Anschutz Buys San Francisco Examiner

In a surprising move, billionaire Philip Anschutz announced Thursday that he was buying the San Francisco Examiner, two other small Bay Area papers and a printing plant, adding publishing to a burgeoning portfolio of holdings that includes telecommunications, sports teams, real estate and movie theaters.

The value of the deal wasn’t disclosed, but the sellers, San Francisco’s Fang family, were asking $15 million for the properties, which include the rights to operate the annual Bay to Breakers footrace in San Francisco.

Anschutz’s newly formed San Francisco Newspaper Co. plans to revive the once-proud Examiner franchise, said Robert Starzel, the company’s chairman. Anschutz -- whose local holdings include the Los Angeles Kings hockey team and Staples Center arena -- won’t try to compete head-to-head with the dominant San Francisco Chronicle, Starzel said.

“It’s a big enough market with enough advertisers and readers that we can find plenty to do that the Chronicle may not be doing,” he said. “We’ll coexist with them” and concentrate on covering the city’s neighborhoods.

The sale baffled industry observers, who said it would be an uphill slog to make the three papers profitable. According to a newspaper management source familiar with the operation, the papers at best break even on revenue of about $12 million a year.

“As an economic investment, it doesn’t make any sense,” veteran industry analyst John Morton said. “You’d do better to go out and buy” a certificate of deposit.

Denver newspaper mogul William Dean Singleton was more blunt. “Phil is a friend so I hate to say this, but I wonder if he had a senile moment or something,” said Singleton, who owns 49 dailies including the Daily News in Los Angeles. “One of the rules of living in Colorado is that you never bet against Phil Anschutz, but this one just blows my mind.”

Starzel said the purchase was probably a one-time deal for Anschutz and did not signal a major move into the newspaper business. He wouldn’t say how much Anschutz planned to invest in reviving the historic “Monarch of the Dailies” that first published in 1865. Starzel said Anschutz, who could not be reached for comment, encouraged him to “be aggressive” in making financial plans.

Chronicle Editor Phil Bronstein said, “There are such things as vanity publications for people who can afford them.” To be taken seriously, though, Anschutz would “have to get some talent, and [the Fangs] pretty much laid everyone off. He would have to start from scratch,” Bronstein said.

The Examiner, a five-day-a-week tabloid with a circulation of about 75,000, will remain a free newspaper. The other two papers, the thrice-weekly San Francisco Independent and the twice-weekly San Mateo Independent, have a combined circulation of about 325,000, Starzel said. The three papers employ a total of about 220 employees.

Starzel, a corporate attorney, has worked with Anschutz for almost 30 years on various boards and in the railroad business, retiring in 2000. Starzel’s father, Frank, ran Associated Press from 1948 to 1962, he said, and his grandfather and uncle had papers in Iowa for 70 years.

An oil and gas billionaire by 1982, Anschutz moved into real estate and railroads, picking up the ailing Denver & Rio Grande Western Railroad and, in 1988, the Southern Pacific Railroad. Anschutz created SP Telecom as a data-transmission company, installing fiber optic cable along right-of-way property adjoining Southern Pacific’s 18,000 miles of tracks. He also laid pipeline for crude oil along tracks in Southern California. In 1995, he spun off SP Telecom, renaming it Qwest Communications International Inc. He took it public two years later, keeping 84% of the company.

In 1996, he sold Southern Pacific to Union-Pacific Corp. for $9.4 billion.

In 2000, Qwest acquired US West Inc., a Baby Bell providing local phone service to 14 Western states. Qwest’s stock soared during the telecom boom that began in the late 1990s, and Forbes magazine estimated Anschutz’s net worth at $18 billion in 2000.

But the bottom fell out of the telecom market, and Anschutz has since sold about $2 billion worth of Qwest stock, whittling his stake to about 16%.

Federal authorities and shareholders launched investigations into telecom industry accounting methods that seemed to boost revenue and mask expenses, making Qwest look more profitable than it was. The company ousted brash Joseph Nacchio as chief executive in mid-2002, and Anschutz later stepped down as chairman. A House panel failed to link Anschutz to accounting improprieties.

Anschutz’s wealth fell dramatically as Qwest’s stock plunged. In late 2003, Forbes pegged his net worth at $5 billion.

A well-known contrarian investor, Anschutz then snapped up ailing theater chains, buying Regal, United Artists Theatre Co. and Orange County-based Edwards Theatre Co. for bargain prices as those firms emerged from Bankruptcy Court protection. Anschutz took Regal Entertainment Group public in 2002. It’s now the world’s largest operator of movie theaters.

In addition to the Kings, Anschutz’ sports holdings include a minority stake in the L.A. Lakers basketball team and five professional soccer teams.

When the deal closes next week, Anschutz will become the fourth owner of the Examiner, which was made famous by publishing magnate William Randolph Hearst. According to legend, the paper’s founder lost the Examiner in a gambling debt to Hearst’s father, mining kingpin George Hearst, in 1880. Son William took over the paper in 1887.

The younger Hearst established the Examiner as one of the country’s most flamboyant newspapers, making it the flagship of the Hearst Corp. empire. Among the writers whose bylines appeared in the paper were Jack London and Mark Twain.

The paper prospered until the mid-1960s, when it began publishing in the afternoon as part of a profit-sharing agreement with the rival Chronicle.

The arrangement made money for Hearst, but set the stage for years of circulation troubles at the Examiner.

Hearst bought the Chronicle in 2000 and settled antitrust issues by selling the Examiner to the Fangs for $1 and kicking in a $66-million subsidy to run the newspaper for three years.

Times staff writer James S. Granelli contributed to this report.