Small-Business Commission Says No to Chron-Ex Merger
By Jason Ma

Joining the bandwagon to freeze the merger of the San Francisco Chronicle and Examiner, the city’s Small Business Advisory Commission last weekvoted 7 to 1 to approve a resolution encouraging the city attorney’s office to investigate whether Hearst Corp.’s planned acquisition of the morning paper would violate anti-trust laws.

The Dec. 8 decision came two days after the Board of Supervisors passed a non-binding resolution urging the city attorney, the attorney general and the state attorney general to sue Hearst and block it from buying the Chronicle. Many fear if such a sale were to go through, the merging of the Chron with Hearst’s Examiner would be imminent.

The only dissenter on the 11-person commission was Colleen Meharry, who said she could not approve the measure without more information. Commissioners Maher Fakhouri, Kishore Kripalani and Dick Mak did not attend.

Before a relatively empty City Hall chamber attended by four people (not including three reporters), advocates for small businesses decried the loss of one of the city’s two major papers as setting the scene for a potential monopoly on advertising space.

“We’re particularly concerned about advertising costs,” said Chris Dittenhafer of the Council of District Merchants, adding that other Hearst-owned papers in Houston and San Antonio, Texas, had doubled ad rates within a year of their competitor’s folding. “That affects all of us not only as individuals but as business owners as well.”

In addition, Dittenhafer said a Chron-Ex merger would push out smaller, community-oriented papers, depriving businesses of information about the markets they serve.

Meharry remained unconvinced by Dittenhafer’s argument, saying that other major dailies in San Francisco have folded in the past without resulting in a single monolithic paper. “The fact is, we have 17 papers in the Bay Area,” she said. “And I wonder how much of this is political.”

AsianWeek President James Fang stepped up and said the two papers’ joint operating agreement, which has for 34 years allowed them to share printing and advertising services while keeping separate editorial deprtments, has given Hearst an unfair advantage in buying the morning paper.

“They were able to purchase the Chronicle before it went on the market,” Fang said, adding that the $660 million price tag for the paper was favorable to Hearst. “It’s quite obvious that what this is, is a money grab. What burns me here is that they get the benefit of the JOA to do it.”

Fang also called the proposed sale of the Examiner a “sham,” saying that Hearst purposely made the paper undesirable by offering only its name and subscriber lists but not its printing presses and delivery trucks.

Meharry -- herself a restaurant owner -- responded, “If McDonald’s were selling its name...I’d buy it in a second.” Moreover, she pointed out that Hearst had a “first refusal” option under the JOA, giving it the legal right to make an initial offer.

But the rest of the commission did not voice Meharry’s skepticism. Commissioner Michael Patterson, while admitting to “strong reservations” about any future participation in a lawsuit, said he would endorse the resolution to investigate the anti-trust issues. He added: “I wonder if two newspapers will be viable in this community. Both the Chronicle and the Examiner are an embarassment to the city.”

Both Commissioners Myrna Lim and Darlene Mar supported the resolution. A merger might harm the smaller, ethnic newspapers serving a specific community, they said.

“They’re really telling the stories behind the scenes,” said Mar.