[Note: Court records in a lawsuit filed by the Fangs against Anschutz after the sale said the actual price was $10.7 million]

By PAUL ELIAS
Associated Press Writer

SAN FRANCISCO (AP) — The new managers of the San Francisco Examiner promised a “seismic shift in Bay Area journalism” when they announced Thursday that billionaire investor Phil Anschutz had bought the troubled newspaper.

But in an era where two newspaper towns are rarities and the money-losing Examiner’s diminishing significance under the tenure of its current owners, the Fang Family, analysts doubted the newspaper could compete effectively in a city dominated by the San Francisco Chronicle.

Since taking over the historic Examiner, the Fangs have fired most of the newspaper’s staff and transformed into a free publication distributed at streetside news racks.

“It’s not surprising that the Fangs wanted to sell,” newspaper analyst John Morton said. “What is a surprise is that someone would want to buy it.”

Instead, Morton and other said the Examiner’s best chances are to continue in its attempts to carve out a small niche as a free newspaper.

“It’s definitely not going to be an easy business to manage,” said David Cole, who publishes the weekly industry newsletter NewsInc. “It is operating from a defensive position.”

Anschutz is paying $20 million for the Examiner and The Independent, a profitable neighborhood giveaway paper, as well as Grant Printing Co. where the papers are produced, according to a source close to the deal who spoke with The Associated Press on condition of anonymity.

Anschutz’s holding company owns interests in about 100 companies in a range of industries, including railroad, real estate and oil ventures. He also owns an interest in the Los Angeles Lakers, the Los Angeles Kings and several professional soccer teams.

He is the 33rd-richest person in the United States, according to Forbes.

Though he once considered buying the Denver Post and a few other newspapers, this is his first foray into publishing.

Robert Starzel, a corporate attorney and an Anschutz confidante, was named chairman of the new publishing group, the SF Newspaper Co. Scott McKibben, who had been chief executive of the Examiner’s parent company, will stay on as president and publisher of the Examiner and Independent.

“We are here to announce a seismic shift in Bay Area journalism,” Starzel said at a news conference. “Phil Anschutz is a long-term investor who wants to strengthen and build the Examiner and the Independent newspapers.”

Starzel is a San Francisco resident and the son of Frank Starzel, a former general manager of The Associated Press who retired in 1962 after 33 years of AP service. Frank Starzel died in 1994.

The notoriously publicity-shy Anschutz didn’t attend the news conference.

Some 220 workers, 75 of them Examiner employees, will be affected by the sale, but the new owners said they haven’t determined if any layoffs will come with the ownership change. They promised to beef up the paper’s coverage, but provided few details Thursday.

“It’s a bit premature to be judging and determining are we going to be adding reporters and all those kind of things,” McKibben said. “We are just going to take it a day at a time.”

McKibben also said the new managers haven’t decided if they’ll keep distributing the Examiner for free or start charging again for subscriptions.

“It’s way too early to determine whether we are going to change our business model on circulation,” McKibben said.

The Denver billionaire will become just the fourth owner of a paper made famous by William Randolph Hearst, who took control in 1887.

Hearst established the Examiner as one of the country’s most flamboyant papers in the country. The paper employed some of American literature’s best-known names, including Ambrose Bierce, Jack London and Mark Twain. In more recent years, Hunter Thompson worked for the Examiner.

The paper thrived for years until switching to afternoons as part of a profit-sharing agreement with the rival San Francisco Chronicle in 1965.

The profit-sharing arrangement made money for Hearst, but spelled the beginning of the end for the Examiner as a widely read paper.

The paper’s circulation dropped from 303,000 in 1965 to 96,000 when Hearst turned over the paper to the Fang family in November 2000. Florence Fang and her family took control of the paper from the Hearst Corp. in November 2000 in a deal that helped Hearst gain antitrust approval of its $660 million purchase of the much-larger Chronicle.

The deal provided the Fang family with a $66.7 million subsidy from New York-based Hearst.

Fang will retain a minority interest in the newspaper and will become a vice chairman and publisher emeritus of the new company.

She also defended her handling of the Examiner, saying she and her family ensured that San Francisco remained a competitive newspaper town.

“We have kept our promise to preserve two daily newspapers in San Francisco, to keep two voices in this town,” Fang said. “Four years ago, we saved the historic San Francisco Examiner from closing.”

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Associated Press writer Ron Harris contributed to this report.

SF Press Club News

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