By Tim Redmond
If Hearst Corp. isn’t satisfied with the concessions it gets from San Francisco Chronicle unions — or if the media giant never intended to keep the paper open — the time may come when the only major daily in San Francisco is circling the drain.
At this point, SF Appeal is reporting, the unions would like a chance to buy the paper , and Gawker is playing around with names of people who might invest.
A little perspective here.
First of all, the Chron isn’t worth much of anything right now. Hearst paid $660 million for the paper, but I’m sure the accountants have already written that off as a total loss and are ready to take the tax deduction. Nobody should be serious thinking that they have to raise a lot of cash to take it over.
The bigger issue is running the thing. Even with really smart management, and a new editorial plan, , the Chron will be losing money for a while, and it would take, say, $50 million to guarantee operating expenses for a couple of years. So any angel investor would need deep pockets and a willingness to lose money for quite some time.
But let’s stop and think about this. When Hearst bought the Chron, the bean counters in New York wanted to shut down the Examiner, but after the feds intervened, the company was forced to sell the Ex to the Fang family. Although “sell” isn’t actually the right word — the Fangs got the paper for nothing, and got $66 million cash to run it.
So why should we tolerate Hearst simply stopping the presses?
We shouldn’t.
Mayor Newsom, Speaker Pelosi, Senators Feinstein and Boxer — all the political leaders in this town — should be demanding that Hearst make a reasonable effort to sell the Chronicle. And by “reasonable,” I mean a deal no worse that what the Fangs got with the Ex.
If the Guild (or some other credible group with a reasonable business plan) wants to buy the paper, Hearst should give it to them — and provide $66 million in transition money. That’s still a good deal for the conglomerate — if the Chron is in fact losing $50 million a year, then the transition pay isn’t much more than one year’s losses. Hearst gets a major tax write-off, gets rid of a money-losing headache, and looks like a decent corporate citizen.
San Francisco gets to keep a daily newspaper, and somebody else gets a chance to try to make it work.
I’m not sure if the feds can order a company not to fold a newspaper right now, but I know that Congress has the power to pass a law preventing a newspaper closure unless and until every effort is made to find a buyer (at a cost the reflects the actual value of the asset, which in this case is about $1.75). Nancy? Dianne? Barbara?