Penny Muse Abernathy, a professor and the Knight Chair in Journalism and Digital Media Economics at the University of North Carolina, has done groundbreaking work both documenting the rise of “news deserts” and developing sustainable business models for local news organizations. She shared a noteworthy example of diversification in her interview with the Medill Local News Initiative’s News Leaders Project. Here’s that account:
With newspaper print advertising at historic lows, publishers of local newspapers, regardless of size, have to move quickly and decisively to seek new sources of revenue and income to support their journalism. The Pilot, a twice-weekly hundred-year-old paper in the Sandhills of eastern North Carolina, has transformed its business model, developing critically important digital skills while also remaining first and foremost a newspaper company with strong ties to the community where it is located.
The Daniels family, along with two close associates, purchased The Pilot in 1996, after selling The News & Observer in Raleigh, which it had owned for 102 years, to McClatchy. The small prize-winning paper with a print circulation of 13,000 covers Moore County, a large geographic area that includes the affluent retirement and golfing communities of Pinehurst and Southern Pines, as well as the once-vibrant, now-struggling towns that manufactured furniture and textiles in the 20th century.
Twenty years ago, The Pilot was almost totally dependent on the newspaper for both its revenue and its profit. With print revenues beginning to decline, David Woronoff, the publisher, realized, “We need to diversify.” Over the past two decades, David has diversified by offering new products and services to both readers and advertisers (phone books, magazines, e-newsletters, an in-house digital ad agency) and by looking beyond the geographic confines of Moore County (publishing magazines in high-growth communities around the state, buying an independent bookstore that brings in 75 to 80 authors from around the country a year, and convening statewide conferences for business leaders). Today, these new products and publications account for more than two-thirds of annual revenue for the company. All this additional revenue supports the continual transformation of the newspaper, which routinely wins national awards for being best in its class.
David has been both creative in spotting opportunities and very disciplined in managing new enterprises. He often gets approached about purchasing other media establishments, but only purchases or creates those businesses that mesh with his editorial goal of “building community” and offering “unique value” to either the residents or businesses his publications and products serve.
When he was appointed publisher in 1996, David first decided to publish a local phone directory in competition with the large telecom company, which had largely ignored the needs of local businesses. This venture was so successful in terms of bringing in additional revenue from local businesses that he decided to move into an adjacent county, Lee County, and publish a phone directory there as well. The Pilot used the information and data on local business gleaned from selling “yellow pages” in the phone directories to establish a local search engine (mooco.com) that matched residents in Moore and surrounding counties in need of certain services (such as a good summer camp) with businesses that provided those services.
Simultaneously, David began experimenting with creating a lifestyle magazine for Moore County – PineStraw. Having successfully launched PineStraw, he then cast an eye around the state and identified two other cities, Greensboro and Wilmington, that lacked eye-catching lifestyle magazines. Most recently, he purchased a lifestyle magazine in a fast-growing area in Charlotte. The Pilot also publishes Business North Carolina magazine, which is distributed to CEOs across the state. The magazines have allowed him to stitch together a statewide advertising network that he can market to large health care and financial services firms.
He then said, “Well, we’re interviewing all sorts of people from around the state, so we might as well bring the tape recorder and a camera and now I’ve got video. And if I’ve got video, then I can start thinking about video for the local advertisers to post on Facebook pages and Twitter. Plus, I’ve got all the data from local businesses that I collect each year doing the phone directories.” So he established an in-house digital ad agency, First Flight, that helps local businesses with everything from their social media posts and web design to search engine optimization and search engine marketing.
David Woronoff, Publisher of The Pilot in North Carolina, has grown his news outlet’s footprint to include phone books, magazines, e-newsletters, business conferences and even a bookstore.
As hundreds of Army officers transferred to nearby Fort Bragg begins buying homes in Moore County (because the schools are better than in adjacent Cumberland County), David looked for ways to reach these “army spouses” who aren’t “natural” readers of The Pilot. After researching the “needs and expectations” of these newcomers, he decides to put out a weekly e-newsletter, sponsored by a local business, that focuses on what to do in the area. The Sway, a twice-weekly e-newsletter with 16,000 digital subscribers, has proved popular not only with millennials and Gen Xers, but also with the retirees and older residents who are longtime subscribers to The Pilot. Following up on the success of The Sway, The Pilot launched a second twice-weekly newsletter, The Pilot’s Briefing. Written by the editor in a conversational tone, this newsletter not only summarizes the most important stories of the day, but also the personal ones that connect The Pilot to the community at large – for example, the death of the publisher’s dog, Opie, a longtime fixture at the newspaper. The Pilot’s Briefing has 22,000 subscribers. Both e-newsletters have open rates of more than 30 percent.
