The Battle for Seattle   

The Seattle Times goes morning, competing one-on-one with its rival--and business partner--the Post-Intelligencer. Is this a war where everyone wins?

PERHAPS MOST CONSPICUOUS AT the first morning news meeting at the Seattle Times after it became an a.m. paper was what was missing. Amid the jolly banter and the brainstorming and the huzzahs for having put out one helluva great paper that day, no one uttered a single word about The Competition, the city's other morning paper, the Post-Intelligencer.
It was quite a different matter across town. Editors at the Post-Intelligencer, called the PI by just about everybody, were reacting to the Times' coverage at their news meeting with the relish of frat boys Monday morning quarterbacking the previous day's intramural football game. The PI had that story a week ago, it wrote about this guy months ago, it was loaded with so much more news. There were a couple of Times stories to spin, to chase, to admire, but quickly the discussion reverted to how the PI, not the Times, had set the city's news agenda, how its stories, not the Times', were ripped and read on Seattle's local television stations that morning.
"This is war. Absolutely. No question," says PI Senior Editor David McCumber afterward, explaining why he came out of daily journalism retirement to help lead the PI's troops into battle. "We're competing for readers and news supremacy."
If this is war, did somebody forget to invite the Times? It's not as though the Times circulation is so far ahead of the PI it can afford to be blasé. With a weekday circulation of 220,000, the Times leads the PI by just 30,000. Compare that to the battle in Orange County, California, where the Register bests the Los Angeles Times' Orange County paper by about 170,000.
But to the Seattle Times' top editors, there is no competition. "Our strategy is not to be a better paper than the PI," says Times Executive Editor Michael Fancher with a confident smile and steely stare. "Our challenge is to be better than the Seattle Times."
For the Times, the move to mornings on March 6 was just one more step in the larger process of redefining what it means to be a newspaper in the 21st century. Seattle's two dailies are fighting a new newspaper war; in the end, nobody loses and everyone's happy. This is the greatest war that never was, engineered to improve both newspapers and to increase the profits of their owners. If William Randolph Hearst's creation of the Spanish- American War to sell newspapers set the tone for journalism in the early 20th century, then the battle in Seattle is the new millennium equivalent.
The Times, owned by the Blethen family, and the PI, owned, ironically, by Hearst Corp., are far from rivals. In fact, they're business partners. Back in the early '80s, when afternoon papers all over the country were dying, the morning PI and the afternoon Times entered a government-sanctioned joint operating agreement, or JOA.
The government allowed dozens of such agreements in the '70s and early '80s, ostensibly to preserve the competition of ideas before anyone envisioned the competitive power of the Internet and the dotcoms. ( "The Death of the JOA,") But the real motivator was money, says Stephen Barnett, a law professor at the University of California at Berkeley and a JOA arch-critic. By successfully lobbying Congress to pass the 1970 Newspaper Preservation Act that allowed JOAs, he says, newspaper owners "were doing what any businessperson would do if allowed by law: give up competition and merge with your competitors so you can fix prices."
In Seattle, the original agreement required both papers to maintain independent and separate news operations, but allowed the Times' corporate parent to run the business of both. In return, the Times' effective split of the profits was 68 percent, with the PI receiving 32 percent.
Even as the seven-time Pulitzer Prize-winning Times became the country's largest and most successful afternoon paper, it has had circulation problems. In the last few years, as the economy boomed in Seattle, circulation at both papers remained flat. To survive, Times owners knew they needed to switch theirs to a morning paper, even if it meant renegotiating the partnership agreement with Hearst.
And so they did. Though the Seattle Times Co. reduced its profit share to 60 percent, it was a reasonable gamble. If the Blethens' bet pays off, the Times circulation will balloon, providing both companies a larger profit pie to divide. Hearst will also benefit from a new agreement that allows the PI to launch a Web site, something it was unable to do under the terms of the old agreement. The new pact also gives Hearst the right to buy the Times if the Blethens decide to sell, and it extends the partnership until 2083.

