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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  • Able_Dart

    Not mentioned here is that SFNC is basically a venture of the Canadian company Black Press. Black Press honcho David Black is an investor and sits on the board of SFNC. Todd Vogt used to be an executive at Barringer, another Canadian news conglomerate which was owned by the controversial Conrad Black (no blood relation to David Black, apparently). Black Press has a proven acquisition strategy of buying up multiple pubs in a metro area and offering group ad buys. This is reasonable enough when you consider that you’re usually talking pubs in different suburbs that reach the same demographic. In SF however the strategy seems to be to buy pubs that reach different demos in the same city. How does that work? And of course consolidation of edit content is an issue as well. Black is basically hiding the ball on what the ultimate strategy is and this should be a concern.

  • Able_Dart

    Not mentioned here is that SFNC is basically a venture of the Canadian company Black Press. Black Press honcho David Black is an investor and sits on the board of SFNC. Todd Vogt used to be an executive at Barringer, another Canadian news conglomerate which was owned by the controversial Conrad Black (no blood relation to David Black, apparently). Black Press has a proven acquisition strategy of buying up multiple pubs in a metro area and offering group ad buys. This is reasonable enough when you consider that you’re usually talking pubs in different suburbs that reach the same demographic. In SF however the strategy seems to be to buy pubs that reach different demos in the same city. How does that work? And of course consolidation of edit content is an issue as well. Black is basically hiding the ball on what the ultimate strategy is and this should be a concern.

  • njudah

    Wow it’s amazing how SF allows this kind of monopolization of print publications, and yet you try and open a clothing store in Hayes Valley and everyone has a conniption about “chain” ownership and “foreign” ownership.

    BTW anyone noticed how tiny the Guardian is since the acquisition? last week’s issue was so devoid of content and pages…life must be tough working for The Man…

    • Forthright

      LOL!!!!!

    • neutral_corner

      Is San Francisco in a position to “allow” or “disallow” what you can buy or sell?

  • njudah

    Wow it’s amazing how SF allows this kind of monopolization of print publications, and yet you try and open a clothing store in Hayes Valley and everyone has a conniption about “chain” ownership and “foreign” ownership.

    BTW anyone noticed how tiny the Guardian is since the acquisition? last week’s issue was so devoid of content and pages…life must be tough working for The Man…

    • Forthright

      LOL!!!!!

    • neutral_corner

      Is San Francisco in a position to “allow” or “disallow” what you can buy or sell?

  • Max A. Cherney

    Mr. Vogt used to work for Hollinger – a long, long time ago
    (http://en.wikipedia.org/wiki/Hollinger_Inc.). Conrad and David Black
    are not related.

    I’d refer you to an earlier article I wrote on
    the topic of consolidation
    (http://sfappeal.com/2013/01/former-rivals-agree-newspaper-owners-drive-to-buy-up-sf-publications-is-a-good-thing/).

    It’s also important to remember the various non-English
    language newspapers that get printed daily in the city. I don’t have
    circ numbers on them, but I do see a lot. Also worth noting that the
    combined Weekly, BG, Ex circ doesn’t beat the Chron’s at this point.

    I can tell you that as a freelancer I still pitch editors at the Weekly,
    the Bay Guardian and the Examiner separately. And each papers’ editors
    make independent decisions.

    All 3 papers have shrunk since purchase, that’s true.

    As Mr. Huber alluded to in this story, he doesn’t understand how ad sales
    consolidation is going to save the three papers. Many other companies
    have attempted similar tactics in the past, and they have failed.

    Also worth noting that Mr. Vogt is not only bullish on newspapers, but says
    he wants more. My question would be: where is he going to go next?

  • Max A. Cherney

    Mr. Vogt used to work for Hollinger – a long, long time ago
    (http://en.wikipedia.org/wiki/Hollinger_Inc.). Conrad and David Black
    are not related.

    I’d refer you to an earlier article I wrote on
    the topic of consolidation
    (http://sfappeal.com/2013/01/former-rivals-agree-newspaper-owners-drive-to-buy-up-sf-publications-is-a-good-thing/).

    It’s also important to remember the various non-English
    language newspapers that get printed daily in the city. I don’t have
    circ numbers on them, but I do see a lot. Also worth noting that the
    combined Weekly, BG, Ex circ doesn’t beat the Chron’s at this point.

    I can tell you that as a freelancer I still pitch editors at the Weekly,
    the Bay Guardian and the Examiner separately. And each papers’ editors
    make independent decisions.

    All 3 papers have shrunk since purchase, that’s true.

    As Mr. Huber alluded to in this story, he doesn’t understand how ad sales
    consolidation is going to save the three papers. Many other companies
    have attempted similar tactics in the past, and they have failed.

    Also worth noting that Mr. Vogt is not only bullish on newspapers, but says
    he wants more. My question would be: where is he going to go next?

  • Atom_Mike

    How is it that the only critic this lazy writer could find is a man who went to jail for psychotically harassing newspaper editors, and snapping Weiner pics in toilets?

    Who gives a f*ck what Petrelis thinks? Once upon a time he was an activist. Now he’s just an unemployed pothead crank who more often shows up in the crime section or barebacking on Xtube [these are facts, not rumors].

    http://articles.latimes.com/2001/dec/28/local/me-18457

    http://castrobiscuit.com/2012/11/30/breaking-activist-michael-petrelis-arrested-over-privacy-violation-involving-san-francisco-supervisor-scott-wiener/

  • Atom_Mike

    How is it that the only critic this lazy writer could find is a man who went to jail for psychotically harassing newspaper editors, and snapping Weiner pics in toilets?

    Who gives a f*ck what Petrelis thinks? Once upon a time he was an activist. Now he’s just an unemployed pothead crank who more often shows up in the crime section or barebacking on Xtube [these are facts, not rumors].

    http://articles.latimes.com/2001/dec/28/local/me-18457

    http://castrobiscuit.com/2012/11/30/breaking-activist-michael-petrelis-arrested-over-privacy-violation-involving-san-francisco-supervisor-scott-wiener/

  • http://www.facebook.com/profile.php?id=100003129025948 Sebra Leaves

    Say goodbye to San Francisco as we know it. The artists, creatives, and dissidents that haven’t left, are packing. Some are cashing in on the way out, making way for Plan Bay Area.

    What will the new “green world class city” be like, and who will be left to document the reconstruction of San Francisco, by state “infill” edict, into New York West?

    What will draw tourists after the single family homes in the Eastern Neighborhoods with views of the Bay are replaced by highrise condos? Will a few random “historically significant” Victorians, Edwardians, and the faux Beaux Arts City Hall be spared as it is turned into the Disneyland of sports arenas? California’s Vegas without Hollywood style?

  • http://www.facebook.com/profile.php?id=100003129025948 Sebra Leaves

    Say goodbye to San Francisco as we know it. The artists, creatives, and dissidents that haven’t left, are packing. Some are cashing in on the way out, making way for Plan Bay Area.

    What will the new “green world class city” be like, and who will be left to document the reconstruction of San Francisco, by state “infill” edict, into New York West?

    What will draw tourists after the single family homes in the Eastern Neighborhoods with views of the Bay are replaced by highrise condos? Will a few random “historically significant” Victorians, Edwardians, and the faux Beaux Arts City Hall be spared as it is turned into the Disneyland of sports arenas? California’s Vegas without Hollywood style?

  • neutral_corner

    the SF Weekly?”

    Is that like The People Magazine? or The Newsweek?

  • neutral_corner

    the SF Weekly?”

    Is that like The People Magazine? or The Newsweek?