Seattle P-I up for sale, may close

Published 8:23 pm Friday, January 9, 2009

The Seattle Post-Intelligencer is set to go out of print in early March unless a new buyer steps forward to acquire the state’s oldest daily newspaper.

Hearst Corp. announced Friday that it’s offering the 114,000-circulation paper for sale due to its mounting operating losses. If the P-I isn’t sold within 60 days, it’s expected to cease all operations or switch to a Web-only publication “with a greatly reduced staff,” the corporation reported.

The Seattle-based paper has had operation losses since 2000, according to Hearst, a major media corporation that owns television stations, other newspapers and magazines. The P-I lost about $14 million in 2008, and its forecast calls for a bigger loss this year.

“Our losses have reached an unacceptable level, so with great regret we are seeking a new owner for the P-I,” Steven R. Swartz, president of Hearst Newspapers, said in a statement.

Snohomish County is the second-largest market after King County for the P-I. About 15,600 copies of the paper were sold daily in Snohomish County in 2008, according to the Audit Bureau of Circulations.

“It’s a sad day for newspapers and journalism in the Puget Sound region,” said Allen Funk, president and publisher of The Herald in Everett.

The P-I’s demise could generate sales opportunities and more readers for The Herald, Funk said. He said the paper will develop a marketing plan in hopes of capturing P-I readers, but that the 50,000-circulation daily won’t change its focus on covering local news in Snohomish and Island counties.

“It would be very counterproductive to change our strategy,” he said.

The P-I, first published in 1863 as the Seattle Gazette, has a long tradition of statewide influence along with the Seattle Times, said David Dilgard, a historian at Everett Public Library.

“The P-I and the Times both have figured out ways to cover news in Snohomish County,” Dilgard said. “Historically, they had attention from Snohomish County readers.”

Longtime P-I reader Mike Sells lamented the news while reading the paper Friday during lunch in Everett.

He said he reads the P-I and the Times daily and sees very different editorial voices.

“I hate to lose another voice,” said Sells, a Democrat who represents Everett in the Legislature and is also secretary of the Snohomish County Labor Council. “On the other hand, newspapers have problems nationwide.”

The public won’t benefit from fewer newspapers, Sells said.

“The problem would be less local news,” Sells said. “When you lose those local newspapers, you lose local focus.”

In 1983, the two papers entered a joint operation agreement in which they produced separate editorial content while the Times handled production, circulation, advertising sales and all other non-news operations for the two.

Many industry analysts expected the P-I, backed by Hearst’s deep pockets, to outlast the Times, controlled by the Blethen family, in Seattle’s newspaper wars. The Times, which has 199,000 readers, has had its own financial troubles and cut 500 positions in 2008 while looking to sell the company’s newspaper holdings in Maine to help it cover its debt.

Newspapers are struggling nationwide, as advertisers switch from print to the Internet and the recession causes businesses to cut back on advertising. Seattle is not the only major city on the verge of becoming a one-newspaper town. Denver’s Rocky Mountain News recently put itself up for sale due to steep losses and could shut down without finding a buyer soon.

“The media industry as a whole is under a lot of pressure to keep up with new media outlets,” Dana Blozis, president of Western Washington Chapter of the Society of Professional Journalists, said in a statement. “At the same time, media organizations must consider new business models to remain financially viable in a world clamoring for instant news and communication.”

In 2003, the Times gave notice that it intended to end the joint operating agreement, saying it wasn’t working financially. The P-I 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 agreement 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 agreement 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 mood in the P-I newsroom was grim Friday.

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

Chris Grygiel, an assistant city editor, said that while the paper’s Web site is strong, 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 said. “No one knows what to make of it.”

The Associated Press contributed to this report.

Reporter Yoshiaki Nohara: 425-339-3029 or ynohara@heraldnet.com.