JOINT OPERATING AGREEMENTS, PROFIT margins, marketing and acquisition strategies, reader retention rates: Mention any of it to most reporters and editors, and you might as well be talking about differential equations. They just don't care. But give them a big breaking news story, pit them against a crosstown rival, and the boys are back in the locker room, gearing up for the big win. "Go out in the newsroom," says PI Pulitzer Prize-winning Senior National Correspondent Andy Schneider. "People are rabid with enthusiasm. It's almost as good as sex!"
Back in the rabbit warren that passes for the Times newsroom, two-time Pulitzer Prize winner and former PI reporter Eric Nalder is looking, amid the maze of cubicles, for the most recent PI deserter, Steve Miletich. Miletich sits in the back of the newsroom next to former Associated Press reporter Mike Carter. Both were hired about the same time a year ago, they say, to help beat the PI on breaking news.
"Hey, Miletich, where are you?" Nalder calls out, poking his head around blind corners.
"I'm back here, finger painting," Miletich retorts, throwing his head back, laughing. "Didya see that in the PI this morning? I couldn't believe it!" Carter says.
In a PI piece about the Times' switch to mornings, columnist Art Thiel sniffed: "There is an art to turning out well-crafted stories on tight deadline, and the Times is in the finger painting stage of this art."
A few days earlier, the Wall Street Journal referred to the Times' recent "setbacks": "In the span of a year, it lost 59 staff members, many to other publications or dotcoms. It couldn't keep up with the PI during the biggest story in Seattle last year, the riotous World Trade Organization meeting. And last month, the Times ran an embarrassing front-page correction apologizing for an erroneous report on the Alaska Airlines crash."
Ouch. But wait, Miletich, Carter and Nalder say: That Wall Street Journal reporter used to work for the PI, so how objective can she be? Times reporters are used to breaking news all day long, so that's not an issue. The WTO riot was no contest; the Times did it better, the PI can't do the second- and third-day stories, getting the context, the layering. "They just don't have the resources," says Carter.
"We set the news agenda in this town," Nalder says.
That Monday evening, local TV news stations reported that the next day's Wall Street Journal would reveal problems with fasteners in every jetliner model Boeing builds at its Seattle plant, requiring the company to replace parts. The PI chased the story for Tuesday's editions, the Times had it on Wednesday.
There was no mention of the Boeing story at the Times' Tuesday morning news meeting, says a Times top editor. And there was no mention of the PI. Instead, conversations about missed stories and the PI take place in small newsroom huddles tucked away in one of the many hutches, thus avoiding the possibility that anyone might endure public humiliation. This civility is part of the Times newsroom culture, where Managing Editor Alex MacLeod has been known to intimidate subordinates not with fits of stapler throwing but with the arch of an eyebrow.
With some minor adjustments for a morning production schedule, the Times culture will remain the same, says MacLeod. The week before the switch, he spent a lot of time talking to editors about how to make the new morning meetings collaborative, about how he would hang back and let others run the show and avoid as much as possible giving his staff the evil eyebrow.
In his debut at the Times' first Monday morning meeting, MacLeod was the antithesis of intimidating, displaying the cheerful supportiveness of a management training facilitator. Dressed casually, felt pen in hand and standing before an easel-size pad of white paper, he presided over an unstructured brainstorming session intended to allow his staff, "these good people, to do their job," he explains.

MACLEOD HOLDS A CERTAIN amount of scorn for Times detractors, especially those who tout the PI--which many at the Times view as a cog in Hearst's huge corporate machine--as the scrappy underdog trouncing them on breaking news. "Which brings me to all the preconversion blather about whether we could ever figure out how to be a morning newspaper after all these generations as a slow-footed, long-winded PM," MacLeod wrote in a memo to the staff lauding the Times' "pretty damn great" work the first week after the move to mornings. "I can't tell you how tired of that talk I got and how embarrassed I was for the craft of journalism to see a newspaper like the Wall Street Journal and some industry publications report such drivel as if it were fact."
Both MacLeod and Publisher Blethen had written the Journal with complaints about the March 3 article, prompting Journal Managing Editor Paul E. Steiger to call their correspondence "cranky" in a March 30 letter to Blethen. "No one hates to be the subject of a newspaper story more than other newspaper people," he wrote, admitting that he, too, has been guilty of "excess sensitivity." But, Steiger added, the communiqués he had received from MacLeod and Blethen made them eligible to "win some kind of super-sensitivity prize."
