S.F. Chronicle, Other Holdings Offered for Sale

SAN FRANCISCO — The family-owned San Francisco Chronicle, the morning newspaper that has extolled the city’s virtues and exposed its vices for more than 130 years, went on the block Wednesday along with other Chronicle Publishing Co. holdings--a package worth an estimated $2 billion.

The announcement followed years of rumors that feuding family members would sell the Chronicle, which was founded in 1865 by Michael H. de Young and his brother, Charles. The current owners are 22 descendants of Michael de Young, including three of his grandchildren, who have fought bitterly over control of the newspaper in recent years.

“It means, inevitably, that San Francisco will be added to the list of cities that have one newspaper,” said Ben H. Bagdikian, former dean of the Graduate School of Journalism at UC Berkeley and a media critic.

“For some time, two-thirds of the family stockholders have been ready to sell when the price was right and at the moment, prices are sky-high in the media business,” Bagdikian said.

The Chronicle’s arch rival, the San Francisco Examiner, which is owned by Hearst Corp., is thought to be the most likely candidate to buy the paper. Under a 1965 joint operating agreement, the two papers share noneditorial operations--including printing, circulation and advertising--until 2005. They equally share profits from their joint operation, the San Francisco Newspaper Agency. Together, they employ about 3,200 people.

Anyone who buys the Chronicle would be bound by that operating agreement. Under the agreement, the Examiner has right of first refusal to buy the newspaper, but would lose that right if the newspaper and other parts of the company were sold as a single entity.

Tim White, publisher of the Examiner, could not be reached for comment Wednesday.

The Chronicle, with a daily circulation of 482,268, is the nation’s 11th-largest newspaper. It and the Examiner jointly publish a Sunday paper with a circulation of 605,354. The afternoon Examiner’s circulation is about 111,000.

Staff members at the Chronicle said they were saddened but not surprised by Wednesday’s announcement.

Carl Hall, president of the Northern California Media Workers Union, which represents workers at the Chronicle and the Examiner, said most reporters at the paper “hate” the idea that it might be purchased by the Examiner. “It seems like surrender, it seems tragic,” he said.

He said Nan Tucker McEvoy, who with her son, Nion McEvoy, owns one-third of the stock in the Chronicle Publishing Co., managed to block previous efforts by the family to sell all or part of the company. But McEvoy, an octogenarian, was ousted from the board in 1995 by other family members. She could not be reached Wednesday for comment.

The Chronicle hit the streets on Jan. 12, 1865, as the Daily Dramatic Chronicle, “a daily record of affairs--local, critical and theatrical.” It made a reputation as a muckraking journal in the wild decades before the turn of the century, training a spotlight on corrupt city officials as it promoted San Francisco and the West.

In 1933, the newspaper won its first Pulitzer Prize. It survived newspaper wars involving four dailies by reaching the operating agreement with the Examiner in 1965. But both newspapers have suffered from a lack of investment and low staff morale in recent years, as rumors flew of first one, then the other, being bought and shut down.

“Any time you lose another voice in a town like San Francisco, you’ve lost a tremendous amount,” said Ken Garcia, a columnist for the Chronicle. The Chronicle, Garcia said, “is as much a part of the tradition of San Francisco as sourdough bread.”

“The Chronicle has been the home for some of the more creative and colorful voices that have emerged in the Bay Area,” Garcia said. “One hopes that maybe they will find a savior.”

Tom Unterman, executive vice president and chief financial officer of Times Mirror Co., said Times Mirror has expressed interest in purchasing the Chronicle.

“We are always interested in buying outstanding, major market newspaper properties, and San Francisco is a major market,” Unterman said. Times Mirror has not made an official offer, Unterman said.

Newspaper industry analysts said the Chronicle Publishing Co. is putting its assets on the auction block at a time when the media market is white-hot. The company has been estimated to have a net worth of close to $2 billion.

The Chronicle Publishing Co. hired an investment banking firm a month ago to appraise its assets and recommend whether it should sell all or part of the company, said company spokesman Don Solem. He said the vote Wednesday by the Chronicle Publishing Co.’s board of directors was unanimous to sell it all, in pieces or as a whole.

“The analysts have been surprised by the robust market and the level of interest,” Solem said. But he said no formal offers have yet been made for any of the company’s properties.

In addition to the Chronicle, the company owns KRON-TV, NBC’s San Francisco affiliate television station, which broadcasts in the fifth-largest television market. It owns the Bloomington (Ill.) Pantagraph, the Worcester (Mass.) Telegram & Gazette, and television stations KAKE in Wichita, Kan., and WOWT in Omaha.

It owns Chronicle Books, a publishing firm in San Francisco, and MBI, an Osceola, Wis.,publisher of transportation books. The family sold its cable operations to Tele-Communications Inc. in 1996 for $580 million.