The Center for Investigative Reporting and The Bay Citizen agreed today to formally explore a merger, a move that would combine the oldest nonprofit investigative news group in the nation with a startup newsroom focused on the San Francisco Bay Area.

The boards of both organizations signed a memorandum of understanding to begin working out details of merging their two staffs. The deal still has hurdles to clear before a merger can be completed.

Former San Francisco Chronicle Executive Editor Phil Bronstein and CIR’s current executive director, Robert J. Rosenthal, will lead the combined organization.

Bronstein will assume the role of executive chairman of the newly constituted 19-member board of directors. In his new role, a paid position, Bronstein’s focus will be on overall strategy and audience engagement. He will emphasize fundraising and developing new ways to sustain the nonprofit.

Bronstein, 61, has served as chairman of the CIR board since January 2011. He played a key role in brokering a potential merger after he was approached to be the next chief executive officer of The Bay Citizen.

“I’ve been a journalist in the Bay Area my entire adult life and have deep roots and affection for the extraordinary and unique culture here,” Bronstein said. “There is more innovation, activism and civic involvement in this region than anywhere in the country. This is the basis for engaging people where we all live. With our unified nonprofit model, we can bring together combined talent, technology, investigative power and creative skills to serve the public in dynamic ways.”

Jeffrey Ubben, chairman of the The Bay Citizen board, said he is believes the merger “bodes well for an informed and engaged Bay Area.”

“Together, we will draw on the vision and talents of each of our high caliber staffs, and ultimately become stronger and more effective than the sum of our parts,” Ubben said.

As executive director of the combined operation, Rosenthal will oversee day-to-day operations of a staff that will number about 65 people. He also will play a key role in creating a vision for the merged organization.

Rosenthal, 63, joined CIR in 2007 and has guided the nonprofit at a time of unprecedented growth. The editorial operations will report to him.

In 2009, CIR launched California Watch, the largest investigative reporting team in the state. CIR added a video unit last year that has enabled the newsroom to produce stories for print and TV media partners across the country.

“We will now be able to bring our combined strategies for engagement and accountability journalism to a region of the country that can best embrace it,” Rosenthal said.

The addition of The Bay Citizen would give CIR its first local reporting hub and an expanded technology team to create reporting apps and tools around data, Rosenthal said. Though just two years old, The Bay Citizen has developed a loyal membership. The Bay Citizen also brings with it a solid fundraising base as the merged nonprofit attempts to develop revenue strategies that will help make it sustainable.

The Bay Citizen will continue to produce local and regional enterprise reporting, Rosenthal said, and California Watch will continue to produce statewide stories. CIR’s reporters, meanwhile, generate national and international investigations. But Rosenthal noted that some CIR stories can be localized for The Bay Citizen’s audiences, and some local stories can be broadened in scope.

“Because it’s the Bay Area, stories we do here will also be of interest to audiences across the country and around the world,” Rosenthal said.

The 35-year-old Center for Investigative Reporting has grown rapidly – from a small newsroom with about a $2.3 million budget three years ago to a $5 million news organization. CIR has produced stories for some of the most recognizable news brands in the country, including Frontline, PBS NEWSHOUR, “60 Minutes,” The Washington Post and Newsweek. California Watch has boosted CIR’s distribution to include hundreds of news outlets in California.

Both boards met over the weekend to negotiate terms of the memorandum of understanding. While most Americans watched the Super Bowl, merger attorneys and board members hammered out details. By late Monday, only a few issues remained, including whether The Bay Citizen and CIR would issue separate press releases about the formal merger talks. (It was decided to do one joint release.)

The combined budgets of the two organizations add up to more than $10 million. A final budget target has not been announced. A small transition team from CIR and The Bay Citizen will begin working on the fine details of merging the two operations, including developing a business plan and building an organizational chart. The transition is expected to take several weeks. During that time, the newsrooms will continue to run independently.

Rosenthal said Mark Katches, CIR’s editorial director, will play a crucial role in determining the merged organization’s editorial strategies.

Katches, 48, has edited two Pulitzer Prize-winning reporting projects and three Pulitzer finalists in the last eight years. CIR hired him in 2009 to build California Watch. He was promoted to editorial director for all of CIR last April.

“Much of the success of CIR and California Watch is directly attributed to Mark’s skills as an editor and as a visionary entrepreneur,” Rosenthal said. “We are both looking forward to working with The Bay Citizen and its staff to create a very special organization.”

Combining the two newsrooms will present challenges. Through its California Watch operation, CIR has forged relationships with local media partners like the San Francisco Chronicle and KQED. In contrast, The Bay Citizen has positioned itself as a competitor to the Chronicle, and it produces stories every Friday and Sunday for The New York Times’ regional pages, also a competitor of the Chronicle and other Bay Area news outlets.

Another delicate issue to resolve: The Bay Citizen newsroom staff has voted to join the local newsroom union. The larger CIR newsroom staff is not part of a union. Other questions remain about The Bay Citizen’s focus and mission – which has included culture and sports coverage – and how that will mesh with CIR, which is known for deeper-dive investigative and explanatory reporting. The merger must be approved by the California attorney general’s office.

The deal comes at a critical time for The Bay Citizen. In September, its first editor, Jonathan Weber, announced he was leaving after 16 months at the helm. In October, Chief Executive Officer Lisa Frazier tendered her resignation. Her last day was Monday.

In December, founder Warren Hellman died. And in January, The Bay Citizen’s interim editor, Steve Fainaru, announced plans to leave.

Of all the changes in leadership, Hellman’s death perhaps left the biggest void. The banjo-picking billionaire founded The Bay Citizen with $5 million in seed money in 2009. He recruited close friends to contribute millions more to the organization. His death will pose fundraising challenges for the merged organization.

Hellman created The Bay Citizen out of concern that strong local reporting had diminished due to severe cuts at the San Francisco Chronicle and other local news outlets.

How the two staffs come together will be closely watched, according to Bay Area-based media industry analyst Ken Doctor.

“In the short term, it’s a vote of confidence in the California Watch model, one with more ramping revenue streams and partnerships than a purely local model,” Doctor said. “If it works, 49 other states will be watching.”

Rosenthal said he is looking forward to working closely with Bronstein.

“At CIR, Phil has been a terrific chair the last year, and since I joined the organization, he has been highly supportive of me,” Rosenthal said. “The CIR board knew of my vision when I joined the organization. I have had tremendous freedom and support in implementing that vision. They have understood the challenges we faced and allowed me to take risks and follow my instincts in a way that was almost impossible in a corporate, traditional setting. I know that will continue as we move forward. This is a huge challenge, not without risks, but it is going to be fun for all of us to be part of building a truly unique, special and important public service news organization.”

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