Press Democrat building in Santa Rosa, California on Monday, December 19, 2011. (BETH SCHLANKER/ The Press Democrat)

The New York Times Co. tentatively agrees to sell The Press Democrat

KEVIN MCCALLUM
THE PRESS DEMOCRAT

The New York Times Co. has tentatively agreed to sell The Press Democrat and its other regional newspapers to a Florida media group, shedding its smallest papers as it focuses on its core business.

The Times Co. said it was in "advanced discussions" Monday to sell its Regional Media Group to Halifax Media Holdings LLC, which owns The Daytona Beach News-Journal.

The deal has not been finalized but is expected to be completed soon, Press Democrat Publisher Bruce Kyse said Monday.

"The deal could be signed at any time," Kyse told Press Democrat staff Monday morning. Once signed, the sale would take about two weeks to close, Kyse said.

Halifax Media is attempting to buy 16 newspapers and related websites owned by the Times Co., mostly in the southeast United States. The deal would include The Press Democrat and two weekly publications in Sonoma County: the Petaluma Argus-Courier and the North Bay Business Journal.

The sale would bring an end to the New York Times' 26-year ownership of The Press Democrat, the dominant news media on the North Coast.

Financial terms and other details were not available, in part because news leaked out before the companies planned, Kyse said.

On Monday morning, the Halifax website listed all of the Times Co.'s regional papers as its own, tipping off media blogger Jim Romenesko. The page was promptly taken down.

Halifax Media Holdings is a young company backed by an investment group with newspaper holdings across the United States. It was formed in 2009 to purchase The Daytona Beach News-Journal for $20 million last year.

One of Halifax's key investors is Stephens Capital Partners, a Little Rock, Ark.-based private equity firm. It owns Stephens Media Group, a Las Vegas-based company that owns 11 daily and 64 weekly newspapers in nine states, primarily in Nevada and Arkansas. Its flagship is the Las Vegas Review-Journal.

"What I do know about Stephens and Halifax is that they both place a high value on local and regional newspaper organizations run by strong local management teams," Kyse wrote in a letter Monday to members of the newspaper's "Celebrate Community" advertising and marketing program.

Neither Michael Golden, chief operating officer of the Times' Regional Media Group, nor Halifax officials could be reached for comment Monday.

The Times' Regional Media Group could fetch between $150 million and $175 million based on its earnings, Hale Holden, an analyst at Barclays Capital, told the Wall Street Journal.

The group has a Monday-to-Friday circulation of 433,251 and 1,755 full-time employees. Times officials have said they expect the "vast majority" of employees will be offered jobs at comparable salary and benefits, Kyse said.

That was little consolation to many Press Democrat staffers, who worried about how the sale would affect their jobs and the journalism they practice.

"I would hope that their plan would be to invest in this community, but we don't know," said Martin Espinoza, a general assignment reporter with the paper since 2004. "If their plan is to keep journalism strong in this community, I would welcome that."

Kyse, who joined the paper in 1977 as a copy editor and became publisher in 2005, said he understands the concerns expressed by employees. The three Sonoma County publications employ 330 people.

"My interest is in seeing that the newspapers and websites continue to serve their community and the employees are treated well," Kyse said.

The buyer has a short track record to evaluate its approach to newspaper acquisitions. After buying the Daytona paper, the new owners cut staff by 10 percent right away, and the new publisher Michael Redding sent out an open letter that was "pretty revealing," said Rick Edmonds, media business analyst for The Poynter Institute, a nonprofit school for journalism located in St. Petersburg, Fla.

The letter explained the new owners were veteran newspapermen committed to local news and a diversity of voices. But it also announced major changes to the opinion page.

"Our own editorials will champion free enterprise, individual rights and responsibilities, and the importance of community involvement," Redding wrote.

The Times Co. has shed assets as it tries to focus on its anchor newspapers: The New York Times, The Boston Globe and the International Herald Tribune.

In July, the company sold more than half of its stake in the Fenway Sports Group, the owner of the Boston Red Sox, for $117 million. It also wrote down the value of its Regional Media Group, resulting in a $161.3 million noncash charge.

Last year, the Regional Media Group accounted for 11 percent of the company's $2.4 billion in revenue. But the group's revenues have tumbled as its regional papers have been hammered by the economic downturn and loss of advertising.

From 2008 to 2009, advertising revenue at the Regional Media Group fell 30.2 percent, to $193 million, and declined 8.2 percent in 2010 to $177 million, according to the Times Co.'s 2010 annual report. Advertising revenue has continued to fall this year, dropping an additional 9.6 percent during the first nine months.

If the right buyer were to emerge, The Boston Globe could be the next asset sold, analysts said. "You need to remove the distraction properties that aren't a part of that future, which is clearly the regional group and could be The Globe," said Ken Doctor, a media and publishing analyst at Outsell Inc.

"The Times is moving even more quickly to double down on its investment in its flagship newspaper, which is essentially its future, and that future is digital," Doctor said.

In recent years, The Press Democrat has invested aggressively in its websites and mobile media in an effort to reach broader audiences. Monthly, the Santa Rosa newspaper's websites have 1 million unique users and generate more than 12 million page views. Online advertising revenue has increased 40 percent this year, Kyse said.

But print circulation continues to fall. Over the last decade, Press Democrat circulation has dropped 38 percent, to around 56,000 copies. The Argus Courier has a weekly circulation of 5,800 and the North Bay Business Journal prints about 7,500 copies per week.

A sale would mark a new chapter for The Press Democrat, which has roots stretching back more than 150 years.

The paper was started in 1857 as the Sonoma Democrat, becoming The Press Democrat after Ernest L. Finley merged it with the Evening Press in 1897. The New York Times purchased the paper from the Finley family in 1985.

The newspaper won the Pulitzer Prize in 1996 for spot news photography and the prestigious George M. Polk Award in 2005 for a series of stories on the flight of more than 2,000 manufacturing jobs from Sonoma County.

Espinoza said employees have long known the Times could someday shed its regional properties to focus on its core assets.

"But it's hard to accept now that it has," he said.

The New York Times contributed to this story.

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