This article was originally published on Northwestern University’s Medill Local News Initiative website and is republished here with permission.

During the heyday of print newspapers, big-shot media moguls were practically kingmakers, using their resources to shape public opinion about everything from elections to wars. Jeremy Gulban of CherryRoad Technologies, on the other hand, mainly wants to use his dozens of newspapers to make a modest profit, build his company’s brand and find new customers for its technology services.

Gulban is one of several new “newspaper barons” aggressively buying dailies and weeklies in small and mid-sized markets. In less than a year, with little fanfare, CherryRoad has gone from owning one newspaper to 63 — and counting.

“It was a good time to get into this business. There were some good values to be had,” Gulban said in an interview. “We’ll definitely look to expand again into the fall. Everything has been going in the right direction, for now.”

Recent headlines have focused on the strategic maneuvering of the biggest chains — Gannett, Lee Enterprises and Alden Global Capital, which own most of the newspapers in the country’s largest markets. At the same time, however, privately owned regional chains have snapped up dozens of newspapers shed by the mega-chains, as well as smaller family-owned operations.

Since 2020, three companies have led the way:

• CherryRoad Media of New Jersey — a unit of CherryRoad Technologies founded in 2020 — owns 63 papers in 10 Midwestern states plus a publication serving Fort Leavenworth in Kansas.
• The 125-year-old Kentucky-based Paxton Media owns 115 newspapers in 10 Southern and Midwestern states.
• The West Virginia-based Ogden Newspapers — founded in 1890 — owns 101 papers in 18 states stretching from New Hampshire to Hawaii.

Two-thirds of the 82 papers Gannett sold in the past two years were bought by CherryRoad or Paxton. Six of the 10 largest newspaper owners in 2022 are regional chains — with between 50 and 142 papers apiece in their growing empires. Three of those largest regional chains did not exist a decade ago, while the other three have been family-operated for generations.

The merger-and-acquisition activity is a bright spot in an otherwise bleak marketplace for traditional local news. As COVID-19 disrupted life and work, the U.S. continued to bleed newspapers. Community after community lost its access to traditional local news coverage — with the least affluent markets faring much worse than others.

The U.S. lost 360 newspapers between the pre-pandemic months of late 2019 and the end of May 2022. All but 24 of those shuttered papers were weeklies, many in economically struggling markets. Most of the communities they served did not get a replacement in digital or print form.

Among the regional media chains, several experienced considerable churn in their portfolios during the past two-plus years. Paxton bought 55 papers, but also sold five and closed or merged 10. Ogden bought 28 and closed or merged 11.

The U.S. has lost one-fourth of its newspapers since 2005 and is on track to lose one-third by 2025, creating vast areas without local news coverage. More than 70 million U.S. citizens live in these “news deserts,” or communities at high risk of becoming news deserts.

“This is a nation increasingly divided journalistically between those who live and work in communities where there is an abundance of local news and those who don’t,” said Penelope Abernathy, visiting professor at Northwestern University’s Medill School of Journalism, Media, Integrated Marketing Communications — and the primary author of the State of Local News 2022 Report, which Medill will publish in serial fashion over coming weeks. “Invariably, the economically struggling, traditionally underserved communities that need local journalism the most are the very places it is most difficult to sustain either print or digital news organizations.”

Deal activity remains robust

Despite challenging economics that continue to kill off traditional publications, deal activity for newspaper properties is robust, according to Sara April of Dirks, Van Essen & April, a newspaper broker. “There will be a lot of announcements over the summer of additional deals,” she predicted. “The deal flow is as good today as five years ago.”

Purchase prices, however, tend to fall in a “really wide range,” she said. Asked if most are between two- and six-times cash flow, or approximately 10%-30% of revenue if a property is unprofitable, April declined to specify, saying only, “Deals get done in those ranges.”

Companies looking to purchase newspapers tend to pay more for properties located near each other and near their existing operations. That enables the purchaser to reduce costs by consolidating functions such as printing, design, sales and back-office work.

“Buyers are geographically focused,” April said. “If they can fold in a property, leverage their management team and add staff, that’s one of the most prominent drivers of value.”

