Billionaire Wants To Forge Nation's Largest Nonprofit Newspaper

Wow, some nutty investor is actually buying into that harebrained scheme to turn the money-bleeding San Francisco Chronicle into a (purposely) nonprofit paper.

Local billionaire Warren Hellman (pictured), a private-equity kingpin, joined with other "prominent San Francisco business leaders" to propose leading such a conversion, according to a report in the San Francisco Business Times.

The Chronicle is something of a bellwether for the rest of the newspaper industry, if only because the transition to online news consumption is so far advanced in the tech-obsessed Bay Area. In the past five years, the paper's circulation has declined to 370,345 from more than 480,000. It lost more than $50 million last year, the latest in a series of deep annual losses over nearly a decade.

Owner Hearst Corp. is slashing expenses and considering closing or selling the paper.

Hellman and team want to prevent that, but only if Hearst keeps playing the role of sugar daddy. From the Business Times:

The proposal would be for a nonprofit corporation "to take over the Chronicle," with Hearst Corp. continuing to provide some philanthropic support, [San Francisco attorney and power broker Bill] Coblentz said. Details remain sketchy. It's unclear if the proposal is being seriously considered.

So, to recap: The Chronicle will keep losing money. Hearst will keep losing money. But Warren Hellman's nonprofit corporation gets to own and control the paper. This is the sort of dealmaking that made Hellman a billionaire. And given Hearst's track record, the company just might take the offer.

(More likely: Hearst finds a way to sell to notorious cheapskate Dean Singleton, who bought up most of the region's other failing newspapers. House Speaker Nancy Pelosi is already on the case, handling some pesky antitrust provisions.)

[Subscriber-only link: Business Times]

(Disclaimer: I used to work at the San Francisco Business Times.)