Hearst Corp. put Seattle's oldest newspaper, the Seattle Post-Intelligencer, up for sale on Friday and said that if it can't find a buyer in the next 60 days the paper would likely close or continue to exist only online.
If it does become an Internet-only operation, the P-I, as the paper is known locally, would have a "greatly reduced staff," Hearst said in a statement. Hearst is a major media company that also owns TV stations, other newspapers and magazines including Cosmopolitan.
"In no case will Hearst continue to publish the P-I in printed form" once the 60 days are up, Hearst said. Steve Swartz, the head of Hearst's newspaper division, broke the news to employees in a meeting Friday.
Seattle is one of two major cities on the verge of losing its second daily newspaper as the industry tries to pull out of a tailspin brought on by falling circulation and advertising revenue. Denver's Rocky Mountain News recently put itself up for sale in the face of steep losses and could close if a buyer isn't found soon.
Hearst said it is not considering buying The Seattle Times, the city's other daily paper, which has handled non-news functions for the P-I since 1983 under a federally approved joint operating agreement. Hearst has owned the P-I since 1921, and the paper has had operating losses since 2000, including $14 million last year.
The mood in the P-I newsroom was grim.
"People are kind of depressed. There's some crying," said Candace Heckman, P-I breaking news editor who has worked at the paper since 2000.
Heckman told The Associated Press that Swartz was peppered with many questions by staffers but declined to say more.
"Our journalists continue to do a spectacular job of serving the people of Seattle, which has been our great privilege for the past 88 years," Swartz said in the written statement. "But our losses have reached an unacceptable level, so with great regret we are seeking a new owner for the P-I."
Chris Grygiel, an assistant city editor, said that while the newspaper'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 told the AP. "No one knows what to make of it."
The news was first reported by Seattle's KING-TV on Thursday night, taking even top editors at the P-I by surprise. Rumors of the P-I's imminent demise have surfaced repeatedly over the years, but the paper's footing seemed a little more solid after Hearst defeated an effort by The Times to dissolve the joint operating agreement two years ago.
Joint operating agreements allow newspapers like The Times and P-I to share business and production operations, which cuts their costs, while keeping their newsrooms separate and independent. They're exemptions to federal antitrust law allowed by the Newspaper Preservation Act of 1970, designed to prop up failing papers. Of more than two dozen JOAs created since the law was passed, fewer than 10 remain.
Many industry analysts expected the P-I, backed by Hearst's deep pockets, to outlast The Times, which is controlled by the Blethen family. The Times, like newspapers around the country, has had severe financial troubles of its own and has cut 500 positions in the past year.
Also Friday, the Star Tribune of Minneapolis ended talks with a union representing employees after being unable to agree on a request for concessions, setting the stage for a possible bankruptcy filing by Minnesota's largest newspaper. Canada's Globe and Mail also said Friday it would cut 80 jobs, or 10 percent of its work force.
"We report on this stuff all the time, and everybody here knows this is a business and sometimes business decisions hurt," said David McCumber, the P-I's managing editor. "But even seeing colleagues and friends go through this at other papers doesn't prepare you for when it happens to a paper and to colleagues you love and admire and strive with every day."
In 1999, Seattle's joint operating agreement was modified to allow The Times to switch from afternoon to morning publication, directly competing with the P-I. Hearst began paying The Times $1 million a year for the right of first refusal should The Times be put up for sale.
The Times gave notice in 2003 that it was seeking to end the JOA, saying the agreement was no longer financially viable. Hearst 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 JOA 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.
Times Publisher and CEO Frank Blethen said in a statement that the JOA structure is inefficient and had been a big part of the deep losses both papers have experienced.
"If the P-I does close and the JOA ends, it will enhance the chances that The Seattle Times can survive the recession," Blethen said.
Seattle Mayor Greg Nickels said he hoped a buyer can be found for the P-I. "And if that proves impossible, I look forward to seeing an electronic version of the state's oldest newspaper. Whatever the outcome, this is a big change for Seattle," he said.
The newspaper's signature 30-foot-diameter globe, spinning "It's in the P-I" in neon lights, is a popular Seattle landmark.
The P-I was founded as the Seattle Gazette in 1863 and has a weekday circulation of 117,000, according to the Audit Bureau of Circulations. The Times' circulation is about 199,000.
Seperately Friday, Boeing Co.. said it will cut 4,500 jobs -- about 3 percent of its workforce. Boeing is a major employer in the Seattle area, where much of the company's aircraft production takes place.