CHRONICLE DECISION TO ASSESS ITS FUTURE SETS STAGE FOR SALE

San Francisco may be entering last days as a two-paper town

Will San Francisco become a one-newspaper town?

On May 10, the family that owns the San Francisco Chronicle (along with two other newspapers, three TV stations, two book companies and a World-Wide Web site) announced that it had retained the investment banking firm Donaldson Lufkin & Jenrette to "review and evaluate the company's financial, business and strategic plans."

The third paragraph of the Chronicle's own story on the matter quotes newspaper business expert John Morton as saying that "nine times out of 10," the result of such an engagement is the sale of all or part of the company. Family members were quoted in the story as saying that a sale wasn't imminent.

The newspaper business in San Francisco is a strange beast. I know from whence I speak – for those just tuning in, I was with Hearst's Examiner in the ’70s and ’80s, both as a line worker and in management.

The Examiner and Chronicle fought tooth-and-nail throughout the ’50s for readers – it was a real newspaper war. Then, in the early part of the ’60s, Hearst and Chronicle management began discussing a "joint printing producing facility" that would encompass "mechanical, advertising, business and circulation departments."

On Oct. 23, 1964, the agreement was signed and on Jan. 4, 1965, the Hearst Corp. combined the Examiner with its afternoon News Call Bulletin, leaving the morning field for the Chronicle. (As we know, the afternoon newspaper business has shriveled since then: In 1965, there were 1444 afternoon papers; in 1997, 816.)

The agreement called for one Sunday newspaper, a 50-50 division of profits and a right of first refusal should either side wish to sell. It was to be 30 years long, with an additional 10-year extension available to both parties; in 1991, Hearst used its option to extend it to 2005.

Despite the signature of a Chronicle cousin on the document that created the San Francisco Newspaper Printing Co. Inc., many in the family believed that signing with the Hearsts was tantamount to signing with the devil (old competitions die hard).

The Chronicle family includes three main branches – the Tobin-Thieriots, the Martins and the McEvoys. The first two branches have lots of members, whereas the McEvoys count only two. A boardroom putsch early in the ’90s moved the Thieriots out of their management role at the paper and brought in a professional management team led by industry veteran John Sias, formerly head of ABC-TV and Capital Cities newspapers.

A counter-putsch a few years later took Nan McEvoy off the board of directors, shortly after she said the Chronicle would sell to Hearst "over my dead body."

Why did the Chronicle hire the bankers? Three possible reasons: