Given the upsurge in newsprint costs, the greed of the cousins who own Chronicle Publishing and the decrepitude of the company's cable operations, the new chairman has every incentive to dissemble the troubled company and sell its parts to the highest bidders. That means it's only a matter of months before Chairman Sias swings the deal in which the Chronicle and Examiner are merged into one Hearst Corp.-owned newspaper.
As newspaper consultant David Cole puts it, "You could not have picked a better executive to deal with the Hearsts." Prior to joining Chronicle Publishing in 1993, Sias was the president of ABC, which is owned by Capital Cities/ABC. Cap Cities/ABC is happy partners with Hearst in the ESPN and A&E cable channels, and Hearst also owns ABC-affiliated TV stations.
The deal is inevitable because the joint operating agreement (JOA) that publishes the Chron and Ex makes it almost impossible for the papers to make money. The recent rise in the price of newsprint guarantees that both sides are now losing millions -- millions that Chronicle Publishing doesn't have to lose.
The JOA consumed about 113,000 metric tons of newsprint in 1993, according to the 1994 Editor & Publisher Yearbook. Assuming that figure as a base line and factoring in a price increase of $200 per metric ton over last year, the JOA will have to spend another $22 million or so on newsprint. Operating profits -- or losses -- are split under the JOA, which means that the already mired-in-debt Chronicle Publishing Co. will lose another $11 million a year. Such losses mean little to the $7 billion-a-year Hearst Corp.
The JOA also guarantees that nobody but the Hearst Corp. will bid for the hemorrhaging Chronicle. Under the JOA, each partner has the right of first refusal to buy the other paper, so all Hearst has to do is bid what the other interloper did plus $1. Besides, no other publisher wants to pay hundreds of millions to become a money-losing partner with Hearst, especially since Hearst shows every indication of waiting until the JOA expires in 2005 to conquer the entire San Francisco market. Hearst loves to play all or nothing, as it proved last week in Houston by purchasing and shuttering the Houston Post, the rival to its Houston Chronicle.
Enter Chairman Sias. With the stubborn McEvoy gone, Chronicle Publishing can now openly deal with the inevitable victors of the not-so-great San Francisco newspaper war. It would be the crowning glory of the 68-year-old Sias' career to maximize the de Young/Thieriot/ McEvoy/Trent/Martin/McEvoy clan's portfolios by selling all the pieces.
And there would probably be several million in gratitude money for the chairman from both sides.
Pizza, Not Power, to the People
Astute Examiner readers learned April 19 that Supervisor Terence Hallinan, a longtime champion of public power, had taken payola from PG&E -- $4.27 for a slice of Vicolo's pizza. As it turns out, the purchase was a joke played on Bay Guardian publisher/editor and public power agitator Bruce Brugmann, according to PG&E's City Hall lobbyist Sam Lauter. After Lauter and Hallinan had a quick lunch last year, Hallinan reached for the bill, but the lobbyist stopped him and said if he paid the tab, he could report it on his financial disclosure forms. Then Brugmann's ever watchful eyes would bug out when he discovered one of his few allies on the board taking money from the most evil of power companies.
By Jack Shafer, George Cothran