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Friday, July 30, 2021

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UncategorizedWhy the Bay Guardian shut down

Why the Bay Guardian shut down

It wasn’t just the Internet or social media — a big chain that owned SF Weekly tried to kill its competitor and wound up damaging both papers beyond repair



By Tim Redmond

JANUARY 20, 2015 – Since there’s a final commemorative edition of the Bay Guardian coming out, and since there’s a lot of confusion about what happened to the paper, I’m going to take a second to give my perspective.

The tech revolution that C.W. Nevius talks about was, of course, a factor: When the Internet became the place to go for classified ads and personal/relationship seekers, alt-weeklies, which lived off those markets, were hurt.

Daily newspapers all over were hurt, too, but the dailies by then were all owned by huge corporations that could afford major losses while they figured out what to do. (Some of them still haven’t figured it out.) I personally think the model of the one giant monopoly daily in big cities is going to die fairly soon; I think we will see a proliferation of digital dailies. This one is a nonprofit; others will find other models.

Digital publications haven’t been able to attract the ad revenue that weeklies and big dailies used to get. On the other hand, delivery is much cheaper – no need to own a press or pay a press bill. No need for newsracks or distributors.

With a fraction of the revenue the Bay Guardian had in its prime, 48hills will be able to hire a similar-sized news staff and do a serious job covering the city. We’re not there yet, but we’ll get there.

But the death of the Guardian wasn’t caused by the failure of the staff to tweet enough – or just by the Internet. There are alt-weeklies all over the country that are surviving and thriving in this new era. The East Bay Express is one of them. Yeah, we made business mistakes; so does every other small business. But they weren’t fatal.

What happened to the Guardian is a much larger, and more important, story. The paper was unable to survive because a chain competitor with deep pockets ran a scorched-earth campaign for more than ten years to put the local independent out of business.

In the process, SF Weekly and its Phoenix-based owners cut ad rates so low that the devalued alt-weekly advertising in SF to the point where neither paper could make a profit.

SF Weekly lost millions, year after year after year. No matter: New Times, later Village Voice Media, was a huge profitable chain and could afford the losses. In the end, the VVM folks figured, the Guardian would go bust and they’d have the market to themselves.

We didn’t go along with the plan. Instead, Bruce Brugmann and Jean Dibble put everything they had into the paper, kept it alive, and fought back. We sued for unfair business practices, and won – but it took more than five years, and during that entire period the predatory pricing continued.

In the end, the suit was settled – and while I can’t comment on the settlement, you can draw your own conclusions.

Bruce and Jean didn’t “cash out.” They had no choice – if they hadn’t sold the paper when they did, it would have folded right then. There was no money left. So they did what they had to do to keep the Guardian alive.

Then VVM sold the SF Weekly to the same company, and after a while, that company decided that it made no sense to have two weekly products in the same market.

SF Weekly may be somewhat profitable today – now that it finally has what the old owners wanted all along, a monopoly on the alt-weekly market. But the strategy VVM adopted wound up deeply wounding both papers, and making it impossible for either of them to thrive. The Weekly is much smaller than it once was, with a much reduced staff (and it may be turning into an entertainment publication.)

If the assholes from Phoenix hadn’t insisted on having the market all to themselves, both papers might be publishing, and thriving, today. Maybe not; maybe the market isn’t big enough for two successful alt-weeklies that put money and effort into serious news coverage. But now it appears that soon we may have none at all.

In which case, a chain that wanted a monopoly will have killed both papers.

The East Bay Express has a brilliant publisher (my friend Jody Colley), a talented staff, a smart business plan, excellent management, and a great, growing market. It has writers who use social media better than I did at the Guardian.

But the story of what happened in San Francisco has to include the history of chain vs. local competition and what happens when someone with a lot of money decides to take over a market. Every local store that has tried to compete with WalMart or Home Depot or Loew’s or Amazon knows the deal. You can do the best job possible, and be the smartest business person in the world, and have great products — but the chains can still hurt you, and sometimes, kill you.


Tim Redmond
Tim Redmond has been a political and investigative reporter in San Francisco for more than 30 years. He spent much of that time as executive editor of the Bay Guardian. He is the founder of 48hills.
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  1. Working at SF Bay Guardian @1978-79, @ time of City Hall murders + Jonestown, was the most exciting, interesting job I’ve ever held. I got to know BBB & Jean quite well at the time, and have long admired how much energy & resources they put into this publication. Tim Redmond’s article here is very insightful, and I look fw to following 48 Hills!