Though the Journal had misspelled MacLeod's name (a correction was published), there was no dispute over the article's contention that the Times' high turnover had been a problem.
In the last year, the Times lost 15 percent of its newsroom staff, twice the normal number, MacLeod says, mostly to larger publications. Three went to the Washington Post; others went to the Philadelphia Inquirer, the Los Angeles Times, Business Week, the Wall Street Journal and Newsday, making the Times the latest farm team for major metropolitan dailies.
James Grimaldi was one of those who left the Times to take a job at the Washington Post. Despite his new employer's prestige and high pay, "it was not easy for me to leave" the Seattle Times, he says.
"The Times is an extraordinarily nurturing and pleasant place to work," Grimaldi continues. "They respect talented people." Thanks to Managing Editor MacLeod's vision of a newsroom built on respect and affection, the Times has successfully attracted "people who are looking for more than a paycheck," Grimaldi says. "They're looking for personal satisfaction."
That said, Grimaldi adds, money is still an issue. "Seattle is expensive, and [Times] salaries have not kept up."
The minimum salary paid first-year Times reporters, according to the Guild contract, is $31,163 annually; if reporters work in the zones, the figure drops to $26,963. Reporters with a minimum six years' experience are guaranteed $44,600 or $38,385 in the zones.
The union figures "have almost no relationship to what most people are paid," says MacLeod, who declined to be more specific. "Guild-represented news staffers [receive] annual increases several times greater than the movement of the contract minimums, plus increases beyond that based on merit."
For some people, MacLeod adds, "particularly those at the high end of skill and experience, money likely always will be an issue." To keep key newsroom staff members from defecting, executives have committed hundreds of thousands of dollars to a new retention program of merit pay over the next four years. A significant percentage of the newsroom staff will receive bonuses in addition to standard base and merit increases. Some payments will be in lump sums. Other bonuses will be distributed in multiyear installments, and employees must remain with the company to collect the full amount, MacLeod explains.
"We don't have an enormous newsroom budget. But we're certainly not being starved," he says. "When it comes to covering news, we don't worry about expenses, we just do it."
Editors at the PI say they have similar carte blanche to cover the news, though they have far fewer bodies to do it with. A year ago, after the JOA was renegotiated, Hearst executives reinvested some of the newfound largesse in the newsroom, adding 20 new staff members. Even so, the PI is outnumbered nearly 2-to-1 by the Times' 320 newsroom employees, though Times executives are quick to add they, not the PI, put out the Sunday paper.

THE DAY OF THE TIMES' morning debut, the paper looked strikingly similar to the PI. The Times had added a few features--a Wall Street Journal-like daily news summary on page 1 and a B-2 "Here and Now" column to help readers "survive and thrive"--but by and large, the mastheads, the layouts, the story treatments of the two papers resembled one another. Above the fold, both had staff-written stories about a Boeing strike, with the Times getting higher marks for a clearer lead. They each had enterprise pieces. The PI ran a moving installment in a series about a young reporter's return to Vietnam, from which she and her family escaped at war's end; the Times published a news feature about the possibility that traffic might cause delays for victims en route to the only trauma center for the city's most severely injured patients. The Times also teased to an inside-the-A-section series: "Sticker Shocked? The real story behind the real estate boom."
Traffic, health and medicine, growth and development and personal investment are among the issues that most concern Seattle residents, according to Times market research, so it was no coincidence that the paper gave them prominent treatment. While the PI tends toward a traditional approach to news, straightforward reporting day after day, explaining what happened and why in short bursts, the Times, which runs far longer stories, attempts to define "news in different terms," says MacLeod, "by getting out of the institutional framework and informing the public debate. The niche is not breaking news. It's making sense of the news."
The Times spends a considerable amount of effort and money on market research "to understand readers, and how they use and see us," says Publisher Blethen, who is also the Times Co.'s CEO. "This is a content war." Times executives have no interest in stealing readers from the PI, Blethen says. They want to reach new readers, to tap into Seattle's recent and "phenomenal growth," he explains.