CherryRoad is an exception, as it has acquired properties in different areas and makes no pretense of being a genuinely “local” owner. Still, Gulban said, his approach is much more customized than that of Gannett, the previous owner of many papers he bought.

Gulban has added editorial staff where, in some cases, Gannett employed no one in the newspaper’s town. He delegates coverage decisions to locally based editors, he said, and lets each newspaper experiment with its look and feel.

“With Gannett, the papers were made to look like USA Today. Everything was one size fits all,” Gulban said. “Now we’re getting people to cover local news, versus stuffing it with national news.”

The response, he said, has been positive.

“Across the board, we’re viewed skeptically at first. We’ve had to prove we’re going to add local coverage (and) invest in staff,” he said. “The era of the independent local owner is going to be very challenging to maintain going forward, and an organization that allows things to be run locally, even if as an organization we’re not based locally, that’s probably the best solution.”

Other news executives, however, say there’s no substitute for truly local ownership. The Tampa Bay Times, for instance, says it is the only metro-news publication in Florida owned locally, in its case by Poynter. It also says it has the largest newsroom in the state and the most readership.

“That’s not a coincidence,” said Conan Gallaty, chairman and chief executive officer. “If CherryRoad Media truly believes the newspaper is an essential resource for developing strong communities, we cheer them on. However, we do feel local ownership is best because people take care of what’s in their backyard first.”

Regional chains have a natural advantage of being tied in more closely to their markets than the big chains, according to veteran newspaper executive Jeremy Halbreich, chairman and chief executive officer of AIM Media Management in Dallas, a chain of 32 publications across Texas, Indiana and Ohio.

“At AIM, we believe every community is unique and distinct. We’ve got really strong publishers and regional managers. I do think local community publishers have some advantage,” he said. “We’re small enough that we do have the local touch, and it’s what we emphasize in those markets

AIM cannot, however, match the scale of Gannett or the ability of large enterprises to invest in technology. “It cuts both ways,” Halbreich said. “I can’t afford a staff of digital engineers to create new solutions.”

To succeed, regional chains need to embrace “any kind of technology that can benefit us,” Halbreich said, and come to grips with the fact that profit margins will never return to their levels in the “golden age” before internet competition. “We’ve got people in the industry who are still stuck in the past and refusing to recognize that things have changed for good. Sadly, a lot of newspapers are not making money right now.”

Halbreich expects a slowdown in mergers and acquisitions activity, partly because so many properties have already changed hands. In addition, many family-run operations are not rushing to sell, and the biggest chains have shown little interest in acquiring small-market newspapers.

On the plus side, he said, “You have a whole new fresh group of individual entrepreneurs who for whatever reason are attracted to the business. That’s a very healthy positive.”

Signs of hope

Despite the continued loss of local news, there are “signs of hope,” said Tim Franklin, senior associate dean, professor and John M. Mutz Chair in Local News at Medill. “New nonprofit digital local news startups have launched or been announced in places like Baltimore, Chicago, Cleveland and Houston. Some legacy news outlets are deftly transforming from print to digital. And local news is increasingly being delivered through newsletters and other digital platforms. But the need to innovate is urgent.”

The new entrants bring new strategies, as well as funding. Gulban said he used cash on hand to make his company’s purchases, a plus given how the industry’s troubled economics can make banks reluctant to finance newspaper acquisitions.

CherryRoad can run its newspaper operations at a relatively low profit margin, Gulban said, then supplement the traditional media business by offering technology services in its new markets — designing, launching and hosting websites, for instance. “I think we can get a steady 10% margin, and then drive other revenue at a higher margin out of it,” Gulban said.

The company also is moving to cheaper locations when leases end and considering other revenue-building options such as publishing visitor guides, and hosting best-of or local-sports-award events. “There’s a lot of potential there,” Gulban said.

For other regional media chains, location is as much a factor in determining what to buy or sell as it is in real estate investing. AIM, for instance, recently sold three newspapers at the edge of its portfolio’s footprint.

The deal started when Brian Jarvis of WV News, a mid-sized chain, approached AIM Media Midwest about its only newspaper in Jarvis’ home state of West Virginia, according to Halbreich.

