Hearst should not be allowed to turn San Francisco into the first major American city with no major daily newspaper
EDITORIAL The San Francisco Chronicle story March 15 on Mayor Gavin Newsom's frequent absence from the city drew comments from many who believe the mayor is out of touch, wandering the state seeking votes for governor at a time when the city is facing a historic financial crisis. The news was really nothing new we've been reporting for months now that the mayor is disengaged in the business of running the city. But it appeared on the front page of the local daily newspaper, and that put the story right in the center of civic discourse.
We've been as critical of the Chron as anyone in town. For 42 years, we've been reporting on the failures of the daily newspapers in San Francisco, and we regularly blast the Hearst-owned near-monopoly daily for its failure to cover major stories and its biased slant on others.
And as the first alternative newspaper in the country founded specifically to provide an editorial and advertising alternative to the moribund dailies, we're the first to agree that the Chron doesn't, and shouldn't, have the final word on what's important in this city. We're big supporters of all sorts of alternative media, and we're glad to see that Web-based news publications, some of them daily, are appearing and offering different ways for people to find information.
But if the Chronicle dies, the city will lose an important, if often infuriating, civic institution. Hearst should not be allowed to turn San Francisco into the first major American city with no major daily newspaper not without extensive oversight, hearings, and a chance for somebody else to take over the paper and try to make it work.
Hearst is complaining that the Chronicle is losing about $50 million a year. Of course, Hearst, a private corporation, won't show anyone, even its own unions, its books.
We realize the newspaper business is rough right now, but we're not convinced that running a daily paper in San Francisco is a doomed proposition. This is one of the wealthiest, best-educated markets in the world and the fact that Hearst can't sell enough newspapers and ads to float its operation is in significant part a sign of how miserable the paper's management has failed. It tried to be a regional paper, which flopped. It's become so politically conservative that progressives, particularly young progressives who make up the future of its demographic base, see little reason to subscribe.
And let's not forget Hearst has made a fortune in San Francisco. In 1965, the Hearst-owned Examiner and the family-owned Chronicle formed a joint operating agreement a government-sanctioned monopoly, blessed by special legislation, that allowed two ostensibly competing companies to fix prices, share markets and pool profits. For the next 26 years, the JOA was a license to print money. Local advertisers paid billions in high rates to the newspaper combine, and those profits far, far eclipse anything the Chron has lost since Hearst bought it.
When the New York company bought out the deYoung Thieriot family in 2001, it sought to create a true monopoly by shutting down the Ex entirely. A local outcry, a lawsuit by Clint Reilly, and threats by federal regulators forced Hearst to sell the bones of the Ex to the Fang family, which essentially got the paper free and was given a $66 million subsidy to run it.
Now, after all this, Hearst is threatening to close shop and walk away, destroying hundreds of union jobs and wiping out a newspaper that is, by its nature, something of a public utility. And once again ironically, just as the Chron reported Mayor Newsom is missing in action. Newsom should be taking the lead on preventing the loss of a major local business. Rep. Nancy Pelosi, who is asking the Justice Department to relax anti-competitive rules on newspaper ownership (a bad idea), should instead push legislation barring a daily newspaper in a one-paper town from closing down unless and until the owners offer it for sale at a fair price and give someone else a chance to run it. Senators Dianne Feinstein and Barbara Boxer should join her.
The Chron unions have talked of an interest in buying the paper. Financier Warren Hellman confirmed to us that he supports creating a nonprofit entity to take over Chronicle operations. Hearst Corp., which has almost certainly already written off its $600 million purchase as a tax loss, should be forced to work with potential buyers and give them a deal no worse than what the Fangs got in 2001.
The future of the Chron has implications for the entire industry and if Hearst is going to carry out the assassination of a newspaper, it should be done in a fishbowl. Congress, the state Legislature, and the San Francisco supervisors should hold hearings, subpoena the Hearst executives, and push alternatives. And Newsom needs to quit gallivanting around the state and start working on his own city's problems. *