The Chronicle Publishing Company, Inc. History

Address:

901 Mission Street
San Francisco, California 94103
U.S.A.

Telephone: (415) 777-1111
Fax: (415) 777-7131

Website: www.sfgate.com

Private Company
Incorporated: 1865
Employees: 2,500
Sales: $534 million (1995)
SICs: 2711 Newspapers; 2731 Book Publishing; 4833 Television Broadcasting Stations; 4822 Telegraph & Other Communications

Company History:

Publisher of The San Francisco Chronicle, The Chronicle Publishing Company, Inc. is a family-owned business with holdings in television broadcasting, book publishing, and newspaper publishing. In addition to The Chronicle, Chronicle Publishing owns the Massachusetts-based Worcester Telegram and Gazette and the Bloomington, Illinois, Pantagraph. The company's book division comprises San Francisco-based Chronicle Books and Osceola, Wisconsin-based Motorbooks International. The company's broadcasting holdings include two television stations in Kansas--KAKE-TV in Wichita and KLBY-TV in Colby&mdash well as KRON-TV in San Francisco, and WOWT-TV in Omaha, Nebraska.

19th-Century Origins

Exactly 130 years before a publicly-contested family feud erupted over the control of Chronicle Publishing, the two patriarchs of the family, Michael and Charles de Young, were spending their days in a print shop on San Francisco's Clay Street, embarking upon their entrepreneurial career in publishing. Their descendants would wage a bitter war against one another in 1995 for control over a half-billion-dollar enterprise that got its start in that Clay Street print shop, but in 1865, brothers Michael and Charles de Young had to focus on financial matters of a far lesser magnitude. They had to recoup their initial investment in the business, an outlay of $20. Michael and Charles de Young were teenagers when they resolved to enter the publishing business, but to do so the ambitious brothers needed start-up money. They borrowed a $20 gold piece from their landlord, used the money to buy an old desk, several fonts of used type, some newsprint, and then tucked themselves away in the corner of their landlord's Clay Street print shop. From there began a publishing business that would enrich generations of their descendants and evolve into the venerable media empire known as Chronicle Publishing.

The de Young brothers started with a free theater program sheet they called The Daily Dramatic Chronicle, which debuted on January 16, 1865. The four-page Daily Dramatic purported itself to be "a daily record of affairs--local, critical, and theatrical," but represented little more than a gossip sheet. The two teenagers handed out the Daily Dramatic at hotels, theaters, restaurants, and saloons, and by the end of their first week were able to pay their landlord back. By the end of their first month, the de Young's had increased the circulation of their fledgling effort to 2,000. It was an encouraging start, to be sure, but that successful first month would be soon forgotten when the de Youngs broke free from their role as upstarts and scored an even more remarkable coup. In April--three months after the inexperienced brothers had printed the first copy of the Daily Dramatic--Abraham Lincoln was assassinated, and the first newspaper to report the news to San Franciscans was the Daily Dramatic. Word of the president's death appeared in the de Youngs' first "extra" edition, hitting the streets several hours before the city's other daily journals reported on the national tragedy. The scoop represented a significant coup for the de Youngs and quickly legitimized their position as news reporters, marking the first pivotal step in their bid to become aggressive, competitive journalists.

Having made a name for themselves with their first great achievement, the de Youngs continued publishing the Daily Dramatic for another three years, building their readership base until they believed they had the necessary support to launch what they referred to as a "real newspaper." In 1868, their aspiration materialized with the first issue of The Daily Morning Chronicle, which debuted along with the de Youngs' emphatic proposal "to publish a bold, bright, fearless and truly independent newspaper, independent in all things, neutral in nothing." With this resolute mission statement guiding its course, The Chronicle thrived under the stewardship of the de Youngs. Promising talents in San Francisco's literary scene were brought into the fold, including Mark Twain and Bret Harte, who wrote short articles for The Chronicle in exchange for desk space. Before long, The Chronicle had eclipsed all its rivals in San Francisco and eventually secured the largest circulation west of the Mississippi River.

Although the newspaper's maturation occurred swiftly and strongly, the first few decades of The Chronicle's history were not without incident. Readers in San Francisco became keenly aware of the conviction behind the de Youngs' mission statement for The Chronicle, particularly the adjectives "bold" and "fearless." In 1879, The Chronicle published a headline comparing a mayoral candidate named Isaac Kalloch to an "unclean leper." Kalloch, who was a preacher, was not flattered by the comparison and used the pulpit at his church as a soapbox. During a sermon, Kalloch referred to the de Young family as "bastards of progeny of a whore born in the slums and nursed in the lap of prostitution," a description that brought Charles de Young to his feet. Charles countered Kalloch's disparaging remark with his own salvo, but his riposte elevated the feud to a decidedly higher level. Charles shot the preacher in the chest, took aim, and shot him again in the thigh. Kalloch survived the assault, but de Young was not as fortunate. In 1880, Kalloch's son assumed the mantle of revenge, got drunk, and shot Charles de Young in the neck, killing him instantly.

