
Coming Wednesday: What I, specifically, would do if I bought the P-I or worked for someone who did. (I know, I’m dragging this on, but it’ll all be worth it I promise.)
