Small Town Papers Mean Big Money

For all the talk of the death of old media, one company is bucking the trend and acquiring small town papers. It turns out that there is still lots of money to be made.

Through GateHouse Media Inc. (GHS ), Fortress controls more than 400 publications, from Michigan's Upper Peninsula to the California desert. This year the company is expected to generate $23 million in net earnings on $400 million in revenues. GateHouse went public in October, raising $248 million, before Fortress, which still holds a 60% stake, resumed gobbling up local papers.

Given the parlous state of the newspaper industry, sinking money into print may seem contrarian, crazy even. But as national chains are broken up and young readers and advertisers flee to the Web, Fortress has spotted an anomaly: There's good money to be made publishing newspapers in small towns and exurbs.

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