The Politicians Are Beginning To Involve Themselves In Newspaper Economic Woes – Time To Celebrate Or To Cry “No Thanks”?

Philip M. Stone March 18, 2009

Nancy Pelosi represents California's 8th District, which includes San Francisco, and she also just happens to be the mighty powerful Speaker of the US House of Representatives, so when she writes to the Justice Department asking if there can’t be some tweaking of antitrust law that might permit Hearst to sell The Chronicle to MediaNews which controls just about every other daily newspaper in the San Francisco Bay Area, then the Justice Department just has to pay some attention.

Hearst has been vocally loud about possibly closing The Chronicle that it says loses around $1 million a week. It has gotten the newspaper’s largest union to agree to 150 job losses, give-backs on some benefits, even allowing the newspaper to lay off staff without regard to seniority (could one ever believe a union would give in on that?), but for all that the company still hasn’t said if it is enough to save the newspaper.

So was it any coincidence that just last week Hearst General Counsel Eve Burton paid a visit to Pelosi’s Washington office? Within days Pelosi is writing to the Attorney General asking that he look into expanding the boundaries of media antitrust to mean not just the number of newspapers in a geographic area, but taking into account all other media such as radio and TV, when deciding whether a sale might be anti-competitive.

Not only that, but Pelosi has arranged for the House Subcommittee on Courts and Competition Policy to hold a hearing soon on the survival of newspapers.

With MediaNews owning just about every daily newspaper in the Bay Area it could well be difficult under present antitrust definitions for Hearst to sell The Chronicle to Dean Singleton’s newspaper group, even though Hearst has a stake close to one-third in MediaNews and the two groups co-operate in the ownership of several California newspapers.

There’s a lot of hardball going on here. Hearst is leaving as an open threat that if it cannot cut its costs enough it may have to close the newspaper. Even though the largest union has caved in, the newspaper now is negotiating with The Teamsters and The Teamsters really don’t like giving anything back that has been hard-earned in previous negotiations.

The Teamsters, however, are caught between a rock and a hard place -- if they don’t cave in enough and the Pelosi plea to the Justice Department works, then a sale to MediaNews could very well happen and one has only to look at what Singleton has done at all levels to the likes of the San Jose Mercury and other Bay Area daily newspapers to know that is not the fate The Chronicle, or the people of San Francisco deserve.  And even if the Pelosi antitrust plea fails, Hearst can still shut down the newspaper if the give-backs aren’t seen as enough.

Pelosi wrote in her letter, “We must ensure that our policies enable our news organizations to survive and to engage in news gathering and analysis that the American people expect.” If she believes that the editorial product now being produced in the Bay Area by Singleton’s newspapers is what “the American people expect” then it seems very likely she has not been reading those newspapers lately.  All are sharing news information, very few if any competitive news beats – that’s not the great tradition of American journalism. If Hearst keeps The Chronicle, albeit with far less employees probably meaning a far lesser editorial product, it still can’t help but be better than what would be on offer otherwise.

Pelosi’s letter went out just a few hours before there was a standing-room only symposium across the bay at the University of California at Berkeley discussing what the Bay Area would be like without an independent Chronicle. Journalists not working for the newspaper all seemed to be of one voice that the Bay Area would be much worse off without Northern California’s largest newspaper in ownership independent of MediaNews.

Neil Henry, Dean of the university’s Graduate School of Journalism, outright disagreed with Pelosi’s letter. "I don't think it's an answer particularly in an age where anybody can be a publisher, anybody in the world can be a provider of content. I don't think it makes sense to look at consolidation, an orthodox of information, as the answer,” he said. A journalist said, “I think we're in for a real dangerous period where there's nobody watching the store."

An interesting sidelight to Pelosi’s letter is that joining the Hearst General Counsel in the meeting last week with The Speaker was none other than former Chronicle editor Phil Bronstein who is now executive vice president and editor-at-large of Hearst newspapers. He wrote a Huffington Post blog about his Washington trip, based mainly on running into so many people from San Francisco, but he never once mentioned the meeting with the most important San Francisco player in Washington – Nancy Pelosi.

 Perhaps what is most disturbing about the Pelosi letter  are the various blogs in response – it seems there are a lot of people out there who don’t care whether newspapers live or die, let alone whether this is the right thing to do. One example sums it up: “Can you imagine a Republican trying to save energy sector jobs in the oil patch by suggesting that maybe the government deregulate?  He or she would be pilloried for being in the pocket of Big Oil.  But apparently it’s ok for liberals to be in the pocket of Big Liberal Media.  Not to mention it being ok for liberals to suddenly be in favor of less government intervention in the market.

“There is no more potent weapon for the cause of liberalism than the liberal media.  Now that newspapers are struggling, liberals are going to protect their interests by bailing out the media.  This is just the tip of the iceberg. Personally, I say let ‘em fail.  Just like we should have let the banks and the auto companies fail.  Failure is an important part of a free market economy.  It clears out the old and busted to make room for the new and improved.”