The Chronicle death watch

Hearst's threat to shutter the San Francisco Chronicle sends shockwaves through an industry in crisis
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sarah@sfbg.com

Is San Francisco really the frontrunner in the race to become the first major U.S. city to go without a major daily? Or is it a victim of disaster capitalism, in which powerful corporations exploit economic meltdowns to exact otherwise unacceptable concessions from employees and/or antitrust legislators?

Media critics chewed on those questions last week, following Hearst Corporation's abrupt Feb. 24 announcement that it is undertaking "critical cost-saving measures including a significant reduction in the number of its unionized and non-unionized employees" at the San Francisco Chronicle, and will close or sell the paper, which has 1,500 employees, 275 in the newsroom, unless these changes occur within weeks.

Noting that the Chronicle lost more than $50 million in 2008 — the worst in a string of nonstop losses the paper has suffered since Hearst bought it in 2000 — Hearst vice chairman and chief executive officer Frank A. Bennack Jr. and Hearst Newspapers president Steven R. Swartz warned that "without the specific changes we are seeking across the entire Chronicle organization, we will have no choice but to quickly seek a buyer for the Chronicle or, should a buyer not be found, to shut the newspaper down."

Two days later, the California Media Workers Guild, which represents workers at the Chronicle, reported that Hearst is seeking "a combination of wide-ranging contractual concessions in addition to layoffs, the exact number of which the company said it did not yet have."

"For Guild-covered positions, the company did say the job cuts would at least number 50," read a Guild statement. "Other proposals include removal of some advertising sales people from Guild coverage and protection, the right to outsource — specifically mentioning ad production — voluntary buyouts, layoffs and wage freezes."

Guild representative Carl Hall said he doesn't see any reason to think Hearst's threats are a bluff.

"The Rocky Mountain News just closed in Denver," Hall told the Guardian. "The Seattle Post-Intelligencer, which is also owned by Hearst, is slated to close in March, if a buyer isn't found. We've seen bankruptcies and disaster scenarios all around the country, and the Chronicle has experienced some of the deepest operating losses in the nation."

Reached for comment March 2, Chronicle publisher Frank Vega told the Guardian, "We're still in the process," while Guild treasurer George Powell said that "proposals have been exchanged and each side is evaluating them."

WHERE'S THE MONEY?

Evaluating Hearst claims is hardly an easy task. A privately held corporation, Hearst doesn't open its books to the public. But one thing is clear, just from reading postings on the corporation's Web site: Hearst is midway through a squeeze in which it's trying to turn a profit on the 15 newspapers it owns throughout the country.

And that means more syndicated stories — and possibly the end of free newspaper Web sites.

As Swartz outlined in a recent press release, all Hearst newspapers will be required to allow for "efficient production or common content sharing," use "outbound telemarketing and self-service ad platforms more effectively," increase their subscription rates, outsource printing, and charge for digital content.

"Exactly how much paid content to hold back from our free sites will be a judgment call made daily by our management," Swartz stated.