Why the San Francisco Chronicle is not going out of business

Take a deep breath and repeat after me: The San Francisco Chronicle is not going to die. Say that five times, and then let’s understand why.

First, let’s look at the numbers. As usual, Alan Mutter did a great breakdown back in January explaining why what happened this week was going to happen eventually.

In the news biz, it’s been widely known that the Chronicle was losing an average of $1 million per week for a long time. The bigger question has been why Hearst has been willing to subsidize it for so long? And what finally made them stop. Presumably, things are getting worse and it pushed the finances past Hearst’s pain threshold.

Now, keep in mind: This statement from Hearst comes as part of a request for massive concessions from its unions. So in part, this is strategy. Things have been bad for a long time. Now Hearst is trying to threaten the nuclear option (shutting down the paper!) to get the unions to give some ground.

I think the guild understands the reality and will come to the table willing to talk. And they’ll probably be willing to do it quickly. It will be painful, but I think it’s far more likely that the unions will reach agreement on just enough savings to satisfy Hearst.

In the event that doesn’t happen, Hearst is probably more likely to sell the papers. Despite the woes, there’s still tremendous value in many of the Chronicle’s assets. But there won’t be many buyers lining up. The only prospect most observers can point to is MediaNews, which owns most Bay Area newspapers, including the Mercury News.

This would cause anti-trust howls, but given the dire straights of the news biz, I think MediaNews would be able to make a persuasive case that their ownership would be better than leaving San Francisco without a daily newspaper. The finances would be complex, but I’m sure there’s reasonable solution. (Again, see Mutter’s post for analysis.)

But assuming the unions grant major concessions, Hearst still has to answer the bigger question: Now what?

Besides yelling “fire,” I would think if Hearst is going to ask for big cuts, it’s also reasonable for the unions expect that Hearst officials spell out in detail their plans for turning the Chronicle around and to stop playing defense.

They’ve had plenty of time to come up with an answer.

 

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