Findings across media markets indicate decreasing circulations and vanishing advertising revenues. At the same time, local media remain crucial for the functioning of democracies. Therefore, media professionals and policy decision-makers are looking for solutions to rein-vent local media in the digital age. Against this background, this study conducts a quasi-experiment in a Swiss local media market to investigate whether and under what conditions specific public support programs will actually facilitate the digital transformation of local media. More specifically, this study draws on strategic path dependence theory as well as longitudinal qualitative and quantitative data in order to investigate the effects of public support programs on the innovation of digital content and business strategies of local news organization, which differ in terms of media type, structures, resources and performance (N = 47). This study contributes to media industry studies by empirically testing the potential of public support programs for local media innovation.