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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  • In big cities in USA the competition is very intense. News papers have to work a lot to keep themselves profitable. However,in distant small towns it is a different thing . It is just a trend and Fortress has understood it and took advantage of the situation

  • 400 papers and $23 million in profits. Is my calculator broken or is that less than an average of $60,000 per paper per year (about $5k a month.) Have you ever seen all the work that it takes to publish a paper? And at those returns a couple of bad month and you’re bouncing payroll checks. BTW it’s just as hard to make money in the UP as it is in Detroit.

  • Rob,

    My first job out of college was as a reporter then as an editor. So my comment is based on both my Journalism degree and my work as a writer/journalist.

    I think that small town papers aren’t doing anything new or original. In fact, I bet they are doing something very old and unoriginal, by covering local news and planting lots of local names and photos.

    It’s not a secret that people buy their local paper (including those papers in towns with 100,000 residents up to big city numbers) to read local news.

    I recently unsubscribed from my local paper (circulation 100,000+) because it covers local news poorly. If I want to know what’s going on elsewhere, I’ll read the NYT or the WSJ.

    So, if it isn’t a secret that subscribers want local news, why don’t papers cover local more aggressively? To do so requires reporters instea0d of syndicated wires and it costs more.