Media Fortune Fame & Folly

Is this how local papers survive?

Traditional media is quick to allocate the blame for its demise. Dying magazines and newspapers believe that digital monsters have stolen their readers, advertisers and the right to exist. But we might reflect on Covid as a way of explaining what has happened. Almost everyone agrees the pandemic has not so much caused fundamental change as it has accelerated trends already underway in retail, media, entertainment, communications and much else. It helps to focus on the way that business models have been broken – not the very concept of newspapers or magazines.

Instead of lamenting the death of hundreds and thousands of local weekly newspapers, we might identify the way home-town media had been changed by 20th century corporate ownership and the search for economies of scale and aggregation.

That’s the clear-eyed view of a successful Australian executive and former professional tennis player who has stumbled into media ownership in the tiny town of Naracoorte, 300 miles from Adelaide, in South Australia.

It’s quite a story.

Michael Waite’s biography is straight out of a movie. Three years ago, he and his wife and young daughters were living in Seattle, in the US. He had grown up in Naracoorte but had spent the previous 20 years in the US, first on a tennis scholarship at university then as a professional player on the International Tennis Federation tour. He became vice president /CFO of large US corporations including Bill & Melinda Gates’ private investment fund and the $50bn BentallGreenOak. He became a US citizen; he even ran for election as Washington state treasurer and came a close second with more than 1m votes in 2016. He dared to say he would not vote for Donald Trump.

But the death of a close friend prompted him and his pediatrician wife to quit their jobs, rent out their house, and do the travel they had dreamed about.

In the middle of their 10-country world tour, the Waite family landed in sleepy Naracoorte late in 2019 to spend time with his parents. It’s a quiet place with one main street, a bakery and a meatworks. Most of its 5,300 population is involved in some way with farming, tourism and – not far away – wine-making. The biggest tourist attraction is a prehistoric fossil cave. During the 1850s, the town had grown as a base for hopeful people in the Victorian gold rush.

Waite was enjoying being back in his quaint hometown, with his American accented family, for what was intended to be a short stay.

Then three things happened. His mother was diagnosed with terminal cancer. Covid-19 struck the world. The Naracoorte Herald, for which his mother had long worked as a manager, suspended publishing.

The family was reeling. But the loss of the only newspaper, after 145 years, hit the town hard: “There was nothing that we did in our lives (growing up in Naracoorte) that didn’t seem to revolve around writing a story for the Herald, taking a picture for the Herald or – particularly in my Mum’s case – selling an ad for the Herald”.

The “big company, far away” decision to stop publishing the town’s weekly newspaper – in a time of crisis – galvanised Michael Waite: “A town the size of Naracoorte does not deserve to be without a newspaper. It’s part of the fabric of a community, like the hospital or police station. I grew up with the Naracoorte Herald. My mum Sue sold advertising and then managed it for 35 years. Australian Community Media walked away from our community with this paper and it struck me that I should see what I could do. The newspaper in a town this size and calibre is such a pivotal communications engine”.

When taking over the suspended newspaper seemed impossible, Waite decided to create a new one. He raised A$20k from four local business people, added in his own A$10k, and decided to launch a new local newspaper for the town – for 10 weeks or however long it would be needed.

From the initial wild idea to the printing of the first edition of the Naracoorte Community News (The News), in May 2020, took just three weeks. Waite and a small team worked 24/7 to produce the paper that would sell-out its 1,700 print run in two days. Sales are now around 2,400. It is believed that the circulation of the now-resumed Herald is a mere 400 weekly copies.

Waite was determined that his new newspaper had to be sustainable for the longterm. He noted how publishers like Australian Community Newspapers (owner of the Naracoorte Herald) had sought to exploit scale economies across large numbers of papers. But the business model looked increasingly vulnerable and had led to the closure of hundreds of regional newspapers across Australia, as everywhere else.

He decided to price his newspaper at A$2 (the Herald is A$1.70) but also to offer annual sponsorships (block booking of ads) to companies, and memberships to readers. He recruited key staffers who had worked on the rival paper and, although they had been as wounded as him by the closure, they thought he was mad for planning a newspaper startup, let alone in the middle of the pandemic. Waite took photographs on his phone, wrote headlines, and and drove the six-hour round-trip (in his Dad’s non air-conditioned car) to collect the newspapers from the only printer he could get. His Mum even sold ads from her sickbed.

From the beginning, Waite wanted to position The News as a community service as much as a newspaper: it donates 25 cents from every copy sold to local sports, arts and community clubs. It has so far given away more than $10,000.

The contrast with the Naracoote Herald could not be more stark. The newspaper (along with hundreds of others) had been offloaded after the TV-led Nine Entertainment Company acquired Fairfax Media in 2019. The regional papers were acquired by private equity which, from the start, said that some of them “don’t make sense”. It became a familiar story as Australian Community Media centralised operations in regional hubs and shared content from newspapers right across the large state of South Australia. Naracoorte readers noticed the appearance in their weekly paper of “random stories from other areas that didn’t mean anything to the locals,” The Herald’s editor is said to be based more than 500km away, and in charge of five regional newspapers.

Waite says: “It had essentially become a zombie newspaper. All pictures, no content, with press release stories and non-local ads. They hadn’t renewed their office lease, so the paper didn’t even have a physical presence in the town.”

It’s a familiar enough story, of course, with echoes across the US, UK and elsewhere. But Waite’s nine-month-old Naracoorte Community News is a weekly newspaper now read by more than 60% of the town’s population. It is credited with holding the local council to account, giving readers the independent reporting they want – and belonging to the town.

The paper managed to breakeven within its first few weeks and its A$332k revenue in the seven months ending in January 2021 will produce a few thousand dollars of profit. The paper is on track for A$600k revenue in the year ending to June 2021. Waite seems to have created the sustainable local paper he had dreamed about.

Some 80% of the revenue comes from advertising and copy sales, with 20% from sponsorship and memberships. The 16pp weekly newspaper costs A$3k for print, paper and design, and about the same for 4-5 (part-time) staff. He’s even got a waiting list for ads. The founder owns 80% of the limited company which owns the paper (the other four local backers each own 5%). Waite now works just 10 hours a week on the paper, but reckons it could afford to pay him a A$100k salary if he wanted to be fully involved.

It’s not a perfect newspaper: well-written, well designed, but with only a basic page-turning digital edition for the hundreds of outback dwellers who can’t get to a newsagent. It’s a work in progress – but it works.

Waite’s left-field newspaper mission is a reminder that local communities need local media, and print can still be viable because it is low-cost and accessible. Small-town newspapers may no longer be a suitable business for corporates. The large-scale shift, especially in advertising revenue, has eliminated the traditional advantages of scale, especially for small weeklies. And almost everything except hyper-local news seems over-supplied by the web. But these one-town papers can clearly thrive as community operations.

Michael Waite is not the first to prove the sustainability of weeklies in towns where local democracy can be compromised by the loss of the only paper. But the folksy story of a corporate high flier, tennis pro and local hero might just attract Hollywood. Perhaps Tom Hanks could breathe new life into local papers everywhere.

Narracoorte Community News