Wednesday, November 7, 2012

So what was the Press Democrat's sale price?

North Bay Business Journal, Nov. 1, 2012
available at
Sonoma Media Investments, LLC, controlled, essentially, by Doug Bosco and Darius Anderson, has purchased the Santa Rosa Press Democrat, The North Bay Business Journal, and the Petaluma Argus-Courier from Halifax Media Group, which had acquired these papers less than a year ago from the New York Times.  These newspapers are a critical source of information for Sonoma County, and their editorial judgment has been generally respected by the community. Puzzlingly, though, the sales price was not disclosed.

Cynthia Gorney, "Battle of the Bay"
in Leaving Readers Behind:
The Age of Corporate Newspapering
, p. 355.
I looked into the matter a bit, trying to find out, at least, what the New York Times had paid for the papers in 1985.  The sales price wasn't disclosed then, either.  I did manage to track down some apocryphal information, suggesting the price had been high indeed; Evert Person (misspelled "Everett" in the source), the publisher in 1985, is reported to have said “I got this offer, I just couldn’t believe how high it was, I accepted it.” I don’t doubt there are Sonoma County residents who know how high it was, but none of them are talking, so I decided to consult the numbers.

The New York Times Company
1985 Annual Reportp. 12.

Figuring the New York Times Company is publicly traded, I took a look at their 1985 Annual Report (UC Berkeley allows the public free access to the Historical Annual Reports database on ProQuest).  The report was deliberately vague; it noted that $389 million was spent by the Times in 1985 on acquisitions, specifically to acquire five newspapers and two radio stations.  The report didn’t break the numbers down any further.

Scratching my head a bit, I decided to poke further and see if the purchase price for the other papers acquired by the Times in 1985 was available.  It was—the papers had been owned by a nonprofit, and the sales price was eventually disclosed on their Form 990.  It was $156 million. In 1985 dollars, that was about $1,426 for each paper circulated daily; in 2012 dollars, $4,001 per paper circulated.

Spartanburg Herald-Journal
Jan. 28, 1990, p.10
Did the  New York Times make a similar offer for the Press Democrat in 1985? If so, at $1,426 per daily circulated, the offer Evert Person “couldn’t believe” would have been $107 million (or $299 million in 2012 dollars).

By way of contrast, Halifax Media Group paid $143 million for the Press Democrat and 15 other papers last year, and on a per-unit of circulation price, the Press Democrat would have been worth a mere $18 million in that deal. In effect, the Press Democrat’s value collapsed by over 90% in the intervening 25 years.

"Reflections of a Newsosaur," Mar. 29, 2010
available at
A 90% collapse in value for the Press Democrat is, disturbingly, consistent with the state of the rest of the newspaper industry.  The Daytona News-Journal, for instance, whose circulation has fallen roughly in line with that of the Press Democrat, was valued at $300 million in 2006; by 2010, its reasonable value was estimated in legal proceedings to be a mere $20 million (a 93% decline in value in the four year period).

The Sonoma Index-Tribune (also owned by Sonoma Media Investments, LLC) has tipped its hand to a degree regarding the purchase price.  Its article noted that the agreement included the Press Democrat’s Rohnert Park printing plant, built for an estimated $30 million in 1986.  A $30 million valuation for the Press Democrat without real estate seems high, but including the facility, it is not wildly unreasonable; a building of the size of the Rohnert Park plant (even if it is 25 years old) certainly seems like it might reasonably be worth $12 million.
Sonoma Index-Tribune, Nov 1, 2012
available at

Of course, it is also possible that the value of the Press Democrat was set at zero -- the New York Times has had serious labor problems relating to pensions for several years, and there have been extensive cutbacks at the Press Democrat over the last half-decade.  Perhaps there was also some assumption of debt or other liabilities by Sonoma Media Investments, LLC, or a measure of “seller financing” by Halifax Media Group to make the entire deal go.

However, the main point stands – there has been a complete collapse in the value of the Press Democrat in the last seven years.  However, I think the implications for the community are actually more serious than merely being one of the largest business failures in the County’s living memory. But those are other posts, for other days.