Sonoma Media Investments, owner of The Press Democrat, pays off debt
The media group that owns The Press Democrat announced Wednesday the company has repaid its investors and is now debt free, nearly seven years after a prominent group of Sonoma County residents purchased the newspaper with a mission to restore local ownership.
Sonoma Media Investments assembled about $15 million in debt and equity funding in November 2012 to acquire The Press Democrat, Petaluma Argus-Courier and North Bay Business Journal for an undisclosed price from Florida-based Halifax Media Group, according to Steve Falk, the company’s CEO.
Eliminating that debt will allow the company to focus its financial resources on local journalism and community involvement, Falk said.
“It’s an assurance that our focus on local journalism, local reporting, will continue,” Falk said. “We’re involved with dozens of community organizations, and that support will continue.”
Sonoma Media Investments, which has 279 employees, also publishes the Sonoma Index-Tribune, Sonoma magazine, La Prensa Sonoma and Spirited magazine. It generated about $40 million in annual revenues last year, Falk said.
The company has been selling off its real estate assets over the last three years to wipe out its debt, repay investors and invest in its business. In January, it reached a ?$5.5 million deal to sell a ?6.6-acre parcel behind the Press Democrat printing plant in Rohnert Park. The buyer, Advanced Building Solutions of Petaluma, plans to build an apartment complex on the land. The transaction allowed Sonoma Media Investments to repay the remaining debts owed to the local investment group, company officials said.
In 2016, it sold an adjacent 12.7-acre property to PB&J Acquisitions of Richmond for $9.5 million. The property included the 73,000-square-foot building that houses the paper’s printing presses along Highway 101, just southeast of the Graton Resort & Casino. Sonoma Media Investments retained ownership of the printing presses and agreed to lease the property for a minimum of ?11 years.
The Press Democrat, which dates back 162 years, has leased its headquarters and parking lots in downtown Santa Rosa since 2014 when Halifax Media - which has since been acquired by another company - sold the property to Cornerstone Properties.
Lead investor Darius Anderson, a Sonoma-based real estate developer, entrepreneur and lobbyist, said the company’s value comes from the quality of news and other products it provides to consumers and local advertisers.
Anderson said he and other investors have been motivated to make the newspaper group successful out of a sense of community pride. That was reinforced last year when The Press Democrat newsroom was awarded the Pulitzer Prize for its coverage of the 2017 October firestorm.
“What we’ve been able to do is recruit great people and win the Pulitzer Prize in a time of crisis, and that shows the commitment the employees have creating a quality product,” Anderson said. “Sometimes you do things for financial returns, sometimes for spiritual returns or for ideological returns. This fulfilled a number of those buckets.”
Newspaper companies across the country have been shedding real estate, particularly those with headquarters in high-value city centers purchased decades ago when revenues soared, said Rick Edmonds, media business analyst for the Poynter Institute, a nonprofit school of journalism in St. Petersburg, Florida.
Newspapers, regardless of the owners, are grappling with a decadeslong drop in print revenues, sinking roughly 10% each year, Edmonds said. Larger companies with multiple properties have the benefit of scale, but local owners can gain an advantage when they are involved in the community, he said.
“Being owned by people in the community is part of the brand,” Edmonds said. “If you do have that hometown advantage and find ways to translate it into business opportunities and translate into the kinds of journalism that make a difference in your community - those are pluses that outweigh problems with not having enough scale.”
Founded in 1857, The Press Democrat was locally owned until 1985 when it was sold to the New York Times Co. In January 2012, the Times sold the newspaper, the North Bay Business Journal and the Argus-Courier - along with ?13 other newspapers, most of them in the Southeast - to Halifax.
Anderson, who acquired the Sonoma Index-Tribune and Sonoma magazine in April 2012, began assembling a group of investors to buy the newspaper back from Halifax.
Jeannie Schulz, philanthropist and widow of the late “Peanuts” cartoonist Charles M. Schulz, said she joined the investment group because she comes from a newspaper family and placed a high value on her local paper. Schulz credited the seven-member board with balancing a commitment to journalism with pragmatic business choices.
“Newspapers are very important to me. I don’t read 10 of them - I read one,” Schulz said Wednesday.
Other investors include Norma Person, whose late husband, Evert Person sold The Press Democrat to the New York Times in 1985; Sandy Weill, the retired CEO and chairman of Citigroup and the philanthropist behind the completion of the Green Music Center in Rohnert Park; Bill Jasper, the former CEO and president of Dolby; Les Vadasz, a founding member of Intel Corp.; and Gary Nelson, founder of the Nelson Family of Companies, which specialize in staffing and recruitment. All remain minority investors in the company.
Readership of Sonoma Media Investments’ print and digital products has increased annually since 2012, reaching seven out of 10 adults in Sonoma County, Falk said. Revenues have been “relatively stable,” he said. Print advertising has dropped between 5% and 8% each year, but the newspaper has offset those declines with growth in revenue from subscriptions, digital advertising and events.
“The core competency of a newspaper and a media company is the journalism. The core competency is not owning buildings and owning land,” Falk said.