Shopping Spree: Newspaper Magnates Within Days Of Closing Deal On Yet Another SF Publication

Hot on the heels of the San Francisco Newspaper Company’s acquisition of the SF Weekly, two principals at the SFNC are within days of closing on an agreement to purchase 49% of venerable LGBTQ publication the Bay Area Reporter.

The SFNC presently owns the San Francisco Examiner,SF Weekly, and Bay Guardian – all bought since the SFNC’s formation in 2011.

In a letter of intent, inked in April, SFNC CEO Todd Vogt and CFO Patrick Brown made clear their plan to acquire a minority stake in the BAR – independently of the SFNC.

All that’s left to cement the deal is “dotting the “I”s and crossing the “T”s” – and that should happen within the 60 days, Brown told The Appeal. (When contacted by The Appeal, Vogt declined to discuss the deal on the record.)

Talks to purchase 49% of the paper began early this year, said B.A.R. general manager Michael Yamashita.

“Our publisher Tom Horn met with Todd and discussed ways we could cooperate, and possibly acquire the Bay Area Reporter, or at least most of it,” Yamashita said.

The BAR’s receptivity to Vogt and Brown’s overtures is a dramatic attitude change for the publication — in December Yamashita told this reporter that the BAR was, “definitely not for sale” despite the many offers it received over the years. When the Appeal asked about the prior offers, Yamashita said none of them have been “serious.”

Moreover, the plan to purchase 49% of the BAR comes as even more of a surprise in an age where the business of spilling ink onto dead trees is in decline.

Further newspaper acquisitions appear to challenge the conventional wisdom, Craig Huber, of Huber Research, told The Appeal.

“San Francisco, of all markets in the country, is one of very toughest,” said Huber, “It’s the tech savvy nature of the households in the Bay Area.”

Brown, however, is optimistic about the purchase, and points to the many ways the SFNC’s existing financial, distribution and ad sales divisions will likely serve the BAR’s business interests.

“We’ve been pretty successful in changing the dynamics of the cost structure,” Brown said.

Even in situations where newspapers are merging Huber still isn’t optimistic about the industry. Huber pointed out that there have been many attempts, and many failures.

National ad sales, one of the possible new revenue streams Vogt mentioned in the BAR’s announcement of the deal, isn’t likely to bear fruit, Huber said.

“National advertisers are leaving newspapers faster than local retailers,” Huber said, “They’re down 12% in 2012.”

Despite doom and gloom pronouncements from industry experts, Brown is confident the new partners will keep the venerable publication afloat.

“We have a solid background in running newspapers,” Brown said.

Putting questions of financial collapse aside, lingering concerns about editorial direction remain in the community. For example, outspoken local activist and LGBT blogger Michael Petrelis is concerned with the purchase’s implications for print media.

“It’s setting off alarms for me because I fear competition will be diminished,” Petrelis told The Appeal.

Brown dismissed those fears. “There is no intent to alter editorial. Absolutely not,” Brown said.

The only apparent change, he said, is that the paper may look for opportunity to expand into underserved communities in the Bay Area. “But, who knows,” he said, referring to the still-early stage of the deal.

Maria De La O, co-president of the National Lesbian and Gay Journalists Association doesn’t see a reason why the new shareholders would exert editorial influence.

“I don’t see a business upside to changing coverage, plus they don’t have a majority stake [which] gives me a lot of hope that coverage will not be impacted in the near future,” she said.

Yamashita echoed much of Brown’s sentiment about the new shareholders’ influence on editorial. It was important, Yamashita said, for the community to retain majority LGBT ownership, and that the new deal is just business.

“It’ll be trying to find efficiencies with all operations. Sharing account, distribution, and advertising sales,” Yamashita said.

Petrelis isn’t satisfied with the current editorial direction – citing several examples well beyond the scope of this article – and doesn’t see the new owners making positive changes. “I certainly don’t see the situation improving,” he said.

Yamashita said the BAR strives to be conscious of any conflict of interest. He also noted that people are under the misperception that the Bob Ross Foundation funds the paper. However, while the Foundation owns the BAR, it does not fund the newspaper directly, Yamashita said. Instead, the BAR relies on revenue from ads and newspaper sales.

At any rate, an ownership change was necessary, as the Bob Ross Foundation is legally required divest 80% of its stake in the company by 2016, Yamashita said.

“We were able to get an extension on the original deadline, but we were operating on borrowed time,” Yamashita said.

As is the case with many local freelance reporters, Max A. Cherney has also freelanced for a variety od SFNC publications. You can read the Appeal’s complete conflict policy here.

Photo of Vogt: Mike Koozmin/SFNC

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