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Vision: Sonoma Media Investments, LLC

Author: Jean Saylor Doppenberg
July, 2013 Issue
In 2011, when the New York Times Company found another corporate buyer for its Regional Media Group, which included Santa Rosa’s Press Democrat, business executive and Sonoma resident Darius Anderson had an “a-ha!” moment. He and his partners in the recently created Sonoma Media Investments, LLC, set about developing a plan to arrange backers and negotiate with lenders and others to return the PD, once again, to local ownership.
In 2011, Anderson had formed Sonoma Media Investments to purchase the Sonoma Index-Tribune, along with its glossy lifestyle magazine, Sonoma, from its long-time owners, the Lynch family. But that acquisition was only the beginning for the new group, which was looking for an opportunity to scale up.
“I initially wanted to go to the New York Times Company to inquire if the PD was for sale. Then, lo and behold, it was sold to Halifax [Media Group] before our group could make our move,” Anderson recalls. “We didn’t know that sale was happening at the time, but we probably weren’t prepared at that point anyway. So it was a perfect alignment for us that Halifax bought the newspapers we were most interested in.”
Those newspapers, in addition to the PD, are the Petaluma Argus-Courier and the North Bay Business Journal, along with their websites and several other online products.
During the holiday season late in 2011, Florida-based Halifax had announced its intention to snap up the three papers––and a baker’s dozen more in NYT’s Regional Media Group—for $143 million. Even most of the papers’ local employees were stunned by this turn of events, fearing the worst from yet another absentee corporate owner, especially one without much of a track record in the industry.

“Bought at a fair price”

When Halifax became the PD’s new owner on January 6, 2012, Anderson and his partners hunkered down to work on their strategy. “We made an offer to Halifax for the PD, but someone else had already made an offer and we were told the paper wasn’t for sale,” he explains. “When that prospective buyer dropped out, Halifax came back to us and said, ‘We may be able to talk to you.’”
Sonoma Media Investments then put its efforts into “identifying the pillars in our society and our community, to see if they’d be interested in joining us in this endeavor,” says Anderson. “These are the people who have a huge impact on the positive things here that we all enjoy.” The local philanthropists and investors who came forward to help green-light the deal were Bill Jasper, Gary Nelson, Norma Person, Jean Schulz, Les Vadasz and Sanford Weill.
So only 10 months after Halifax purchased the PD, it changed hands once again, on November 8, 2012. By returning ownership of the newspaper to a local group after 27 years of being controlled from 3,000 miles away, Sonoma Media Investments became a game changer overnight.
Both Anderson and CEO Steven Falk declined to reveal what their investment group paid for the PD, Argus-Courier and Business Journal, “but we bought the company from Halifax at a fair price,” adds Anderson. “I don’t feel that we stole it or got ripped off.”
The sale to Sonoma Media Investments included the PD’s printing plant on 13 acres in Rohnert Park and a vacant 7-acre adjacent lot. The building in downtown Santa Rosa on Mendocino Avenue that serves as the PD’s headquarters wasn’t part of the deal, but Falk confirms that Sonoma Media signed a 10-year lease to continue to occupy the various offices there that are necessary to put out the daily newspaper.
“It’s not the most modern building, but we’re locked in,” says Falk. “The location downtown is great, and the building is functional and works well. We’ve also done some extensive remodeling.” The PD’s circulation department was also relocated from the Santa Rosa building to the Rohnert Park plant.
Additional remodeling took place on the downtown building’s first floor to make way for the PD Media Lab, a division of the company that Falk calls “the most sophisticated digital development operation of any newspaper in the nation.” The lab builds websites for a wide range of businesses and manages its clients’ social media functions.

Committed to printed papers 

The printing plant, built in the mid-1980s, is the real estate crown jewel for Sonoma Media Investments, but it also required a bit of freshening up. “We inherited a great plant from the Times, and they made some improvements and upgrades about six years ago. But the roof needed repairs, and we’ve finished stage one of that project,” says Anderson.
“The plant prints all of the newspapers, and it’s a world-class press,” adds Falk. “So we’ll always be looking for ways to keep it busy.”
But will the newspapers eventually cease to be printed? “We’re absolutely committed to printed papers, and I’m not one who thinks that print will ever go away completely,” says Anderson. “I’m 48 and I’m digitally very active, but as long as I have the option of reading the printed paper, I’ll read the printed paper. I like the feel and the smell and the texture of it. So, yes, we’ll continue to print.”
Meanwhile, the vacant lot near the plant is a “wait and see” situation, says Anderson, revealing little. “There are some things going on with the [Graton Rancheria] casino coming online soon and other residential development deals being looked at, so we’re working closely with the city of Rohnert Park about its master plan and long-term vision.”

