Toward the end of the last day of testimony in hearings on the proposed joint operations of the two daily newspapers here, a woman suddenly entered the courtroom with several copies of a letter from her boss.
The letter delivered to the hearing Wednesday, from businessman Donald L. Snellman, was an offer to buy the Seattle Post-Intelligencer. The Post-Intelligencer's owner, the Hearst Corp., wants the morning paper to combine part of its operations with the afternoon Seattle Times.
Surprised attorneys for the Post-Intelligencer and the Times called the letter a "grandstand play" and said it shouldn't be admitted to the record because it was "highly improper" to dignify something delivered at such a late hour.
William Dwyer, an antitrust attorney representing opponents of a joint operation--Post-Intelligencer employes, suburban newspaper publishers and some downtown businessmen who contend the Post-Intelligencer is not failing as claimed--said Snellman has enough financial assets to buy Hearst's property.
The surprise offer to buy the financially beleagured P-I, which was admitted into the record, brought the hearing to a close in the way it began. The hearing opened Nov. 2 with the disclosure that international newspaper publisher Rupert Murdoch wants to buy the P-I if the joint operation agreement is denied by the government.
Hearst attorneys tried to show at the hearings that the paper has lost millions of dollars despite a strong effort to compete with the Times. The opponents produced a collection of former P-I editors who testified they were forced to buy expensive Hearst news features they didn't want and were hampered by directives from Hearst that kept the paper in a constant state of disarray.
The proposed joint operation of the two papers was first announced last January when Hearst said the P-I would have to go into joint operations with the Times or would be forced to fold.
The P-I has a daily circulation of 196,000, while the Times circulation is 254,000.
The 1970 Newspaper Preservation Act allows newspapers to combine certain functions, while maintaining separate editorial and newsgathering departments. Such arrangements require approval by the U.S. attorney general, who must determine if the weaker paper is in "probable danger of financial failure."
If the arrangement in Seattle is approved, the advertising, circulation and production departments of the P-I would be absorbed by the Times. The afternoon Times would cease publication of its morning edition. The morning P-I would discontinue its Sunday paper, providing the Times with six pages of editorials and columns to be inserted into the Sunday Times.
The opponents of the joint operations, as well as an attorney from the Justice Department's Antitrust Division, have argued that Hearst should seek a buyer for its paper rather than enter into joint operations with the Times. But Hearst, which bought the 100-year-old P-I 60 years ago, has maintained the P-I is not for sale.
Hearst Corp. President Frank Bennack testified that Murdoch approached him in October about a possible purchase. But no price was discussed and Bennack told the Australian publisher the P-I was not for sale. In the hearings, Hearst attorneys and witnesses dismissed Murdoch's offer.
"You're going to have big, bold headlines about a mother boiling her baby and eating it and things like that," John Morton, a newspaper consultant called to testify for Hearst, told the court. "I have nothing against Mr. Murdoch but he publishes terrible newspapers and I would assume Hearst feels the same way."
Louis Guzzo, a former P-I managing editor, told the hearing that part of the P-I's troubles were in overcoming the Hearst name and reputation.
Guzzo also said Hearst made an insufficient investment in the P-I to make it competitive with the Times. He said Hearst used a "candy-stick approach," granting new resources to the P-I only to take them--and more--back again.
Guzzo, who left the P-I in 1973 and later went to work for former Washington Gov. Dixy Lee Ray, told of Ray's consternation with the P-I's coverage of her.
Ray, who was defeated in her bid for reelection last year, became so outraged with the P-I's coverage of her that during her 1980 reelection bid she publicly announced she was no longer speaking about any subject to anyone who worked with the P-I.
In 1978, Guzzo said, she asked a friend to find somebody to buy the P-I. Her friend found Joe L. Allbritton, then publisher of the now defunct Washington Star. He reportedly expressed an interest, but Hearst told an intermediary the P-I was not for sale.
Most of the testimony in the hearing revolved around the P-I's finances. Hearst witnesses testified that Hearst losses totaled $14.3 million from 1968 through 1980, and projected the paper will lose another $21.5 million through 1985.
The Times, on the other hand, is expected to make record profits this year of $5.4 million, its president, William J. Pennington, said.
The opponents contended the P-I's losses are exaggerated, and that, under proper management, the paper could become profitable by 1984.
Under questioning from opponents, P-I Publisher Virgil Fassio conceded his paper has made gains in circulation this year, despite the announcement of the intended joint operation, while the Times lost circulation. But he said those gains could be attributed to an increase in the price of the Times, while the price of the P-I has remained the same.
Fassio defended Hearst's management of the paper and offered a long list of "initiatives" undertaken during his tenure with the P-I to improve the paper's position--including promotional efforts such as the P-I's offer to pay $25,000 to any P-I reader struck by the falling satellite Skylab in 1979.
Administrative Law Judge Daniel Hanscom has until Dec. 18 to make a recommendation to Atty. Gen. William French Smith, who will make the final decision on the proposal for joint operations of the papers.