The Seattle Times cannot dissolve a 20-year-old publishing agreement with the rival Seattle Post-Intelligencer, a judge said Thursday in a ruling that keeps Seattle a two-newspaper town.

“It's a big victory,” Post-Intelligencer attorney Guy Michelson said after the decision in King County Superior Court. “We’re very happy.”

Seattle Times spokeswoman Kerry Coughlin expressed disappointment at the ruling, calling the agreement between the newspapers a “failed business model that threatens the survival of an independent newspaper.”

Under the agreement, the Times handles the circulation, distribution and other non-news functions for both papers in exchange for a greater share of their joint profits. Without the agreement, the Hearst-owned Post-Intelligencer says it could not survive.

But the Times contends the deal is no longer financially viable. It invoked a provision that allows the parties to end joint operations if either sustains three consecutive years of financial losses. The Times said it has lost money in 2000, 2001 and 2002.

Hearst attorneys argued that The Times’ loss in 2000, when both papers were hit by a massive strike, should not count toward the three consecutive years of losses. They said the strike triggered a provision that protects both parties from harm in the event of such unusual circumstances that are beyond normal market conditions.

Times Publisher Frank Blethen has repeatedly alleged that Hearst is using the pact to “bleed” his company’s assets and force a sale of The Times. Hearst holds a separate agreement that gives it the first opportunity to buy the Times if it is ever sold.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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