HOT SPRINGS -- After the success of a similar plan in Pine Bluff, the publisher of The Sentinel-Record said Wednesday that he is offering preferred stock for sale to the people of Hot Springs to fund the transition to a digital newspaper and maintain seven days a week of "quality journalism at the community level."
Walter E. Hussman Jr., chairman of WEHCO Media, Inc., the parent company of The Sentinel-Record, told members of the Hot Springs National Park Rotary Club during their weekly Zoom meeting that the company has already raised $650,000 of its $1 million goal of preferred stock, which returns a 5% annual dividend.
The money goes for the purchase of iPads for subscribers to use to access the digital replica of the newspaper and the cost of the "personal one-on-one training" for each customer in how to use the new technology.
"Our newspapers are the first ones in the country to supply iPads for our home delivery subscribers," Hussman said. "Like my grandfather who dealt with labor shortages and my dad who dealt with prohibitively expensive typesetting equipment, we today are dealing with an existential threat to daily newspapers in America."
Over the past 15 years, the entire newspaper industry has lost more than 75% of its main source of revenue, which is advertising, he said, noting that more than 2,100 newspapers in the United States have closed. While most were weeklies, about 75 of them were daily publications.
Other newspapers in Arkansas -- like those in Arkadelphia, Hope, Stuttgart and Helena-West Helena -- have closed, Hussman said, and even larger newspapers like ones in New Orleans; Birmingham, Ala.; Portland, Ore.; Cleveland; and Syracuse, N.Y., have switched to three-day-a-week publication to survive.
One of the largest newspaper groups in the country, McClatchy -- which operates newspapers in Miami, Kansas City, Mo., and Sacramento, Calif., among other major cities -- has dropped all of its Saturday editions, he said.
"So we are trying to find a way to remain a seven-day-a-week newspaper here in Hot Springs, but we simply can't do it anymore in print," Hussman said. "It's not economically feasible, but that doesn't mean we can't do it. We think we can do it by eliminating a lot of the production, distribution and material costs like newsprint and ink. That way even with much lower revenues we can still provide quality journalism at the community level."
The company has already made the transition to digital with its newspapers in Little Rock, Northwest Arkansas, El Dorado and Texarkana. Last year, company officials were contacted by a broker who said the Gannett Co., which owned the Pine Bluff Commercial, could no longer sustain it as a print newspaper and "asked us if we could make it sustainable with our digital replica and iPad program," Hussman said.
"We looked at it and thought it might work, but realized it was going to cost us about $400,000" for the iPads and the training provided free to the customers, he said, noting that officials talked with a bank in Pine Bluff and while they were willing to invest the $400,000 themselves "we wanted to try something new."
"I wanted to see if we could sell $400,000 of preferred stock to people who lived in Pine Bluff. They would literally be buying into maintaining a newspaper for Pine Bluff and returning it to a seven-day-a-week publication," he said, noting that at that time, it was publishing only five days a week.
Not only would the community's investment cover the cost of the iPads and the training, "but I thought this might create a model for other newspapers around America to copy in order to cover those large, and what appeared to many newspaper owners, as prohibitive upfront costs" of the plan.
"Well, the citizens of Pine Bluff responded and purchased all $400,000 worth of preferred stock. It turned out we only spent about two-thirds of what we had anticipated, so we offered to redeem a third of the stocks and give people part of their money back," he said. "Some people did return it, but others, after noting they were receiving a 5% annual dividend, decided to keep it. We only redeemed about 20% of the stock."
The plan is to do the same in Hot Springs, but The Sentinel-Record has a larger circulation than Pine Bluff so it will cost about $850,000 for the iPads and $200,000 in training costs "so our goal is to raise $1 million."
The fact that the venture has already sold $650,000 in stocks is "very encouraging for us," he said.
Before his unexpected death, attorney and amateur historian Clay Farrar had told Hussman that when the Arlington Hotel was built "they didn't have enough to finish it, so they issued preferred stocks in order to do it," Hussman said. "He told me there's a history of preferred stock in Hot Springs."
Hussman said when he went to work in the family business in 1971, his father gave him the task of building a new office building for The Sentinel-Record, and after touring the country to study other newspaper plants, he hired the Cromwell Architectural Firm and a contractor to construct the newspaper's building at 300 Spring St.
"It's hard to believe that was almost 50 years ago," he said.