Jarvis had recently acquired two other nearby small-market papers from Gannett. Acquiring the neighboring Point Pleasant Register made business sense. And since AIM operated that paper in conjunction with two Ohio papers over the border from Point Pleasant, according to Halbreich, the negotiations grew to include the Gallipolis Daily Tribune and Pomeroy Daily Sentinel.

“We suggested to Brian he take all three publications and he quickly agreed,” Halbreich said. “This small cluster is significantly distanced from the remainder of our Ohio publications in Western Ohio and these three never benefited from the synergies and management we have brought to these other holdings. So, this small transaction was a win-win for Brian Jarvis and for AIM Media Midwest.” AIM, which previously sold three Ohio papers in 2019, said it anticipates no further changes in its portfolio.

In a statement, Jarvis alluded to the efficiencies he expects to obtain from the purchase. “We are committed to being a high-quality news source through our print and digital platforms, and we see these three publications as an excellent chance to further expand our footprint,” Jarvis said in a news release announcing the deal. “They go nicely with our other recent acquisitions, especially the Jackson County Herald and Star News.” Jarvis did not respond to a request for comment.

Small can be effective

Unlike fast-growing regional chains, where questions persist about how big is “too big,” some local chains have sat out the acquisition frenzy. The Times Review Media Group on Long Island, New York, for instance, last acquired a newspaper in 1999, when it bought the Shelter Island Reporter.

Publisher Andrew Olsen doesn’t rule out seizing an opportunity but said he will be highly selective. A limiting factor, he said, could be finding brands of a similar high quality to the ones he owns, Olsen noted.

“Editorial quality to us is everything,” he said. “The more talented journalists I can get, the more digital subscriptions I can get.”

Olsen’s chain has three distinct community news brands, and generates revenues through print, digital and events. Revenues overall are growing, he said, helped by a calendar of events that is expanding as COVID-19 precautions wind down. Some of his business strategies mirror those of larger chains.

This year, for instance, Olsen’s Northforker.com lifestyle brand is staging a two-part “best-of-the-North-Fork” event with 300 people attending a business networking and award bash at a winery, followed by a second event open to the public featuring local chefs, wineries and other sponsors.

On the news side, Olsen’s brands are intensely local and digital-oriented, including the Suffolk Times, first published in 1857. “I'm really focused on building out our digital audience,” he said. “We have a huge focus on newsletters, and I'm sending daily emails to more than 48,000 people.”

The Times Review also has diversified into digital services, including for clients outside the New York region, Olsen noted. “We're creating websites for people, doing SEO and SEM.”

Given the difficult economics of newspaper publishing, and with the federal Paycheck Protection Program coming to an end, the Times Review responded by implementing open-book management. The object was to create transparency and a sense of shared purpose by distributing financial information to employees, Olsen said. “Everything is transparent. We have a weekly check-in every Thursday with the entire staff.”

Meantime, to the north of Olsen is a local “chain” that is a chain no more.

In 2016, four accomplished professionals shook up the newspaper business in leafy New England by purchasing The Berkshire Eagle in Massachusetts, along with three smaller sister papers in Vermont. “The purpose of our purchase was to try to return The Eagle to the level of quality it was known for before it fell into absentee ownership,” said Fredric Rutberg, a former judge who was part of the investment group.

Rutberg’s group had a simple goal, albeit with very detailed short- and long-range financial plans, he said. “We believed that if we improved the quality and quantity of the content, it would increase readership that would lead to an increase in advertising.”

Under the new owners, The Eagle hired additional newsroom staff and added content. It also invested in new content-management software to help it disentangle from the prior owner’s integrated systems — a significant hurdle for companies acquiring newspapers from larger owners that have cut costs with automation and consolidation.

More recently, The Eagle sold the three Vermont papers to an owner based in that state, and struggled through the pandemic, with the help of federal assistance it used “strategically and carefully,” Rutberg said. “We survived the worst of the pandemic by making timely adjustments that were indicated because of the depth of the impact that COVID had on advertising revenue.”

Asked if the future is bright, Rutberg is blunt: “It’s a tough future,” he said. “One thing we learned from COVID, and it is encouraging, is it proved the concept that people will pay for reliable information that is relevant to their lives. The future of news is bright in that way. But obviously the threats to the industry keep increasing daily.”