Single town?

Pub date May 2, 2006
SectionEditorialSectionNews & Opinion

Like Clear Channel radio stations, many smaller papers would have little or no staff, nobody to answer the phone, nobody to take local tips and cover local news … they would be nothing but shells of once-thriving community newspapers.

This map, prepared by the San Jose Newspaper Guild, shows all of the newspapers that will soon be owned by Dean Singleton’s MediaNews Group. MediaNews started out with 11 papers, and the addition of 33 Knight-Ridder papers will give the Denver-based outfit a total of 44 daily and community papers in the Bay Area.

Most of the daily newspaper coverage of the deal (including the coverage by Knight-Ridder and MediaNews papers) has focused on the four biggest papers involved and ignored the smaller papers altogether — a sign, perhaps, that neither chain cares that much about community publications.

Currently owned by MediaNews: (1) Alameda Times Star; (2) Fremont Argus; (3) Hayward Daily Review; (4) Marin Independent Journal; (5) Milpitas Post; (6) Oakland Tribune; (7) Pacifica Tribune; (8) San Mateo County Times; (9) Tri-Valley Herald; (10) Reporter (Vacaville); (11) Vallejo Times-Herald.

Currently owned by Knight-Ridder, soon to be taken over by MediaNews: (1) Alameda Journal; (2) Almaden Resident; (3) Berkeley Voice; (4) Brentwood News; (5) Burlingame Daily News; (6) Campbell Reporter; (7) Concord Transcript; (8–11) Contra Costa Newspapers (Contra Costa Times, West County Times, Valley Times, San Ramon Times); (12) Contra Costa Sun; (13) Cupertino Courier; (14) East Bay Daily News; (15) El Cerrito Journal; (16) Antioch Ledger-Dispatch; (17) Los Gatos Daily News; (18) Los Gatos Weekly-Times; (19) Montclarion; (20) Monterey County Herald (not shown); (21) Palo Alto Daily News; (22) Pleasant Hill/Martinez Record; (23) Piedmonter; (24) Redwood City Daily News; (25) Rose Garden Resident; (26) San Jose Mercury News; (27) San Mateo Daily News; (28) Saratoga News; (29) Sunnyvale Sun; (30) Salinas Valley Advisor (not shown); (31) Walnut Creek Journal; (32) West County Weekly; (33) Willow Glen Resident. MediaNews owns 29 other California publications.

Stop Singleton’s media grab!

EDITORIAL At first glance, it looks like one of the oddest deals in recent newspaper history: McClatchy, the Sacramento-based newspaper chain, buys the much bigger Knight-Ridder chain, then sells two of the Knight-Ridder papers to MediaNews Group, run by Dean Singleton out of Denver, and two to the New York Citybased Hearst Corp., which owns the San Francisco Chronicle. Then Hearst immediately sells its two papers to Singleton’s shop, in exchange for an equity share in MediaNews operations outside of the Bay Area.

The upshot: MediaNews will take over the San Jose Mercury News and the Contra Costa Times, along with some 33 small-market dailies and weeklies, which, combined with the 11 Bay Area papers the chain already owns, will give Singleton control of every major daily newspaper in the Bay Area except the Chronicle.

It creates the potential for a newspaper monopoly of stunning proportions and threatens the quality of journalism in one of the most populous, educated, and liberal regions in the nation. Singleton, known as "lean Dean" for his cost-cutting moves, is likely to slash staffing at papers like the Times and the Merc, consolidate news gathering, and offer readers less local news.

In fact, in its most recent annual report, filed with the Securities and Exchange Commission, MediaNews outlined its strategy for profitability. "One of our key acquisition strategies is to acquire newspapers in markets contiguous to our own," the report states. This so-called clustering strategy allows the company to consolidate advertising and business functions as well as news gathering. "We seek to increase operating cash flows at acquired newspapers by reducing labor costs," the report notes.

In other words, a smaller number of reporters will be doing fewer stories, which will run in more papers. This, Luther Jackson, executive officer of the San Jose Newspaper Guild, argues, "means cookie-cutter coverage and fewer voices contributing to important public policy debates."

There are deeper concerns with this deal including the possibility that Hearst and Singleton could be forming an unholy alliance that would nearly wipe out daily competition in the Bay Area.