  2. A different order of magnitude, that’s where.

    The Guardian became so self-centered and such a product of a small clique of friends that it never criticized its friends even as they led their constituencies to their political deaths yet continue to serve and cater to them.

    Maintaining friendships and valuing political relationships no matter how doomed they were is what sent the SFBG over the edge. Relevant reporting to their political base is what could have saved them. Instead they put forth the primarily same irrelevant crap of “the most vulnerable” be they glitter starred queers and trans people by Marke or Burning Man by Steven or Bruce’s incessant rantings against PG&E or Tim’s equivocal hand wringing over his allies capitulating to whatever neoliberal or developer imperative came across their plates such as the Eastern Neighborhoods plan which is the coup d’grace on progressive SF.

    The Guardian committed suicide due to its own short-sighted choices.

  3. That “powerful connected computer in your pocket” looks like it’s been more a leash on your thinking. Where exactly is 6000 on a a scale of 1 to 10?

  4. LA’s politics are bad but there’s way more squabbling here. Also, not sure but I think LA is still very very leftwing at this point but changing slowly again. SF is definitely changing a lot. The new report I just read is that 4 million millennial voters in California are independent and libertarian.

  5. JHT,

    According to the SFBG archives you last worked there in 2008 and you admit that you no longer live in the city and that much of what now goes on here “goes right by you”.

    The demise of SFBG is due to multiple factors. No doubt some of the things mentioned by Tim were a part of it, but his account conveniently smacks too much of this all being a vast right-wing conspiracy to explain it all.

    The primary reasons were surely economic. Readership was way down, the paper shrank dramatically in size, advertizers went on-line, the demographic changes in SF no longer favor extreme left-wing reporting and there was poor management both before and after the change of ownership.

    The writing on the wall was there for all to see for a good few years before the final denouement. don’t let nostalgia for your time there cloud a more objective viewpoint.

  6. I’m now an LA resident, so much of the interminable squabbling on the 48 Hills website goes right by me, since I have different local politics to contend with. But when I see the same posters throwing their ignorance around concerning a paper I knew intimately and loved a lot, it’s beyond annoying. Read Tim’s piece carefully and then logout, go find a park, and throw rocks at each other. Most of those responding to Tim know very little about what happened at the SFBG, just as they know very little about how great it was to go to work there everyday. I repeat: Read Tim’s piece. When you’re finished you’ll know more than you did when you posted theories that, while sometimes entertaining, are very wrong.

  7. Greg, I would guess that the legal settlement includes a confidentiality agreement, which implies financial penalties for anyone who spills the beans.

    Yes, it’s possible that someone could snitch in a clandestine way but it is not as riskless and easy as you imply. An ISP can be subpoenaed, as could any VPN or proxy server used. You’re really asking Tim to do something like wear a disguise and go an internet cafe, or else have someone else leak this via something like TOR.

    But even then, if there are only a very few people who know the truth, then it’s going to look very suspicious. And one thing I like about Tim is that he has integrity. He’s fundamentally honest, even if he does present a rather skewed version of the facts for a political end.

    Your question remains valid, however. None of the problems cited here would have mattered if there were a 20 million nest-egg underpinning SFBG. It could have been self-funding and completely independent. The failure to collect that 20 million, or anything close to it, was the most critical factor. I’ve already outlined what I think happened, based on what we do know.

    But then again that was a purely fortuitous and random windfall and I personally never thought their case had merit. And if SFBG’s viability depended critical on a unpredicable windfall, then we are back to asking the same questions anyway.

  8. A facile and trite pile of malarkey. Mercantilism was practice a few hundred years ago and the last thing it was prone–or intended–to do was improve the lives of the poor and downtrodden. Capitalism only started working for the poor with the threat of Marxist thinking.

  9. You are on point today. I am loving this. Also possibly a bad business model? I would have removed the papers, went online only a decade ago when BB still owned it.

  10. The reason why the SFBG expired was because it became less and less relevant to San Franciscans as it became more and more relevant to the political operative friends of the staffers and those political operatives became more and more dependent upon the neoliberal mayors for their funding.

