One city's battle over merger of two daily papers

More than 500 US cities that once hosted competing newspapers have become one-newspaper towns.

A controversial technique designed to help stem this trend is now facing a serious challenge in Seattle.

The debate centers around joint operating arrangements (JOAs). First devised during the Great Depression, JOAs allow two papers to merge advertising, circulation, promotion, production, and printing operations. News and editorial departments remain separate and presumably independent. JOAs have helped preserve a semblance of newspaper competition in 24 cities around the country.

Last year, publisher William Randolph Hearst Jr.'s Seattle Post-Intelligencer agreed to join with the larger, profitable Seattle Times (of which the Knight-Ridder chain owns a large share). But a coalition of local businesses, citizens, community and suburban papers, and 200 Post-Intelligencer employees is opposing the effort.

Mr. Hearst argues that $14 million in losses over 12 years, gloomier future forecasts, and an inexorable ''downward spiral'' destroying No. 2 papers nationwide made the JOA necessary.

But opponents blame the paper's losses on mismanagement. They also argue that a string of prospective buyers - including Australian news magnate Rupert Murdoch - plus Hearst's refusal to consider sale or closure plans, prove a JOA is not needed. Further, they say, ''anticompetitive effects'' of a JOA on smaller competitors would subvert the Preservation Act's purpose ''to preserve the publication of newspapers.''

The US Justice Department's antitrust division, which has endorsed all previous JOA applications, opposes the Seattle arrangement. It argues that by ''incremental cost-benefit analysis,'' the Post-Intelligencer already returns Hearst a net profit.

But administrative law judge Daniel Hanscom has recommended the JOA be approved as proposed. US Attorney General William French Smith is expected to rule sometime after April 1.

The issue of competition among daily papers has been underscored recently by the demise of the Washington Star and the Philadelphia Bulletin. Today, fewer than 40 cities have separately owned, competitive dailies.

New York, which once had a dozen dailies, now has three. And the New York Daily News, which boasts the country's largest circulation, is in serious financial trouble.

Proponents of the merger mechanism say JOAs offer several advantages to publishers. Joined papers can cut nearly in half many fast-rising expenses and split profits. And, say newspaper owners, JOAs allow weaker papers to gain the financial security essential to editorial competition. No joined paper has ever folded.

But critics charge that JOAs undermine a free press. Without the need to compete for readers, they argue, joined papers soon lose their editorial freedom and vitality. Critics say the weaker paper is cast in a permanently subservient, though profitable, position, hence it has no motive to invest in quality. Critics also argue that with respect to advertising, JOAs lock competitors out of markets.

The attorney general's recommendation may not end the battle here. Opponents to the JOA have lodged a constitutional objection to the Newspaper Preservation Act itself, calling it a violation of First Amendment protection of a free press and of the primacy of the Sherman Antitrust Act.