The whole mess has its roots in the decision by the Knight-Ridder board several months ago to put the company up for sale. It was the kind of decision that demonstrates the problems with treating newspapers like baseball cards, to trade on the open market: Knight-Ridder was quite profitable, ran some of the better newspapers in the nation, and had a reputation (by chain standards, anyway) of being willing to spend money on the editorial product. But the stock price wasn’t quite high enough, and a few big shareholders (who weren’t satisfied with 20 percent profits) were complaining, so the entire company went on the block.

McClatchy, a well-managed company that has the Sacramento Bee as its flagship, wanted some of the Knight-Ridder papers but only the ones in fast-growing markets. So after submitting a winning bid, the McClatchy folks starting looking for ways to dump the San Jose Mercury News, the Contra Costa Times, the Monterey Herald, the St. Paul Pioneer-Dispatch, and some 20 smaller community papers in the Bay Area.

But why, exactly, is Hearst getting involved? Well, Peter Scheer, a former antitrust lawyer who runs the California First Amendment Coalition, has some theories. The first possible reason? Hearst has plenty of cash on hand, and the deal would allow MediaNews to avoid having to seek as much financing from bankers.

More likely: Hearst through the Chronicle would have been Singleton’s only local competitor, and is the only significant political player in California that could have pressured regulators to oppose the deal. The arrangement, Scheer says, turns Hearst from a potential foe into a partner. Already the two companies have announced they may seek to share distribution systems. And there may be other plans in the works.

In fact, one of the most interesting ideas about the deal comes from a former Chronicle assistant managing editor, Alan Mutter, who writes a blog called Reflections of a Newsosaur ( Mutter suggests that the deal might lead to the end of real newspaper competition in the Bay Area, for once and for all. "Hearst," he speculates, "hopes at some point to work with MediaNews to extricate itself from the costly problem posed by the San Francisco Chronicle, which is widely believed to be losing about $1 million per week."

The idea: Down the road, Hearst merges the Chron with MediaNews or, if the Justice Department won’t allow that, the two companies enter into a joint operating agreement. A JOA works like this: The two companies share all printing, business, sales, and distribution operations, run two theoretically separate newsrooms, and at the end of the day split the profits. The Chron and the Examiner were run for years under a JOA, and it was terrible for readers: With no economic incentive to compete, both papers stagnated. But it can be the equivalent of a license to print money.

"Unlike some publishers who shun JOA relationships," Mutter notes, "Dean Singleton has embraced them and seems to be making them work in places like Denver and Detroit. Is the San Francisco Chronicle next on his list?"

Imagine what a near-complete monopoly of Bay Area dailies in the hands of a notorious cost-cutter would mean. For starters, we can count on more standardized, conservative politics (at least the Knight-Ridder papers opposed the war). Perhaps all reporting and editing would be consolidated into one newsroom, in San Francisco or San Jose. Like Clear Channel radio stations, many smaller papers might wind up with little or no staff, nobody to answer the phone, nobody to take local tips and cover local news … they’d be nothing but shells of once-thriving community newspapers. They would have abandoned the crucial local-watchdog role of a daily newspaper (and made life more difficult for the few remaining independents).

The fact that this is a possible, even likely, scenario is alarming. In short order, one company could control every major daily in the Bay Area (except the Examiner and the Santa Rosa Press-Democrat) fixing prices, sharing markets, pooling profits, and keeping ad rates artificially high and the quality of journalism abysmally low.

Have there been discussions around this? What is Hearst’s real interest here, and how does it jibe with Singleton’s dream of a massive regional "cluster"? Until we know the answers, the MediaNews-McClatchy deal should never go forward.

It’s almost too much to ask that the Bush administration, which loves big-business mergers, give it a thorough review. But the California attorney general has grounds to challenge it too.

AG Bill Lockyer completely ducked on the deal that merged the two largest chains in the alternative press, Village Voice Media and New Times. He can’t be allowed to duck this one: There must be a detailed, public investigation, and the newspaper chains must come clean and release the details of the deal. The two leading Democratic candidates for attorney general, Jerry Brown and Rocky Delgadillo, need to make this a top issue in the campaign. It should be an issue in the governor’s race, and every city and town that’s affected, including San Francisco, should pass a resolution against the merger. SFBG

PS Local arts and community organizations on the Peninsula are alarmed about the deal for another reason: Knight-Ridder contributes millions of dollars a year to those groups. Will Singleton continue that tradition?

Bay Area Congressional letter to DOJ re. KR sale antitrust concerns