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Hearst Makes Demands on Chronicle

As predicted here at Media Watch, after warning that the San Francisco Chronicle might fold, the parent Hearst Corporation made demands on the newspaper guild and other unions for drastic concessions to keep the paper operating. Management and labor likely will have the next 2-3 weeks to work out the givebacks or the paper could be shuttered by the end of the first quarter.

Media Watch has obtained the memo sent to guild members on the highlights of the proposal. There were a few mundane items - such as increasing the work week from 37.5 hours to 40 hours without an increase in pay, trimming four weeks of vacation to three, and loosening existing constraints on management to use freelancers. And there were a few more difficult ones, such as more layoffs and discontinuing pension contribution.

In all fairness, the demands were harsh, but not entirely unreasonable. Partly due to the high cost of living in the Bay Area, and partly due to the fact that San Francisco was one of the strongest union towns, the employees at the San Francisco newspapers have always enjoyed some of the best benefit packages of newspapers anywhere in the United States. While California's escalating taxation is taking its toll on all residents, it's not particularly a burden that Hearst should be forced to carry as its employees are giving away more and more of their salaries to satiate a near-bankrupt state's penchant for spending.

It appears that the guild, after putting up light resistance, would be willing to accept most of management's demands - given the choice of losing their jobs outright vs. losing a few perks, vacation and sick days and freeze in pay. At least Hearst is not asking for direct pay cuts and unpaid furloughs, as a number of newspaper chains have done.

But the ball might be out of the guild's hands. Its other more notorious union brethren representing the composing room, pressmen and truck drivers may be less willing to give in. And this time, if they decide to call management's bluff, they may be making a grave mistake.

Meanwhile, Hearst is exploring other ways to improve its revenue stream as it's losing about $1 million per week at the Chronicle and a bit less at its other 15 papers. The company is contemplating a pay scheme for certain articles on its properties' web sites, including the Chronicle's popular sfgate.com site.

According to the Wall Street Journal, Hearst president Steven Swartz said his company is developing a new digital strategy that may also include a Kindle-like reading device:

Reworking its digital strategy is a part of Hearst's "100 Days" plan to cast a critical eye on longstanding newspaper-industry business practices. Mr. Swartz promised profound changes. "One inescapable conclusion of our study is that our cost base is significantly out of line with the revenue available in our business today," Mr. Swartz said. "It is equally inescapable that during good times our industry developed business practices that were at best inefficient."