Oh, sad newspaper industry. Does anyone believe in you anymore?

Private equity billionaire Warren Hellman was to be the savior of the San Francisco Chronicle, Hearst's cash-bleeding newspaper, which has laid off scores of journalists as recently as last week. But talks with the newspaper and the union weren't as interesting to Hellman, ultimately, as a sexy new idea: Become a sort of Arianna Huffington of the San Francisco-area news market.

So Hellman is now setting up an online (primarily) news operation for the region, according to reports in the San Francisco Business Times and New York Times. Like Huffington's Huffington Post, the venture's staff will include a hefty dose of amateur reporters, including students rom the University of California, Berkeley's graduate journalism school and possibly, according to some of the initial discussions we heard about, local volunteers. Unlike HuffPo, however, it would be a nonprofit, and will work with the local public radio station KQED.

It's a smart move: Even as they greedily snap up iPhones and Macbooks, the Bay Area's tech savvy readers have been abandoning the print edition of the Chronicle, whose circulation fell more than 20 percent over five years to 370,000. The paper lost around $4 million per month last year. Hellman's gambit is also commendable. By pumping $5 million of his foundation's cash into the venture, Hellman seeds a money stream that should help at least some laid off local journalists

But, in an interview with the New York Times, Hellman was cruelly blunt about the loser in all of this: papers like the Chronicle. Asked about whether he was ushering them to an early grave, Hellman said:

I think that demise might be inevitable, anyway. This might put journalism, broadly defined, on a much more stable foundation.

Wow. Perhaps the Times should ask its own executives that same question: The paper confirmed in its own news columns it has been in lengthy talks with Hellman's group "about the possibility of supplying [the group's] reporting to a San Francisco edition that the [Times] plans to start."

Newspapers: Even other newspapers relish feasting on their corpses. Strictly in the interest of the "civic good," of couse.

(Pic: Hellman, by AP.)

When the Chronicle's website this morning yanked a column lambasting the mayor, charges of political cowardice quickly followed. The paper was scared, but not of the mayor: Frightened for its business, the paper is now charging for some Web content.

Vlae Kershner, News Director for the site, writes that the column in question, by former Chronicle editor Phil Bronstein (pictured), was never supposed to be online in the first place. "It's subscriber-only content that was posted by mistake," he told us.

Following months of discussions about doing this sort of thing, the paper has decided to inaugurate its first premium section, containing Bronstein's column (see the email Chronicle editor Ward Bushee sent us, below). It's a small experiment, but an extraordinary step: SFGate has historically been perhaps the most open newspaper website in the country; unlike other big-city papers, it never even tried to charge for access to its extensive archives.

It's odd that the Chronicle would choose opinion content for its first premium content experiment, given the experience of the The New York Times. The Times abandoned its effort to charge for opinion content, TimesSelect, after discovering that a paywall diminished the paper's voice and reduced its advertising revenue. Plus the market for political and cultural opinion is oversaturated; Bronstein's opinion pieces will likewise be a tough sell. The market pays no attention to newsroom hierarchies that put columnists and former editors up on pedestals.

More salable would be the Chronicle's least glamorous work, local news reporting, and any other beat it truly owns, like restaurant reviews. In politics and food alike, though, the paper faces competition from a growing corps of bloggers who could permanently steal way readers. For its own stake, the Chronicle should make sure it will be able to abandon any future experiments more readily than it launched the current one.

Chronicle editor Bushee's email:

Here's the deal. Phil's column was created from the start to be a print-only column in the Monday Chronicle. When we first started talking about the column, Phil and I agreed to try this as a low-stakes experiment. The experiment is not indicative of any larger plan by the Chronicle, SFGate or Hearst. It is not the start of a premium content imitative or a pay wall. But it was designed to test how different content models can serve different audiences. Each week Phil reaches a significant online audience with his blog, which is not available in print. By introducing a column by Phil that is different in its content and mission from his blog, we can see if it adds value to the printed paper by giving readers unique content that they could not get free online. As with any experiment, it will be evaluated at some point to see if we stick with it or change it.



Unfortunately, the brief appearance of the column on SFGate this week made some people think we were pulling it off because of the content. As you surmised in your note, that was not the case. The column was posted for a short time on SFGate through a misunderstanding and then pulled down when it was discovered.

(Pic" Bronstein, via the Chronicle)

This "ink on paper" solution basically makes the newspaper at least as exciting as the internet, according to the San Francisco Chronicle, which is responsible for the cutting-edge technology:

The newspaper's top editors say they are committed to producing a paper
that can compete effectively against the imagery of the Internet,
glossy magazines and television - or anything else that impinges on a
potential reader's valuable time.

