For the six months ending in March, the Chron’s daily circulation plunged 22.7%, from 312,118 to 241,330, the latest Audit Bureau of Circulations report shows.

On the other hand, the circulation of the San Jose Mercury News surged, putting it at No. 6 among Sunday newspapers and No. 8 on the list of big dailies, because on Jan. 1 it began counting the circulation of the Oakland Tribune and Contra Costa Times as its own. The new combined circulation of the Merc is 516,701 daily. The three papers are owned by MediaNews Group of Denver.

The company hopes the move will wake up national advertisers to its reach in the Bay Area.

“Quite frankly, San Francisco is the fifth-largest DMA in the country, and you would expect the newspaper in the fifth-largest DMA to be in the top 10 ranking of newspapers,” Mercury News Publisher Mac Tully told E&P.

The Chron said that the remaking of its business model by charging more for the newspaper was responsible for the drop, which was expected.

“Newspapers have traditionally relied almost exclusively on advertising, but the Chronicle has moved to a model in which circulation revenues produce a much larger share of the paper’s income — a move [Chronicle President Mark] Adkins said has put the newspaper on sounder footing,” the Chron reported today.

The Chron story quoted Adkins as saying “the worst of our newspaper circulation declines are now in the past.”

He said that in recent weeks, the Chronicle has seen an increase in new subscribers.