Under the agreement, which took effect June 4, the paper's 39 color room staffers become employees of American Color, which will buy and add to the Chronicle's existing color prepress equipment.
American Color also will establish a digital link between its Houston production plant with the Chronicle's prepress facilities.
Jack Stanley, senior vice president of operations, said his paper expects gains in production capacity, productivity and color quality from American Color's expertise.
In a prepared statement, Stanley added that "significant cost savings" would accrue from the facilities management contract.
American Color said the Chronicle is the first major newspaper client, although it provides color services to several large-circulation weeklies and many magazines.
Ray Dittrich, American Color sales and marketing senior vice president, said the the Chronicle will enjoy operational benefits while its management retains "complete control of the production process."
Among its prepress services, American Color supplies desktop-to-high-end systems integration for various businesses, provides Photo CD imaging, digital photography services and digital special effects for movies.
The parent company's Sullivan Graphics subsidiary is a large commercial printer familiar to newspapers for its flexo-printed color comics sections.
By: Editorial Staff THE HOUSTON CHRONICLE signed a five-year, $27 million contract with American Color calling for the Sullivan Communications company to manage the paper's color prepress advertising production.