Michael de Young, who managed to avoid the flurry of bullets touched off by his newspaper's "bold" and "fearless" reporting, stood solely in charge of The Chronicle after his brother's demise and, thanks to his early start in the business, enjoyed a remarkably long reign of command. Michael de Young led the family business for 60 years, holding sway until his death in 1925. Shortly before his death, de Young selected his replacement and initiated what would turn out to be a legacy of de Young family control over The Chronicle and the businesses that would later be acquired from the profits gleaned from the newspaper. De Young was intent on keeping The Chronicle a family business, but he had no son to pass the reins of command to. His only son had died in 1913, leaving him with four daughters at the time of his death. Social customs of the 1920s did not look highly on according women powerful business positions, but de Young was able to keep The Chronicle within the family by naming his son-in-law, George Cameron, as his successor. In the decades to come, three branches of the de Young family would take turns controlling The Chronicle and its subsidiary businesses. Although none of the company's future leaders bore the de Young name, all were related either through blood or marriage to Michael de Young.

Great Depression and Postwar Period

Not long after Michael de Young's death, The Chronicle began to suffer financially, as advertising dropped off during the 1930s. It was the first meaningful setback in what would turn out to be a roller-coaster ride for The Chronicle during the 20th century, as the company's fortunes dipped and rose with the passing of every decade. The turnaround from declining advertising during the first half of the 1930s was begun in 1936 when Paul Smith took over as editor. Under Smith's watch, the newspaper was rejuvenated, thanks in large part to the increased attention paid to covering international news. Giving a priority to international news would be The Chronicle's saving grace following the conclusion of World War II, when the newspaper's readership began to wane during the late 1940s and early 1950s. Sunday editor Scott Newhall emerged as the hero during this postwar era after being promoted to editor-in-chief in 1952. Newhall recaptured the readers lost during the late 1940s by orchestrating a series of promotions and giveaways. Perhaps more importantly, Newhall increased the coverage allotted to foreign news, building on the work achieved under the leadership of Paul Smith. Newhall established a network of correspondents that stretched around the globe, increasing The Chronicle's stature among the leading metropolitan daily newspapers.

While Newhall busied himself at The Chronicle, a de Young descendent was managing a new facet of the family business. In 1949, The Chronicle had branched out into broadcasting by starting a television station in San Francisco known by its call letters, KRON. An affiliate of the National Broadcasting Company, Inc. (NBC), KRON-TV was headed by a grandson of Michael de Young named Charles de Young Thieriot. Thieriot's rise through the ranks of Chronicle Publishing brought him to the position of assistant publisher at the company by 1952, and it was he who selected Newhall as a replacement for Smith. Thieriot was named editor and publisher in 1955--titles he would hold for more than two decades--and oversaw several of the most definitive changes in the company's history.

Together, Newhall and Thieriot shaped The Chronicle into a popular favorite among San Francisco readers. Comics were added, gossip-oriented articles were emphasized, and, perhaps most importantly, columnists were added. By 1960, The Chronicle had fully recovered from its postwar problems and slipped past its archrival, The San Francisco Examiner, to hold the largest circulation in northern California. As the newspaper flourished, Thieriot continued to expand the reach of his family's business into other areas, furthering the diversification begun with the establishment of KRON. In 1962, Chronicle Features Syndicate was formed to market the work of The Chronicle's star columnists, and in 1968 a San Francisco-based book division was formed and named Chronicle Books.

The Chronicle celebrated its 100th anniversary in 1965, a century after the de Young brothers began printing their free theater and gossip sheet on Clay Street. The historic milestone was marked by a historic development that was forward-looking rather than retrospective: in 1965, The Chronicle joined forces with its long-time nemesis, the Hearst-controlled Examiner. The two newspapers entered into a joint operating agreement (JOA) by forming an agency to handle the operations of the two newspapers jointly, with the exception of the newspapers' editorial departments.

New management took control of Chronicle Publishing and its flagship property The Chronicle during the 1970s. Although the transition from one generation of the de Young family to another generation was a peaceful one, the individuals who entered the spotlight in the 1970s became the chief protagonists of the family spat that would capture headlines during the 1990s. Nan Tucker McEvoy, a granddaughter of Michael de Young, began serving as board chairman of the family owned company in 1974, three years before Thieriot's death paved the way for the succession of his son and Michael de Young's great-grandson, Richard Tobin Thieriot, as editor and publisher. Although McEvoy did not take an active role in running Chronicle Publishing until nearly two decades after being named board chairman, her influence would be strongly felt once she became more involved in running the family enterprise. As the leadership issue stood by the late 1970s, however, there were no outward signs of intra-familial dissent. This would change by the mid-1990s. During the interim, Chronicle Publishing diversified its interests.

