Monopoly money

As the ax falls at the Chronicle, observers ponder whether a MediaNews cure could be worse than the disease

Employees at the San Francisco Chronicle are anxiously awaiting the March 31 deadline that its owner the Hearst Corp. has set for accepting buyout offers, after which the ax could fall on any employee at any time. The California Media Workers Guild has voted to accept 150 layoffs and to end seniority considerations at the city's major daily.

Hearst claims that amendments to the union's contract are essential to avoid closing or selling the 144-year-old paper, although the company refuses to open its books, making it impossible to verify claims that the Chronicle is losing $1 million a week. Rather than challenging that corporate prerogative, Speaker of the House Nancy Pelosi wants to explore allowing a local monopoly like MediaNews to buy the Chronicle, the last major Bay Area newspaper MediaNews doesn't already own through its Bay Area News Group subsidiary.

In a March 16 letter to U.S. Attorney General Eric Holder, Pelosi wrote: "I am confident that the antitrust division, in assessing any concerns that any proposed mergers or other arrangements in the San Francisco area might reduce competition, will take into appropriate account, as relevant, not only the number of daily and weekly newspapers in the Bay Area, but also the other sources of news and advertising outlets available in the electronic and digital age, so that conclusions reached reflect current market realities."

Holder responded March 18, telling reporters, "It's important for this nation to maintain a healthy newspaper industry. So to the extent that we have to look at our enforcement policies and conform them to the reality that the industry faces, that's something I'm going to be willing to do."

Sara Steffens, chair of the Guild's Bay Area News Group East Bay unit, recently raised her concerns about that strategy. "Consolidating some or all Bay Area News Group operations with the Chronicle could prove the financial salvation for our struggling newspapers, potentially guarding against bankruptcies or outright shutdown," she wrote on the union's Web site. "But it could also pave the way for further job loss and erosion of standards."

Justice department lawyers have in the past ruled against mergers that created newspaper monopolies, but media analyst Alan Mutter believes times have changed. "It's just a question of who is going to qualify," Mutter told the Guardian.

Retired UC Berkeley journalism professor Ben Bagdikian, author of books critical of media monopolies, said the Chronicle's "surprising announcement" that it might have to shut down could be a scam. He notes that this news comes "not long after Hearst and [MediaNews owner Dean} Singleton, who owns all the East Bay dailies, formed a partnership to buy media in other parts of the country.

"Hearst a few years ago — granted, in boom times — gifted the Examiner to the Fang family along with a stunning gift of $56 million to the Fangs to take it and make it into a daily," Bagdikian said. "I think it has never before happened in the news business or any other business to pay someone else to compete with them.