Local News Operator Projects Quadrupling Revenue Over Next Two Years. No, Seriously
By: Christiana Sciaudone
James McDonald and his partners bought seven local news websites this year and set up another five, all in the South Jersey and Philadelphia area.
The forecast is for sales of $2 million in 2024, which the team projects will double next year and then again in 2026. Access Global Media & Technology, the umbrella company under which these brands exist, just hit profitability this month. McDonald, a media M&A veteran, is targeting profit margin between 30% and 40%, eventually.
McDonald has led media company launches and turnarounds over the past decades, among them the Washington Examiner, and most recently led an advisory business handling deals from $5 million to $25 million. He had been approached by small outfits, hyperlocal sites, which had decent unit economics but didn’t have scale, he told AMO. He didn’t think there was much to be done initially, but realized that he could create a cluster of regional news sites in an area he knows well and sees as one megamarket.
“I ran Philadelphia Weekly and we bought Atlantic City Weekly, so I was able to recognize that there’s a huge opportunity for sales and content share across those marketplaces,” McDonald said. He expects to end the year with 15 sites, and he said he and his investors will expand “as far as we can, till we think it doesn’t make sense to do it anymore.”
McDonald’s optimism comes even as he admits the business model of local media is generally broken and community papers are in trouble, with many on their last legs. But he thinks if they tackle the “robust opportunity in the local marketplace” by giving readers what they need and want, and running a business to make money, he can make it.
No Rush
While it may seem like Access Global is moving at hyperspeed, it’s actually going it slowly and not pouring big PE money into the project.
“Every dollar is important. We watch what we do,” McDonald said. “We try to find the best, most economical way to do it. That’s the way a startup needs to be run if it’s going to be successful.”
He’d consider taking outside money—after all, they are looking to expand—but very cautiously. It’s also not clear that he can find a cluster equal to the one in Jersey-Philly. The goal for now is “to create a strong cluster here with literally millions of readers, great results for clients, monetize it in ways that other media companies are not monetizing and make money.”
All sites are free, and revenue is driven by advertising. But that’s not all the company’s banking on for sales. Besides newsletters, sponsorships and paid content, Access Global is working on “tech-enabled revenue strategies that will set us apart in terms of how we are generating revenue.”
The first venture will be a real estate solution for vacation rentals, not to compete with Airbnb, but to go up against real estate agents who charge hefty fees. They are also looking at ecommerce, selling local products and partnering with retailers to do it.
“We do have other plans that I’d prefer not to go into in terms of extension of that, but you can see that we have found a way to capture the market that nobody else has with deep local engagement,” McDonald said.
Deep local engagement also means readership is broad, from suburban moms to 18- to 49-year-olds, and it’s a less competitive market for ads given the sharply focused coverage areas.
Lean Operation
Access Global has 10 full-time employees and hires contractors to fill the gaps. In its first month, September, sports site On Pattison attracted “a couple 100,000 people.” Three-month-old Wissahickon Now reached 70,000 readers last month. Altogether, the sites reach just under a million readers.
Each site, aside from the sporting site On Pattison, is named for a school district because that’s what people care about first and foremost, McDonald said. Reporters are embedded in the communities and state, regional and sporting news is scaled across publications.
There’s also good news, like the highlighting of community heroes, and “Rescue of the Week” for pets, which is among the most highly-trafficked sites, McDonald said.
McDonald said he’s not out to save journalism or democracy, and Access Global is very much a commercial enterprise. To sell you need to have an audience, and that’s the primary focus, giving residents news they need and can’t get elsewhere.
“This is about proving out a business model that works, that provides a service to a community that is important,” McDonald said. “That’s how we look at it. If we engage with our communities and we embed in them and we try to improve them, we will win.”