Going Regional p. 29

By: George Garneau Thomson says it will sell 25 of its smaller dailies
and cluster others in 'strategic marketing groups' sp.

IN A MAJOR shakeup of the seventh largest U.S. newspaper group, Thomson Newspapers Corp. put 25 of its smaller dailies up for sale Jan. 19, as part of a new strategy to cluster its remaining papers into aggressive regional marketing companies.
Papers targeted for sale ? including five in Texas and three each in New York and Missouri ? have average circulation of 10,000. They represent 7% of revenue and 9% of circulation for Thomson Newspapers, whose Toronto Globe and Mail is the flagship for 144 U.S. and Canadian dailies, many of them small and rural. The company's 109 U.S. papers sell over 2 million copies daily.
The core strategy of clustering papers into 15 or so "strategic marketing groups" ? each functioning as a single operating unit ? "will allow us to focus and to maximize our core capabilities," said Thomson Newspapers president and CEO Dick Harrington.
The new management structure replaces "the old paradigm," under which each newspaper was operated independently and managed from headquarters in Stamford, Conn., and through four regions.
The new plan calls for groups to offer "coordinated regional services" and for individual papers to share administration, technology and financial management. Cooperation could include niche publications, database marketing, advertising products, distribution services and commercial printing.
Even though they fit into no strategic marketing group, some larger papers ? the Connecticut Post in Bridgeport, for example ? will be retained because they are "strategic" to long-term growth, Thomson said.
Thomson said it has no plans to close any of the papers offered for sale because "they all have good prospects." They are being sold directly by Thomson, which has received expressions of interest in buying the lot, but no offers to date.
Formed in response to a long profit decline, and management turmoil following a 1980s buying binge, the restructuring comes almost two years after Thomson took a $170-million charge for the costs of closing or selling some papers and writing down the value of others. In the last 18 months, it has sold one paper and closed three.
Newspaper analyst John Morton said Thomson's plan reflected several realities, chief among them the fact that "life is tougher for small-town newspapers than it used to be."
In many areas, giant retailers have displaced the small department stores that traditionally supported small-town papers, and retailers increasingly make advertising decisions regionally. As a result, profits at small-town dailies have shrunk, Morton said.
William Dean Singleton, who in the last decade or so has assembled the nation's 12th largest newspaper chain, the closely held MediaNews Group, said Thomson is clearly focusing on "geographic regions where they can get a large amount of critical mass and identify properties that don't fit and spin them off . . . . In operating smaller papers, it's certainly a good strategy."
By clustering multiple papers, often small and with limited resources, the groups can share overhead such as accounting, printing and news, while offering advertisers more, including regional buys, said Singleton, who has used the strategy before and who last year acquired the Easton, Pa., Express-Times from Thomson.
That's exactly what Harrington intends: to align newspapers to fit emerging regional markets.
The plan envisions that individual newspapers will retain their identities, with no major editorial changes. Instead, it "allows us to attack the marketplace," Harrington said in an interview.
Thomson's six papers in Central Ohio near Columbus, for example, will become a single $50-million-a-year business run by more sophisticated managers than the individual properties could afford before. To some extent, each group will run smaller operations specializing in alternate delivery, total-market-coverage ad products, database marketing, electronic publishing and product development.
The goal, Harrington said, is to create a family of advertising products, whether delivered in the newspaper, by private carriers, mail or computers.
"We are looking at this as a positive move that will allow us to grow and develop the business," said Harrington, who has spent 12 years with Thomson and was in the information and publishing group before being called in 18 months ago to reorganize the newspapers.
"We are not downsizing the business," he declared, adding that proceeds from the papers sold will be ploughed back into the newly formed groups by expanding staff or acquiring properties that fit its strategy.
The reorganization already has shifted about half the 200-person corporate staff out of the nest and into business units to be closer to customers, he said.
Thomson said the following papers are for sale:
In Texas, the Kerrville Daily Times, Big Spring Herald, Corbin News-Herald, Huntsville Item, and Marshall News Messenger.
In New York, the Herkimer Evening Telegram, Olean Times-Herald and Oswego Palladium Times.
In Missouri, the Mexico Ledger, Sedalia Democrat and Sikeston Standard Democrat. In Kentucky, the Richmond Register and Corbin Times-Tribune.
In Indiana, the Vidette Messenger in Valpariaso and New Albany Tribune. In Illinois, the Jacksonville Journal Courier and Sterling Daily Gazette.
Elsewhere: the Ada (Okla.) Evening News; Barstow, Calif., Desert Dispatch; Dickinson (N.D.) Press; Leavenworth (Kan.) Times; Northwest Arkansas Times in Fayetteville; Mitchell, S.D., Daily Republic; Portsmouth (Ohio) Times; and Worthington (Minn.) Daily Globe.