Conventional wisdom is that, for all their chronic problems, newspapers remain very nice cash cows, throwing off revenue at a profit margin that far exceeds most mortal businesses.
Well, journey with me to San Francisco, where court papers have confirmed something that's been whispered for years: that the San Francisco Chronicle, under Hearst's ownership, has been losing money at a rate of $1 million a week since 2000, or $330 million in all.
That's truly impressive. In fact, one would argue that it takes some skill to lose money at that rapid a clip operating a newspaper. But Hearst is doing it in San Francisco (quick disclosure: I worked for Hearst at the San Francisco Examiner in the mid-1980s, and family scion Will Hearst is an old friend). It's arguable that there are some unique factors at work by the Bay: the San Francisco market's historic indifference to good journalism, leftover high costs of merging the Chronicle and Examiner staffs after Hearst bought the Chron for $660 million in 2000, the after-effects of the high-tech crash at the turn of the century and the proliferation of online local competitors that start out in San Francisco, most notably craigslist, which reportedly has sucked $50-65 million a year out of the Bay Area employment classifieds market alone.
All of those are possible explanations. Or maybe, as with so many things, what's happening in Northern California is a harbinger of what's going to happen across the country as newspapers' chronic problems (declining readership and advertising, increased competition) continue to mount.
Whatever the reason, you have to wonder how long Hearst will put up with the situation. The Chronicle story suggests that Hearst has talked with William Dean Singleton's MediaNews Group about selling the Chronicle to MediaNews, where it would fit in nicely among all the other Bay Area papers (San Jose Mercury, Oakland Tribune, Contra Costa Times, countless small dailies and weeklies) that MediaNews now owns. Antitrust enforcers might have other ideas--and indeed, this is all coming out because local business interests are raising questions about the already cozy relationship between Hearst and MediaNews.
This is a situation that bears watching. Hearst CEO Victor Ganzi is quoted in a deposition taken as part of the law suit as saying, "At some point, we either had to fix it, sell it or shut it down." Uh-oh. As that suggests, at some point, probably soon, Hearst is going to have to find a buyer to take the money-loser off its hands. Or perhaps it will just walk away, and leave the Bay Area to MediaNews. Stay tuned.
Comments