Feb 25 2009
San Francisco Chronicle in Turmoil; $50 Million Losses in 2008, is a Bailout in Order & are Hearst Family’s Evil Side Catching up to them?
San Francisco Chronicle in Turmoil; $50 Million Losses in 2008, is a Bailout in Order & are Hearst Family’s Evil Side Catching up to them?
By Marc Chamot
John Diaz, the San Francisco Chronicle’s editorial page editor, three weeks ago did an Op-Ed piece about failing newspapers. John Diaz opinioned that newspapers shouldn’t be obligated, and should not be allowed to receive any bailout moneys, because it would set a dangerous precedent of governmental control into contents that are being written by newspapers that do get this money. It could essentially destroy the journalism independence that newspapers have, free from total government controls, that is guaranteed by our U.S. constitution. Freedom of the press is one of our biggest constitutional protections that we still have.
Unfortunately for failing newspapers, John Diaz is absolutely right about this. Unlike banks, automobiles and other manufacturers, newspapers are news and information sources for the general public. Newspapers influence people, both socially and politically. Once it gets tainted by government interference, it’s all over with the public trust.
It’s a fact that the San Francisco Chronicle has been having a steady decline in profit since the year 2000. The $50 million that they claim to have lost recently in 2008 is the second largest chunk lost since 2001 for their newspaper. The San Francisco Chronicle is Northern California’s largest newspaper and it’s the costliest to run and operate.
“But the problem with the San Francisco Chronicle not only lies upon its labor woes and the economy, it’s more or less the product itself, and their biggest mayhem is the Randolph Hearst family who own them and the other 15 newspapers around the country.”
With their Seattle Post-Intellingencer about to shut down soon, it’s more about the Hearst Corporation’s historical hapless management styles over their unionized personnel and in their lack of judgments on the way they have made various newspapers acquisitions throughout the last two decades. From the defunct Houston Post to the former San Francisco Examiner. The Hearst Corporation have concocted very shady deals to buy out and eliminate competitors on their way to becoming a one newspaper town and a monopoly.
When the Hearst Corporation burned the former Houston Post employees, via shady Dean Singleton deals to legally steal millions of dollars in employee retirement trust funds, and not only they killed their opportunity to build up their circulation with the demise of the Post, the Hearst’s Houston Chronicle never won the hearts of the former Houston Post readers and their circulation figures barely increased even after the Post shut down.
It was such a PR disaster for the Hearst that they could never recover from, but fortunately for the Houston Chronicle, they were able to survive within that market, because they did not have prohibitive unionized costs to go along with their publication, unlike with the Seattle Post-Intelligencer and the San Francisco Chronicle.
And now for the juicy part of the story, the Hearst Corporation wants to blame their San Francisco woes on dot.coms and the economy. But their San Francisco problems go way beyond that. Their demise in San Francisco can be said in two names, former mayor Willie Brown and the corrupt Fang family, the corrupt Chinese political powerbrokers, and former owners of the now defunct San Francisco Independent.
The Hearst families have compounded more missteps, one after the other, and during the Willie Brown years, they wrote a series of articles that prompted numerous FBI raids and investigations into illegal non bid contracts, including the Fang family who were also being investigated over their million dollar HUD money that Willie Brown helped them acquire through his influence, and they were also being investigated over their connections to illegal contracts in the BART (Bay Area Rapid Transit) expansion to San Francisco International Airport, where James Fang was a BART board director.
The way the Hearst Corporation acquired the then thriving San Francisco Chronicle around 2000, by using former mayor Willie Brown and the Fang family shady corruptive concocted deals, it severely ruined the Chronicle’s reputation among the citizens of San Francisco. To regain that political clout that they have lost to the sleazy Fang family and their newspapers, it was a fight that they had to do, and sold their souls out to the devil just to get what they wanted and it killed their journalism reputation in the process.