The spoils include some of the richest urban demographics in the nation. In two decades, the Seattle metropolitan area's population has ballooned from 1.7 million to 2.3 million, with housing prices in many neighborhoods, fueled by the region's burgeoning high-tech economy and its soaring salaries, tripling and quadrupling.
Unemployment is a low 3.5 percent, and Seattle residents are well educated (68 percent have attended college) and well paid (nearly 45 percent have a household income of $50,000 or more; a quarter of the households earn more than $75,000). Seven out of 10 working adults hold white-collar jobs, and only 10 percent speak a language other than English at home.
The demographics of the papers' respective readers are similar, according to a recent report by the marketing company Scarborough, although "there is a slightly higher propensity for the average reader of the PI to be male or age 55 or older. There is a higher propensity for the average weekday reader of the Times to have a household income of $50,000 or more, be a college grad or work in a white collar position."
What's more, in this war, everybody's a winner: In the event of a serious economic downturn, either paper sustaining losses for three years can negotiate a shutdown. Regardless of who survives, the Times is guaranteed 68 percent of the profits, the PI 32 percent, according to the JOA. The surviving company will maintain a morning monopoly, and will split the costs of the newsroom operation with the loser.
Blethen plans to continue pumping money into the Times newsroom budget--he says the Seattle Times Co. profit margins are half that of most publicly traded newspapers--and lauds Hearst for doing the same. "In a perfect world, PI readers will stay loyal, and the paper will stay healthy. But," Blethen adds, "if we couldn't grow the PI before, I have no illusion it's now going to connect with the community in a big way just because they're throwing a lot of money at it."
The Blethen family's fierce dedication to Seattle and to preserving the Times as an independent newspaper has pushed Frank Blethen to experiment with bold new ways of redefining newspapering in the last decade. The Times was among the first papers to advocate advanced business degrees for its editors, has embraced readership surveys and focus groups to help shape news coverage, welcomed public journalism and news-you-can-use service pieces and mobilized reporters to the suburbs. Long before Times Mirror Chairman and CEO Mark H. Willes announced plans to obliterate the wall between business and editorial, the Seattle Times had developed a model for interdepartmental cooperation, says Blethen, led in part by reporters and editors who had crossed over to take business jobs.
Blethen takes pride in being open with the newsroom staff about his business initiatives and his civic involvement: He bought ads in the Times to help defeat a proposed anti-affirmative-action law and took a lead role in bringing a new baseball stadium to Seattle. "The staff called me 'Ballpark Frank,' " he says, his grin as comfortable as the sweater hanging over a chair in front of his messy desk.
"Frank is comfortable doing these things because he has complete confidence that the newsroom will ignore his activities in doing its job," explains Executive Editor Fancher. "He has a track record of not involving himself in news judgment."
In the corner of Blethen's office, atop the computer, sits a ratty vintage baseball cap, one of the many he passed out to employees 20 years ago when the Times put out a morning edition for a short while, a venture that was quickly quashed after the JOA was implemented. Blethen was circulation director back then, and he opposed the JOA. As he climbed the corporate ladder, he moved the hat until it came to rest in the tastefully appointed publisher's suite, and sat there as a reminder "that we would be a morning paper again one day," he says.
Despite concerns over massive circulation losses, production failures, transportation breakdowns, late deliveries and disgruntled employees forced to start work hours before dawn or change day shifts to night, the conversion went "far better than we expected," Blethen says. His eyes, though bleary and bloodshot, are nonetheless glimmering with genuine excitement. Up with his pressmen in the middle of the night, Blethen, flanked by family members, pushed the button in the North Creek plant that got the morning presses rolling that first day.
Later, at the 10 a.m. news meeting, when an editor reported some minor glitches in the North Creek run, someone quipped: "Probably the sight of all those Blethens scared 'em."

