WILL A SAN FRANCISCO MERGER MAKE A BETTER PAPER?

Hearst's efforts to sell the Examiner notwithstanding, merger inevitable

They're prepping a farewell edition of the San Francisco Examiner – just in case.

The last issue will be filled with anecdotes and history of the 134-year-old paper, prepared in the event that its owner since 1880 – the Hearst Corp. – can't find a "qualified" buyer.

Just as NewsInc. went on its annual summer hiatus in early August, Hearst announced that it had acquired the morning San Francisco Chronicle, that it would dissolve the San Francisco Newspaper Agency and that the afternoon Examiner was for sale, to meet U.S. Justice Department concerns about monopoly ownership. (We issued a special NewsInc. Newswire on the topic, which is on the Web at http://colegroup.com/nw/ni/nn990808.HTML.)

In the event a "qualified" buyer wasn't found, Hearst said, it would merge the Examiner and Chronicle.

The pundits in the crowd (this one included) all believe that Hearst's investment banker, Veronis Suhler & Associates Inc. of New York, is only going through the motions of trying to sell the Examiner. Hearst is selling only the subscription list, the nameplate and the names of the existing workers – there is no 50 percent ownership in the Newspaper Agency (for, as Hearst CEO Frank Bennack told Chronicle reporters, there is no longer a Newspaper Agency). Nonetheless, it is apparent from coverage in other Bay Area media that Veronis Suhler is actively contacting potential buyers and sounding them out.

Without printing presses and trucks, and with only a very small circulation list – the Ex regularly sells more than half its 111,018 circulation as single copies – there really is "no there there." The two most likely bidders have both declined the opportunity: Knight Ridder Inc. of San Jose, which owns both the Mercury News to the south and the Contra Costa Times to the east, and MediaNews Group of Denver, which owns the Oakland Tribune and four other papers to the Ex's east and the San Mateo Times to the south.

Many have speculated that an ideal situation would be to take the Examiner to an all-on-line environment and dispense with the nasties of printing and distribution. One Bay Area new media manager openly speculated about doing just that. Unfortunately, Hearst will probably evaluate only those bids that specifically detail an ink-on-paper future.

And though San Francisco politicians are making noises about attempting to "save" the Examiner by urging the Justice Department to deny Hearst's application to merge the Examiner and Chronicle, the feisty daily's hard-hitting political reporting won't be particularly missed at City Hall. As with the "sale," the politicians are going through the motions of trying to save the paper.

No, the smart money is on a merger. (In fact, by the time you read this, it may have already happened, as Hearst officials have privately indicated that they will wait only one publishing cycle after Justice Department approval to shut down the Examiner.) Already the product of five previous newspaper mergers, the resulting San Francisco Examiner-Chronicle will be run by many of the existing Hearst managers, to the chill of many Chronicle workers (Hearst has promised jobs to all Examiner, Chronicle and Agency workers).

The question is whether San Francisco and the Bay Area will be better served by one newspaper owned by one company. Better than what? Better than the previous situation, where the infighting between Examiner and Chronicle officials was so dramatic that nothing substantial could really be accomplished?

Certainly two healthy San Francisco newspapers would be best, but that ain't in the cards. It seems to me (a former Examiner line worker and executive) that a focused company owned by a deep-pockets organization like Hearst has the ability to make the San Francisco Examiner-Chronicle a quality newspaper.

There's an open question about whether Hearst will do that, but the fact that it's allowing the paper's editors to prepare a good-bye is an indication of the direction it will take in the future.

– David M. Cole

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From NEWSINC., Aug. 30, 1999, Copyright © 1999, The Cole Group. All Rights Reserved.