The Digital Skeptic: The Newspaper Gets Its Revenge

TheStreet.com

NEW YORK (TheStreet) -- Sherwood Olin has apparently cracked the code for building a news business in this crumbling digital age.

"If the Pope crashes one foot outside Lincoln County, it's not news," Olin, the editor of Newcastle, Maine's hometown paper told me a month or so back.


His Lincoln County News is one of the most fascinating media entities I have encountered in some time. It's been the news source for this rocky nook of mid-coastal Maine for the past 138 years, pretty much once a week, and somehow over that century and a third this traditional printed paper has escaped the dogs of the digital age.

First off, big is beautiful when it comes to The Lincoln County News. Yes. There's a website and Facebook page, but the foundation of this brand is a full-color, 36-page, seven-column-wide printed edition.

This stretch of news real estate -- just under 36 inches wide when open fully -- creates a dramatic frame for content. Sure, the coverage is about damage-free blizzards, citizens stressed about fireworks legislation and the kid who won the spelling bee. But the message is clear: Information has value. It's a commitment to news that comes straight from the owners of this privately held operation.

"I tried to push for bigger photos," Olin told me of a conversation he had with Chris Roberts, publisher for Lincoln County Publishing -- who runs the printing press by himself, according to Olin. Olin wanted more layout options with larger images.

Roberts "looked at me long and hard," Olin said. "And then politely said, 'But that would cut down on the news.'"


By all accounts, The Lincoln County News -- with two editors, four staff reporters, about three dozen stringers and support staff and advertising personnel -- is a pretty darn good business. Olin said he prints 9,000 copies per week and revenues are solid.

Buffett's deal of choice
Anybody watching newspaper stocks -- which have seen a mid-teen percent valuation jump in the past year -- will agree Olin is probably right. The upside of small- to medium-sized print outlets has not been lost on America's best investors. None other than Warren Buffett began gobbling up smaller print news outlets last year. The flashiest was a $142 million purchase of 63 papers from Richmond, Va.-based Media General .

In fact, this sector is so successful that analysts are codifying an investing approach. Want to buy a local print cash cow? Check out a blog post by Peter Beller and Sarah Erickson, content director and content manager respectively at Los Angeles online content exchange Ebyline, called, Uncovering the Buffet Equation for Newspaper Survivability.

The secrets to media success these days? Never mind talk at media giants such as Gannett scoring this or that paid-content play online. What makes real money these days is keeping it small, keeping it local, ignoring the Web and not sweating falling circulation.

If investors want to see what woes await if this advice is ignored, just drive north on Route 1 to Thomaston, Maine. There Courier Publications -- the publishers of The Courier Gazette, The Camden Herald and other local Maine papers -- was bought in 2008 by a Web entrepreneur named Richard Anderson. Armed with an $885,000 Knight Foundation grant, Anderson changed the focus of these outlets from print to Web, gave most of his content away online and deployed new digital production software. But -- like many other media outlets lost in the Web wilderness -- costs rose, revenues fell and by March 2012 Anderson ceased operations.


Even still, local news printed on paper held its value: A free-circ paper publisher named Reade Brower bought the outstanding assets, reports show, and a print-focused Courier Gazette and Camden Herald began publishing yet again.

No new media answer
Even more stunning for investors to consider is how new-media's leading lights are almost irrelevant in the discussion on how to replicate the success of The Lincoln County News. Last month, I had the chance to directly question Tim Armstrong, CEO of AOL , about the success of papers such as the News compared with struggling new-media local options -- specifically Armstrong's Patch.

"That type of success you see in smaller papers is what we hope to replicate," he told me. When I pressed him and mentioned the grim results for Patch, Armstrong said he hopes it will be profitable by the end of 2014.

Here's the kicker: Maybe new-media options such as Patch work out. And maybe they won't. The fact is, it probably doesn't matter. The Lincoln County News will probably be around for another 138 years, Web or no Web. That means, for investors looking for rare upside in today's confused information economy, kicking it old-school and seeking out news, printed on paper for a targeted market turns out to be as good a bet as you can take.

"We are not going anywhere," Olin told me.

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