San Francisco Chronicle on verge of going bust: Hearst

Joining a rapidly lengthening list of troubled US newspapers, Hearst Corporation said it would have to close or sell the San Francisco Chronicle, northern California's largest-selling newspaper, unless unions agreed to job slashes and other cost-cutting measures.

Hearst said The Chronicle, which has daily paid circulation of 339,000, lost more than $50 million in 2008 and will lose more this year. It has had significant losses every year since 2001.

''Without the specific changes we are seeking across the entire Chronicle organization, we will have no choice but to quickly seek a buyer or, should a buyer not be found, to shut the newspaper down,'' said a joint statement by Frank A Bennack Jr, Hearst's vice-chairman and chief executive, and Steven R Swartz, president of its newspaper division.

While Hearst did not specify targets or deadlines, the management made it clear to employees that the cost-cutting would require a significant number of layoffs. "Our current situation dictates that we accomplish these cost savings quickly," Chronicle Publisher Frank Vega wrote in a memo to the staff. "Business as usual is no longer an option."

The California Media Guild, which represents many Chronicle employees, has so far not responded to the ultimatum.

Hearst owns 16 daily newspapers, including the Houston Chronicle, the San Antonio News-Express, Albany Times-Union (New York) and the Seattle Post Intelligencer. Staff members at the Intelligencer received similar news recently, with Hearst leaders saying the paper would be closed or turned into an Internet-only publication.

Hearst owned The San Francisco Examiner for more than a century, but the rival Chronicle became the city's dominant paper. In 2000, Hearst bought The Chronicle for $660 million, and sold The Examiner, while retaining many Examiner workers, significantly increasing the size and cost of The Chronicle's staff.

The Chronicle has already made deep cuts, signed a contract to outsource printing, and explored selling its building. The Examiner, which has a much smaller staff, is now distributed free.

The Chronicle has given Hearst financial headaches ever since the New York-based company bought the newspaper. The timing of the acquisition proved ill-fated, as the 'dot-com bust' that soon followed caused its advertising revenue to shrivel plummet.

The newspaper's losses have been piling up ever since, and now the recession, coupled with more advertising options on the Internet, has apparently pushed the 144-year-old newspaper to the breaking point.

Publishers like New York Times Co and Gannett Co, as well as numerous smaller ones. are cutting costs and seeking to sell assets after forecasting further declines in print advertising sales. Philadelphia Newspapers LLC and Journal Register Co have already filed for bankruptcy protection.