It creates the potential for a newspaper monopoly of stunning proportions — and threatens the quality of journalism in one of the most populous, educated, and liberal regions in the nation. Singleton, known as "lean Dean" for his cost-cutting moves, is likely to slash staffing at papers like the Times and the Merc, consolidate news gathering, and offer readers less local news.
In fact, in its most recent annual report, filed with the Securities and Exchange Commission, MediaNews outlined its strategy for profitability. "One of our key acquisition strategies is to acquire newspapers in markets contiguous to our own," the report states. This so-called clustering strategy allows the company to consolidate advertising and business functions as well as news gathering. "We seek to increase operating cash flows at acquired newspapers by reducing labor costs," the report notes.
In other words, a smaller number of reporters will be doing fewer stories, which will run in more papers. This, Luther Jackson, executive officer of the San Jose Newspaper Guild, argues, "means cookie-cutter coverage and fewer voices contributing to important public policy debates."
There are deeper concerns with this deal — including the possibility that Hearst and Singleton could be forming an unholy alliance that would nearly wipe out daily competition in the Bay Area.
The whole mess has its roots in the decision by the Knight-Ridder board several months ago to put the company up for sale. It was the kind of decision that demonstrates the problems with treating newspapers like baseball cards, to trade on the open market: Knight-Ridder was quite profitable, ran some of the better newspapers in the nation, and had a reputation (by chain standards, anyway) of being willing to spend money on the editorial product. But the stock price wasn't quite high enough, and a few big shareholders (who weren't satisfied with 20 percent profits) were complaining, so the entire company went on the block.
McClatchy, a well-managed company that has the Sacramento Bee as its flagship, wanted some of the Knight-Ridder papers — but only the ones in fast-growing markets. So after submitting a winning bid, the McClatchy folks starting looking for ways to dump the San Jose Mercury News, the Contra Costa Times, the Monterey Herald, the St. Paul Pioneer-Dispatch, and some 20 smaller community papers in the Bay Area.
But why, exactly, is Hearst getting involved? Well, Peter Scheer, a former antitrust lawyer who runs the California First Amendment Coalition, has some theories. The first possible reason? Hearst has plenty of cash on hand, and the deal would allow MediaNews to avoid having to seek as much financing from bankers.
More likely: Hearst — through the Chronicle — would have been Singleton’s only local competitor, and is the only significant political player in California that could have pressured regulators to oppose the deal. The arrangement, Scheer says, turns Hearst from a potential foe into a partner. Already the two companies have announced they may seek to share distribution systems. And there may be other plans in the works.
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