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Terminal Condition 

With the Examiner near death, an insider says the Fangs had 10 million reasons to run it on the cheap

Wednesday, Mar 5 2003
Antitrust attorney Joe Alioto saw the train wreck coming at the San Francisco Examiner a long time ago.

Alioto's client, wealthy political operative and real estate investor Clint Reilly, sued in 2000 in an effort to prevent the Hearst Corp. from selling the paper to the politically connected Fang family, which owns a string of lackluster newspapers in San Francisco and San Mateo County. After trial testimony revealed that Hearst had "horse-traded" favorable coverage to Mayor Willie Brown in return for his blessing of the sale, a federal judge branded it "malodorous" but allowed the deal to go through. To assuage the U.S. Justice Department's antitrust concerns, Hearst gave the Fangs a $66 million subsidy to help ensure the paper stayed afloat until it found its legs as a serious competitor to the Chronicle.

But Alioto says the deal also contained a multimillion-dollar incentive for the Fangs to run the paper in the cheapest, least professional way possible.

"The first $16.7 million [of the subsidy] had to be spent getting the Examiner up and going in the first year," says Alioto. "After that, Hearst was to reimburse the Fangs for up to $25 million a year in expenses. But contractually, the Fangs only had to spend about $15 million a year on the newspaper. The extra $10 million could then be split between Hearst and the Fangs. Hearst wouldn't have to pay $5 million; the Fangs pocketed $5 million.

"The deal," says the lawyer, "was a fake. The $66 million was simply a payment to survive for three years and then drop out."

And now, after just more than two years of publishing, the Ex appears to be in its death throes. Two weeks ago, the Fangs laid off most of the staff, handing them a miserly eight days of severance pay. But if Alioto's information is correct, the Fangs are walking away with as much as $10 million that they didn't sink into the paper.

Ex-Examiner columnist Debbie Morse backs Alioto. "If the Fangs came in under budget, they got to keep one half of the money," she says. Repeated calls to Publisher Florence Fang and her son James, who recently merged the gutted Ex with their Independent newspaper, did not elicit a response.

The Ex's second denouement did more than disappoint the city's newspaper readers. It left in its wake a score of professionally crushed young journalists who didn't realize when they were hired that the paper had to be run in a disorganized, low-overhead manner in order for the Fangs to reap their windfall.

The Ex's fate was presaged in its very first issue under Fang ownership in late November 2000.

"I still get the shakes thinking about it," says one former newsie. "I filed my story and went home. The next day I came to work [but] there were no papers in the racks. I wondered, 'What the hell is going on, where are the papers?' I saw [then-Executive Editor] Marty Steffens walking into the elevator with a bundle of papers. She looked pale, shaky. She wouldn't give me a paper.

"In the newsroom, I saw it: typos everywhere, the main story jumped to nowhere. It got worse: There was a photo of a happy, waving Mayor Willie Brown in the middle of the front page; the photo is blurry, pixelated. 'What the fuck are the editors thinking?' I thought. After what everybody has said about political influence-peddling, there is Willie, smiling and waving -- it was devastating."

The cascade of typos and other screw-ups in the "Fangxaminer" entertained press critics for months. Editors and managers came and went. The paper did not really improve until Florence Fang fired its publisher, Ted Fang, another son. Last year, she transformed it into an interesting tabloid format. That may have improved the Fangs' chances of selling off the Examiner name, but it came too late to save the paper.

Ex-Features Editor Leslie Katz was one of the 40 staffers laid off (15 editors, reporters, and photographers remain). "From the start you could tell that the financial situation was not good," she says. "There were not enough readers, hardly any ads. The news content was not strong enough. Reporters were inexperienced, couldn't get a handle on what to cover."

Other former employees, who want to remain anonymous, tell of an initially chaotic workplace in which twentysomething writers and editors struggled -- without guidance from seasoned managers -- to put out a respectable newspaper, with big dollops of investigative journalism and coverage of city politics.

"Right off the bat, there was no infrastructure in place," says one ex-reporter. "There was no city editor, no assigning editor, no planning; it was all up to us, and I was worried. There were no fax machines, no e-mail, no working elevators. [Managing Editor] Bob Porterfield spent hours each day chain-smoking and prowling the roof, complaining about how he couldn't get anything done.

"On Thanksgiving Day, nobody showed up to work, not even the editors."

One day in the newsroom, the former employee continues, "I saw this enormous guy wearing sweat pants, a too-small 49ers T-shirt circa 1983, boat shoes, no socks -- and I wondered, 'Who let this homeless person in?' And it turns out to be Dave Burgin, the new chief editor.

"A few days later, I hear shouting in the newsroom and it's Porterfield, eyes bugging out, shouting with incredible force at Burgin, 'You are half the editor that I am!' Porterfield quit and stalked out with an exit line: 'Don't have another heart attack, Dave.' Burgin had had strokes and a heart attack; he was on the verge of tears."

Dysfunction ruled. "Burgin gave up on real reporting from day one," the one-time Ex staffer continues. "He told us that we did not have beats, because the Chronicle had everything covered already. He did improve the paper with his nifty little boxes and items like 'The Question Man,' but he was a stooge for the Fangs. He directed me to do stories that cozied up to political power. It wasn't about policy, it wasn't about journalism. It was about proximity to power."

Another ex-reporter says, "Burgin did loopy news. He hired P.J. Corkery, an old white guy writing imitations of Herb Caen, another old white guy. We were supposed to be writing about the neglected minorities, the downtrodden, not about Moose's restaurant and an era that is past."

When Burgin was fired a year ago, the editorial reins were taken up by Zoran Basich, a Fang veteran. By then, most of the original band of idealistic reporters had quit in disgust. "It was a slow-motion train wreck, painful to watch, especially when I was on the train," says a former newshound.

The Fangs paid themselves huge salaries for running the paper, but did little marketing to increase its small circulation. Nonetheless, the Examiner had its fans -- mostly political and news junkie types.

Phil Bronstein, executive editor of the Chronicle, says that the Ex's moribundity doesn't mean the Chron has a monopoly on the local market. "This is the most competitive media market outside of New York," he says. "Go five miles in any direction and you will run into another daily newspaper." But of course, few San Franciscans read those out-of-town papers, which include the Oakland Tribune, San Jose Mercury News, and Marin Independent Journal.

San Francisco State journalism professor Tom Johnson disagrees with Bronstein's analysis, saying the Ex's terminal condition will only strengthen the Chron's effective monopoly. "Clearly," he says, "the loss of the Examiner has lessened what was already -- if you look at the numbers -- a fairly noncompetitive environment."

After all is said and done, the Ex's problems were less about Fang family greed than Hearst Corp. expediency, says a former Ex employee.

"It wasn't just about the Fangs. The Chronicle used us all to get the Department of Justice off its back."

About The Author

Peter Byrne


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