Chronicle to cut 25% of jobs in newsroom

Joe Garofoli, Staff Writer
San Francisco Chronicle

May 19, 2007

To cut costs and try to adapt to a changing media marketplace, The Chronicle will trim 25 percent of its newsroom staff by the end of the summer.

"This is one of the biggest one-time hits we've heard about anywhere in the country," said Tom Rosenstiel, director of the Project for Excellence in Journalism, in Washington.

Eighty reporters, photographers, copy editors and others, as well as 20 employees in management positions are expected to be laid off by end of the summer. Chronicle Publisher Frank Vega said Friday that voluntary buyouts are likely to be offered.

Vega declined to say whether the paper is continuing to lose $1 million a week, as Hearst attorney Daniel Wall stated in court in November during a hearing on an antitrust suit filed by San Francisco businessman Clint Reilly.

"We're not getting into any specifics at this point," Vega said. "It's fairly common knowledge that we have had a tough financial row here for several years. As we continue to evaluate our situation, unfortunately continued belt-tightening is necessary."

Some of The Chronicle's production and other non-news departments have been reduced during the past few years, but until now the newsroom has been spared deep cuts.

Analysts predicted the reductions at The Chronicle could have repercussions for readers. While an increasing number of people get news from online aggregators such as Google News and Yahoo, those stories are most often originally reported by print journalists.

"That's not just trimming fat, that's an amputation. That's losing a limb," said Rosenstiel, who grew up in the Bay Area.

He said the effect, even for people who don't read the paper, "is that 25 percent of what goes on in the Bay Area won't be covered. It will happen in the dark. ... Our research shows that there is a lot of information that appears in a daily newspaper that doesn't get covered by TV stations or citizen journalists or bloggers when a newspaper's staff is cut."

With all the free online places to find information, analysts say, it's a great time to be a consumer of news, but a lousy time to be selling a print publication.

While The Chronicle isn't subject to the same quarterly profit pressures from Wall Street investors as publicly held publications -- the paper is owned by the privately held Hearst Corp. -- it is on the precipice of changes in the news business, largely because of its location.

"We're here in the birthplace of (the free online classified site) Craigslist and in the cradle of Silicon Valley, where everyone is wired," said Peter Appert, a media analyst at Goldman Sachs in San Francisco.

Historically, Rosenstiel said, the paper has been hurt by its inability to penetrate its marketplace as much as other major metropolitan papers.

Until Hearst bought The Chronicle in 2000, readers may have been turned off by the paper, Rosenstiel said. "It was underserving its marketplace. That's changed, and it's a lot better now," he said. "But Hearst bought it in 2000, which was a very difficult time to buy a newspaper."

Vega said the layoffs have nothing to do with the cost of Hearst's purchase of The Chronicle seven years ago, nor has the paper felt any impact from the recent purchase of the San Jose Mercury News and Contra Costa Times by MediaNews, which gave the Denver corporation control of most other large daily papers in the Bay Area.

Instead, Vega said, the layoffs reflect that revenue from advertising and other sources isn't keeping pace with the cost of running the paper.

But most newspapers are still making money, analysts said, albeit not the average 20 percent profit margins they once enjoyed. In most major cities, Appert said, newspapers are still operating as a monopoly business at a time of myriad competition.

While times may be tough now, "not many papers are losing money," said John Murray, vice president of circulation marketing for the Newspaper Association of America.

Despite possessing one of the nation's most widely read newspaper Web sites -- SFGate.com -- The Chronicle, like its print brethren, hasn't been able to monetize online eyeballs.

"Although online usage is gaining, no one has monetized it on a newspaper basis to the point that equalizes what is happening on the print side," Vega said.

The Chronicle does not charge people to visit SFGate, nor does it ask them to register. Vega declined to say whether that would change.

In a recent commentary in the Wall Street Journal, Arkansas Democrat-Gazette publisher Walter Hussman Jr. said newspapers create $500 to $900 in revenue per subscriber annually, according to the Inland Cost and Revenue Study. But, Hussman wrote, a newspaper's Web site "typically generates $5 to $10 per unique visitor."

"I actually think it is very progressive and astute of The Chronicle not to charge people or make them register," said Barry Parr, a media analyst with Jupiter Research. "It can't. There's too much competition out there."