Bay Area papers rewrite plans in tough financial year

By Michael Liedtke, AP Business Writer
Monday December 03, 2001

SAN FRANCISCO – When San Francisco Examiner Publisher Ted Fang was fired by his own mother just before Halloween, it punctuated a year of humbling setbacks in a local newspaper industry that once mirrored the Silicon Valley’s exuberance. 

Little about the past year has panned out as expected by San Francisco Bay area publishers, who are trimming staffs and lowering expectations to make up for millions of advertising dollars that evaporated in the high-tech meltdown. 

“It’s like they were on top of Mount Olympus one day and then sitting in the valley of the shadow of death the next,” said David Cole, an industry consultant in Pacifica. 

All of the Bay Area’s metropolitan papers are licking their wounds. 

Fang had pledged to build the new Examiner into a scrappy morning rival to Northern California’s largest newspaper, making most of the $66 million subsidy the Hearst Corp., promised to avoid antitrust trouble as it merged the old Examiner’s staff with the San Francisco Chronicle’s. 

Instead he’s been reduced to threatening to sue his mother to get his job back, and she has been saddled with a lawsuit by seven construction companies alleging that the Examiner hadn’t paid $1.4 million in bills. Fang declined to comment for this story, through his attorney Robert Wallach. 

Hearst, which made improving news coverage one of its top priorities last year when it bought the Chronicle for $660 million, is pruning 220 workers from its payroll. 

The San Jose Mercury News has backtracked, too. Besides abandoning a much-heralded San Francisco edition launched during last year’s boom, the Mercury News eliminated nearly 10 percent of its staff in a wave of corporate-mandated budget cuts that provoked Publisher Jay Harris to resign in protest. 

Large suburban papers in the region also have been hurt by the downturn. The Walnut Creek-based Contra Costa Times — owned, like the Mercury News, by Knight Ridder — also jettisoned about 10 percent of its work force earlier this year. 

Difficult times aren’t new in the famously cyclical newspaper industry. But the severity of this slowdown caught Bay Area publishers off guard. 

“It’s been rough year for newspapers all over the country, but it’s just been a disaster in San Francisco,” said newspaper industry analyst John Morton. “Things are worse in San Francisco than just about any other place, expect maybe downtown New York.” 

Bay Area publishers insist the problems of the past year haven’t hurt their papers’ quality. They say they’re confident that their papers will continue to improve despite the cutbacks. 

“I’m still optimistic,” said Chronicle Publisher John Oppedahl, who described this year’s ad slump as the worst he has seen in 40 years. “I believe we can get where we need to be, although it may require some changes that we didn’t anticipate.” 

Mercury News Publisher Joseph Natoli, hired to replace Harris, said the San Jose paper remains committed to investing in improvements. He said the Mercury News’ decision to expand its sports coverage, including the recent hiring of respected columnist Skip Bayless, underscored the paper’s commitment. 

“At the end of the day, we still have to grow and that means we have to spend money in the right spots,” Natoli said. 

But this year’s sharp drop in revenue means the Mercury News can’t afford to spend money as freely as it did during the past few years of prosperity powered by the Silicon Valley’s Internet-driven economic boom. 

In 2000, the Mercury News generated $341 million in revenue, an increase of $35 million, or 11 percent, from 1999. Knight Ridder hasn’t provided specifics about how far revenues have fallen at the Mercury News this year, but the San Jose paper’s total advertising inches had dropped by 13 percent through October. 

Looking to offset a 20 percent decline in advertising revenue this year, the Chronicle had been cutting corners even before last week’s announcement of an 8.5 percent reduction of its work force. The previous concessions included curtailing travel and switching the paper’s Sunday magazine to every other week. 

The Chronicle’s financial hardships haven’t hurt its readership yet. The paper’s unaudited weekday circulation stood at 512,042 as of Sept. 30, an increase of about 12 percent from the previous year. 

The recently announced staff cuts may make it more difficult for the paper in the future, said Carl Hall, a Chronicle reporter and president of the Northern California Media Workers Guild, which represents most of the paper’s newsroom workers. 

“I think a lot of the internal debate is going to be centered on whether we will be able to continue to improve the editorial product,” Hall said. “This is bound to hurt.” 

Each round of cutbacks if making it more difficult for unemployed journalists to find work in the Bay Area. This, too, is a painful about-face from recent years when a proliferation of dot-com businesses in San Francisco and the Silicon Valley turned reporters and editors into hot commodities. 

Rick Radin, an 18-year industry veteran, remembers having his pick of attractive job offers last year before deciding to go to work in September 2000 as a copy editor for the Examiner, at the time still owned by Hearst. Radin said he accepted the Examiner offer largely because of assurances his job would be secure after Hearst merged the paper’s staff with the Chronicle in November 2000. 

The Chronicle laid off Radin, 51, last week. With a hefty home mortgage that he took on during the good times, Radin is now wondering if he will be able to find another job that will pay him anything close to his $55,000 annual salary at the Chronicle. 

“I’m anxious,” Radin said. “It’s a bad time to lose a job in this industry.”