Hearst Threatens Sale Or Closure Unless Unions Approve 'Significant' Cuts

This story was written by Staci D. Kramer.
Yesterday, the big news out of Hearst Corporation was one hiringthat of Yahoo's Neeraj Khemlani as digital advisor to CEO Frank Bennack, Jr. Today's news from the private publishing company at best means more cuts at the San Francisco Chronicle and, at worst, the paper's closure. (Yes, I fully realize some people will have a party over the fall of another newspaper and might throw a parade over that one.) According to a statement posted on the Hearst corporate site, the paper has had major losses each year since 2001, including more than $50 million in 2008, and "that this year's losses to date are worse." Cost-cutting measures would include "a significant reduction in the number of its unionized and nonunion employees." More after the jump.

Bennack and Steven R. Swartz, president of Hearst Newspapers: "Because of the sea change newspapers everywhere are undergoing and these dire economic times, it is essential that our management and the local union leadership work together to implement the changes necessary to bring the cost of producing the Chronicle into line with available revenue. ... without the specific changes we are seeking across the entire Chronicle organization, we will have no choice but to quickly seek a buyer for the Chronicle or, should a buyer not be found, to shut the newspaper down." Hearst acquired the Chronicle in 2000.

SFGate.com: "The company did not specify the size of the staff reductions or the nature of the other cost-savings measures it has in mind. The company said it will immediately seek discussions with the Northern California Media Workers Guild, Local 39521, and the International Brotherhood of Teamsters, Local 853, which represent the majority of workers at the Chronicle." The story attributed to "Hearst Newspapers" says the news staff of about 275, even after previous cuts, is still the largest of any paper in the Bay Area.

"In the case of the Chronicle, (Publisher Frank) Vega said the expense of producing and delivering the newspaper to a seven-day subscriber is more than double the $7.75 weekly cost to subscribe. At the beginning of the year, in an effort to evolve its business model and offset its substantial losses, the Chronicle raised its subscription and newsstand prices, taking a cue from European papers that charge far more than their American counterparts."

No better time for an announcement meant to scare up major concessions than a week that already includes two newspaper publishing companies filing for Chapter 11 bankruptcy.

By Staci D. Kramer