In the 1980s, Chronicle Publishing began acquiring other newspapers. The Pantagraph, published in Bloomington, Illinois, was purchased, as were The Worcester Telegram and Gazette and Sunday Telegram, which served the second-largest market in New England. Eventually, Chronicle Publishing increased the scope of its newspaper division to include four daily newspapers, three Sunday newspapers, and four weekly publications. By the end of the 1980s, the company had also solidified its position in broadcasting, adding television stations WOWT-TV, an NBC affiliate in Omaha, Nebraska, and three stations in Kansas--KAKE-TV in Wichita, an independent station in Copeland, and KLBY-TV, a satellite station in Colby. In addition to these television stations, Chronicle Publishing also added half a dozen cable television companies. It was these additions to Chronicle Publishing's operations--particularly the broadcasting acquisitions--that were partly responsible for igniting the family feud between McEvoy and her cousins.

Turbulent 1990s

By the early 1990s, Nan McEvoy was the single largest shareholder in the family business and closely involved in running the company's affairs. Her presence alone was probably enough to irk other family members because McEvoy was decidedly more liberal than other de Young descendants who sat on the company's board. Her political leanings were expressed in The Chronicle's editorial page, which became far less conservative under her control. Philosophically, McEvoy and her cousins were at odds, creating fundamental differences that were exacerbated by the anemic profitability of the Chronicle Publishing empire. With the exception of the company's book division, each facet of Chronicle Publishing's operations was performing miserably during the early 1990s, and much of the blame was cast on Richard Thieriot, who reportedly rarely entered The Chronicle's newsroom and, according to insiders, read the newspaper just as infrequently. The charges of mismanagement were rife, prompting McEvoy to suggest what other family members regarded as unthinkable. McEvoy wanted to bring in outside professional help, an experienced executive from outside the de Young family, something that had never been done in the company's 127-year history.

Under McEvoy's direction, room was made among Chronicle Publishing's nepotistic upper management for the arrival of new blood. Among the notable de Young family members given the axe in 1992 were Richard Thieriot, who had served as editor and publisher since 1977, and Frances "Rannie" Martin III, who headed the company's television operations. Thieriot was replaced in 1993 with John Sias, a retired executive vice-president of Capital Cities/ABC who became the first non-family member to preside as chief executive officer in Chronicle Publishing's existence.

Sias immediately began cutting costs wherever he could and struggled to cure the ills brought about by years of mismanagement, but the ongoing feud within the de Young family took center stage. The excommunication of Thieriot and the arrival of an outsider had added fuel to the contentious struggle between McEvoy and roughly 20 of her cousins. The conflict intensified in 1994 when McEvoy rejected a $900 million offer by Tele-Communications Inc. (TCI) and Rupert Murdoch's News Corp. for KRON and several of Chronicle Publishing's cable systems. A faction of de Young family members wanted to sell some of Chronicle Publishing's assets, but McEvoy, holding sway as the largest shareholder, adamantly refused to do so. As one media analyst noted, "The dispute stems largely from a philosophical division on the board about raising cash versus holding onto assets like KRON and the newspaper. Nan (McEvoy) was a staunch defender of holding onto assets. Others were interested in selling."

The "others" often referred to in newspaper accounts were the de Young family members pitted against McEvoy, a group of cousins reportedly led by the disgruntled and usurped Thieriot and Frances Martin III. Thwarted by McEvoy's refusal to sell any of the company's assets, this warring faction took aim at McEvoy in 1995 by passing a corporate bylaw that barred anyone over the age of 73 from sitting on Chronicle Publishing's board of directors. McEvoy, 75 years old at the time, was ousted from the company's board, but she fought back by filing a lawsuit, which put the long-running family squabble into the public spotlight. McEvoy eventually dropped the lawsuit in exchange for a director emeritus title, but the resolution of the de Young family fight did nothing to resolve the problems Chronicle Publishing faced as it entered the late 1990s.

In 1996, Chronicle Publishing's cable systems in California, Hawaii, and New Mexico were sold to TCI for $580 million in stock. The divestiture of the company's cable systems, however, was not a panacea. As Chronicle Publishing entered the late 1990s, its future was unclear. Some pundits speculated that The Chronicle would be sold, while others pointed to a future merger with The Examiner. Whatever the fate of the company's flagship property, Chronicle Publishing was in need of wholesale changes as the 21st century neared. The responsibility for orchestrating such changes and perpetuating a more than 130-year family dynasty fell to John Sias, Chronicle Publishing's chairman and president.

Principal Divisions: Newspaper Division; Chronicle Book Division; Chronicle Broadcasting Company; Chronicle Features Syndicate; CityLine.

The Chronicle Publishing Company, Inc. History

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