In a UK news market long dominated by centuries-old national dailies, there is unending criticism of how the digital platforms have “stolen” the advertising on which regional newspapers, in particular, had come to depend. The post-digital mayhem has led to the closure of more than 290 regional newspapers in the last 20 years, with (according to Press Gazette) the loss of two-thirds of the journalist headcount. No fewer than 22 print brands have been shut since 2022.
The familiar publisher complaints took an unwelcome turn during hearings in the UK Parliament earlier this year. Members of the country’s House of Lords heard from executives of the country’s two largest regional news groups Reach and Newsquest that the tech platforms continued to be a challenge both for the distribution of news and advertising, although they were calm about current market conditions.
But they were politely contradicted by a new voice.
Joshi Herrmann is founder of the four-year-old Manchester Mill and three other local, longform newsletters. His startup has had an impact out of all proportion to its funding or current scale because it has concentrated on subscriber-funded, quality journalism in the major cities outside London. The low-cost business model seems perfectly weighted for the metro areas where once-successful daily newspapers (and their digital offshoots) are seemingly trying to survive just by selling ads, trimming content and cutting costs.
He shattered the calm consensus of the parliamentary committee: “I think the larger question of ‘how has quality been maintained in local media?’ generally is that it obviously hasn’t. In the local town near where my mum lives in Sussex, there used to be two local newspapers, both of which had an office on the high street… Now, there is one newspaper and it doesn’t have any local coverage to speak of. There might be one story about the local town. The rest of it will be aggregated from other local communities where the same large news organisation owns other titles. It is effectively a zombie newspaper. It says it is about one town. But, in fact, it has just got content and stories from all over the country and from all over the region. So, quality hasn’t been maintained. If you go on the websites of local newspapers in the UK, you will find all sorts of stories that are not journalism and they’re not local, and you’ll even find so many ads covering that content that it’s very difficult to read.”
The quietly-spoken Herrmann’s hand-grenade throwing continued with his assertion that news innovation in the UK had been suppressed by archaic rules that favour large incumbents, including the tens of millions of pounds of government advertising and local council ‘notices’ which tend to be channelled exclusively to traditional publishers of print newspapers: “We have this bizarre spectre in this country of zombie newspapers that do not have any local original journalism and do not even have any local reporters, but they are kept alive because of these public notice advertising arrangements, which all go to these very large newspaper groups.”
In some ways, the parliamentary session underlined the point – for the outgoing Conservative Government – that it’s all about supply and demand. While the “market” will tend to encourage innovation from the likes of Joshi Herrmann, UK local and national government can play its role by – for example – “fairly” placing those local council planning notices (at a cost of £40mn) and not just in print – and also by spreading its £100mn advertising budget beyond broadcasters and daily newspapers.
The unexpected message made clear that the UK Government could help to incentivise innovation in regional news “simply” by re-allocating just some of its current budgets. The theme was picked up by The Guardian which commented: “You might think that the government would want to support these news entrepreneurs, who are levelling-up information provision in communities across the UK. But no. In fact, successive governments have channelled a range of subsidies to the corporate publishers who own the surviving legacy local papers, while the indies have received next to nothing.”
It added that the UK was well behind other countries in its support of local news, by contrast with the US “where philanthropists have pledged $500mn to rebuild local news, with the target of raising $1bn over the next decade. Governments in Denmark, the Netherlands and New Zealand provides subsidies for local news through arm’s-length mechanisms to protect journalistic independence. The City of New York puts more than 80% of its advertising budget in the hands of community media. In Canada, there are tax breaks for journalism.”
Herrmann’s claim that some UK “zombie” local newspapers were being kept alive solely by the paid notices of regional councils helps to illuminate the challenge of Reach Plc. The country’s largest news publisher is a listed company responsible for no fewer than 120 national, regional and local print and digital brands which reach more than 70% of the UK population. That’s some 47mn Brits (about 25% of them registered) and, although almost 80% of its £570mn revenue is print (75% from readers), it is the UK’s sixth largest digital group.