Customer service 7,800 miles closer

Six months after the new owners took charge, numerous changes have taken place in the running of the papers––albeit, some more slowly than others. “It’s taken a longer period of time than we anticipated to decouple ourselves from the corporate mother ship,” says Anderson. “A lot of things need to happen for a smooth separation when there are millions of dollars involved. But we’re very optimistic, and the community has already started to see the benefits.”
A major component of separating from outside ownership—and one of the company’s first strategic moves—was to return the circulation department’s customer service functions to local control, says Falk. “We brought it back to Sonoma County from the Philippines, so that department is now 7,800 miles closer to our customers,” he says with a laugh.
Anderson underlines the importance of providing locally based customer service. “Now, when subscribers call, they’re glad the people they talk to know the difference between, say, Guerneville and Glen Ellen. It’s much easier than trying to communicate with someone in a foreign land.”
By May, about 20 new employees had been hired, including 10 positions that had gone unfilled for some time, in the PD’s newsroom and other departments. “We’re definitely investing in the products,” says Falk.
Another change that PD readers will soon notice is enhanced business news. “We’re looking to expand our business coverage so it has section-cover placement at least three days per week,” says Falk. “It won’t be competing with the Business Journal, which is a weekly and concentrates on business-to-business news, though there’s overlap at times. The PD’s business news is more consumer- and personal finance-oriented, such as retirement planning and similar topics.”

Promoting Wine Country

Falk believes consumers are beginning to have a new respect and appreciation for what a media company really does provide, regardless of the format. “The challenge is how to monetize the value in a format other than print,” he says. “Slowly but surely, media companies are figuring it out, and consumers are willing to pay. If, 10 years from now, they’re all reading the papers on a tablet and paying for it, there’s nothing wrong with that.”
In March, he says, the company surpassed 15 million page views of its digital products for the first time, while the PD’s circulation stands at approximately 55,000. “Ad revenue is holding up pretty well, and we’re pleased the economy is strong here. We feel we bought at a good time.”
A high-profile result of the new ownership is the first Press Democrat North Coast Wine Challenge, a wine competition created by Sonoma Media Investments in partnership with Vineyard & Winery Management. Judging took place in late May with more than 900 entries. “The idea of the Wine Challenge is to help bring even more focus to the North Coast wine industry,” says Falk.
To further promote that industry, the quarterly Sonoma magazine, published by the Index-Tribune, will increase its coverage to include more of the North Bay’s destination regions, and distribution will be expanded. “Right now its content tends to be focused on Sonoma Valley, but we see it as an opportunity to reach more people and more advertisers,” says Falk. “Even taking it to a monthly isn’t out of the question.”
The PD’s Savor magazine, also a Wine Country lifestyle quarterly first introduced in 2002, was placed on temporary hiatus a few years ago, adds Falk. “The New York Times stopped publishing it, but we think there’s a lot of interest in such a magazine, so that might lead us to another new publication or an expansion of what Sonoma magazine does right now. If properly done, it can generate not only local but national advertising.”

Wider distribution in Napa

Rumors have swirled recently that Sonoma Media Investments’ next conquest will be the Napa Valley Register, together with its three weeklies distributed in American Canyon, St. Helena and Calistoga.
“I won’t address that particular rumor, but I will say that our company will look at new opportunities,” says Anderson. “But we made a commitment to the staffs of the PD, Argus-Courier and the Business Journal that we would take the appropriate amount of time to make certain we got this purchase right first—that things are working properly, the transitions are all completed and management teams are in place––before we consider other acquisitions,” says Anderson.
Falk is more straightforward. “The Napa paper isn’t for sale as far as I know, and there are no discussions going on regarding the Napa Register. But it’s a possibility, and we see it as an opportunity to expand.”
He points out that the PD has beefed up its Napa coverage in recent months, and home delivery has resumed there, too, with several hundred new subscribers. “We’re back there with a couple dozen newsstand accounts in grocery stores and new rack locations, as well. The PD’s presence is really growing quickly in the city of Napa.”
Halifax had decided Napa “wasn’t worth going into” and pulled out, according to Anderson. “But many people in northern Napa County, in particular, are closely tied with Santa Rosa, so the news of northern Sonoma County and Santa Rosa is important to them. Sometimes what’s relevant here is also relevant there.”

