Outer Cape newspaper asks the public to invest in local journalism
Provincetown Independent Publisher Teresa Parker is looking for investors.
But the type of investors she's looking for aren't your typical deep-pocketed Wall Street tycoons. She's looking for neighbors and friends to help make the paper sustainable by investing in a Direct Public Offering (DPO). CAI's Kathryn Eident talked with Parker to learn more about it.
Eident Teresa, what is a DPO?
Parker Well, a DPO is a way of offering shares in a company. We are opening up the ownership of the paper to many people. In a DPO, the Securities and Exchange Commission allows us to make investing fairly easy for people to do. They do have to see all the risks, which are daunting, but they are also able to invest small amounts of money because the process is reasonably easy.
Lots of people are worried about the crisis in local journalism, and one of the things that's getting talked about is what are the business models that might work better? So, we've been thinking and looking a lot at how ownership has affected local newspapers. And our business model includes broadening ownership and making the community not just a recipient of our news, but a participant in owning the paper and in building the capacity of the paper.
Eident So this is a type of stock, as you explained, but it's not like something you're going to see on Wall Street. If someone invests the minimum, which is $500, what do they get?
Parker The main thing they get is participation, ownership in the paper, which means if we become profitable, our bylaws call for sharing dividends with the owners, in a year that we are profitable, at a level of 6%, then our board can decide to distribute dividends to people equaling 5% of their investment.
And I think, you know, if you do the math, nobody is going to get rich doing this. I think this is a kind of investment for people who want to take part in building local journalism. And I think where the benefit really is in seeing that journalism get stronger, see real jobs get created at a little bit less shoestring salaries than we launched with. As investors, they don't get a voice in the editorial matters. In fact, they don't even get to vote. This is not a conventional investment.
Eident How much are you looking to raise and how we use that money for the newspaper?
Parker Well, the total raised that we're looking for is $750,000. So, we took half of that and put it into the DPO. So, we're looking to raise $375,000. We started on July 28th. We have about 80 people participating so far, and we've raised about $80,000. The government limits the amount of time you can have a direct public offering open and it is one year.
And what we're going to do with the money, we need to expand our staff and we need to be able to pay people more reasonable salaries. You know, no one's really going to want to take my job if the salary isn't something you can begin to live on here.
Eident What prompted you to go for a DPO rather than, say, find a private investor with deep pockets, [laughs] which I'm sure that's really easy to do or get alone?
Parker You know, the word on the street is newspapers are a terrible business to be in. So, a traditional investor thinks we're crazy more or less. If you look at statistics nationwide, local newspapers are not doing so terribly badly. They're closing right and left, primarily due to an ownership structure that is very extractive and and hurting those papers, making them irrelevant. But the other places where newspapers are dying out are places where there's no economy at all. So, we're in a place where people care about the news and where we do have a difficult and a seasonal economy, but we have a real economy. So, we think there's some promise for this as a business.
Eident Other papers and organizations have tried this strategy. Did you look to them when you were considering a DPO?
Parker Yeah, we were really inspired by a paper. It's an online paper actually called Berkeleyside in California. Someone here actually introduced us to the editor and publisher there, and they told us their story. They introduced us to a law firm that specializes in what's called democratizing ownership. And because we were really modeling our plan after them, we felt comfortable working with a lawyer there.
Eident And that's Teresa Parker, publisher of the Provincetown Independent. Thanks so much for chatting with us and best of luck with you and your DPO.
Parker Thank you, Kathryn.
This conversation was lightly edited for grammar and clarity.