The new edition of the Chronicle debuted today, using the crisp new front page to promote a weeklong series on... fog. Publishers in other towns take note: If this doesn't get newspaper-hating youngsters to read, you may have to start investing your money in some kind of magical, science fiction newspaper with video, instant commentary and constantly-changing headlines. Good luck with that.

The editorial workers would invest some of their own money, a Guild representative told the Appeal. But they could hardly acquire the Chronicle on their own, even assuming a heavy markdown from Hearst's 2000 price of $660 million.

Possible buyers fall into a few broad categories:

Old San Francisco money: There's been chatter among Chronicle journalists for years about the possibility of a local investor like private-equity billionaire Warren Hellman or Gap founder Don Fisher buying the paper. It's hard to imagine either of those red-blooded capitalists giving up on the idea of a profitable local newspaper, but then one never puts money into a cash-hemorrhaging hometown paper for purely rational reasons.

New dot-com money: If it's hard to imagine local elders funding a (purposely!) non-profit Chronicle, it's even harder to picture Silicon Valley's many Google million- and billion-aires doing likewise. Newspaper philanthropy would hardly be a hot topic of conversation among young founders on the Web 2.0 cocktail circuit.

Craig Newmark: The San Francisco-based Craigslist founder likes to think of himself as being in a different, entirely more altruistic class of startup founder. In the case of newspapers, he does stand apart, and not just because of his instrumental role in ushering along the decline of print journalism: Newmark has a peculiar (for the tech world) obsession with journalism and politics, leading to investments in content aggregator Daylife and citizen journalism initiative NewAssignment.net and advisory roles at the Center for Citizen Media and Sunlight Foundation.

But even assuming he wanted to buy the Chronicle, it would seem a stretch for Newmark to do so on his own. Craigslist throws off maybe $100 million or $130 million in annual profits, which Newmark must split with other shareholders. The Chronicle is losing $50 million a year just operating, to say nothing of the purchase price.

With enough cash from employees, a fire-sale price from Hearst and maybe one or two more rich investors, it's possible to imagine Newmark picking up the paper, should some sort of expensive guilt complex compel him to do so.

The Chronicle would then be the largest nonprofit paper in the country, ahead of the Poynter Institute's St. Petersburg Times.

More likely, though, would-be newspaper philanthropists will come to the same conclusion as would-be newspaper investors: It makes little sense to invest in fixing the old problems of a dying industry when you can net much more glory or profit starting from scratch.

Northern California's dominant daily loses $50 million per year, give or take a few million, and owner Hearst is threatening to shut it down. So it should come as little surprise that management's demands pretty much mirror the tentative "agreement" reached late Monday.

Chronicle bosses sought in contract renegotiation the right to fire people without regard for seniority and to slash "vacation, sick time, and maternity/paternity leave" and to "outsource some jobs to nonunionized employees."

What did they get? The "ability to lay off employees without regard to seniority... reductions in vacation time, sick leave and maternity/paternity leave... and the right for the company to subcontract any work," according to the Guild.

The silver lining, for employees: two weeks of severance for every year of service.

Even assuming the deal is approved by union members, it only clears the way for more questions about the paper. How many layoffs? Will management be able to win similar concessions from its Teamsters local? Will it eventually demand still more concessions from a union that (we're told) at one point in recent negotiations offered to replace vacation with unpaid leave and cut paychecks?

Increasingly, though, the finer points of contract clauses and benefits are obscured by the bigger question of whether the most internet-addled bunch of readers in the country can support a large metro daily at all. Chronicle staffers won't be the only ones intensely curious about the answer.

The absence of a strong newspaper, a contender with the New York Times, Washington Post, or even Los Angeles Times, has long frustrated the intelligentsia of the Bay Area. Instead, we have a sorry ink-on-dead-trees product that even some employees call the San Francisco Comical.

The joke is that the Chronicle isn't really Hearst's paper. The chain bought it in 2000 after publishing the San Francisco Examiner, the one-time "Monarch of the Dailies," for more than a century, and overseeing its slow decline. (Time wrote about the Examiner's troubles almost a half-century ago.)

In the 2000 deal, Hearst merged the staffs of the Examiner and the Chronicle into a single Chronicle newsroom, all but guaranteeing losses. And indeed, in its overstaffed state, the paper has not made a profit since 2001, and lost $50 million in 2008. (The Examiner, meanwhile, has passed through various owners and is now a sporadically distributed free tabloid owned by railroad billionaire Philip Anschutz.)

