Recently, the Half Moon Bay Review covered a school bond election that appeared too close to call. There was an extensive report on racism experienced by Asian Americans following a viral video of a local incident that shocked many. There were stories on youth softball, plans for an encampment to ease homelessness and new programs at the local high school, to name just a few of the things the newspaper covered.
In some ways, it was just another full week for me, the editor of a small-town newspaper who has more of a calling than a career. In other ways, it was a new beginning for the 120-year-old weekly newspaper tucked into the little yellow building next to City Hall in a city 30 minutes south of San Francisco.
It was anything but a garden-variety media purchase. In this case, the buyers were not planning to drink in profits and spit out whatever remained.
The deal was several months in the making that began with a September 2017 phone call from Francis Wick, CEO of Wick Communications. The family-owned newspaper company based in Arizona had run the Review for more than 20 years, but as Wick explained on the call, the times were changing. He told the us that he planned to sell the newspaper and the land beneath our feet to raise capital for other endeavors. It was an extraordinary blow.
If you are reading these words, you already know the landscape.
These are trying times for newspaper companies that once had a license to print money. Margins have slipped across the industry as advertising migrated to savvy online giants that target consumers like never before. Revenues have fallen and, despite technological efficiencies, newsgathering in a town like Half Moon Bay remains a labor-intensive proposition. The Review was Wick’s only operation in California, where the cost of doing business is notoriously high.
Almost in passing, Wick said something else that day: Why don’t you guys seek a nonprofit to buy the newspaper?
Suffice to say, Half Moon Bay didn’t have a nonprofit like that. I couldn’t get my head around the concept, initially, but it did plant a seed.
While Wick sought buyers through a traditional newspaper broker, I looked for some less obvious investors. I began a series of conversations with folks I thought would understand the value of their hometown newspaper. I knew it would be tricky. There are people of means who see a newspaper as a platform for their personal agenda. I needed to find people with a different conception of personal wealth.
One of those people is Lenny Mendonca, who, in addition to owning a local brewery, is senior partner emeritus at the global consulting firm McKinsey and Co. He is an avid news reader and a member of the Guardian.org board of directors.
Though I knew him by reputation, we had never met before I called to bend his ear about the pending sale. Mendonca didn’t have to be told what a newspaper meant to a town of 13,000 like Half Moon Bay. Without it, there would be no coverage at City Hall. No one would report on high school graduations, new road projects or any of the public events that together form a community.
He also reminded me of something I’d almost forgotten in my zeal to impress people like him: The Review was profitable and, therefore, a more alluring investment than many sexier projects in nearby Silicon Valley.
Soon we were five investors and one newspaper editor. Our tight group included a former school board member who was a savvy real estate investor, a well-known local businesswoman, an important participant in area nonprofits and a chief technology officer at a software firm who asked how he might help.
The group first gathered in a small newspaper conference room in December 2017. Soon we pivoted away from forming a nonprofit. There were several reasons.
The first was concern over how that tax status might rightly limit our journalism. The Review has a tradition of endorsing local candidates and ballot measures and that would have to end. Attorneys also cautioned it would be hard to return to for-profit status, should investors ultimately choose to do so.
Another important step was the decision to form as a California benefit corporation. The five board members understood from day one that the Coastside News Group Inc., the entity that now owns the Review, exists not only to seek profit but also to benefit the community. It’s an important signal to investors and to readers. Our enterprise is owned by neighbors who are committed to improving this special place.
I hope public benefit status also proves a recruiting tool for journalists who are wary of working for traditional newspapers that sometimes seem locked in a spiral of budget cuts aimed solely at maintaining the bottom line for shareholders. That will not be the case here.
It is not immediately clear how many other legacy news organizations are now organized as public benefit corporations or their close cousins, certified B Corps. But this spring, Stanford JSK Fellow Don Day suggested in a Medium post that forming a B Corp might make sense for other newspapers.
“In many ways, the effort to meet the information needs of a community is the ultimate public benefit — helping to bring news and coverage to a geographic or other community to help them make better decisions and be better informed,” Day wrote.
In keeping with the mission, it’s important to note that the newspaper’s community buyers did not seek to cut costs out of the gate. They rehired all existing staff and secured contract accountants as well as IT and legal support. They paid seasoned specialists in the dark arts of corporate acquisition. They vowed to replace our health benefits with something better and even rolled over sick leave. That support buoyed staff during an uncertain time that could have driven away talent.
None of this means that all our troubles are over. Hurdles remain.
We will have to plug the leak in our paid print subscriptions. We still have to expand revenue streams. We will seek to re-establish relationships with local and national advertisers who have taken their money elsewhere. And we will need to remain vigilant against potential conflicts that could corrupt a locally owned enterprise like ours.
Those challenges do not seem insurmountable now that the community has bought into our mission, both literally and figuratively.
Navigating a community purchase
- Explain your mission. The people who might in invest are not likely to be media pros. Use your storytelling skills to tell them why the newspaper is important to their town.
- It takes two to tango. A thoughtful seller is as important as a willing buyer. The two must work together on a transition plan if the buyer is a relative novice. Both sides have a stake in a positive outcome.
- Get sound professional advice. You will need an attorney, an accountant and an experienced mergers and acquisition specialist to shepherd the deal.
- Be open to change. While new community buyers might not know the newspaper game, they undoubtedly have good ideas. Don’t be wed to process.
- Market local ownership. People in your community want local business to succeed. Talk it up at civic organizations, neighborhood meetings and anywhere they will let you talk about your transition.