Sep 24, 2020
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Can This Worcester, Mass. Entrepreneur Solve Warren Buffett’s Local Newspaper Problem?

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Warren Buffett (C) CEO of Berkshire Hathaway speaks to the click as he arrives at the 2019 annual. [+] GETTY Warren Buffett – who owns a stable of newspapers – said back in 2012 that the leaders of local newspapers would determine a business model. In April he said he had changed his mind

 

But I’m guessing Buffett has not spoken with Worcester Mass-based Mark Henderson who is optimistic about his local venture to reinvent the local news business model. Before stepping into his solution let s look into the problem. The newspaper industry has been shrinking — between 2006 and 2016 newspaper revenues tumbled 63 percent from $49 billion to $18 billion per Pew Research Center

 

A large reason is that businesses like Google Facebook and Craigslist have gobbled up advertising revenue that formerly went to newspapers. And except for the New York Times the Wall Street Journal and some others the newspapers haven’t mounted an effective strategy to boost revenue growth enough to offset the loss of print advertising revenue

 

But Buffett – whose BH Media owns the Buffalo News the Omaha Herald and others — inked a June 2018 five year manage Lee Enterprises to manage his newspapers and their digital properties per CNBC. Seven years ago Buffett believed that at least one of the 1 400 local newspapers in the U

 

S. would figure out of how best to make money in the local newspaper industry and he would copy the successful strategies. PROMOTED Civic Nation BRANDVOICE | Paid Program
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Leveraging Opportunity Employment To Advance Racial Justice In Corporate America As he said in 2012 Two or three years from now you ll see a miles better-defined pattern of operations online and in print by papers  according to Warren Buffett and His Newspaper Investments a 2013 Babson College case I co-authored with my colleague Sam Hariharan

 

Now Buffett is singing a further tune. In an April 2019 interview with Yahoo Finance he said that the decline of advertising had turned the newspaper industry from monopoly to franchise to competitive [and now most newspapers are] toast. Consider GateHouse Media the parent of the Worcester Telegram & Gazette (T&G) for which I write a column

 

On May 24 Nieman reported that GateHouse — a. k. a. New Media Investments — [today] unleashed a new set of layoffs in its newsrooms. While the company won t offer a particular number expect about 200 GateHouse newsroom employees out once all the termination dust settles…This restructuring one of the largest in recent GateHouse history sees layoffs beginning now and continuing over the next couple of months

 

Henderson — founder of The016 – a platform named after the 1st three digits of Worcester-area zip codes that connects local readers and advertisers – aspires to aid solve the difficulty facing these local newspapers. He went into business after graduation from Worcester s Assumption College. As he said Initially I went to work in the plastics field a summer job that changed into [my] first professional job

 

That was beneficial because I worked for small companies and actually got exposed to business. In 1990 I was made general manager of a company in Shirley. But he had a fondness for journalism. My interest in journalism started as a senior at Wachusett Regional. Even with my full-time jobs in plastics I kept my hands in it writing for the Telegram The Gazette and then the combined T&G

 

Had the opportunity to join the employees part-time in 1990 and thus began my official career there he explained. Henderson tried to compete with the T&G — launching the Worcester Sun in 2015. But the sun set at the Sun — it ceased publication in February 2018. That s when coding began for The016 – which launched in November 2018

 

However the assumption came to him in 2012. As he said [I got the idea] when I was the Digital Director at the T&G (when it was owned by the New York Times). It was apparent to me even back then how social media would evolve but it was not nearly as apparent to users

 

So in that sense the assumption had merit but the timing wasn t right. The016 was built with a digital mindset in place of one intended to engage users even with the cost. He saw An opportunity…to build a digital community that serves users businesses and conventional media companies. The model of convening users and monetizing the audience with businesses who have got to get their message out…was broken because the transition from print to digital was not executed with a digital mindset

 

The desire to maximize engagement at all costs created the opportunity for us to come in… Henderson believes that The016 has a roughly $3 million revenue opportunity in central Massachusetts. He sees 300 000 social media users in a 15-mile radius of Worcester – 60 percent of whom get news from social media

 

Many of the more than 21 000 local businesses in the region can pay to access those users. As he said The base rate to become a verified [business] user is $20/month which we re raising to $30 soon. For that the customer manages its page a twin of other platforms and keeps and serves the audience it convenes…Businesses can also sponsor the total site for $1 000 per month soon to be $2 000 per month

 

He believes that The016 can sign contracts with 20 percent of the businesses in its region. Paying at least the base rate…[would bring about annual revenues] of $1. 5 million. Section sponsorships…can double that number. The016 is growing. As Henderson said We re at about 4 300 registered users and growing daily

 

We’ve more than 1 000 000 page-views since January the 1st 500 000 in 88 days the next 500 000 in 44 days. Indeed we re working to manage growth effectively [and hence we are now] seeking a technology partner. What do you believe Warren?

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