FAMILY LOOMS LARGE AT the Seattle Times Co.: New employees are guided through a shabby hall to the publisher's suite, where a rogues' gallery of five generations of Blethen family photos hangs. The Blethen family has owned the Times for more than 100 years, with Frank Blethen and three cousins representing the fourth generation at the board of directors meetings. The fifth generation, now in their teens and early 20s, are poised to accept the mantle when their turn comes; two years ago, the oldest five went on a retreat to Maine, the birthplace of Times founder Alden Blethen, and wrote their vision of the company's future.
Even so, Times executives remain suspicious of Hearst's motives. They worry Hearst is waiting for the Blethen family to lose stewardship of the Times due to disinterest and internecine squabbling, as has occurred at so many family newspapers in the last half century. Knight Ridder, which bought 49.5 percent of Seattle Times voting stock during the Depression, expects the Blethen family to crack, says Executive Editor Fancher. (See "Independent's Day," October 1996.) Knight Ridder and Hearst are "standing in line, waiting for the Blethens to die," Fancher says. "They think maybe in the next 30 years, the Blethens will sell. Well, they have no interest in selling. The fifth generation has already started working here."
While Knight Ridder would like to control the Seattle Times, says spokesman Chip Visci, "are we standing in line waiting for them to die? Absolutely not."
Hearst's long-range strategy for the Seattle market is to "own it," says former PI Editor and Publisher J.D. Alexander, now assistant to the president of Hearst Newspapers. But, he adds, "Nobody's holding their breath waiting for the Blethen family to pass away. It's a protection of assets to be in it for the long term." Alexander points to recent developments in Los Angeles, where the Chandler family suddenly agreed in March to sell Times Mirror, the corporate parent of the Los Angeles Times, to the Tribune Co. In Seattle, Hearst executives are "setting themselves up" for that sort of eventuality, Alexander says. "We don't expect it will happen soon. But it could."
Not as long as Frank Blethen is breathing. "You sell your soul to the devil once you go public," Blethen says. Public ownership means kowtowing to "faceless institutional investors interested only in short-term profits and stock prices," he says, instead of upholding the values he cherishes: a passionate commitment to journalism, his employees and the community his newspaper serves.
Despite its best efforts, the Seattle Times Co. was unable to grow the PI's morning circulation, says Blethen, an odd incongruity considering Seattle, home to Microsoft, Amazon.com, Starbucks and a multibillion-dollar technology industry, is enjoying an unprecedented economic boom.
Blethen blames Hearst for producing an inferior newspaper that has thus suffered flat circulation. The Times' stagnant circulation, he says, was due to its position in the afternoons.
Over at the PI, there is little patience for "inferior newspaper" talk. "I'd match our staff and product against theirs every day of the week," Alexander says.
In the short term at least, few in the PI newsroom seem worried about going out of business. The competition has energized PI reporters and editors, says PI Metropolitan Editor Kathleen Best, who is credited with helping breathe new life into the paper since she arrived nearly four years ago. Hearst has bought a new computer system, started to redesign the paper to help differentiate it from the Times and funded readership surveys to help shape coverage. Says Best: "Why would Hearst spend that kind of money only to turn around and shut down the paper?"
Best blames the Seattle Times Co., not the PI or Hearst, for failing to market the newspaper well enough to build readership. "They control the circulation," Best says. "There's a lot of suspicion on this side that if the [subscription] checks say Seattle Times Co., then maybe the PI comes second," a charge top executives at the Times Co. deny.
The Times has no interest in driving the PI out of business, Fancher says. "We want to extend Blethen ownership, to sustain the Blethen franchise." Adds Hearst executive Alexander: "The objective of the amended JOA is not to kill a newspaper, but to grow the market."
As a consequence of the war of words, both sides are able to pump resources into their respective products, strengthening the quality, buoying morale, energizing and sharpening the staff and, ultimately, selling more newspapers, if you believe that formula works. In the newsroom, at least, trying to figure out the corporate czars' strategy seems pointless. "It certainly doesn't keep me up at night," says Best. "No one in newspapers can say if they'll be here in 15 years," she adds, "because who knows if papers will survive at all?" Look down the road 80 years, when the joint operating agreement expires, she says definitively, and "neither paper will be here."
In the meanwhile, she adds, the real challenge for both papers is "to make newspapers relevant to a generation who doesn't buy enough fish to justify using it for fish wrap."