Bill Gates, Microsoft (NASDAQ: MSFT) founder and internet godfather, penned an essay in 1996 that contained the now famous quote “content is king.” Gates’ thesis was that the internet would become a marketplace for content.

Gates didn’t get rich by accident.

Twenty-two years later, the Oklahoma-style land rush to produce and acquire the most and best content continues at a breakneck pace. AT&T (NYSE: T) acquired content powerhouse Time Warner (NYSE: TWX). Netflix (NASDAQ: NFLX) and Amazon (NASDAQ: AMZN) are throwing money at Hollywood, looking for the next hit.

#-ad_banner-#Of course, these are the shiny objects. There are quieter, less capital-intensive, and, ultimately, much more profitable deals afoot. One completely overlooked space is the small market and regional newspaper segment.

One company is doing that.

Formed in 2007, New Media Investment Group (NYSE: NEWM) has spent over $1 billion building its portfolio — acquiring 145 daily newspapers and 340 weekly newspapers across 37 states with a combined reach of over 4 million. Throw in the 538 websites and GateHouse Media, the holding company for New Media, reaches over 22 million people in the United States each week and serves over 200,000 business customers through advertising and related marketing services.

But why local news?

It sells. Everyone loves seeing who’s getting married, who’s died and when the arrangements are, whose kid made Eagle Scout. It’s community-based content and there will always be a niche for that.

And it’s cheap to acquire.

At the mainstream birth of the internet (1990s), futurists sang the death knell for newspapers immediately. It took traditional, print news media about 13 years to become gravely ill. It had nothing to do with the proliferation of online news. It was about money, more precisely, lack of it.

With the onset of the 2008 Financial Crisis, newspaper publishers that relied on debt to finance their operations folded multiple papers due to the lack of available capital.

According to Business Insider, more than 166 print newspapers in the U.S ceased operations between 2008 and 2010.

With that kind of widespread industry destruction, it was easy for the mainstream to leave print media for dead. But look when New Media was formed: 2007.

The $1 billion spent buying up cheap assets over the last 11 years translates in to over $1 billion in annual revenue. Pretty good return on investment.

But the company is moving beyond just shifting local daily and weeklies to a digital platform. New Media offers a suite of value-added services that include event production and management, data marketing for small and medium sized businesses and content syndication, custom content development and marketing design.

On the surface, this looks like a great — a low-cost, high-margin media platform. But does it truly work?

I was fortunate enough to talk with a source who spent a few years in the trenches at the company on the content and production side, and my hunch was confirmed. The source pointed out that New Media’s crown jewel is the Austin, Texas-based Center for News and Design, a hot bed for cutting-edge tech, content and cultural/style development. This arm of the company’s business functions as a product development hub where more than 200 GateHouse Media newspapers and 300 special sections and magazines are edited and designed. The Center also supports product development for responsive websites and mobile apps.

According to my source, the initial move into production consolidation was unpopular due to the high number of layoffs created at the company’s acquired publications. However, the cost efficiencies and the high-quality output of the shop has demonstrated management’s vision and prowess.

The numbers are just as compelling.

New Media has grown annual revenue at an average annual rate of 35% over the last five years. While next year’s numbers will be a little less, keep in mind the company has been growing by acquisition, the top line number is expected to come in a little over $1.57 billion for this year, a 17% improvement over 2017 numbers.

The company’s successful growth trajectory has translated into expansion of the common dividend by 20% on an average annual basis over the last three years while long term debt to capitalization is at a relatively comfortable 33%; not bad for a media company.

Despite the stellar numbers, the stock price has remained relatively flat over the last 12 months. Shares currently trade at just 0.7 times sales and 1.2 times their tangible book value.

Risks To Consider: New Media is majority owned, managed and advised by Fortress Investment Group, an investment firm with about $41.4 billion of assets under management. (Last year, Tokyo-based multinational conglomerate SoftBank Group acquired Fortress for $3.3 billion in cash). While NEWM is extremely successful, private equity firms typically make money any way they can, even if it means carving up a business they own.

While NEWM’s parent has deep pockets, interest rates are creeping north, meaning capital flow towards deals could dry up as borrowing costs escalate. This would definitely put the kibosh on NEWM’s growth as acquisition has been the main driver.

Action To Take: NEWM shares currently trade at $15.96 with an attractive 9.27% dividend yield. Patient investors have an excellent opportunity to own a high-quality, under-the-radar tech/internet stock and get paid handsomely just to hold it. If the company’s growth continues on its current glide path, investors could enjoy total returns approaching 20% over the next 12 to 18 months.