Central plans moves to boost its margins

By: Lucia Moses

Central Newspapers Inc. is working on expanding its morning Indianapolis Star even as it plans to print the final edition of its 130-year-old afternoon News.
The company says it will start to outsource transportation for the Star to a trucking company after the News prints its final edition Oct. 1. Central announced earlier this year that it would close the News because of declining afternoon readership. The News’ circulation has plunged to 33,175 from 111,000 a decade ago.
Severance costs for 61 transportation workers, plus managers, will result in a one-time, pretax charge of $3.4 million, or about 5 cents a share. The company previously reported it would take a $1.25 million charge relating to the closing of the News. The outsourcing also is expected to increase Central’s annual pretax savings from combining the papers to about $4.1 million from $3 million to $3.5 million.
Dale Duncan, president and publisher of the Star and News, said that as the transportation operation has become more streamlined and regulated, it made sense to contract it out. “It’s not our core business,” he said.
The company also announced it finalized plans to move its Indianapolis presses from downtown to a new facility 16 miles to the northwest. The $70-million move will be done over the next 31/2 years.
The move will let the Star print more color ads. “We expect we’ll be able to get $5 million more a year in color revenues,” Duncan said. The move also will provide increased press capacity and storage space to produce more zoned editions. The Star also plans to start address-specific delivery that will let readers buy editions of the newspaper tailored to their interests.
The move will take 455 jobs from downtown and cut 80 production and transportation positions as a result of more streamlined production and automation. “A lot of human labor now goes into handling and movement of newsprint,” Duncan said. “It’s a very labor-intensive effort.” He said some of the jobs will likely be absorbed by other departments.
In conjunction with the production move, the Star will join a growing number of papers that have switched to a narrower web width, with the change to start in about 11/2 years. Within five years, the production move is expected to generate about $6.1 million in annual savings.
Louis A. Weil III, Central’s chairman, president, and ceo, said the production and outsourcing moves are part of the company’s plan to bring cash-flow margins at the Star closer to those at Central’s other flagship, The Arizona Republic.
Meanwhile, the News is planning a 48-page commemorative section for its final issue Oct. 1, when it expects to sell 25,000 more than the 33,000 copies usually sold.
“We’re working hard to capture all News readers as Star readers,” Duncan said. “I think realistically we can expect to get 90% of home-delivery and 75% to 80% of single-copy buyers.”
Twenty News editorial positions were eliminated through buyouts in connection with the closing.

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