Rebuilding local news by thinking like an entrepreneur

Episode 289 of “E&P Reports” — A Vodcast series hosted by Mike Blinder

Pason Gaddis, managing partner and CEO of Hoffman Media Group, doesn’t mince words when it comes to the state of local journalism. In a recent interview on E&P Reports, he described the industry as being at a “critical inflection point,” one that requires a radical departure from business as usual.

“Community journalism is the fabric of America,” Gaddis said. “We just have a hard time accepting that news reporting in our communities is going to go away.” For Gaddis, newspapers can’t survive if they cling to outdated models built around syndication and large overhead. Instead, he believes in what he calls the “Netflixification” of news—moving away from simply distributing other people’s content and focusing on creating original reporting that audiences can’t get anywhere else.

“If you really think about it and you follow Netflix’s business model,” he said, “Netflix came out of a DVD infrastructure that was manufactured and delivered by mail to people’s homes. They were a distributor of third-party content. That’s really what newspapers are in my opinion right now.”

Gaddis argues that this shift isn’t optional. “You have to change or you have to die,” he said. “You have to get off of your legacy business addiction, and you’ve got to break the mold.”

A lean model for sustainable growth

Part of Hoffman Media Group’s approach is acquiring newspapers in markets where the publication remains the primary source of local information. Recently, the company purchased the Washington Missourian, a third-generation family-owned newspaper.

“These are unique communities where that newspaper is the primary information source,” Gaddis explained. “The community relies on them for their information, their high school sports coverage, their city council meetings, their school board, traffic accidents, breaking news.”

But buying newspapers is just the start. Hoffman Media focuses on “right-sizing the infrastructure,” which means shedding unnecessary costs and reinvesting in reporting. “We’re very nimble. We’re very lean and mean,” Gaddis said. “What we’ve seen is those dollars that you’re spending—if you will, on copy machines—we can put them into journalists on the street covering the prep sports, sitting there and doing the investigative journalism pieces.”

This philosophy draws on Gaddis’s own background as an entrepreneur. “I built my company from scratch with friends and family, bootstrapped together, and learned how to take a nickel and turn it into a dollar,” he said. That mindset has shaped Hoffman’s model of giving local publishers full P&L responsibility and profit sharing, so they operate more like owners.

“When you’re a small business operator…every single dollar counts,” Gaddis said. “You watch it like a hawk, and dollars add up very, very quickly.”

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Why prep sports matter more than ever

One of the areas Hoffman Media has prioritized is local sports coverage, something Gaddis sees as foundational to the value proposition of a local paper.

“If you asked [Mr. Hoffman] about newspapers today, he would pull out of his shoebox a clipping of him as a football star, with his high school football game of him being in the newspaper,” Gaddis said. “These are keepsake things that really give me goosebumps when you think about them—how powerful newspapers are when it comes to prep sports and coverage.”

He believes many news organizations have abandoned this territory to social media, losing connection with their communities in the process. “We think there is a news desert across the country that’s occurred in prep sports,” he said. “It creates momentum and excitement around the community when they’ve got really great coverage of their schools.”

Gaddis sees this as a long-term investment in relevance. “I’m a firm believer fifty years from now, a standout high school kid—whether it’s girls volleyball, men’s basketball—they’re not going to have that Facebook post somewhere in a shoebox or framed on their wall,” he said.

Betting on recurring revenue and reader trust

While many legacy publishers remain dependent on traditional advertising, Hoffman Media’s model is evolving to prioritize subscriptions and reader revenue.

“If you have enough value proposition there…just enough to where you can capture somebody to give you $5, $10, $15, $20 a month, however your model is, that revenue is more predictable,” Gaddis said. He emphasized that subscription dollars are often higher margin and more reliable than advertising alone.

“It will cover your news-gathering costs,” he added. “Then all of the ancillary revenue that you’re getting on digital advertising, whatever was remaining in your legacy advertising model, is just all profit at that point.”

For Gaddis, the strategy boils down to rebuilding trust and offering content worth paying for. “What people are yearning for and they’re hungry for is hyperlocal community journalism, first and foremost, that they know and they can trust,” he said.

Looking forward

When asked what he’d say to publishers ready to give up, Gaddis didn’t hesitate. “You have to get to streaming,” he said. “You’ve got to get there quick. But you can run a very profitable online media, niche media, magazine—whatever it is—if you can build high-quality content where your audience will give you recurring revenue.”

He believes the stakes are too high to cling to old habits. “If you don’t get there and you’re still trying to stay on film just like Kodak did, you’re going to die,” Gaddis said. “You’re going to go out of business. It’s just as simple as that.”