The Hearst’s Examiner, through their editorials tried to portray themselves as innocent victims of a plot being orchestrated by former mayor Willie Brown and the Fang family to extort $66 Million and the Examiner away from them, during their acquisition process of the San Francisco Chronicle, their former hand in hand JOA (Joint Operating Agreement) cohorts.
In Walker’s court opinion he wrote, ““Malodorous wheeling and dealing, the cronyism that fueled the Fang transaction at the local level also exerted influence over the DOJ investigation.”
The Hearst’s could have gotten away with it “free and clear,” but when Judge Vaughn Walker ruled in Hearst favor that they could SHUT down the San Francisco Examiner without having to neither deal that paper away nor compensate the Fang family $66 Million, but unfortunately to the shock of everyone, they did it anyway; they went against the judge’s ruling, only to pander with the politically powerful corrupt family that was well connected to former mayor Willie Brown and senator Dianne Feinstein.
It was a deal made in hell, and eventually all participants of the deal have fallen out of grace with the city’s citizenry, including the orchestrators of the $66 Million fleecing of the Hearst’s, the Fang family and former Mayor Willie Brown who are now pretty much out of the San Francisco political scene.
San Francisco Chronicle’s problems were much more than about giving a despised corruptive Chinese family the Fangs, a prized San Francisco institution like the San Francisco Examiner plus $66 Million, through political extortions. It was also as recently when they hired their former nemesis, and the former San Francisco corrupt mayor as an Op-Ed writer for their newspaper.
“It really surprised the heck out of the city, in the hiring of Willie Brown as their Op-Ed writer, they must have thought that this man could single handedly save their falling readership, no one ever talks about Willie Brown’s columns, but the opposite actually happened, people just stopped reading their newspaper all together. The San Francisco Chronicle forgot one thing, they first exposed the man as a political crook and then they came out and brought him on board as a writer. That’s pretty dumb.”
It didn’t help any when they went gangbusters in their support for gay marriage. Back prior to the Willie Brown days, gay issues were never subjects of interest by the editors of the Hearst papers, until the Fang Independent made it an issue through their newspapers. Most San Francisco gays despised the former Hearst Examiner, when they (the Chronicle) tried to support the gay marriage and vehemently went against proposition 8, it didn’t faze the homosexual groups. All the Chronicle did was further eroding away their wealthy conservative core of readers in Northern California.
I personally have no sympathy for the Hearst’s newspapers, I think that they got just what they deserve, and do you really think that they should get any tax-payer bailout, and especially when Judge Vaughn Walker told them that they did not have to give the Fangs the $66 Million and the Examiner, but they did it anyway? They have totally lost their reputation as a credible news source for most San Franciscans.
More synopses on the Crooked Hearst-Fang Examiner Deal: Source From Hearst Owned Examiner:
Politicians Played Like Puppets to facilitate the $66 million deal, local politicians were played like puppets, including Sen. Dianne Feinstein and SF Mayor Willie Brown, who was in contact with US Attorney General Janet Reno on numerous occasions on the Fangs’ behalf and who dedicated a part of his “State of the City” speech to saving the Examiner, despite saying earlier the publication wasn’t even worthy as toilet paper.Richmond District resident Feinstein was a big help in facilitating the deal because she sits on the Senate’s Judiciary Committee, which oversees the Department of Justice – the same Department of Justice that was responsible for approving the Hearst Corporation’s pending acquisition of the SF Chronicle.
The senator claimed she was just arranging an innocent luncheon between herself, Florence Fang and SF Examiner Publisher Tim White. But White testified under oath that he took the luncheon as a very overt signal that the Justice Department would continue to delay and scrutinize the Chronicle deal unless something was done to appease Florence Fang, a long-time supporter of Feinstein.
