WHMC Inc. is courting outside investors to help it expand its WEHOville.com business by adding a print publication, an events business and an online video channel.
Henry E. (Hank) Scott, owner of WHMC (which stands for West Hollywood Media Company), acknowledged that he has been in conversations with various people about investing in the company, which he founded a little more than a year ago and has financed by himself thus far.
“WEHOville has performed far better than I expected,” Scott said, citing its growth in 12 months to an average of 37,000 to 39,000 unique visitors and more than 92,000 page views, important measures of growth for online media. But, Scott said, the company isn’t yet profitable and cannot continue to grow or even survive without adding a print product.
“While the myth today is that print is dead, the reality is that local print publications are thriving,” Scott said. “Warren Buffett, no fool when it comes to investing, has been buying up small local newspapers by the dozens in the past year. By contrast, there is not a single local online news publication in the United States without a print component that is profitable.”
Scott said a print version of WEHOville is important for two reasons: A community survey by the City of West Hollywood showed that half of WeHo residents prefer to get information in print. Thus a print version of WEHOville would expand its audience to serve those people. And local advertisers generally are reluctant to advertise online, in part because it’s not clear to them who their ads are reaching. While a newspaper might be distributed only within a particular city and surrounding areas, web traffic can come from readers on the other side of the world who aren’t likely to patronize a local business.
Scott declined to say whom he is talking to about investing in WHMC. He acknowledged that an earlier effort to raise money for a print edition through an online crowd sourcing campaign had failed. “It’s clear to me now,” he said, “that people who invest in a for-profit company like WHMC aren’t thinking of it as a charitable contribution. They want to see a return on their investment, as they should.”
Scott said WHMC is hoping to raise about $300,000 from accredited investors. Such an investor must have an income of more than $200,000 in each of two successive years or joint income with a spouse of more than $300,000 in that period. The U.S. Securities and Exchange Commission also characterizes as accredited investors individuals or couples with a net worth of more than $1 million, not including the value of the person’s home; a trust, charitable organization or company with assets of more than $5 million, or a bank, insurance company or other investment company.
Scott said his focus in seeking investors has been on individuals with a passion for West Hollywood who believe that an independent and objective source of news is essential to the health and well being of the community.
“Just as every town needs a good public library, every town needs a good newspaper, be it paper or in digital form,” Scott said. “From the founding of the Republic, it’s been clear that a free press is essential to provide the information and foster the debate that are key to good government.”
Scott is a former journalist who moved to the business side of media and became vice president for new media and new product development at The New York Times Company, where he took The Times online for the first time in 1994. During his 20 years in New York City, he also served as a consultant to numerous media companies including BusinessWeek, the Wall Street Journal and Out Publishing, whose owner hired him in 2006 to rescue it from imminent financial failure. Scott launched Metro New York, a 330,000 circulation free daily newspaper for young people in New York City in 2004. He moved to West Hollywood in October 2012, saying that after 20 years in New York City he wanted to refocus his life by living in a place where he felt a strong sense of community.