San Francisco – The room echoed with the clink of glasses as Denver financier Philip Anschutz circulated among guests celebrating his entrance into the city’s rough-and-tumble newspaper game.
Amid the hors d’oeuvres and cocktails, guests discussed the future of his latest acquisition, the fabled San Francisco Examiner, recalled several people who were there.
Anschutz threw the party at the Fairmont Hotel on Nob Hill shortly after his surprise $20 million purchase of The Examiner and two smaller sister newspapers in February. Once the flagship of William Randolph Hearst’s newspaper empire, The Examiner has suffered a decades-long decline and spent the last few years on life support.
John Burks, chairman of the journalism department at San Francisco State University, was introduced to Anschutz at the party and offered some advice.
Burks, a one-time managing editor of Rolling Stone magazine, recalled telling the Colorado tycoon that without an increase in resources, the newspaper would continue its slide into obscurity. Anschutz listened and said he planned to improve the paper – but it wouldn’t happen overnight, according to Burks.
“He knows he has things to learn,” said Burks. “He isn’t pretending to be the rebirth of William Randolph Hearst.”
The bargain spotter Anschutz has a gift for spotting undervalued assets. To form Qwest Communications International in the mid-1990s, he used railroad rights of way that he owned to create a fiber-optic cable network. That project became Qwest, which later bought US West, the Baby Bell.
Beginning in 2000, he built the world’s largest movie chain, Regal Entertainment Group, by purchasing United Artists Theaters, Edwards Theaters and Regal Cinemas after each collapsed into bankruptcy.
Those holdings, as well as oil, real estate and sports assets, have contributed to a net worth of $5.2 billion, according to Forbes magazine. His high-profile deal making made it all the more surprising that he would purchase a struggling free daily newspaper that clings to life in the shadow of the San Francisco Chronicle.
The purchase has unleashed wide-ranging speculation about Anschutz’s intentions and thrown a wild card into this city’s freewheeling newspaper game. Some observers wonder if The Examiner is really a way for Anschutz to ingratiate himself with the community prior to negotiating a sports deal, such as purchasing the San Francisco 49ers football team or replacing aging Candlestick Park, now 3Com Park, where the team plays.
Community ties would be important for anyone hoping to cut a stadium deal, said Philip Bronstein, editor of the San Francisco Chronicle.
Others speculate that Anschutz wants to build a media empire of newspapers and broadcast outlets.
Still others in San Francisco wonder if he plans to use his media clout to push a conservative agenda in a trend-setting city where diversity is a given, politicians are liberal and gays have serious clout.
Anschutz’s Denver-based Foundation for a Better Life has funded a billboard and media campaign promoting traditional values. His Los Angeles-based Walden Media and Bristol Bay Productions produce family-oriented films such as the upcoming “Around the World in 80 Days.”
Anschutz declined to be interviewed. But spokesman Jim Monaghan denied that his boss has a hidden agenda in The Examiner purchase.
“Anschutz has purchased one of the more storied newspapers in the country, and his desire is to re-establish the newspaper as a well regarded voice of journalism excellence,” said Monaghan.
Once a major metropolitan daily with a circulation topping 300,000 in the mid-1960s, The Examiner became a shoestring operation in recent years.
“I don’t know anyone who knows anyone who reads it,” said Burks.
The Fang family, which sold the paper to Anschutz, burned through a $66 million subsidy given to them by the Hearst Corp., which dumped the paper four years ago.
Even the most optimistic industry analysts say it would cost tens of millions of dollars for Anschutz to make The Examiner a viable competitor to the dominant Chronicle.
A peculiar business
The Examiner acquisition puts Anschutz foursquare in an industry that has claimed its share of casualties.
“You can be very smart and have lots of money and still fail. The newspaper business is peculiar,” said Ben Bagdikian, former dean of the Graduate School of Journalism at the University of California, Berkeley.
Scores of newspapers have vanished amid readership declines and competition for advertising revenue from television, cable, radio, the Internet and other media, said Patrick Quinn, president of PQ Media, a Stamford, Conn., media research firm.
Denver is one of the few cities to boast more than one daily. The Denver Post and the Rocky Mountain News have competing newsrooms, but their business operations are combined.
For the survivors, newspapers generate healthy profit margins, Quinn said.
Anschutz considered a newspaper acquisition at least once in the past. In the early 1980s, when the Bonfils family was selling The Denver Post, he considered acquiring the newspaper, according to Robert Starzel, a longtime Anschutz associate who now oversees his new San Francisco holdings.
