He disclosed that the Chronicle was bleeding millions of dollars annually, partially because of lost revenue to the Web, and exclaimed that drastic cost reductions were necessary to keep the paper alive.
“These are tough times for newspapers, and they need to take cost out of the system,” Wall told the judge. “They need to find new revenue streams.”
Hearst has already faced something akin to all of this before. Reilly sued it in 2000 when the company bought the Chron and attempted to nix competition by shutting down its long-held San Francisco Examiner. Reilly didn't block the deal, but the Justice Department forced Hearst to keep open the reliably conservative Examiner, today owned by another Denver-based company.
This week Illston ruled that Hearst and MediaNews must temporarily stop any agreements to combine advertising sales and distribution networks until Dec. 6, when she'll decide whether to extend her prohibition on merging business operations.
Reilly has emerged over the last decade as a serious pain for corporate media executives and unshakable critic of concentrated newspaper ownership in the Bay Area. His most recent lawsuit charges that the Hearst and MediaNews partnership would dilute fair competition and limit alternatives for both readers and advertisers.
“They started the blood flow with the firings,” Alioto told reporters after the hearing. “We think when they’re done with this they’re going to have entirely different newspapers.”
Recent job losses don’t stop at just MediaNews. The Chronicle is getting in on the action too.
Divisive contract negotiations between the Chronicle and the Web Pressman and Prepress Workers Union Local 4 over the last two years ended recently when the union "reluctantly approved" an agreement, union treasurer Paul Kolter told us. The union was the last holdout at the paper to accept drastically reduced workers’ rights.
By successfully pushing its will on the unions, Hearst has virtually ensured that the press operators won’t pose much of a threat to the company anymore, because around the same time it signed a $1 billion outsourcing deal with the Canadian printing company Transcontinental.
The union’s new contract is up in about three years, and there are no assurances Local 4 will have any workers in the new plant Transcontinental has promised to build. That could mean the end of its relationship with the Chronicle and about 225 workers from the paper that it represents.
The previous contract ended in the summer of 2005, and under the paper’s new publisher, Frank “Darth” Vega, management called for drastic cuts in salaries and benefits. The two groups spent several intervening months battling over the proposed changes.
In July, Vega prepared the paper for a strike, issuing a memo that outlined exactly how to keep the paper operating throughout a work stoppage, and hired a notorious security firm that specializes in handling labor disputes.
The union points out that while the Chronicle complains of massive financial bloodletting, its parent company, Hearst, has somehow scraped together enough money for a brand-new $500 million office building in midtown Manhattan, the construction of which was completed over the summer. The company also sold the sprawling 82,000-acre ranch that surrounds Hearst Castle to the state early last year for nearly $100 million. It was once home to the notoriously belligerent and imperialistic newspaper magnate William Randolph Hearst.
Union members say there are wide ramifications to what’s happening here. In July the World Association of Newspapers published a report describing how more news services globally, including the New York Times, were outsourcing major tasks, even news reporting, to save money.
“There are a lot of labor unions that have an interest in what is happening with us,” Local 4 organizer and press operator Bruce Carlton told members at a meeting in late October. “If this flies, it will be a blueprint on how to break unions.
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