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Newspapers Eat Their Own in Bay Area

In "The Battle for Bay Area Readers," The New York Times has allegedly fired the latest significant shot.

The Times announced Friday that it has added 1,100 subscribers in the region since launching its San Francisco Bay Edition in September.

"Single-copy sales are up too," senior Times executive Jim Schachter said Thursday. "We're delighted at the reception we're getting from Bay Area readers for the pages that Felicity Barringer is editing, and for our Bay Area blog," he said.

The modest edition is actually an additional two pages each of Bay Area news running in the Friday and Sunday editions of the paper. Before the section hit the streets, The Times had 40,080 daily subscribers in the San Francisco-San Jose-Oakland market and 57,514 on Sundays.

Also looking to cash in on a region that houses notoriously favorable readership demographics, The Wall Street Journal launched its own Bay Area edition in November. Its edition also includes extra pages filled with area news and runs each Thursday.

Continue reading "Newspapers Eat Their Own in Bay Area" »

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."

William Randolph Hearst, R.I.P.

There goes my pension.

OK, that's not exactly the first thing I thought of when the potential demise of the San Francisco Chronicle made the news yesterday. I count dozens of friends in that paper's newsroom after spending six years there in the 1990s. Bosses, colleagues, softball teammates ... in a few months, they all could be out on the street looking for jobs.

It's quite possible that that alarmist announcement by management is merely a negotiating tactic to extract more concessions from the guild. After all, publisher Frank Vega has a reputation as a union-buster. But he means business - it's no secret that the Hearst Corporation spent upwards of $1 billion since acquiring the Chron and divesting the Examiner in 1999.

Most of my friends at the paper seemed resigned to the new reality. No one is terribly surprised by this. One of them greeted the news with a mix of aplomb and regret - and also provided a colorful and insightful narrative on how we got here:

For you history/TV buffs, George Hearst, the mining magnate who was a real character on "Deadwood" acquired The Examiner in 1880 as payment for a gambling debt and gave it to his son William to run in 1887. William Randolph Hearst allegedly started the Spanish-American War by sinking the Maine to help newspaper circulation, went on to bigger and better things (building the Hearst Castle and cavorting with Marion Davies), then went on to "Citizen Kane" fame, being the basis for the movie and not pleased about it. He also had plans to become President of the United States but couldn't pull off that trick.

I arrived in 1982 when William Randolph Hearst III worked on the paper. In my time, Willie the 3rd eventually was made Editor/Publisher, then vanished with the bad times and went on to a new business where he continues to make more money. (His cousin was Patty Hearst, who was kidnapped by the Symbionese Liberation Army and ultimately joined her captors in furthering their cause. Apprehended after having taken part in a bank robbery with other SLA members, Hearst was imprisoned for almost two years before her sentence was commuted by President Jimmy Carter. She was later granted a presidential pardon by President Bill Clinton in his last act as president.)

More years down the road, The Examiner bought The Chronicle, the other original San Francisco paper that is celebrating its 144th birthday this year and running a series now which struck me as very funny. (I told lots of people, they want to run this because they know they won't make 150 years and want to do a historical perspective before it goes under using the pretense of the new presses; they're not laughing at me now.)

Also in my time here, you may remember Phil Bronstein, who was a very good reporter/writer that covered the fall of Marcos in the Philippines. As a reward, he married Sharon Stone, adopted a baby, got bitten by a Komodo dragon, divorced, married the heir of the Borders chain, which is on its way out the door too, got promoted to Editor, started a new promotion "Journalism of Action," then got booted downstairs (physically) but upstairs where all managers go when they've run the course and they don't want the bad publicity with a parting.

They brought in an optimistic new editor who "wouldn't take the job if good things weren't ahead." He's lasted a little more than a year and delivered the news along with the publisher who came here several years ago to put things in order. So they kept moving forward by cutting staff, changing the design, setting up a 15-year contract with the company that owns the new presses even though they're losing a million a week. I'll leave you readers out there to figure out how successful they have been.

But I'll close by adding a 2003 report that said the 61 family members of the Hearsts were worth more than $5.2 billion. I guess The Chronicle is eating into all that profit, and the old saying is, you can have even more if you get rid of the bad guys. Boy, our family would like to have those problems.

Playing Monopoly in San Francisco

There was a time when the San Francisco Bay Area was the second-best newspaper market in America, behind only New York City. Major metro and suburban dailies, owned by different entities, were all competing in the same high-energy newsmaking environment.

A decade later, the Bay Area is on the verge of becoming a one-newspaper region.

The Hearst Corporation (full disclosure: my former employer) owns the biggest paper - the San Francisco Chronicle - but its ever-dwindling circulation is dwarfed by the Dean Singleton-owned MediaNews Group papers surrounding it: San Jose Mercury News to the south, Contra Costa Times and Oakland Tribune to the east and Marin Independent Journal to the north (the only thing west is the Honolulu Advertiser). The only other paper in the region not owned by MediaNews is New York Times Co.'s Santa Rosa Press Democrat.

And it looks like Hearst is ready to throw in the towel - or at the very least, get into bed with Singleton.

Alan Mutter, a well-connected insider writing on his blog "Reflections of a Newsosaur," revealed that Hearst actually already has a significant stake in the MediaNews operations in Northern California, inasmuch that it helped secure the latter's purchases of Contra Costa Times and Mercury News. As a privately held company, Hearst's books aren't open to the public. But it's believed that it has pumped more than $1 billion into the money-losing Chronicle in this decade.

Against this backdrop, Mutter speculates on what might happen:

With the outlook for the newspaper business now worse than ever, a more radical solution than nipping and tucking the Chronicle to profitability would seem to be in order. And it probably is this:

Folding the Chronicle into the network of MediaNews Group papers that completely surround it - a network, significantly, that Hearst itself played a major role in building.

In that event, the Chronicle's now-independent news, ad sales, production, distribution and administrative staffs would be merged into a single entity managed by MediaNews. Deep staff cuts likely would result in every department, not the least of which would be the already decimated newsroom.

In other words, one newspaper operation in the entire Bay Area, with different banners depending on where they're distributed.

When Hearst bought the Chronicle and folded the Examiner into it in 1999, there were nearly 600 newsroom employees. With annual and now semi-annual buyouts since then, that number has dwindled down to 260. Reliable sources inside that newsroom indicate that the staff size might be close to just 200 by the end of the year.

That is if the aforementioned "merger" doesn't take place.

Back in the '90s, the Department of Justice, with assistance from then-mayors Frank Jordan and Willie Brown, did its part to keep San Francisco from becoming a one-newspaper town. But in today's economic climate, particularly one facing the woebegone newspaper industry, it's doubtful that the DoJ can - or even wishes to - do much of anything.