February 26 2003

WITH FIVE MONTHS left before its subsidy from Hearst Corp. officially expires, the San Francisco Examiner is already acting like a paper on its deathbed.

On Feb. 21 the Ex laid off at least 40 employees, canceled home delivery, and relaunched as a free weekday tabloid produced by a tiny news staff of eight.

The changes allow the Fang family, which took over the paper in November 2000, to meet the minimum legal requirements to continue receiving payments from Hearst. But it's more obvious than ever that the Fangs are not going to build a paper that can truly compete with the San Francisco Chronicle.

It's less obvious why the Examiner has been such a financial failure. Some claim it's virtually impossible to start a new daily paper in a town with a well-established competitor. In fact, in a lawsuit filed to block the transfer of the Ex to the Fangs in 2000, real-estate investor Clint Reilly charged that the deal was nothing more than a fraud designed to eventually give Hearst a daily monopoly (see "The Truth Hurts," 5/10/00).

But many others – including sources with ties to the paper – say financial mismanagement by the Fang family hastened the deterioration of the Examiner.

The 'Examadent'

Even with rumors of the Examiner's imminent demise swirling, last week's layoffs were a shock.

Newsroom staffers were summoned to a meeting Feb. 21 at 2:30 p.m. by vice president James Fang. "He gave a one-and-a-half-minute speech and then took off," said Tom Roderick, a former staff writer. "Then [executive editor] Zoran [Basich] tried to explain it a little better, saying 'I don't know if James was clear: you've all been laid off.' " Roderick joined a dozen other fired employees at Anú, a bar around the corner from the Examiner's Market Street office, to drink, commiserate, and exchange phone numbers. "We knew it was coming," one said. "Just not this soon."

Most offered dire predictions for the future of the paper. "Look, they run wire [service stories] all the time anyway," one staffer told us. "They don't care how it comes together or what it looks like."

Roderick suggested that the new paper be called "The Examadent," since it's likely to share even more content with the Fangs' Independent. In fact, many former staffers think the Fangs are refocusing their efforts on that paper. They'll continue publishing the Ex only as long as they can get reimbursed for it, staffers predict.

Still, the new plan for the Ex satisfies the family's contract with Hearst, which agreed to give the Fangs a three-year subsidy to satisfy the U.S. Justice Department and grease the way for its own takeover of the Chronicle.

The 2000 Hearst-Fang agreement, recently obtained by the Bay Guardian, simply requires that the Fangs "publish a daily newspaper at least five days a week in the City of San Francisco area." Hearst agreed to reimburse the Fangs up to $66.7 million for costs "directly related to the publication of the Examiner or the operation of related websites."

When the deal first became public, both companies claimed it would maintain newspaper competition in San Francisco.

When Reilly brought his suit, they repeated their claims under oath – but the highly politicized context of the deal was also revealed. Many local officials, led by Fang ally Mayor Willie Brown, had lobbied the Justice Department to force Hearst to find a buyer for the Ex. And the well- connected Fangs had promised Hearst they would milk their ties to help get the Chron deal approved. Judge Vaughn Walker described the arrangement as "malodorous," but let it go through anyway.

It's hard to imagine anyone would argue that the current slimmed-down Ex, produced by staff of eight, could compete with the Chronicle, which has a 489-worker newsroom.

Phone calls to Examiner publisher Florence Fang and her son James were not returned. But at a press conference held on Fisherman's Wharf at the same time the layoffs were announced at its Market Street headquarters, the company distributed a statement. "Examiner management is more determined than ever to survive and stand as a profitable, self-supporting business," it says.

Constant problems

Problems at the Ex have been almost constant since the paper's much-maligned debut in November 2000. Almost the entire news staff turned over within the first three months. At least half a dozen top editors and administrators have been forced out, including Ted Fang, who had been the publisher.

And for more than a year the Fangs have engaged in contentious contract negotiations with the Graphic Communications International Union Local 4N, which represents the prepress workers who design and lay out ads for the Examiner and Independent.

Just three days before the layoffs, the Fangs signed a one-year contract with 14 prepress workers. But the day after the contract was signed, the 10 full-time employees who supported the union drive had their hours cut to 30 hours a week, the minimum guaranteed in the contract, according to union president Eddie Rosario.

Although the contract protected the prepress workers from last week's layoffs, the 30-hour guarantee only applies until July, when the Hearst subsidy is set to expire.