Shifting Economic Winds

Although some prognosticators began predicting the demise of the newspaper industry as early as the mid-1990s, Wall Street continued to be bullish on the stock of publicly traded newspaper companies through 2005. With little competition for advertisers or readers, investors viewed newspapers—especially those in small and midsized markets—as de facto monopolies, which meant the owners could exercise great latitude in setting prices, especially for print advertising. Profit margins routinely exceeded 20 percent at many newspapers.

Source: Mark Perry's Carpe Diem Blog

As of 2000, advertising accounted for as much as 85 percent of total revenue at the typical newspaper, with circulation accounting for the rest. But 2000 proved the peak year for newspaper advertising; by 2010, it had fallen below 1950 levels, and the decline continued unabated in following years.[7] Newspapers in large, “wired” metropolitan areas felt the competition from the Internet first, and their margins begin to decline dramatically early in the decade as advertising shifted to the web. Classified advertising, the most profitable, was the first to go. At many papers, classified advertising had enjoyed a profit margin of 80 percent (meaning that, after expenses, publishers kept 80 cents of every dollar earned).

By 2006, Wall Street had taken notice, and the stock price of large publicly traded media companies began to plummet dramatically. By the beginning of 2009, the stock price of major public newspaper companies was less than a fifth of what it had been in 2005.[8]

Source: Yahoo News
Chart Indicating Newspaper Stock Prices from 2002-2009    

However, the future still looked bright for the privately owned News Reporter, even though rural Columbus County was not experiencing the economic growth of more populated, adjacent counties on the Carolina coast. Under Greer, print advertising—both classified and display—remained strong, accounting for roughly 75 percent of total revenue. The additional 25 percent came from circulation (both subscriptions and newsstand sales), which held steady at 10,000 copies, and from printing other newspapers in the area on the offset press that Jim High had purchased in 1974.[9]

Les High began to consider expanding. He envisioned “a suburban strategy” that would piggy-back on the booming growth in the coastal community of Wilmington, only 50 miles away, and tie together five small newspapers in the surrounding counties of Brunswick to the south, Columbus to the west, and Pender to the north. A unified “suburban” market, he believed, would attract advertisers, especially real estate developers and automotive dealers, who wanted to reach residents of the outlying communities. Their only other options were the regional television station (too inefficient, in High’s view) and the Wilmington Star News (with low household penetration in these counties).[10]

In contrast to landlocked Columbus County, both Pender and Brunswick had profited from the coastal real estate boom. They had also benefitted from being close to a studio complex near the Wilmington regional airport. As of 2005, more than 20 films and a dozen television shows—including Matlock, One Tree Hill, Dawson's Creek and Crimes of the Heart—had been shot on location in the picturesque towns of Southport in Brunswick and Burgaw in Pender.[11]

Since the 1930s, the High family had been half-owners of the State Port Pilot, an award-winning weekly newspaper in Southport with a circulation of 8,000. So when three small papers in Pender County with a total circulation of 5,000 became available in 2005, Les decided to purchase them. “I had never been to business school, but I got my MBA managing those papers,” he says.

We had to assume debt, which meant our assumptions about revenue growth were critical. And to make matters worse, almost immediately I realized the newsroom culture was not good. The focus was almost entirely on soft [non-hard news] stories.

Over the next two years, Les High each week traveled 120 miles round-trip between Burgaw and Whiteville as he attempted to “turn around the newsroom” and deliver the projected revenue growth.

Then in fall 2008, the stock market crashed, and the shock waves rippled across America. The worst recession since the Great Depression hit Columbus County especially hard. When major local employer Georgia Pacific closed shop, suddenly the county had one of the highest unemployment rates in the state—hovering around 15 percent—and one of the lowest per capita household incomes.[12] As consumer spending declined, small businesses went bankrupt. Fewer businesses meant fewer advertisements in the News Reporter. Compounding the financial distress, an accompanying real estate bust in Pender and Brunswick counties wiped out visions of a grand “suburban” advertising strategy to lift the fortunes of the five small papers.

When confronted by lean times in the past, the High family had responded by hunkering down and investing in the News Reporter. This time, Publisher Jim High and Ad Director Greer remained intent on “protecting” print advertising, even though it was declining rapidly, because it was so much more profitable than the banner and display advertising sold on Jim High, who still typed stories and editorials on an old Royal typewriter instead of a computer terminal, was also hesitant to invest any more editorial resources in the digital edition, for fear it would undermine circulation of the print edition.

But beyond “holding the line,” both he and his son were unclear on how best to invest their rapidly dwindling profits. So in 2009, when the News Reporter had an opportunity to join two other small newspapers in a University of North Carolina-Chapel Hill pilot project to research alternative strategies and business models for community news organizations, they agreed to participate, hoping that it would, as Jim High puts it, “provide us with some answers about when things will get better.”[13]

[7] Mark Perry, “Creative Destruction: Newspaper ad revenue continued its precipitous free fall in 2013, and it’s probably not over yet,” Carpe Diem blog, 4/25/14. See:

[8] Stock market: Prices come from Yahoo Finance’s interactive custom chart from 01-2-2002 to 12-29-2008 for New York Times, Gannett, Media General, McClatchy and Lee Enterprises stocks:;range

[9] Financial information is based on interviews with Les High from 2009 through 2014 and on proprietary data shared with the University of North Carolina research team.

[10] Circulation data comes from the Audit Bureau of Circulations, or ABC, U.S. Division. 2006. ABC data is currently accessed through

[11] Recent television shows included Revolution and Under the Dome. Recent movies included Tammy, Safe Haven and 22 Jump Street. Source: and

[12]  Source: the North Carolina Department of Commerce. See:

[13] Author interviews with Jim High in June 2013 in Whiteville, North Carolina. All further quotes from Jim High, unless otherwise attributed, are from these interviews.