HEARST MAY SELL OR CLOSE THE SAN FRANCISCO CHRONICLE

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BY ROBERT MacMILLAN and JANET KORNBLUM

Hearst Corp will lay off a “significant” number of jobs at the money-losing San Francisco Chronicle, and may shut the daily paper if it cannot cut costs within weeks.

It would be the second West Coast U.S. newspaper that the New York-based publisher may shut down in coming weeks as they struggle with a devastating decline in advertising revenue and big losses.

Privately held Hearst has said it might take the Seattle Post-Intelligencer online only or close the paper if it cannot find a buyer by mid-March.

The Chronicle lost more than $50 million last year and this year’s losses to date are worse, Hearst said in a statement on its website on Tuesday. It has lost “major” amounts of money since 2001, a year after Hearst bought the paper.

“Given the losses the Chronicle continues to sustain, the time to implement these changes cannot be long,” said Hearst Corp Chief Executive Frank Bennack Jr.

“Survival is the outcome we all want to achieve. But without the specific changes we are seeking across the entire Chronicle organization, we will have no choice but to quickly seek a buyer for the Chronicle or, should a buyer not be found, to shut the newspaper down,” he added.

More than 100 employees gathered in a conference room to hear the news from Editor Ward Bushee and Publisher Frank Vega after receiving a message about a mandatory staff meeting.

“Some people were crying at the meeting,” said Rachel Gordon, 47, a transportation reporter at the paper.

“But people are trying to get the newspaper out for tomorrow.”

“We knew it was going to be ominous when we got that message,” Gordon added.

“[Vega] said Hearst really wants to make this work, that shutting us down is a last resort.”

A Hearst spokesman declined to say whether the company has hired an adviser or banker to try to sell the paper.

The paper employs 275 news staff. It is unknown how many employees it has in total.

The paper is the 12th largest in the United States, according to the U.S. Audit Bureau of Circulations, with average weekday circulation of 339,430. It is the 19th-largest paper by Sunday circulation.

Circulation fell 7 percent as of the six months ended Sept. 30, 2008, compared with the same period a year earlier.

The Pulitzer Prize-winning Chronicle was founded in 1865 and has grown as the city of San Francisco has grown.

It also has earned a place in popular culture, most recently in the film “Zodiac” about the serial killer who sent puzzles and letters to the paper to taunt the police in the 1960s.

The Chronicle is the latest U.S. paper to face the threat of extinction if its owners cannot find ways to cut costs.

Advance Newspapers’s Star-Ledger in Newark, New Jersey, cut its newsroom staff by 40 percent last year.

Other papers, including EW Scripps Co’s (SSP.N: Quote, Profile, Research) Rocky Mountain News, could fold if a buyer is not found.

The Chronicle and its unions are expected to begin discussing the situation later Tuesday and on Wednesday.

Doug Cuthbertson, who represents the Northern California Media Workers Guild, declined to comment on the talks.

Hearst owns several other papers throughout the United States including the Times Union in Albany New York, and the Houston Chronicle. It also owns magazines such as Marie Claire and O, The Oprah Magazine.

See Related: WASHINGTON POST PROFITS FALL AS REVENUES RISE

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