In a statement, Hearst said that if the savings cannot be accomplished "quickly," the company will seek a buyer, and if none comes forward, it will close The Chronicle. The Chronicle lost more than $50 million in 2008 and is on a pace to lose more than that this year, Hearst said.

Frank J. Vega, chairman and publisher of The Chronicle, said, "It's just a fact of life that we need to live within our means as a newspaper - and we have not for years."

Vega said plans remain on track for a June 29 transition to new presses owned and operated by Canada-based Transcontinental Inc., which will give The Chronicle industry-leading color reproduction.

If the reductions can be accomplished, Vega said, "We are optimistic that we can emerge from this tough cycle with a healthy and vibrant Chronicle."

The company did not specify the size of the staff reductions or the nature of the other cost-saving measures it has in mind. The company said it immediately will seek discussions with Northern California Media Workers Guild Local 39521 and International Brotherhood of Teamsters Local 853, which represent the majority of workers at The Chronicle.

"Because of the sea change newspapers everywhere are undergoing and these dire economic times, it is essential that our management and the local union leadership work together to implement the changes necessary to bring the cost of producing The Chronicle into line with available revenue," Frank A. Bennack Jr., Hearst vice chairman and chief executive, and Steven R. Swartz, president of Hearst Newspapers, said in a joint statement.

Hearst purchased The Chronicle in 2000, but soon afterward felt the impact of an economic downturn in the dot-com sector as well as the loss of classified advertising to Craigslist and other online sites. The problems have been exacerbated by the current recession.

In the news release, the privately held, New York company said The Chronicle has suffered "major losses" since 2001.

"Given the losses The Chronicle continues to sustain, the time to implement these changes cannot be long. These changes are designed to give The Chronicle the best possible chance to survive this economic downturn and continue to serve the people of the Bay Area with distinction, as it has since 1865," Bennack and Swartz said in their statement.

"Survival is the outcome we all want to achieve," they added. "But without specific changes we are seeking across the entire Chronicle organization, we will have no choice but to quickly seek a buyer for The Chronicle, and, should a buyer not be found, to shut down the newspaper."

Doug Cuthbertson, executive officer of the local newspaper guild, said, "We're extremely concerned for our members and we have a meeting planned for 10 a.m. (today) with management to hear what plans they have and offer any plans we may have to address what's obviously a serious problem."

Rome Aloise, secretary-treasurer at the Teamsters, added, "It remains to be seen what they think is needed. I'm a bit skeptical that any further cuts on the wage side and the staffing side will make up the difference that's needed when revenues are nonexistent. The problems are on the revenue side. The solution is not necessarily on the worker side. I'm hopeful they have some ideas, but I'm not optimistic."

In its statement, Hearst said that cost reductions are part of a broader effort to restore The Chronicle to financial health. At the beginning of the year, The Chronicle raised prices for home delivery and single copies.

Hearst owns 15 other newspapers, including the Houston Chronicle, the San Antonio News-Express and the Albany Times-Union in New York. Hearst announced Jan. 9 that if a buyer for the Seattle Post-Intelligencer is not found by March, it will close that paper, which has lost money since 2000. Vega said readers and advertisers will see no difference in The Chronicle during the discussions with the unions.

"Even with the reduction in workforce, our goal will be to retain our essential and well-read content," Vega said. "We will continue to produce the very best newspaper for our readers and preserve one of San Francisco's oldest and most important institutions."

The Chronicle, the Bay Area's largest and oldest newspaper, is read by more than 1.6 million people weekly. It also operates SFGate, among the nation's 10 largest news Web sites. SFGate depends on the Chronicle's print news staff for much its content.

The Bay Area is home to 21 daily newspapers covering an 11-county area.

The Chronicle's news staff of about 275, even after a series of reductions in recent years, is the largest of any newspaper in the Bay Area.

"While the reductions are an unfortunate sign of the times, the news staff has always been resilient in San Francisco," said Ward Bushee, editor and executive vice president. "We remain fully dedicated toward serving our readers with an outstanding newspaper. We are playing to win."

The area's other leading newspapers - the Bay Area Media News Group that includes the San Jose Mercury News, the Contra Costa Times and the Oakland Tribune - also have seen revenues decline sharply and have cut staff.

These problems are a reflection of those faced by newspapers across America as they experience fundamental changes in their business model brought on by rapid growth in readership on free Internet sites, a decline in paid circulation, the erosion of advertising and rising costs.

Advertising traditionally has offset the cost of producing and delivering a newspaper, which allowed publishers to charge readers substantially less than the actual cost of doing business. The loss of advertising has undermined that pricing model.

In the case of The Chronicle, Vega said the expense of producing and delivering the newspaper to a seven-day subscriber is more than double the $7.75 weekly cost to subscribe.

At the beginning of the year, in an effort to evolve its business model and offset its substantial losses, The Chronicle raised its subscription and newsstand prices, taking a cue from European papers that charge far more than their American counterparts.

"We know that people in this community care deeply about The Chronicle," Vega said. "In today's world, The Chronicle is still very inexpensive. This is a critical time, and we deeply hope our readers will stick with us."

The challenge The Chronicle faces, Vega said, is to bring its revenues from advertising and circulation into balance with its expenses so that the newspaper can at least break even financially.

"We are asking our unions to work with us as partners in making these difficult cost-cutting decisions and reduction in force to ensure the newspaper survives," Vega said.

This article appeared on page A - 1 of the San Francisco Chronicle