    Echoing the echoes of the echo chamber when the echo chamber you’re echoing has no resources or numbers is a fast path to political and economic irrelevance.

  11. Trolls are easy to dismiss, Tim. Much harder are the folks who are progressive but still curious about what really happened. Yesterday I posed a question. I pointed out that if those in the know really wanted to get the full story out, there are ways to do that which can’t be traced back. The question is, do you or Bruce *want* to get the story out? If not, why not? Thus far, we haven’t seen anything responding to that point. Your comment of “Let’s leave it at that” leads me to believe that we probably won’t.

  12. Guest, where you derive the notion that banks and landlord represent 40% of GDP? I have never seen such a figure before and I’ve been following economics for a long time.

    In any event, banks and REITs are public securities and are owned by our IRA’s, 401-K’s and mutual funds, i.e. their profits are recycled back to us through dividends and capital gains.

    I’d agree that taxes are much too high, however.

  13. The market economy beginning a few hundred years ago brought incredible social and economic gains to the lower classes, and gave families that were once feudal serfs a means of escape from the heavy yoke of the all-powerful landlords. Most of us know the current system is terrible, but we like the freedom to chose our jobs and which products we purchase. Besides, the market economy is a small segment of the overall economy – landlords and banks make up 40% of the economy, effectively extracting rents from tenants and homeowners (a feudal relationship), and the government is taking another large chunk of our cash to fund its operations. After paying rent, mortgage and taxes, most of us have a fraction of our earnings to spend with the big, bad capitalist businesses.

  14. A more generalized lesson is that the whole “invisible hand” meme which holds that capitalism is the most efficient system is utterly overrated if not wholly false. The problem is that the capitalists are typically NOT ruled by logic and rational thinking, but by some flavor-of-the-week capitalistic-self-actualization claptrap.

  15. You can quibble that the players haven’t matured yet but my point is that consumers now carry a powerful connected computer in their pocket and the revenue streams that paid the bills for the SFBG — bars, restaurants, music venues, prostitutes — can reach consumers more effectively through their phones than through a weekly newspaper.

    And as far as spin, if the corporate spin at the Chronicle is a 6 on a scale of 1-10, the SFBG (and 48 Hills) is a 6,000 in the other direction. How many times this week did we hear about how Ed Lee’s state of the city speech was nothing but a pack of lies and that Ron Conway loves to waterboard people?

    You call that useful reading? Really???? You needed to read that to know that Tim Redmond would be unhappy with something Ed Lee said?

  16. You’re wrong, Sam. The survival of the paper was their top priority. You know nothing of the finances, debts, mortgage, etc. Trust me, they didn’t walk away rich. Too bad — they deserved to walk away rich, after all those years. But if there had been money to keep the Guardian alive and independent, they would have done it.
    As for me, I am happy to be running 48hills. Let’s leave it at that.

  17. Actually, Dave, yes. None of these resources can ever replace a good independent weekly. Yelp sucks. They call businesses to extort money and then manipulate their reviews in accordance with their answers. I’ve always found SFist to be pretty worthless. Can’t comment on the other sites you mentioned because I never tried them. Maybe I should.

    But that’s beside the point. The problem is that it’s very hard to get local news free from corporate spin, so when corporations gobble up independent media, or run them into the ground in order to corner the market, that’s not good for democracy and it doesn’t make for an informed public.

  18. There is one thing we know for sure, and that is that SFBG collected very little. Otherwise they would have been sustainable and viable throughout this period. Indeed, BBB could have just re-mortgaged the property and retired to live off the income stream.

    As I noted above, 20 million in Treasuries and Federals at 5% pa would yield a tidy million a year – easily enough to pay Tim, Steven and the other handful and still have change.

    There are a few things we know from reporting at the time. The defendant structured their affairs so their US subsidiaries had a negative net worth and the positive net worth assets were in Canada – conveniently beyond the jurisdiction of a US court.

    In fact SFBG made a big deal out of seizing 2 rusty old delivery trucks, which was noise in the grand scheme of things. Yet they heralded it as a triumph for justice.

    If SFBG had any money left they should have filed a malpractice suit against their lawyers who put everything into suing and nothing into collecting. And any lawyer fresh out of law school knows that you don’t spend a fortune on litigating if the defendant is judgement-proof, or can arrange their affairs to be so.

