A Chronicle of turmoil

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By: Joe Strupp

Decade of family dissension leads to paper’s sale


Nearly a decade of turmoil among the family ownership of the San Francisco Chronicle, including a strong divide over whether to squeeze the 134-year-old newspaper for profits or reinvest for the future, led to the recent decision to sell the newspaper, according to longtime observers of the Chronicle Publishing Co.
That division, coupled with concerns about the impact of a joint operating agreement (JOA) with the rival San Francisco Examiner and fears about the impact of the federal inheritance tax on future heirs, left the paper’s board of directors with no choice but to sell the paper and other holdings of the company, valued at roughly $2 billion.
“”The closer you get to the JOA, the more they have to allow time to settle things and prepare for it,”” says Bob McCormick, former president of the San Francisco Newspaper Agency, which handles advertising and circulation for both newspapers. “”There has always been a possibility of selling, and each year it grew closer.””
In addition to the morning newspaper, Chronicle Publishing also owns daily newspapers in Worcester, Mass., and Bloomington, Ill.; San Francisco NBC affiliate KRON-TV and two other TV stations; the BayTV cable channel; the SFGate.com Web site; and a publishing house.
Chronicle Publishing officials have said the family members decided to sell because most had no interest in running the newspaper or its related properties. That position is a sharp change from just 10 years ago when a number of key executive positions in the company and the newspaper were held by family members.
Since 1989, however, the 20 descendants of Chronicle founder Michael de Young ? who started the newspaper with his brother, Charles, in 1865 ? have bickered over which direction to take the daily in the face of decreasing circulation, increasing competition, and looming inheritance taxes. That infighting has also created various factions on the Chronicle Publishing’s board of directors, which voted unanimously June 16 to put the paper up for sale.
The board and other stockholders represent the descendants of three of Michael de Young’s four daughters, who hold controlling interest in the company.
Many observers say the dissension began in 1989 when the family trust that owned the Chronicle broke up and longtime publisher Richard Thieriot ? a de Young descendent ? arranged for heirs to receive additional distribution of the company in exchange for agreeing not to sell stock for seven years.
In 1992, after the newspaper agency reportedly lost nearly $20 million, a faction of family members led by then-board chair Nan Tucker McEvoy ? granddaughter of Michael de Young ? pushed for the removal of Richard Thieriot, who had held the publisher post for 16 years.
The management overhaul also led to the removal of:
Charles “”Kip”” Thieriot, Richard’s broth-er, as president of Westcom, a cable
franchise later sold by the company.
Francis Martin, who oversaw the company’s TV stations.
Peter Thieriot, another cousin, who
published the company’s newspapers in
Worcester, Mass., and Bloomington, Ill.
In April 1993, McEvoy brought in former Capital Cities Corp. executive John Sias, a tough, cost-cutting executive, who continues as Chronicle Publishing CEO today.
Some insiders say the McEvoy faction was disappointed that the company was not making enough money, while Thieriot family members were more interested in reinvesting to make the newspaper stronger for the future.
“”Dick Thieriot was always building the franchise and the other factions of the family saw that as a wonderful thing, but they weren’t getting any money out of it,”” says John Raytis, who served as vice president of circulation for the San Francisco Newspaper Agency from 1986 to 1994. “”Dick Theiriot was trying to build the Chronicle up for the eventual end of the JOA by investing in marketing. But when the next group came in, led by Sias, they were cutting circulation to outlying areas and trying to make it more profitable.””
Top 10 U.S. markets with competing
daily newspapers
(in terms of daily circulation, as of September 1998)
1. The New York Times 1.1 million
New York Post 437,467
New York Daily News 723,143
2. Los Angeles Times 1,067,540
Daily News 201,107
The Orange County Register 356,953
3. Chicago Tribune 673,508
Chicago Sun-Times 485,666
4. The Washington Post 759,122
The Washington Times 100,536
5. The Boston Globe 470,825
Boston Herald 271,425
6. The Denver Post 341,554
Denver Rocky Mountain News 331,978
7. The Philadelphia Inquirer 428,895
The Philadelphia Daily News 175,448
(under same ownership)
8. San Francisco Chronicle 475,324
San Francisco Examiner 113,198*
9. Detroit Free Press 278,286
The Detroit News 245,351*
10. The Seattle Times 227,715
Seattle Post-Intelligencer 196,271*
* = joint operating agreement in effect
(Editor & Publisher WebSite:http:www.mediainfo.com) [Caption]
(copyright: Editor & Publisher August 14, 1999) [Caption]

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