Community Newspapers Still Profitable

As much talk as we've heard lately about the impending death of newspapers, there's at least one company finding profitability in good old-fashioned community rags.
A recent story from BusinessWeek mentioned a couple of small-town Arkansas newspapers that are a tiny piece of a growing chain that's finding there's still plenty of money to be made in modest print markets.
The Sun Times in Heber Springs and the Arkadelphia Daily Siftings Herald, two of the papers mentioned in the article, are both Liberty Group Publishing papers, which is now in the midst of a name change to GateHouse Media. GateHouse, with headquarters in Fairport, N.Y., was bought last year by a New York hedge fund and venture capital firm, known as Fortress Investment Group LLC.
The BusinessWeek story says For-tress, by way of GateHouse, now controls more than 400 publications nationwide and is expected to pull in $23 million in net earnings on $400 million in revenue. In most of those communities as much as 70 percent of the population is hooked on local news, where most big-city dailies are lucky these days to get only about 40 percent of the market.
Fortress sees an opening to scoop up local ad dollars as big papers have seen national advertisers defect to television and the Internet. The BusinessWeek story quotes an Arkadelphia dentist about the importance of hometown papers.
"We are in a town of 10,000 and the local paper is maybe eight to 10 pages. People will read that," said Randall Jones, who is a regular advertiser in the Arkadelphia Daily Siftings Herald. "Our message would be lost in a larger newspaper."
A strategy of GateHouse in going after regional advertisers is to encircle a major hub, like Boston, where the Boston Herald and the Boston Globe dominate, with community papers and offer package deals to advertisers encompassing its ring of papers and Web sites.
Sound familiar? That could mirror what Stephens Media Group of Las Vegas has aggressively been doing in the central Arkansas market with its acquisitions of several publications — most recently the Hot Springs Village Voice — that make a virtual hoop around the Arkansas Democrat-Gazette's base.
GateHouse's Arkansas properties, other than the two already mentioned, include The Hope Star, Nevada County Picayune, Gurdon Times, Stuttgart Daily Leader and the Newport Independent.