Bad Blood Boils in Feud Between Fangs, Hearst

Since 1994, when the Fang family backed Proposition J passed with 55 percent of the vote, the costs for legal advertising for non-consecutive daily publications more than doubled, from $2.20 a line in 1991 to $4.78 in 2000. After the Fangs took over the SF Examiner, with a $66 million subsidy, the Independent dropped the price to $3.98 per line in 2001 and 2002.

The city pays to publish public notices concerning numerous topics, including the meetings of government agencies and commissions and invitations to bid to provide various types of city services.

The total cost of the legal advertising contract for publications with a minimum of three editions a week has climbed to $1.1 million, with the Independent being the only business trying to win the contract since 1997.

Proposition J created a formula for awarding the contract, giving preferential points based on the publication's cost, total circulation and whether or not the publication is minority or women owned. The formula essentially guarantees the Independent the contract.

According to a June 28, 2000 report in the San Jose Mercury News, the Fang family recorded a $40,000 donation to the Prop. J campaign after the election. They also donated $6,200 in a non-monetary contribution for the distribution of literature.

Since acquiring the Examiner, the Fangs have been trying to acquire most of the city's legal advertising business for daily and non-daily publications, worth about $1.5 million a year.

The SF Board of Supervisors was concerned about the costs of the city's legal ads and the inability for most city residents to get them when they reviewed the legal advertising contract earlier this year.

The Independent stopped publishing a stand-alone issue of its Saturday issue in February 2001, just months after the Fang family acquired the Examiner from the Hearst Corporation. By inserting the Independent in the Examiner, the newspaper had a limited distribution ­ only subscribers and people who purchased copies of the Examiner or got a limited copy in an Independent newsrack, had access to the city's legal ads.

The city's legal ads were printed in the Saturday Independent with a circulation of 165,000. When it was inserted into the Examiner, circulation dropped dramatically ­ to about 30,000.

This past April the Independent resumed publishing a 150,000-copy Saturday edition separate from the Examiner.

The Examiner tried to get the city's business for daily publications but the city's purchasing department refused to recommend the newspaper because it is not printed in the city, in violation of the family's earlier Prop. J measure, and because the newspaper is in violation of the city's domestic partner ordinance.

The Examiner claims it is not in violation of city law because five percent of the newspaper, including the TV Examiner and X-Files and Wheels sections, is printed at the Fang family's Grant Printing Company on Evans Avenue. According to Wayne Wash, advertising projects manager at the Examiner, the entire paper is planned to be printed at Grant as of Dec. 2.

The contract for advertising in daily publications, worth about $30,000 a year, was granted to the Chronicle despite its higher cost per line for advertising.

Newspapers Advised to Send "Unknowledgeable" Representatives

One of the strategies for getting the public notices, according to a June 2, 2000 e-mail from Ted Fang to one of the Independent Newspaper Group's advertising directors, is to send a person who was not knowledgeable about the details of the newspapers' operations to the Board of Supervisors hearing concerning the notices.

"I would like to send someone who is not so knowledgeable that if they started grilling us on our deliveries, etc., the person can say I don't know the details," Fang said. "On the other hand, I would like to send someone who is knowledgeable enough to say that we are a solid operation and will correct/look into any shortcomings that we may have."

When the Board of Supervisors held hearings earlier this year concerning public notices, political editor Frank Gallagher represented the Examiner and no one showed up to represent the Independent.

Supes Want Voters to Decide Issue

Because of the concerns over the cost and distribution of the city's legal notices, four members of the SF Board of Supervisors put Proposition K on the Nov. 5 ballot. The measure would change the formula created by the Fangs when they sponsored the 1994 proposition. Prop. K would not preclude the Independent from winning the contract, but it would have to bid "fair and square" for the business, according to the proposition's author, SF Supervisor Jake McGoldrick.

James Fang and Warren Hinckle had lunch with McGoldrick and Jennifer Clary in August. According to McGoldrick, Hinckle said he would stop bashing the supervisor in his columns if he would withdraw his support for Prop. K.

As well, Fang said his family's newspapers could do a better job "fact checking" if McGoldrick stopped supporting the proposition.

McGoldrick refused to drop his support for Proposition K. He says a battery of Fang family columnists, including Hinckle, Frank Gallagher and Samson Wong, have used a "gutter approach" to bash him since.

"I'm not afraid of them," McGoldrick said. "It's time we put competition back into our bid process for official advertising."

Two people who were instrumental in helping the Fang family get the legal advertising contract in 1994 have reversed their earlier positions and gone to work for the passage of this November's Proposition K.

Doug Comstock, past president of the Coalition for San Francisco Neighborhoods, an umbrella group comprised of neighborhood organizations, was the treasurer for the Prop. J campaign.

"I admit I made a mistake," he said. "It became apparent that their agenda was not to be the best newspaper, but to make the most money.

"Now I'm doing penance for the taxpayers of San Francisco," he said of his efforts to pass Prop. K.

Barbara Meskunas, the current president of the Coalition for San Francisco Neighborhoods, was the leader of the Independent Boosters, a now-defunct group that was formed to support the newspaper. She no longer believes Prop. J was in the public's best interest.