So Hearst is stuck with a title to which it has no sentimental attachment, which shows no signs of making money, in a tough market (the region has 21 daily newspapers spread around 11 counties). The publisher has already threatened to shutter the Seattle Post-Intelligencer. The trend towards reading news online is better established in the technophiliac Bay Area than elsewhere. It no longer seems so unfathomable that the Chronicle might close. The shame is that not many people might mourn its passing.

Update: SFist has a memo from Chronicle publisher Frank Vega.

From: Margo Donohue
Sent: Tuesday, October 21, 2008 11:04 AM
To: Batey, Eve
Subject: Invitation for Discussion of 2008 Election

Hello Eve,

I was given your name through a mutual friend, Laura Compton. My name is Margo Donohue.

One of my pr clients is Examiner.com, a start-up localized website that is rolling into 60 local markets in the next 15 months. Examiner.com is an evolving online network that provides comprehensive localized content on a variety of subjects, both regionally and nationally. Local individuals ("Examiners") offer a wide range of utility information to their communities from an insider's perspective on subjects ranging from Arts & Entertainment to Travel to Politics to Sports to Food to Music — you name it, Examiner.com covers it.

The site is launching in 5 cities to start, and we are putting together a launch event in San Francisco on November 3. It will be held at an art gallery and will offer a panel discussion (featuring 3 top national political Examiners — left, right and center, moderated by local media talent) followed by a cocktail reception. The event will introduce Examiner.com/sanfrancisco to the community and it will also provide opportunity for those who want to become Examiners to meet the CEO, some current Examiners and find out more about the company.

I am including the link to the details for the party below. Feel free to pass this along to anyone you feel would like to come as well. This will be a large event and a major social and business networking opportunity.

Please let me know if you have any questions.

http://www.ttdusa.com/examinerdotcom/

Best,

Margo Donohue

From: Batey, Eve
Sent: Tuesday, October 21, 2008 2:18 PM
To: Margo Donohue
Subject: RE: Invitation for Discussion of 2008 Election

Hi, Margo-

How does this "start-up" relate to the San Francisco Examiner, the local newspaper?

Best,

—Eve

From: Margo Donohue
Sent: Tuesday, October 21, 2008 12:10 PM
To: Batey, Eve
Subject: RE: Invitation for Discussion of 2008 Election

Hello Eve,

We are two entirely separate entities.

Margo

From: Batey, Eve
Sent: Tuesday, October 21, 2008 3:54 PM
To: Margo Donohue
Subject: RE: Invitation for Discussion of 2008 Election

Thanks, Margo-

Just to clarify what you say when you say they they are "two entirely separate entities", Examiner.com has absolutely no relationship to, business or otherwise, with the San Francisco Examiner, is that correct?

As you can imagine, in this market there's a lot of potential for confusion (the SF Examiner is a very strong brand here), so any help you can provide me would be great.

Thanks for clarifying.

Best,

—Eve

From: Margo Donohue
Sent: Tuesday, October 21, 2008 1:20 PM
To: Batey, Eve
Subject: RE: Invitation for Discussion of 2008 Election

Hi Eve,

They are owned by the same parent company, but otherwise not affiliated. Examiner.com and Examiner.com/SF is an independent entity with completely original and independent content.

Let me know if I can send you any more information.

Cheers,

Margo

Due to staffing limitations, Top O' The Bay will be taking a week off, and will return next Monday, October 13. Thanks for reading!

Odd. Valleywag just lost three of our writers, and we're still managing to blog.

Mostly because each has already announced plans to develop dashboards of their own — in partnership with Yahoo — and they're confused about the new tool. "For us, we've already got something going with Yahoo, and I'm not sure this changes that strategy," one agency exec told the WSJ. "The news is more a continued statement along the line that digital media is really hard to buy. We need to make it easier."

Publisher and CEO Frank Vega, originally brought on by parent company Hearst for his union-busting expertise and lovingly nicknamed "Darth Vega." Under his watch, operating losses at the company have actually mounted even as he's reduced the workforce. And while the 15-year, $155 million deal for a new press operations center in Fremont will serve to potentially gut the activist press workers' union, it also makes the paper especially unattractive as an acquisition. Meanwhile, executives are rumored to be spending anywhere from $500,000 to $2 million a month on management consultants. Cut them out, and the Chronicle's deficit will instantly shrink.

Craig told my wife she was out of my league. I know that! This is the guy who destroyed newspapers? Master of the obvious. But he's come a long way himself from the days when he was his own best browser in the Craigslist "Missed Connections" section.

Four hurt in morning rampage [Examiner]

An online outlet for road rage [Chronicle]