The Secret Newspaper Wedding (Sep. 1, 1999)

For three years, the details were kept secret. Just what were the terms of the agreement that compelled the Hearst Corporation's Examiner and the family-owned Chronicle to abandon their fierce competition in San Francisco in 1965?

Why were they so eager to kill off Hearst's afternoon News Call-Bulletin and shift the morning Examiner into its slot, leaving the Chronicle as the city's sole morning newspaper?

Why did they so willingly combine the Examiner and Chronicle's non-editorial operations, even though the Chronicle was making tons more money than the Examiner?

Those questions were particularly important to us at the headquarters of the newspaper unions that struck the two papers in 1968 for a greater share of the highly escalated profits that resulted from the merger agreement of 1965.

The information could be used as an effective weapon in our propaganda war against what we constantly attacked as San Francisco's monopoly press.

An anonymous tipster had told the two of us who ran the strikers' publicity department, the Chronicle's late Charlie Raudebaugh and me, then the Chronicle's labor editor, that the merger had been consummated in Nevada's capital, Carson City. It was in the Secretary of State's office there, we were told, that the secret details could be found.

Carson City? It seemed unlikely, but what the hell, we called on the Chronicle's Carson City correspondent to check out the state files there -- and by God, it was true.

As we wrote in the newspaper unions' Strike Bulletin, and I later wrote anonymously in the San Francisco Bay Guardian, the newspapers had sent six of their lawyers to the Nevada capital to file the incorporation papers that made them one.

The Strike Bulletin described it this way: “Charles deYoung Theriot, publisher of the Chronicle, and Randolph A. Hearst, chairman of the executive committee of the Hearst Corporation, eloped to Nevada on Sept. 1, 1965.”

They didn't elope personally, of course. Their lawyers handled the details like getting the license -- and they were married under assumed names.

The lawyers did not say they were acting on behalf of the newspapers, but were instead filing incorporation papers at the request of something called the “CT Corporation” at 333 Pine St. in San Francisco. Their new corporation would be known as “Central States Enterprises,” with its principal offices at One East First St. in Reno — the address of the First National Bank of Nevada. The corporation's directors would be the six lawyers and its purpose was “primarily and essentially to engage in the business of printing.”

Thus the marriage of the Chronicle and Examiner, they would have us believe, began with plans to set up a print shop operated by a half-dozen San Francisco attorneys at a bank in Reno.

But on Sept. 10, the eight-day-old Central States Enterprises suddenly became the San Francisco Newspaper Printing Company. Three days later, the papers' marriage was announced, with the lawyers who had posed as the joint corporation's directors replaced by Theriot, Randolph Hearst and other Chronicle and Examiner owners and directors.

The announcement, however, did not disclose terms of the merger agreement.

Those terms, as we discovered three years later, included the curious — and now abrogated — stipulation that “the corporation is to have perpetual existence.” Lest human sentiment ever interfere with profit chasing, another clause declared that “the corporation shall not have the power to make donations for charitable, scientific, educational, civic or trade purposes” — a holdover from the quirky will of Chronicle founder Mike deYoung.

The corporation was empowered, furthermore, “to carry on any business” from manufacturing to operating hotels -- and anywhere in the world.

But the crucial item among the long-secret terms guaranteed that the profits of the joint operation would be shared 50-50.

It was a startling discovery. The Chronicle, which had soared far ahead of the Examiner in circulation and income after many years of head-to-head struggle for dominance had quietly agreed to back off and share revenue equally with its long-time rival.

It turned out that the Chronicle had been eager and willing to give up its dominant position, its traditional independence and all that was meant by its longtime slogan, “the city's only home-owned newspaper,” in exchange for higher profits promised by a joint newspaper operation that would destroy the need for expensive competition.

For the Examiner, it was a grand opportunity to greatly increase its income without having to bother increasing its readership. As a matter of fact, its already steadily declining circulation declined even more steeply when the Examiner shifted to the afternoon, while its income nevertheless began climbing.

As the papers fully expected, the merger created an advertising monopoly that enabled them to more than double their ad rates — and to continue raising them in the years that followed.

It wasn't just the terms of the agreement that had been kept secret. The mere fact of the merger agreement had been kept secret for nearly a year while the papers awaited clearance from the Justice Department's anti-trust division.

But even after they got clearance, they had found it necessary to steal away secretly to Nevada.

So why the secrecy? Obviously, the publishers felt it would be easier to combat the complaints of their employees and readers if they could present them with an accomplished fact. More: they wanted time to plan carefully so that the enormous problems of physically merging three papers into two would move smoothly.

However, the New York Times broke the story that there had been a merger, the Oakland Tribune ran it and publishers of the Chronicle, Examiner and News Call-Bulletin were forced to run an Associated Press story on the merger that concluded with one of the more peculiar last lines in San Francisco journalism: “Neither publisher was available for comment.”

That's when the incorporation papers were hurriedly amended to change the name of Central State Enterprises to the San Francisco Newspaper Printing Company and the merger was finally and belatedly announced.

Even so, the papers managed, of course, to keep the details of their greedy deal secret for three years more.

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