Business

SAN FRANCISCO (CBS 5 / KCBS / AP) ― The owner of the San Francisco Chronicle said Tuesday that it will sell or close the daily newspaper if it can't dramatically lower expenses within the next few months.

With the announcement, the Chronicle joined the lengthening list of imperiled newspapers as Hearst Corp. set out to purge the paper's payroll and slash other costs in a last-ditch effort to reverse years of heavy losses.

Hearst said the cuts and possible shuttering are due to the "sea change newspapers everywhere are undergoing and these dire economic times."

The company, which owns Northern California's largest daily newspaper with a paid weekday circulation of 339,430, didn't specify a savings target in their grim announcement. But the New York-based Hearst said the cost cutting would require "significant" layoffs "within weeks."

"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."

Hearst said it would 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 effort here is to try and bring our balance sheet in order here," said Chronicle Editor Ward Bushee. "We're very hopeful we can make this happen. The Chronicle, I believe, is a very important institution, if one of the most important institutions in San Francisco and the Bay Area. It needs to be preserved. I think we're going to have a plan to make that happen and like any other business that's suffering you have to take steps to rectify things."

After years of struggles, the San Francisco newspaper's troubles have worsened amid the longest recession since the early 1980s.

The Chronicle has given Hearst financial headaches since they bought the newspaper in a complex deal valued at $660 million. The late 2000 acquisition proved to be ill-timed. Shortly after Hearst took control, the Chronicle was hard hit by a high-tech bust that caused its advertising revenue to shrivel.

The newspaper's losses have been piling up ever since, despite previous job cuts and other austerity measures that were designed to stanch the bleeding. Now the 14-month-old recession, coupled with more advertising options on the Internet, has apparently pushed the 144-year-old newspaper to the breaking point.

Hearst said the Chronicle lost $50 million last year and is hemorrhaging even more money so far this year as advertisers clamp down on their marketing budgets and increasingly divert more money to the Internet.

"It's a serious business issue. I don't doubt that there are losses," said Carl Hall, a representative for the Media Workers Guild, "and I don't doubt that the company wants to operate in the black. We're going to listen with them and respond in good faith. We've done this before and usually we reach agreements."

Given the challenges facing the Chronicle, the grim warning hardly came as a surprise, said Kevin Fagan, who has been a reporter at the newspaper for 16 years.

"The mood here is more upbeat than you would expect," Fagan said. "There has been a lot of gallows humor but reporters are still doing what they do, write stories." He said the newsroom of about 275 employees is still clinging to hope that the paper will survive because there still appear to be ways to lower the sprawling operation's overhead.

Several other struggling newspapers around the country are facing a fate similar to the Chronicle's. They are on the sales block, have filed for bankruptcy or are facing a possible shutdown.

Just last month, Hearst laid out plans to close the Seattle Post-Intelligencer if a buyer isn't found before April. A similar fate awaits The E.W. Scripps Co.'s Rocky Mountain News in Denver and Gannett Co.'s Tucson Citizen in Arizona unless buyers are found for those papers.

But there would still be at least one large daily newspaper left in those other big cities where publishers are mulling a shutdown.

The only other daily newspaper in San Francisco is the Examiner, which is given away for free. Hearst owned the Examiner, but sold it for just $100 and even provided the new owners with a $67 million subsidy as a condition for completing the Chronicle acquisition. The Examiner changed hands in 2004, and is now owned by the Anschutz Co.

Meantime, Chronicle officials said despite Tuesday's announcement, their plans remained on track for now for a June 29 transition to new printing presses owned and operated by Canadian-based Transcontinental Inc., which would give the Chronicle industry-leading color reproduction.

(© 2009 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)