Chronicle Falling Apart - Why Is There No Bay Area Guide Online?

We knew that Hearst's moves in Seattle -- saying in early January that it would sell or close down the Post-Intelligencer -- was just a dry run for San Francisco. After all, the Hearst-owned Chronicle has bled more than a quarter of a billion dollars by most estimates since Hearst bought it in 2000. Now that's pre-recession loss. If we say the storm of recession is taking down the weakened trees, we'd have to say that it will of course take the fallen timber with it.

It's been an amazement, really. How could you use a quarter of billion dollars publishing a monopoly daily in one of the most affluent cities and metro areas, in and around San Francisco? You can point to the unsolved issues of combining the old Chron and the Examiner, but still. You can point to the belief that the Chronicle has always been a better features product than a news one. You can point to the endless dance around who would run SFGate, the Chron's site. You can point to a lot of things, but still it's an amazement.

Down the road to the south and to the east, Dean Singleton's proud vision of a Bay Area publishing colossus wobbles as well. The Mercury News hosts less than half the newsroom staff it did at the turn of the century, and the wear and tear on the once-proud paper shows every day in its pages. Like a lot of newsroom staff across the country, the remaining staffers keep one eye on the keyboard and another on the door. Singleton has pledged to keep MediaNews out of the bankruptcy hole, but each new wider economic reckoning makes that more difficult. He's the ultimate survivor -- so far -- keeping a keen gaze while Scripps blinks in Denver and going with the reducing flow in Detroit. But even his bag of tricks is wearing thin.

So, in the Bay Area -- a highly educated, civically minded, affluent region -- we see the effects of being ground zero in the internet revolution.

Sure, it is the deep recession that is forcing new Hearst President Steve Swartz to move on his 100-day agenda of change and causing Singleton's Bay Area News Group to circle its wagons tighter each day.

It's the underlying webbiness of the region though that made the recession so much more damaging. Think craigslist first. I recall working at Knight Ridder New Media in the late '90s when KR employees starting reporting that they got 10X better results on craigslist than with (discounted!) Merc News classifieds. Like today's news readers, who have dropped their subscriptions and get the news free online, they felt a bit ambivalent, even odd about it. Like Walter Isaacson, though, they didn't want to be chumps, so craigslist there they went.

Long story short, usage of Yahoo (YHOO), Google (GOOG), eBay (EBAY), Yelp, Palm (PALM) and iPhone (AAPL) all have added up. Reading time on both SFGate and MercuryNews.com are low, as web-savvy locals know where to get what they want fast -- and it's not usually on newspaper sites.

Yes, there are 21 daily newspapers covering an 11-county area, but surprisingly, no vibrant, metro-wide local news/city guide online site. There have been efforts over the years, but none big, none well-funded. If there were ever a region that could and should support community journalism, you would think it would be the Bay Area. MediaNews still owns BayArea.com, but makes no use of it.

Could the Chronicle indeed go away? Well, don't expect anyone to buy it. The newspaper market is, to use the kind word, illiquid. Frozen solid by two minor problems: 1) the credit meltdown, which will someday ease; 2) no one knows how the hell to value a newspaper company because no one has "visibility" in future revenue, which is a nice way to say no one likes what they see ahead.

Maybe, Hearst and MediaNews, once close, but now more distant partners, can figure out some new cost-sharing plans that will pass government review. If not, we can now imagine the Chronicle indeed closing, if it doesn't get the "significant" cost reductions it wants. My guess, given our times, is that it will get reductions, and then reduce itself in product and people to some sense of immediate sustainability. It may keep publishing, though it may scrap days like Detroit or whole sections like many of its brethren.

Consider, though, we've gone so quickly from an era where two papers in a single metro area could be profitable (Minneapolis, Seattle, Denver) to an era in which a big city daily with several hundred newsroom staffers may not be profitable. As Bernanke searches for The Bottom, newspapers are disappearing into it.

Disclosure: no positions

Comments

[Mad Hedge Fund Trader]

Looks like the San Francisco Chronicle may be about to join the dustbin of history. The industry rag, Editor and Publisher, says that the privately owned Hearst Corporation has given the venerable paper an ultimatum to cut costs or close. The 150 year old Chronicle lost $50 million last year. Of course, this may all be a ploy just to beat up one of the last surviving unions, but they have made a similar threat to their paper in Seattle. Ironically, Hearst acquired the Chronicle and dumped the San Francisco Examiner in 2,000, which was then put on a crash diet and made profitable by its new owners. If the Chronicle goes it will join the Philadelphia Enquirer which went under last week, and the soon to be shut Christian Science Monitor. Google has been eating their lunch for years. It is tough to chop down a forest to make paper, get a union to print it, and manually distribute your product, and then compete against a one man email blast on costs. If the Chronicle goes it will be survived by a much smaller SFGate.com, one of the most successful web based newspaper portals out there. There could be a ninth earning save by a surprise buyer. But moguls willing to lose money just to promote a political view are a dying breed. Rupert Murdoch has been the only recent buyer of newspapers, and something tells me that a match with the Chronicle would not exactly be one made in Heaven. As a long time print journalist myself, I am sad to see newspapers go. But you can’t exactly sit like Denmark’s old King Canute and order the tide to stop rising.

2009 Feb 25 06:03 PM

[Mad Hedge Fund Trader]

In five years there will probably be only two mass circulation papers left, The New York Times and the Wall Street Journal, with the Washington Post as an outlyer. Thousands of small, local, niche publications will take up the slack. As a long time print journalist dating back to the typewriter days myself, I am sad to see newspapers go. But you can’t exactly sit like Denmark’s old King Canute and order the tide to stop rising. Journalism is degrading into an army of guys banging away at the computers at 3:00 AM in their boxer shorts. Trust, accuracy, objectivity, style, and taste will be the victims.

2009 Feb 26 07:00 AM

[munge]

"amazement" that "ground zero for the Internet revolution" can't support a daily newspaper?

What is /amazing/ is that supposedly intelligent Internet users (present company excluded, Ken) don't see that craigslist destroyed the revenue model that paid the investigative reporters, and so there's zero discussion about how to address that problem. And what amazes me even more is that so many people think that bloggers wearing pajamas are capable of providing all the news that a voter needs to keep a democracy going. And who think that the advertising-only model won't tempt the pajama-wearers from gaming the news to drive clicks. (note to self, must learn to spell mesothelemia correctly.)

2009 Feb 27 09:16 PM