Judge Walker says, “Malodorous Wheeling and Dealing”Federal Court Judge Vaughn Walker oversaw the lawsuit brought by Clint Reilly to prevent the closing of the SF Examiner.In his decision for the court, Walker said there were numerous “malodorous” elements of the events that led the Hearst Corporation’s decision to sell the Examiner for $100 to the Fang family, along with a $66 million subsidy over 32 months.The contract has a provision that would give the Fang family up to $12 million if it saves the Hearst Corporation an equal amount. If the Fangs fully exercise the clause in the contract, the Hearst Corporation’s total expenditure would be about $54 million, with $42 million going to the Examiner and $12 million to the Fangs.
Walker determined that the sale of the SF Chronicle to the Hearst Corporation was not a violation of federal anti-trust laws and that the “transfer” of the Examiner to the ExIn Corporation was not necessary. But Hearst officials said they would honor the contract, which was signed March 16, 2000.
30-year-term of the original Joint Operating Agreement (JOA) between the Chronicle and Examiner expired in 1995 and the Hearst Corporation exercised an option to extend the agreement 10 years. But when the principals at the Chronicle said they would not extend the terms of the deal after 2005, the pressure was on to make a deal before Hearst officials were stuck with a worthless, money-losing newspaper in a highly competitive market.Walker determined that Hearst executives had discovered a way to increase profits in a JOA.
The executives figured they could shift the burden of increasing readership to the Chronicle; it could save, and thus make, more money for the Examiner. But the strategy slashed the Examiner’s circulation numbers to a point where most experts determined the newspaper could not survive in the Bay Area marketplace without substantial infusions of money.Because Hearst executives were concerned about political pressure blocking the purchase of the Chronicle, they agreed to sell the Examiner to the Fangs.
In Walker’s court opinion he wrote, “The cronyism that fueled the Fang transaction at the local level also exerted influence over the DOJ investigation.”
Feinstein made a lunch date with Florence Fang and Examiner Publisher Tim White at the Villa Taverna, a restaurant in the financial district, on Jan. 21, less that two months before the March 16 Examiner sale was announced. White testified that he came to the conclusion that there would be roadblocks for the Chronicle acquisition at the Department of Justice unless something was done to appease Florence Fang.
Shortly thereafter, negotiations commenced between the Hearst Corporation and Fang to “save the Examiner” and arrest any concerns the Department of Justice may have.Feinstein and Fang have been acquaintances since the early 1980s, when Feinstein appointed Fang to a position on the city’s Small Business Commission.
Several years later, U.S. President George Bush appointed Fang to become a national advisor to the U.S. Small Business Administration.On Aug. 30, White and Examiner Editor Phil Bronstein met with the mayor, who was running for re-election. During the meeting White offered to “horse trade” favorable political coverage in the Examiner if the mayor would provide Hearst Corporation assistance getting the Chronicle acquisition completed.Vaughn also questioned the lack of explanation in support of DOJ’s positions, especially the department’s determination that the transfer of the Examiner to ExIn satisfied anti-trust concerns and preserved competition in the marketplace.
In 14 previous instances of a JOA being dissolved, there were no court opinions and little antitrust enforcement activity or litigation, Walker determined. The judge was “astonished and disappointed that DOJ would allow itself to be put in a position where the inference can be so easily drawn that its action or inaction in this case was political favoritism masquerading as law enforcement.
“”The arrangement between Hearst and ExIn contemplated in the March 16 contract appear inimical to competition and could constitute a violation of antitrust laws,” Vaughn said.But according to Joel Klein, the head of DOJ’s anti-trust division, there was a team of experienced attorneys looking at the Chronicle sale and no one at DOJ was influenced by undue pressure.
said it was “wholly unremarkable” that Mayor Brown expressed concerns about the sale to Janet Reno or that any other political figure or individual contacted DOJ about the matter.In an Aug. 10 letter to Walker, Klein called for the judge to delete some of the sharp criticisms he levied in his decision. Walker replied that he would reopen the case if a formal request was forthcoming, but he noted that two offers had already been made to DOJ officials asking for an explanation of their actions and they refused both times. Full Story:
