Chron owner exploits its most valuable asset

just what we need -- luxury condos at Fifth and Mission

What does Hearst Corporation own at the corner of Fifth and Mission that's actually worth a lot of money?

No, it's not the San Francisco Chronicle. The New York-based media congomerate bought the Chron in 1999, at the top of the newspaper market, for something in the neighborhood of a billion dollars, but it's not even worth a small fraction of that today. Mid-sized dailies like the Chron have lost so much value over the past 12 years that Hearst would have trouble getting ten cents on the dollar if it put the paper on the market.

So here's this unperforming asset on the Hearst balance sheet that can't be unloaded without a huge write-down. What's a corporate bean-counter to do?

Well, in this case (as in the case with urban dailies around the country) it turns out that the most valuable thing Hearst got when it bought the ol' Chron was the real estate that came in the package. The Chronicle Building is worth a fortune as a development site, but it's an historic structure that can't be torn down. On the other hand, the old Examiner building, and the parking lots and the various odd lots on the edges, make up a nice site for high-end condos and office space -- and now that the market is picking up, Hearst and its development partner, Forest City, are looking to make some cash off the Fifth and Mission dirt.

We're talking two highrises, one residential and one commercial, and six smaller buildings. It will change the face of an area that's outside the downtown core and that abuts a more low-rent district. Hearst and Forest City are talking about people working in the "creative economy" -- particularly young tech firms. Between Twitter on one end and the Chron's new project on the other, the Sixth Street corridor might start to get pinched.

I wonder what the supporters of the Twitter tax break are going to think about this. And I wonder whether the "young tech companies" that the city wants to attract to the area are going to be demanding tax breaks, too.

And I wonder what the Chron will have to say about all of that.