Just 10 days ago, a Seattle Court handed down a decision with significant ramifications for the company that owns daily newspapers in Portland, Augusta and Waterville in a ruling that has been fueling speculation about the future of the parent company’s largest newspaper, the Seattle Times. By extension, such speculation is also attending the future of the subsidiary that owns Maine’s largest news organization and the very news itself .

What lies behind the court decision is an interpretation of a contract entered into by the Times with its cross-town rival the Hearst-owned Post-Intelligencer, “P-I.”

The contract – known as a Joint Operating Agreement -was entered into by the rival newspapers some decades ago so that the Times would control circulation, printing and advertising for both papers and that the two could remain competitive in news reporting and editorial functions, which remain separate under the agreement. The deal is a good one for the Times so long as both papers are making money since it reaps 60 percent of the profits but imposes an unwelcome burden when there aren’t any.

A few months ago, the Times sought to end the agreement under a clause that it said permitted it to do so if the paper had three straight years of operating losses claiming a right to end the arrangement if continuing it was simply going to drive it under.

The Hearst-owned P-I paper brought its own suit to block the Times’s move.

The key to the so far successful Hearst position in the Seattle courts-one on which an appeal is likely-is its position that losses in at least one of the three years involved were an anomaly, arising out of a 49-day strike at the Blethen-owned Times. The legal principle known as “force majeur” allows courts to overlook a strict interpretation of a business agreement when an extraordinary and unexpected event such as a hurricane or an unanticipated labor strike distorts the typical expectations of the parties. Because the same strike spilled into a second calendar year, Hearst has vowed to continue its objections to a further move by Blethen to end the agreement.

Seattle Times President Carolyn Kelly referred to the decision as “very disappointing” in her memo that was distributed company-wide in the aftermath of the decision.

The decision came less than a month after a memo from Publisher Frank Blethen to his staff that the company was thinking about selling some of its real estate assets as a means of providing relief to some of the company’s financial pressures.

The blow dealt by the recent court ruling coupled with the consideration of a sale of certain of the paper’s non-newspaper assets in the family-owned company – one that is quite small by newspaper chain standards – inevitably leads one to wonder what about Blethen’s Maine subsidiaries?

If the Seattle Times puts some of its real estate assets up for sale to raise cash, can sale of any of its smaller papers in the eight-paper chain such as the Portland Press Herald, Sunday Telegram, Kennebec Journal and Central Maine Sentinel be far behind? Indeed, a report carried by the Times itself quoted a spokeswoman as saying that sale of some of the papers in the chain “is something the family is looking at.”

If national trends are any indication, the papers which have since their inception more than a century ago been under some type of family-owned control may for the first time see ownership by a large media chain.

Keep in mind that though Blethen’s Maine papers are owned by a Seattle-based company, it is still under Blethen family leadership and control even though the Knight-Ridder chain holds a significant minority stake. The Seattle Times according to the International Directory of Company Histories, “is one of the last independently and locally owned metropolitan newspapers in the country, one of the few newspapers to avoid absorption by large publishing chains.”

Ownership by a large scale chain is often perceived as distasteful to local values. As Jean Gannett Hawley, chairman of the coard and publisher of Guy Gannett Publishing Company observed a few years before her family sold its Maine papers to Blethen “if you are owned by a chain, you lose your family identity. That’s why I have also stiff-armed being purchased by a chain. Eighteen or 20 years ago the Gannett [pronounced Guh-NET but no relation to the Guy Gannett family] chain tried to buy us, but I could see that would not be in the best interest of the state of Maine.”

One reason why the Guy Gannett family, the long-time previous owners of the Blethen Maine newspapers discouraged approaches made by larger out of state chains in favor of the 1998 sale to Blethen was due to concern that the Guy Gannett heirs had for continuing ownership of the newspaper under a family-owned company like their own that would be perceived as responsive to Maine based concerns. In this regard, it is worth noting too that the Blethens themselves have family roots in Maine. Their paper’s founder, Frank’s great-grandfather, Col. Alden Blethen, was born just outside of Belfast, spent five years as headmaster of Farmington’s Abbott Prep School and put in time as a Portland attorney before heading out west.

A key to understanding where the Blethen Maine papers are headed may lie in another contract between the Times and the P-I. This gives the Hearst chain first opportunity to buy if the Times itself is ever put up for sale. Given our own state’s tie-ins to the Times ownership, will Maine’s largest daily and its several satellites be on the coattails of such a transaction? Is there a Hearst lurking prominently in Maine’s media future?

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