By: Lucia Moses

San Francisco braces for creation of news juggernaut

The San Francisco area, wealthy and already teeming with media outlets, is bracing for more competition.
Now that the family-owned San Francisco Chronicle has been sold to New York-based Hearst Corp., the likely outcome is that Hearst will fold its San Francisco Examiner into the Chronicle, its joint operating agreement (JOA) partner.
Observers say a merged Examiner-Chronicle would be stronger financially, more focused on outside rivals, and thus better positioned to compete.
“”I think you’ll have a much more strengthened paper, backed by a company that’s clearly in it for the long run,”” says Alan Nichols Jr., the former chief financial officer of Chronicle Publishing Co. who left in May to run an Internet start-up. “”So that’s not good news for the other papers in the area.””
Ben Bagdikian, retired journalism dean at the University of California at Berkeley and author of “”The Media Monopoly,”” says the fairly aggressive Chronicle might push south. “”There is room down there. But they bump into San Jose quickly,”” he says of Knight Ridder’s San Jose Mercury News.
Knight Ridder, which also publishes the Contra Costa Times in Walnut Creek, and MediaNews Group, two of the Bay Area’s dominant media players, say they don’t anticipate a change in strategy.
Before Hearst can combine the two papers, it has to try to sell the Examiner to satisfy antitrust regulations. Observers say a sale is unlikely because the offer doesn’t include a continuation of the JOA, which gives the Examiner half the profits although it’s the smaller of the two papers. The Examiner, daily circulation 114,776, has the added disadvantage of being the afternoon paper. It’s dwarfed by the morning Chronicle, daily circulation 482,268.
“”The question is now: How do we know there will be a bona fide effort to find a buyer?”” says Steve Barnett, an antitrust lawyer who challenged the San Francisco JOA 30 years ago. “”The [U.S.] Justice Department ought to oversee this auction and make sure enough time is allowed for people to put bids together and not turn down a qualified buyer.””
Over the years, the government has enforced the antitrust law with varying degrees of zeal, ranging from St. Louis, where regulators ran the sale themselves, to Pittsburgh, where the Post-Gazette folded the Press with little interference, says Barnett, who teaches law at the University of California at Berkeley.
The San Francisco JOA is the 12th to be terminated in the past 15 years, according to Hearst.
San Francisco government officials, with backing by union representatives, media watchdogs, antitrust lawyers, and others, are investigating legal options to keep both papers operating. Says Barnett: “”All the city can do now is back up that search.””
Hearst says if it can’t sell the Examiner, it’ll merge the paper with the Chronicle and offer jobs to all Examiner staffers, who now number 217. Much remains unknown, such as how long all those jobs are guaranteed; which elements a combined paper will take from the Chronicle and which it will take from the Examiner, Hearst’s founding paper; and which managers will run the combined paper. Observers expect Hearst will look to its own executives. Says Larry Hatfield, vice president of The Newspaper Guild unit representing Examiner employees, “”The way the Examiner [management] acts, they figure they’re going to be in charge.””
Some lament the likely end of a longtime spirited competition between the two papers, which they worry will mean fewer watchdogs and less breadth of coverage.
“”It’s a tragedy for San Francisco and a tragedy for journalism,”” says Bruce Brugmann, editor and publisher of the weekly alternative San Francisco Bay Guardian. “”In this great market, you will have one monopoly paper bringing you the news a day late.””
Union leaders say they are optimistic about Hearst’s assurances and expect any job duplications will be resolved by attrition. “”The unions are pretty strong,”” says Carl Hall, a Chronicle science writer and president of the Guild unit representing Chronicle staffers. “”They’re going to have a pretty peaceful deal here.””
The unions’ clout notwithstanding, a combined paper might bring staff reassignments. “”That could be the most difficult part of all this,”” Hall says.
Buyer interest in the Chronicle Publishing Co.’s other properties, which were put up for sale along with the Chronicle and SFGate.com in mid-June, is expected to be intense. These hot properties are The Pantagraph in Bloomington, Ill.; the Telegram & Gazette in Worcester, Mass.; Chronicle Books, a book publisher; a cable TV news channel; and three TV stations: NBC affiliate KRON Channel 4 in San Francisco, KAKE in Wichita, Kan., and WOWT in Omaha, Neb.
With the high prices newspapers and TV stations are fetching these days, the two newspapers and KRON in San Francisco, the fifth-biggest television market, are likely to command top dollar ? and high interest. In another recent deal in a similar-size TV market, CBS plunked down $485 million for KTVT in Dallas, the No. 7 market.
The New York Times Co., MediaNews, and Community Newspaper Co. (CNC) in Needham, Mass., are among companies reportedly eyeing the Worcester paper, daily circulation 105,896. “”Clearly, it’s a natural extension of our market,”” says CNC president Kirk Davis, whose company owns 88 small weeklies and two dailies in eastern Massachusetts. The Pantagraph, daily circulation 49,618, is expected to draw interest from a number of Midwest newspaper companies. Pulitzer Inc. is looking to make some purchases this year, and is looking at both papers, CEO Robert C. Woodworth says.
The Deal
Sold to Hearst
San Francisco Chronicle
SFGate Web site
Still for sale
The Pantagraph Bloomington, Ill.
Telegram & Gazette Worcester, Mass.
KRON TV San Francisco
KAKE TVWichita, Kan.
WOWT TV Omaha, Neb.
Chronicle Books San Francisco
BayTV cable station San Francisco

(Editor & Publisher WebSite:http:www.mediainfo.com) [Caption]
(copyright: Editor & Publisher August 14, 1999) [Caption]

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