The legacy publisher is slowly emerging from a miserable history of pension deficits and phone hacking liabilities. It’s best known for the Daily Mirror, Daily Express and Daily Star, that may account for more than 50% of the print revenue. To the legacy financial headaches, we might include the way the company – under its previous CEO – continued to acquire print newspapers. It still reports to shareholders as if the diverse national, regional and hyperlocal portfolio of daily, weekly and monthly newspapers, magazines and digital services as “one business”.
You only have to ask whether Reach Plc – as publisher of some of the UK’s largest national tabloid dailies – would today be expected to acquire ( its) local weeklies selling a mere 1,500 copies. Of course, it wouldn’t. A newspaper strategy that was once under-pinned by the scale economies of print, paper and distribution is outdated, to say the least, and helps to explain the local news “blockage” identified by Joshi Herrmann. But, of course, it’s not easy for anyone.
The key point may be that “hyperlocal news” is a different business. In the UK, as elsewhere, you might divide the print-digital news business into three categories:
- National dailies, most of which (with the exception of Reach) are published by companies without other news brands
- Regional ‘metro’ dailies, of which Reach is far the largest publisher
- Local monthly and weekly news brands (for towns of under, say, 100,000 people)
The small-scale “local weekly” market is, of course, most likely to be neglected by broadcasting and major digital media. It, therefore, needs to attract the support of digital startups, philanthropy and community interests – without the risk of heavyweight competition from publishers who can earn their profits elsewhere.
That’s why it is becoming a quite different business.
Nowhere is this clearer than the hyperlocal Nub News network, launched by former equities market trader Karl Hancock. Just five years ago, he knew little about media. But a university reunion with a techie friend led to his plan for hundreds of mobile-first, hyperlocal news sites. He had spent 25 years working for London investment banks and was nearing the end of a six-year stint as head of equity sales for Berenberg when he decided to raise funds for the local news idea from five investor friends. They paid some £700k for 8% of the shares, to fund the launch of the mobile sites that promised to put “your town in your pocket”. It started with January 2019 launches in Hancock’s adopted home county of Devon, and continued with Teddington, in south west London, where he had previously lived.
His plan was for each town to have a service comprising: local news, classified ads and a system of stories from “trusted contributors”, such as local councillors, politicians and event organisers. Readers are encouraged to post their own local news and events – or to “nub it”.
Hancock claimed to be in pursuit of “what the local newspaper was 25 years ago, but on the web. We want to be in the heart of every town and city in the UK. We want to provide everything that a town wants and to get the community talking. We want to make local news easily accessible on all devices, particularly mobile, without intrusive pop-up advertising, enforced surveys or clickbait. We will ensure our content remains truly local.”
He said Nub News was initially targeting smaller towns whose residents felt neglected by local newspapers that are now published (either in print or digitally) from distant offices consolidated in larger places. Some, presumably, were being “served” by those “zombie” papers. The key to the Nub News business model was one or two journalists posting some 2-3 news stories a day in each of 3-4 towns (so less than one journalist per community) with centralised technology and some ad sales.
Today, Nub News’ sprightly local sites are in 30 towns including its flagship in Crewe, in the UK’s NorthWest. More than five years after launch, it expects to breakeven in 2025, for the first time:
| Nub News £k Yr end Sept SnapShot | 2025* | 2024 | 2023 | 2022 |
| Revenue | 684 | 520 | 500 | 322 |
| EBITDA | 6 | (278) | (656) | (671) |
| Headcount | 19 | 19 | 36 | 31 |
After a slow start, revenue (mostly advertising and content marketing) has doubled in the last three years and is predicted to grow by 30% in 2025. Some £75k (14%) of this year’s revenue comes from Crewe which (together with five other towns) generates 30% of the total revenue, much of it from supermarkets, car dealers, real estate agents and job ads.
