San Francisco Chronicle Urges Judge to OK Newspaper Deal

SAN FRANCISCO — The San Francisco Examiner is a financial failure and its profit-sharing deal has harmed newspaper readers by holding back its larger partner, the Chronicle Publishing Co. said in legal filings Friday.

The owners of the Chronicle, whose $660-million purchase by the Hearst Corp. has been challenged in a federal antitrust trial, urged U.S. District Judge Vaughn Walker not to block the deal.

“Society, and the people of San Francisco, would be better off if the Examiner were closed, leaving the Chronicle in a stronger position to compete effectively with the other media that are encroaching on San Francisco,” the Chronicle said.

Other proposed “findings of fact” for the judge to consider were filed Friday by Hearst and Ted Fang, a local publisher who has agreed to accept a $66-million Hearst subsidy to run a smaller version of the Examiner.

Hearst hopes to end its 50-50 profit sharing alliance with the Chronicle, which has provided the Examiner with the lion’s share of the profits since their joint operating agreement was created in 1965.

Clint Reilly, a real estate developer and past mayoral candidate, has sued to block Hearst’s plans. He says Hearst is trying to boost its profits by creating an illegal monopoly, and that Hearst’s subsidy to Fang is so small that it will ensure the failure of the new Examiner.