In the meantime, the local independent bookstore, The Country Bookshop, on the main street in Southern Pines was losing money and about to go out of business. The Pilot bought the bookstore, and David turned it over to his cousin, Kimberly Daniels, to manage, with these instructions: “You have to get it to break even in a year.” She did, and by the end of the second year, they were scheduling 75 to 80 readings annually, including New York Times best-selling authors, which bring in residents from around the region.
Having learned how to stage and host events through the bookstore, David then turned his attention to establishing annual conferences, hosted at the nearby Pinehurst resort. There is one for chief executives of companies located in North Carolina, as well as another focused on manufacturers in the region. Having outsourced the printing of the newspaper to The News & Observer in 2010, David is currently focused on converting the former press room into a community meeting space, where the paper can sponsor mixers for businesses and residents, as well as host forums on important issues confronting the community.
As a result of what he has learned from owning and operating a local bookstore, The Pilot is also considering establishing an e-commerce site that will handle retail sales for local businesses, as well as the many artists and craftsmen in the state.
The Pilot today is a digital media enterprise with almost 20 different branded publications, products and services. David calls the sum of all his efforts a “get-out-of-jail” strategy. “Facebook and Google have boxed us in – put newspaper publishers in jail by siphoning off the digital ad revenue that we were counting on to transition to a new business model. So I had to think beyond the confines of the traditional newspaper business and beyond the geographic confines of Moore County. I had to think about building community in a totally different way.”
(Abernathy offers other case studies on the University of North Carolina’s Strategic Digital Media Entrepreneur page.)
Woronoff: ‘We Needed to Offer More Than Just the Newspaper’
David Woronoff, Publisher of The Pilot and other publications in North Carolina, talked with the Medill Local News Initiative about his views on diversifying beyond the original newspaper:
We started 20 years ago. We realized that old adage, “If the only tool you have is a hammer, everything looks like a nail.” So the only tool we had was the newspaper, and the solution to all of our community’s information and marketing needs was going to be more newspaper. Well, that might not be the case. That might not be the solution. So we needed to offer more than just the newspaper. That’s how we got into the phone book, we got into the magazines, we got into the digital agency, and we got into events. We wanted to be able to offer a portfolio of solutions to our community. My colleagues who own just a newspaper, I think they’re all in trouble right now. Those who have diversified their media holdings in any one market, they’ve got a much brighter path forward.
Expanding beyond your market:
We felt like we got to the edge of the aquarium and then had to go out of our market. Could we have bought a radio station? Could we have bought a TV station? Well, yeah, we could have done that. But we didn’t have the opportunity for that. … If those opportunities had presented themselves or if they do in the future, we would be very interested, at the right price.
On whether the original news product becomes less important:
We’re still putting as much effort financially into it. My attention is diverted, but the folks who are charged with putting out the paper have the same if not more resources. They just don’t have a publisher only focused on the newspaper.
On how consumers accept the variety of products:
They like each one and they’re proud of them. I think that’s the key – to put out products that your community is going to be proud of. You put out a 132-page, perfect-bound, 10-by-12 magazine that lands with a thud on their desk, they can’t help but be proud of that. It’s beautiful; it’s edited by a New York Times best-selling author.
What independent bookstores and newspapers may have in common:
I’m holding my breath that newspapers will have the same sort of rejuvenation that independent bookshops have had. When we bought (the Country Bookshop) in 2010 we had Borders, and Barnes & Noble, and Amazon had just released the Kindle and independent bookstores were going the way of the dodo bird. And now Borders is gone and Barnes & Noble is on life support and independent bookshops are just rocking along. I think that’s because they’re authentic and they offer a glimpse of what their communities are and can be and they are an experience to go into one. Going forward, I think newspapers have to be authentic to their community and can’t just be an outpost for whatever hedge fund or chain that owns them.