    That failure should be put in the context of SFBG’s other failures. There is a clear pattern of negligence and incompetence.

  19. I was expecting an article on what really happened with the settlement. I thought, for just a second, that maybe it was OK for you to talk now that the Guardian is gone and they can’t go after the Guardian’s assets if you break the gag order. Well I guess not.

    So Tim… I was thinking… you know how anonymous trolls hide their identities through changing their IP addresses and various other tactics? Well I was thinking that maybe someone in the know could use the same tactic to reveal what really happened. Perhaps someone could go on a local blog and say, “a little birdie told me that…” It wouldn’t be that hard to break the gag order without any consequences. The public library doesn’t keep records of who used the computer. No one could ever prove that it was you who spilled the beans.

    On the other hand, if you could say, would you *want* to? I guess that’s the first question one should ask before all others.

  20. Great analysis. I didn’t usually agree with a lot of the political coverage, but the Guardian was really good at keeping tabs on what the pols at City Hall were up to with their endlessly entertaining scandals. I’m looking forward to the new, expanded improved 48 Hills.

  21. As Tim mentioned, the East Bay Express is doing fine, ever since it went back to being independent after a few years as a New Times paper. A recent note goes into detail about the state of the EBE.
    The Anderson Valley Advertiser is going strong, too.

  22. Dave’s comments are about things like entertainment.
    We wonder where will citizenry get the alternative sources of information in order to collate and synthesize information necessary in a democratic process ? Particularly when bills to vote on might be ambiguously worded ( Vote YES on something that might deprive one ) or carry railroad provisions not amply explained in mainstream media ?

  23. Excellent satire, Dave. Although I have to say that SFist sucks major ass and, at least in that regard, I think SFW and SFBG were better.

    One other thing. Tim ducked the question of that $20 million judgement that BBB got from the parent of SFWeekly. But it is abundantly clear that SFBG collected almost none of that money, else SFBG would have been golden in perpetuity. Five million in T-bonds at that time would have given them an income stream of a million a year – easily enough to pay their six staff and sundries.

    OK, Tim is estopped from discussing that. I get that. But isn’t the incompetence around the failure to collect those monies absolutely material to any understanding of SFBG’s fiscal collapse. It’s like they won the lottery and then frittered it all away.

  24. If only we could somehow stop technology and communication advancements in their tracks. If only.

    If we could somehow make Yelp go away then people would still need to go down to a dusty old bin on the street, hope that some homeless person wasn’t using it as his/her personal locker, reach inside and pull out a paper with food and drink listings. No first hand reviews, but viewing the information and getting directions on your phone is SUCH a drag.

    Without SFStation people would still need the printed alt Weeklies to find out who is playing where.

    If SFist would go away then people might still turn to alt weeklies for local news. We wouldn’t have to rely on SF.Funcheap.com for quirky events if we had strong alt weeklies around.

    If only people still needed to carry around a newspaper in order to have hooker listings when they felt the need.

    Yes, it’s all the fault of a few assholes from Phoenix.

  25. I question this claim:

    “Bruce and Jean didn’t “cash out.” They had no choice – if they hadn’t sold the paper when they did, it would have folded right then. There was no money left. So they did what they had to do to keep the Guardian alive.”

    I read somewhere they netted about 3 million from the sale of the business and property. So why would the business :”have folded right then” with the equity those net proceeds implies? Even if there was no cash, there was collateral to be hypothecated for a loan.

    Now, that is not to say that Bruce and Jean don’t deserve a comfortable and relaxed retirement. They spotted a business niche and exploited it, so they deserve to enjoy the fruits of that. I’d have done the exact same thing.

    But clearly had the survival of the SFBG been their top priority, they would have taken a risk and made that 3 million available to SFBG which, no doubt, and even sans the hooker ad revenues, would have survived in some form.

    I do not expect you to have a bad word for BBB. But I would respectfully suggest that you are being a little biased in your assessment of the reasons for the demise of SFBG. It is probably no coincidence that the real fall in influence and fiscal viability started happening right after BBB bailed.

    One last point. My understanding is that you quit because you refused to let a few staff go. With the benefit of hindsight, isn’t it possible that it would have been more prudent to have cut your losses back then and stayed at the helm, rather than quit and see everyone lose their jobs not so long after?

    All that said, in personal terms, I think you are much more in control of your destiny here.

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