Wednesday, February 25, 2009

SF leads creative destruction

With an influence far disproportionate to its population (744,000) or size (<47 square miles), San Francisco prides itself on being at the forefront of social, political and economics change. Soon it may become the largest city in the US without its own daily newspaper. As Editor and Publisher reported Tuesday night:

The San Francisco Chronicle will be sold or closed unless major cost-cutting measures -- including an unspecified "significant reduction in the number of unionized and non-union employees" -- can be realized within weeks, parent company Hearst Corp. said Tuesday evening.
In July 2007, Business Week columnist Jon Fine wrote:
When Do You Stop The Presses?

Play with me on this one: Which major American newspaper should be the first to throw up its hands and stop publishing a print product?

It's a question worth asking. This could be the worst year for newspapers since the Great Depression. The double-digit revenue declines long forecast by doomsters have arrived.

WHEN, EXACTLY, do you junk something that no longer works? And which major paper should go first—not today, but within the next 18 or 24 months?

San Francisco Chronicle, I'm looking at you.

Killing print requires acknowledging not just that the old mode is dead but also that the future means less revenue and shrunken staffs. This is why it makes sense soonest at a money-losing newspaper already grappling with those realities, and one in a major city that generates enough local ad dollars to support a sizable online business.

On paper, San Francisco is perfect: a Web-centric town, a cash-drain daily, and private ownership. Which does not mean this will happen. San Francisco is the ancestral home of the Hearst empire, the birthplace of William Randolph Hearst and the town where he ran his first paper.
(This is the same Hearst who built Hearst Castle, served as the model for Citizen Kane, and was credited with starting the Spanish-American War.)

The official account at the Chronicle and Hearst Corp. makes it sound more like a threat to the unions than a plan to close the paper. The reports did not give a deadline nor specific requirements for cuts, which are intended to stem chronic Chronicle losses that reached $50m in 2008.

In contrast, when Hearst made a comparable announcement in Seattle on January 9, Hearst announced a 60 day deadline and that (as the NYT reported) “if it could not find a buyer, it would either shut the paper entirely or make it an Internet-only operation with a much-reduced staff.”

The problem is the numbers for converting a newspaper from print to Internet-only work about as well as converting from a computer systems company to an OS company (ask NeXT how well that worked out). As MediaDailyNews noted dryly: “As with most newspapers, online ad revenues are a small fraction of print; the P-I would not be able to support anything on the scale of the current operation.”

Perhaps for these reasons, Hearst did not mention an Internet-only Chronicle. Still, SFGate.com is considered to be a successful newspaper portal, and it’s possible Hearst (or successor) will operate the portal as an Internet-only news site.

It seems improbable that the paper will be saved by a buyer. As others have noted, there are many newspapers for sale right now — including a few making money — but no buyers anywhere to be found. With no buyers in sight, wage cuts would merely forestall the paper’s inevitable end.

If the paper folds, then I expect some publisher to buy the brand name to create an ad-supported free shopper to compete with the Examiner. Ironically, Hearst owned the Examiner until it sold it in 2000 to purchase the stronger Chronicle — but the Examiner’s low-cost, low-quality business model will probably outlive the Chronicle. Other survivors are likely to be hyperlocal papers.

The news was also covered by Public Press, the new startup SF newspaper that is hoping to use an PBS-type business model to support a 501c3-published newspaper.

The Chronicle (20th largest by one ranking) would be the largest printed US paper to disappear, joining the Christian Science Monitor which ends its printed daily paper next month. While the recession is accelerating the inevitable, the bad news will continue for a 10-15 years until the disappearance of most or all of the metropolitan daily papers, marking the end of some 150 years of history in the US.

3 comments:

Doug Klein said...

I actually like a physical paper and subscribe to the Chron, but in the end I have to ask: do I care? Not really. You must, I repeat, you must, adjust to economic realities. The value of the printed edition should either be reflected in the price to the individual reader or the otherwise associated revenue (i.e., ads). If not then this is not a rational business decision, regardless of the bleating for the "beauty of the daily news".

thomas said...

the chronicle is a liberal shit rag not fit to wrap fish in hope it closes tommorrow

thomas said...

just like san francisco liberal government it is a abject failure