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S.F. Chronicle Stirs Speculation

Magazine article Editor & Publisher

S.F. Chronicle Stirs Speculation

Article excerpt

Rumors abound again over possible sale of daily to rival Examiner

The company that publishes the San Francisco Chronicle has hired an investment banking firm to evaluate its holdings, rekindling speculation that it will sell all or part of the company and putting employees on edge.

The Chronicle Publishing Co. released a terse statement saying it hired Donaldson, Lufkin & Jenrette of New York to evaluate its financial, business and strategic plans. Chronicle Publishing chief executive John Sias would not comment further on the announcement.

Several industry analysts and observers say that hiring an investment banking firm usually means the company plans to sell part or all of its assets. "They are putting up a 'For Sale' sign," says one former Chronicle columnist. "When you bring in anyone to go over the books, you're saying, 'Tell us what we're worth, find someone who might be interested, and tell us the price'." Some employees say this rumor, unlike ones before it, seems to have more weight. In addition to the Chronicle, family-owned Chronicle Publishing owns two other papers, the Bloomington, Ill., Pantagraph and the Worcester, Mass., Telegram & Gazette. It also has three television stations: KRON in San Francisco; KAKE in Wichita, Kan.; and WOWT in Omaha, Neb. Other properties are Chronicle Books; MBI, a Wisconsin book publisher; and cable news channel BayTV. Chronicle Publishing and its joint operating agreement partner, the San Francisco Examiner, jointly own SFGate, a Bay-area information service. The company employs about 3,200 in all.

Over the years, the Chronicle and Examiner have been the subject of rumors that one will buy out the other or that the two will merge. In the often-cited scenario, Examiner parent Hearst Corp., which has first crack at buying the Chronicle, would buy its competitor and shut it down.

Hearst vice president and general manager George Irish declined to comment for this story. In the past, Hearst has steadfastly denied any intentions of folding the 133-year-old Examiner, its first newspaper.

Under the joint operating agreement, which was signed in 1965 and expires in 2005, the two papers operate separate newsrooms and share other operations such as printing, circulation, and advertising, splitting revenues evenly. The Chronicle publishes in the morning, the Examiner in the afternoon. The two put out a joint Sunday edition.

Both papers are losing circulation. In the past decade, the Chronicle's weekday circulation fell 15.3% to 475,000 from 561,000. while the Examiner's weekday circulation fell 19.5% to 111,000 from 138,000, according to the Audit Bureau of Circulations. The combined Sunday Examiner-Chronicle's circulation fell 18.4% to 592,000 from 726,000 in the same period.

"You can make a lot more money publishing one newspaper in a community than two," says John Morton, a Silver Spring, Md.-based newspaper analyst.

The Chronicle was founded in 1865 by the de Young family, whose descendants still own the parent company. A 10-member board of directors consisting of five family members and five non-family members runs the company. Over the years, relatives have disagreed on whether to sell off parts of the company and have increasingly relied on outside managers to run the business. Until recently, a majority of shareholders favored keeping the company together, but that coalition has since broken down.

The privately-held Chronicle Publishing doesn't disclose its finances. Morton says using common circulation multiples, the Chronicle could command $400 million to $1 billion. …

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