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Monday, May 15, 2000

Bruising S.F.
newspaper trial
ends today

Associated Press


SAN FRANCISCO -- The would-be publisher of the San Francisco Examiner testified today that he'll compete successfully against the San Francisco Chronicle by focusing on local issues and advertisers.

Ted Fang said he expects to fill a market niche now poorly served in the city -- intense daily coverage of local issues, along with advertising focused on the city's readers, at one-tenth the price of ads that now appear all over the Bay area in the Chronicle and Examiner.

"We are not going to make any pretense of being a metropolitan newspaper, but rather a local daily newspaper," Fang testified in a lawsuit seeking to block the Hearst Corp. from buying the morning Chronicle and giving him the afternoon Examiner.

As part of the deal, Hearst plans to Fang a $66 million subsidy over three years to keep the Examiner publishing.

Hearst is being sued by Clint Reilly, a real estate investor and former mayoral candidate, on antitrust grounds to block its $660 million purchase of the Chronicle. Reilly claims Hearst wants to let the Examiner fail quickly and leave the city with a single newspaper.

The nonjury trial was expected to wrap up after Fang's testimony and closing arguments later today. U.S. District Judge Vaughn Walker has not said when he will rule.

(The case is being watched closely by the media industry in Honolulu, where a lawsuit by the state and a citizens' group put the planned shutdown of the Star-Bulletin on hold. Liberty Newspapers L.P., the Star-Bulletin's owner, planned to close the afternoon paper last Oct. 30 in exchange for $26.5 million from Gannett Co., the owner of the Honolulu Advertiser. The two companies would have ended their JOA, which was due to expire in 2012.

But the state and a group called Save Our Star-Bulletin sued, claiming that the shutdown agreement violated federal antitrust laws and would leave Gannett with a monopoly in the local news market. Federal Judge Alan Kay filed a temporary injunction against the shutdown and set a September trial date. However, Liberty Newspaper agreed last month to put the Star-Bulletin up for sale. If a buyer is not found, the lawsuit will proceed, according to a deal among the parties of the dispute.)

In the San Francisco trial, Fang and executives of the Chronicle and Examiner have been trying to show that Hearst's proposed deal will improve competition in San Francisco.

But if a federal judge allows Hearst to buy the Chronicle and end a joint operating agreement between the two daily papers, Fang will have a huge challenge ahead of him.

He'll have to build a staff from scratch -- the Examiner's employees will go to the Chronicle. He'll also have to do without the Examiner's printing presses.

And while some experts have testified that it will be a losing proposition without spending up to $250 million, Fang said he can do it with just the $66 million subsidy.

No matter how the judge decides, one thing is clear from the two-week old trial: journalism ethics and credibility have taken a beating.

Embarrassing testimony by a series of newspaper executives have cast a shadow on Hearst's commitment to journalistic excellence and caused public anguish in the newsrooms of both the Chronicle and the Examiner, arch rivals whose financial destiny has been yoked together in a joint operating agreement since 1965.

On the trial's first day, Examiner Publisher Timothy O. White -- the executive Hearst sent out from New York to overcome opposition to its efforts to end the JOA and run a single morning paper in San Francisco -- testified that he had offered Mayor Willie Brown favorable editorials in return for his political support of the deal.

"The idea of a quid pro quo offer -- it's a nightmare," Frank Woods, who teaches media ethics at the Poynter Institute in St. Petersburg, Fla., told the Examiner. "Timothy White essentially verified every fear expressed by our readers -- (that) we are for sale."

Hearst denied that White's superiors knew of his offer and replaced White as publisher following his testimony.

He told the Examiner on Saturday that he welcomes an inquiry by Charles Renfrew, a retired federal judge Hearst hired to look into possible violations of journalistic ethics.

In the interview, White told the Examiner his remark to Brown was a meaningless "throwaway" line, and his testimony made the comment sound more substantial than it was.

"I am completely confident," White said. "It will show there was never a deal of any kind, that there was not, in fact, horse trading. The firestorm that followed is really unfortunate."

Top Hearst executives who followed White to the witness stand said that they were shocked by White's testimony, even though White gave essentially the same statement to Justice Department investigators in December and sent e-mails about his meeting with the mayor to his superiors last August.

"I was horrified," Hearst CEO Frank Bennack Jr. said Friday. "If true, it is clearly outside and contrary to our policies . . . and Journalism 101."

It has been a "public relations nightmare," Matt Wilson, executive editor of the Chronicle, wrote in a column yesterday. But reporting every detail is the only way out for journalists: "Honest newspapers bend over backwards to make sure every unappetizing fact about their actions or their executives' actions has been made public," he explained.

Even if Hearst wins the antitrust case and succeeds in merging the staffs of the city's two daily papers, its reputation has been seriously damaged by the trial, said William Woo, former editor of the St. Louis Post-Dispatch.

"The truthfulness of the company is being brought into question," said Woo, a Stanford journalism professor who also teaches journalism ethics at UC-Berkeley. "It has put the journalistic credibility of the company at stake.

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