But the clues to a very bumpy first five years are in the halved headcount in 2024, as a result of the closure of 17 local editions. The painful learnings have been that some towns are just too small even to generate even the £30-40k of advertising required – and also to find sufficiently versatile but experienced journalists to write content, take photos and engage in social media. Beyond that, the company simply tried to grow too quickly and now seems likely to be aiming for a 2-3 year target of 40-50 towns rather than the 100 Hancock once predicted. Longer-term, it still hopes to reach 200 towns. A network like Nub News could eventually generate substantial earnings from lotteries, perhaps linked to local charities.
But there’s more.
The local news startup that launched with £700k and – 18 months after launch – was seeking a further £2mn of investment – has actually invested a total of £3.5mn to date. If you needed any further evidence of the birth pains, you only have to note that Hancock himself now owns about 25% of the company. The 54% majority shareholder is Bill Holmes, owner of the Crewe-based £3bn fuel card provider Radius, one of its biggest advertisers. It means that each Nub News town – the average annual costs of which are £30k – has cost the company an average of more than £100k to establish. Which wasn’t, of course, as expected.
Having burned through all that cash, it is now clear that the Nub News business model is viable: the tiny staffing really does generate well-read news and loyal audiences. Karl Hancock is finally proving his point.
But Nub News has other problems.
Take its flagship site in Crewe. The longtime railway town and home of Bentley Cars has a population of only 55k but the Nub News site gets a claimed 150k monthly visitors, so a large proportion of the total population ‘tune in’ each week. The trouble is that it competes with Cheshire Live, an ambitous multi-town site from Reach Plc which has long published newspapers across the whole region. Some Reach executives are, incidentally, quietly envious of Nub News’ low-cost business model, far from the traditions of their large-scale dailies and even Reach’s own, richer hyperlocal brands.
The Reach Live sites (with a claimed UK-wide audience of 29mn) have become a core part of its digital programme, not just in their own newspaper towns. We might not have been alone in wondering why a news company (still) dependant on reader revenues should have concentrated so much of its energy and investment on free digital services. But it is notable that the five-year Reach CEO Jim Mullen’s messaging about a strategy (mostly) about digital has subtly switched in recent presentations to emphasising that print revenues have been holding up better than expected. It begs the question of why wouldn’t Reach have sought to provide ‘free’ digital services as part of the subscriptions and copy sales by readers? Wouldn’t that have helped to maintain or even increase reader revenues, especially amid the soggy digital advertising of recent years?
But the strategy was, inevitably, shaped by the agonising task of paying off its legacy debts without the capacity for significant investment either in organic development or acquisitions. The digital success can be measured by its 11mn audiences in each of Birmingham and Manchester.
That’s where we come back to the viability of local news in the UK, not just because the £400mn Reach is all over the market but because it too is challenged by the same conditions as little Nub News. No fewer than 13 of the 14 digital local news brands closed during the past two years have been from Reach. They had been part of the company’s ambitious 2021 plan to cover every county in England and Wales via print or online.
All but two of the closed sites had been launched into areas where Reach did not have newspapers. But the closure of sites each with (at most) a few journalists, arguably, emphasises the company’s difficult-to-manage diversity. It seems obvious that the syndicated national advertisers – which can embrace Reach’s national and metro daily news brands – will mean little to its Cheshire Live website or the Crewe Chronicle newspaper. For all the claims of its unrivalled print/ digital audience, the small-town, long tail probably adds little potential revenue and profit to a network with such strength in many of the UK’s largest towns and cities.
It’s time for change.
“News” is, of course, not a single industry. Hyperlocal news is all on its own and the UK might be better served by letting startups like Nub News and Mill Media get on with it, free from the legacy of newspapers and printing presses. It would be a relief for Herrmann, Hancock and their peers but could also usher in an expansive era of small-scale innovation for local news, powered by low-cost business models – and some government advertising.
As Reach Plc slowly approaches its point of financial normality, it could do worse than trim its historic long tail and divest local weeklies and their digital equivalents in order to maximise its opportunities in print and digital “dailies”. It might start doing that before the new UK government decides to shift its advertising away from the “zombie” papers. Time for action.
