San Francisco Chronicle may shut down

By Robert MacMillan and Janet Kornblum

NEW YORK/SAN FRANCISCO (Reuters) - San Francisco may lose its main newspaper, the San Francisco Chronicle, as owner Hearst Corp cuts a "significant" number of jobs and decides whether to shut or sell the money-losing daily.

The privately held New York-based publisher already is considering shutting a second West Coast paper, the Seattle Post-Intelligencer, in the face of a devastating decline in advertising revenue and big losses.

Founded shortly after Gold Rush fever hit California in the mid-19th century, the Chronicle has long been an essential part of daily life for many Bay Area residents, even as it sometimes disappointed or outraged them.

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

"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," said Hearst Corp Chief Executive Frank Bennack Jr.

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. " 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 and 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 September 30, 2008, compared with the same period a year earlier.

The Pulitzer Prize-winning Chronicle was founded in 1865, about a decade and a half after gold was found in California.

With the help of the local literary crowd, including Mark Twain and Bret Harte, the paper captured the largest circulation west of the Mississippi.

It covered the biggest events in the city's history, from the earthquake and fire of 1906 to the assassination of its mayor, George Moscone, and the state's first openly gay elected official, Harvey Milk, in 1978.

The paper has reflected many changes in U.S. culture first seen in its own often cutting-edge city, including the shift from beatnik -- a word it may have coined -- to hippie in the 1950s and '60s and the shock waves from the AIDS pandemic in the city's sizeable gay population.