“It became too expensive too fast and we looked away,” said Starzel.
Media conglomerate Times Mirror Co. bought The Denver Post for $95 million and later sold it to its current owner, William Dean Singleton.
Anschutz bided his time. Along with The Examiner, Anschutz’s $20 million bought two other papers: the twice-weekly San Mateo Independent and the thrice-weekly San Francisco Independent. He also bought the Bay to Breakers footrace, which annually draws more than 40,000 runners and is sponsored by The Examiner.
As part of the deal, he also got a printing company that spins out not only his newspapers, but a variety of other publications. The plant runs approximately 85 percent of the time, and Anschutz’s San Francisco Newspaper Company plans to add several more presses, said P. Scott McKibben, publisher of The Examiner and Independent.
Research done for Anschutz before The Examiner acquisition found that the three Bay Area newspapers could capture about 15 percent of San Francisco’s print advertising, McKibben said. McKibben declined to discuss current ad revenues.
A recent edition of The Examiner was noticeably missing the large retail ads that are the bread-and-butter of newspaper advertising. Advertisers who purchase space in The Examiner can get package rates to run the same ads in The Independent newspapers, increasing their exposure to a circulation of 441,835.
Precedent for a gambler
Anschutz isn’t the first to take a gamble on The Examiner. William Randolph Hearst’s father won it as payment for a gambling debt in 1880. For his son, the newspaper served as a launching pad to world renown.
William Randolph Hearst was a larger-than-life character credited with helping foment the Spanish-American War. He reportedly told his correspondents in Cuba: “You supply the pictures, I’ll supply the war.” Orson Wells based his classic movie, “Citizen Kane,” on Hearst’s life.
Once a San Francisco powerhouse, The Examiner operated as an afternoon newspaper years after demand for such papers had fallen.
In 2000, the Hearst Corp. bought the more successful Chronicle and sold The Examiner to the Fangs, a prominent and politically connected Chinese-American family.
The Examiner, which had a circulation of 96,000 before the Fangs took over, proceeded to collapse. The new owners slashed staff, circulation plunged and advertisers fled.
Anschutz plans nothing short of a resurrection. The circulation for The Examiner throughout 2003, before Anschutz took over was, was 57,518, according to Verified Audit Circulation. Between January and March of this year, daily circulation was 69,173, according to the circulation auditor. The Examiner’s circulation has grown since Anschutz’s team took over in February, said McKibben, and it now tops 88,000.
The staff for all three papers, including reporters, photographers, designers and editors, is around 50, he said. By the end of the year, editorial staff will increase by 25 percent, McKibben said.
That may not be enough to survive in San Francisco’s gritty newspaper market.
“If you buy a newspaper that is the only one in the market, you have basically bought a money machine,” said media analyst John Morton.
“If you buy a newspaper like the Examiner that is in a highly competitive market, that doesn’t always work out.”
One block from the Examiner’s Market Street office, pedestrians can choose from a cluster of 10 newspaper boxes. The Chronicle, The Oakland Tribune (owned by Singleton’s ap), Contra Costa Times, San Jose Mercury News and several free publications, including The San Francisco Bay Guardian and Examiner, are all available.
Critics of The Chronicle say the newspaper doesn’t pay enough attention to San Francisco and its neighborhoods, according to Tim Redmond, executive editor of the Bay Guardian, a free weekly.
“They’re not paying enough attention to the city. They are trying to fight the battle in the suburbs. Every week we have 10 great local stories here and we don’t sit around worrying that The Chronicle will get them,” Redmond said.
Many in the city’s business community want a strong second newspaper and are rooting for The Examiner, said Carol Piasente, a spokeswoman for the San Francisco Chamber of Commerce. The city and its tightknit neighborhoods are a niche that The Examiner hungers to serve, said Starzel. “There is a serious need for very good coverage of local news.”
Bronstein is quick to defend his newspaper, saying The Chronicle covers San Francisco extensively and well. Unless there is a serious change at The Examiner, it is unlikely to become viable, Bronstein said.
“(Anschutz) is obviously a very bright guy and a very successful businessman, and you should never dismiss him. But San Francisco is a tough town, and if you aren’t willing to be kicked in the head two or three times a day, you shouldn’t be here.”
Staff writer Tom McGhee can be reached at 303-820-1671 or tmcghee@denverpost.com