No meddling in news coverage

Newspaper publishing is an industry that people may perceive as diminishing, says Anderson. “But I believe it’s a valuable investment, because it goes to the core of our community, and that includes local news, local successes and local profiles.”
Yet Sonoma Media Investments also wants its papers to continue to remain competitive on a national level, he adds. “We have great thinkers and great people who care a lot about the quality of the products and, because of that, we’ll be recognized for the quality journalism we produce.”
At the time of the acquisition, says Falk, there were skeptics who wondered how a political lobbyist and influential former heads of business could own a newspaper without meddling in its newsgathering operations and editorial stance.
“But there hasn’t been a single episode of the owners interfering with news content, nor will there be,” he says. “It’s absolutely working the way we said it would work. Six months later, I’m still hearing positive comments every day about the acquisition. There’s just something about local ownership in a community like ours that resonates with folks.”

Darius Anderson, managing member

Anderson is founder and CEO of Sacramento-based Platinum Advisors, LLC, which provides lobbying, real estate project development, procurement, public affairs and strategic consulting to many corporations and governments. His clients have included Napa Valley Vintners, Pfizer, Microsoft and AT&T. He’s also founder and CEO of Kenwood Investments, a locally based development firm.
“I’ve been a Sonoma County resident for many years and moved here in 1983 when my father was the under-sheriff for the county,” says Anderson, who attended Santa Rosa Junior College and finished his schooling in Washington, D.C., at George Washington University. He moved back to Sonoma County in 1998.
“I work in my Sonoma office one day per week, and I try to balance my time between Sacramento and Sonoma,” he says. “I used to try to stay in both places, and I did that before I was married. But my only residence now is in Sonoma County—and I’m home every night.”
Though he doesn’t maintain an office at Press Democrat headquarters, Anderson does visit the newspaper occasionally to attend meetings. “Our ownership group governs with the adage that four heads are better than one,” he adds. “It’s a real democracy, and we’re also very engaged with all our investors. We listen to and share information with them. They’re all extremely smart in business and their input is important to us.”

Steven Falk, CEO

Falk is the former president and CEO of the San Francisco Chamber of Commerce. Before joining the chamber in 2005, he spent 18 years at the San Francisco Chronicle, most recently as its publisher and president. He began his newspaper career in Pennsylvania and was vice president/circulation director for the Gannett Westchester Rockland Newspapers in New York before moving to California.
“Shortly after the PD acquisition, I packed up and left San Francisco to move to Santa Rosa,” explains Falk. “This is a full-time job for me, not semi-retirement. Trust me, it’s plenty of work. I meet with the PD’s editors on occasion, but I pretty much leave the news operations alone. I’m on the PD editorial board now, but I won’t be writing editorials. I write the checks, I don’t write articles.”

Bill Hooper, COO

Following a 26-year career with Clear Channel Outdoor, Hooper joined Anderson’s Kenwood Investments three years ago as president. He’s a former president of the California State Outdoor Advertising Association and once served as a board member on the chambers of commerce in San Francisco, Oakland and San Leandro.

Douglas Bosco, general counsel

Santa Rosa resident Bosco is a former member of the California Legislature, where he was responsible for such legislation as the California Wild and Scenic Rivers Act, the California Wilderness Act of 1984 and the Klamath-Trinity Rivers Restoration Act. As a United States Congressman during the 1980s, he was a member of the House Public Works and Transportation Committee and the Foreign Affairs Committee. Currently chairman of the State Coastal Conservancy, Bosco practices regulatory and environmental law for the San Francisco-based firm Hanson Bridgett, LLC.


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