The strange deal behind the SF Weekly sale

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Jim Larkin and Mike Lacey: Gone? For real?

We all knew something like this was coming. Village Voice Media, owner of SF Weekly and 12 other alternative papers, has been looking for a way out of a seemingly intractable bind for some time now.

See, the sex ads the VVM sells on its Backpage web site have created a huge stir. After NY Times columnist Nicholas Kristof started a moral crusade to rid the world of the demonic prostitution ads, a lot of national and local advertisers decided they didn't want to be affiliated with VVM, so they pulled millions of dollars worth of print advertising. Then Goldman Sachs dumped its ownership stake. And since some of the VVM papers were already doing poorly, the cascade of bad news was a real threat to the chain's bottom line -- and possibly its future. VVM was already underwater on its bank loans, and the Bank of Montreal had in effect foreclosed and taken control of the company's finances.

Oh, but there's nothing that could be done about Backpage, since (according to Reuters) it pulls in about $3 million a month in sex-ad revenue. That money was paying the bankers off and keeping the whole operation afloat.

So what is a poor predatory chain to do? Can't live with Backpage; can't live without it.

It doesn't take a rocket scientist to figure out what Mike Lacey and Jim Larkin have been thinking about: If Backpage were just conveniently put into a separate company, then everyone would have plausible deniability. So suddenly Village Voice Media becomes Voice Media Holdings, under new management -- that is, the same management that's always been there, except for Lacey and Larkin, who now own Backpage. The headlines blare: SF Weekly has been sold! No more evil Backpage! Come on back, noble advertisers!

But let's remember: Lacey and Larkin are Village Voice Media. They built the company and hand-picked the senior management. I know how hard it is for an owner to give up his newspaper; these guys are control freaks and there's no way they were walking away totally from VVM.

Scott Tobias, the new CEO, isn't responding to my messages. Neither is Lacey. But let's take a look at the essential element here: How did Tobias and his team come up with the cash to buy VVM -- which isn't worth what it was five years ago, but is still a significant media property? How did they actually "buy" it when the Bank of Montreal owns most of VVM and would want to be paid back some $70 million in outstanding loans? How would they find private financing for a company that couldn't pay its bills without the Backpage revenue that will suddenly be going away?

Tobias told Reuters that "some private investors" were found, and maybe so, but I bet it's this simple: The deal was financed with the Bank of Lacey and the Larkin National Trust. Those two almost certainly still hold the note on the company, and thus are still in a way the owners, and will probably still play a management role -- if only because their money (and whatever deal they wheedled out of the Bank of Montreal) is still in the game.

So yes, you can say that SF Weekly and its brother and sister papers have been "sold." But unless Nick Kristof and the advertisers who cut off the dollars are pretty damn dumb, they'll take a hard look at this and say: Really?

Comments

Did they pay the damages from your lawsuit?

All paper-print media is dying of anorexia. I see you guys are down to only 44 pages some weeks. I remember when Herr Bruce used to put out a thick 150pg tome every week. People turned to you for rentals, jobs, and meeting men/women.

Why not convert the SFBG into an online publication and help green the planet?

You can jostle alongside BeyondChron and all the other chatterers.

Posted by Guest on Sep. 25, 2012 @ 1:49 pm

Just because SFWeekly ate your lunch doesn't mean any of us share your obsessive hatred of them, any more than we can rationally understand your loathing of PG&E.

Any chance you can be less weird, spiteful and vindictive?

Posted by Guest on Sep. 25, 2012 @ 2:34 pm

Hey...the hooker ads are where I turn to in the SFBG when I want to see engaging, honest writing.

Posted by Another Guest on Sep. 25, 2012 @ 3:15 pm

Our current issue is dedicated to them, no hiding it. And we love our weirdness (just barely!) even more than the I told you so's. You might just have to move on here.

Posted by caitlin on Sep. 25, 2012 @ 3:53 pm

Like bemoaning cell phone radiation and then putting a cell phone tower on the roof?

Or, being part of a massive chain sucks while still being an independent "newspaper" is where it's at?

Or, unions are cool, just not at the Bay Guardian?

Good lord, if you are looking for bizarre hypocrisy, do you have to leave the front office doors?

Posted by matlock on Sep. 25, 2012 @ 9:29 pm

Or moaning about evil for-profit real estate companies...and then selling your own property to one of them and making a good $1.5 million profit from the sale.

Never got an answer to this one: Did Bruce pay Sarah or any of the other employees he laid off some of the profit he made from the sale?

Posted by Guest on Sep. 26, 2012 @ 6:13 am

Human traffickers and the poor women kidnapped into sex work! Cause you do know that not all the sex workers advertising on your site and in your paper are in it for the love of the job, right?

Posted by D. Native on Sep. 26, 2012 @ 5:03 am

I'm sure the Guardian can't discount all its "medical" marijuana ads, of course.

Posted by Hortencia on Sep. 28, 2012 @ 7:54 am

Thanks, Guest, you said it all and very well. Now a leftist owns all three non-alternative 'alternative' rags. Does this at last mean we will be rid of gasbags Brugmann and Redmond ? That would be the good news.

Posted by Guest Marcy Fleming on Jan. 09, 2013 @ 3:51 pm

The SFBG, like any other newspaper, goes out of its way not to offend advertisers - in this case, whores.

So if the SFBG wants to complain about Backpage, will Tim reveal what percentage of Guardian revenues comes from sex-oriented advertising?

Tim:

"So yes, you can say that SF Weekly and its brother and sister papers have been "sold." But unless Nick Kristof and the advertisers who cut off the dollars are pretty damn dumb, they'll take a hard look at this and say: Really?"

So papers with sex ads should be boycotted. Got it.

Posted by Demented, Yet Terribly, Terribly Persistent on Sep. 26, 2012 @ 6:01 am

Tim you are nothing but hired help at a foreign held chain, stop acting high and mighty. You refuse to disclose to the public how bad the Guardian finances were/are and how you funded the paper for years on borrowed cash. You got nothing out of the lawsuit and your current "alt weekly" is a hollow shell devoid of any insight or reporting. Cut the smugness and admit you are a failure .

Posted by Non troller rolling on Sep. 27, 2012 @ 11:30 pm

"Oh, but there's nothing that could be done about Backpage, since (according to Reuters) it pulls in about $3 million a month in sex-ad revenue. That money was paying the bankers off and keeping the whole operation afloat."

When the last print alt-weekly shuts down a few years from now, and the definitive history of alt-weeklies is written, I hope that the ironic fact is noted that since the days of the Berkeley Barb, the key financial support of the alt-weeklies' self-righteous radical politics has been hooker ads.

This is the real source of Tim's rage - first Craigslist, and then backpage are doing to print sex ads what Craigslist is doing to newspaper classified advertising. Sadly, the Guardian's feeble attempt to run online sex ads just can't compete. I think that the Guardian's "we're all about sex workers" editorial position is an effort to provide a friendly environment for sexually-oriented advertising, so the print sex ads won't go away, but that's not going to work.

You have to hand it to Bruce - he managed to have a career that precisely spanned the time period where a print alt-weekly was feasible. The party's over, and Tim's wondering where everyone went...

Posted by Demented, Yet Terribly, Terribly Persistent on Sep. 28, 2012 @ 7:32 am
Posted by lillipublicans on Sep. 28, 2012 @ 8:06 am