Production: Creating Partnerships

By: Nu Yang

From the Los Angeles to Chicago, consolidation is becoming an increasingly normal trend in the industry. Many newspaper companies have now turned to partnerships with neighboring markets in order to save on costs, time and resources. In a few cases, some of these printing partnerships have soured. The Los Angeles Times filed a lawsuit in October against the Orange County Register accusing the Santa Ana, Calif. newspaper of a breach of contract and failure to pay more than $2 million in delivery fees. But it shows that it takes the right partner to make the plan work.

Earlier this year, the Minneapolis Star Tribune started printing St. Paul Pioneer Press. Star Tribune chief executive officer Mike Klingensmith told his paper the agreement with Digital First Media, parent company of the Pioneer Press, was a significant expansion of the Star Tribune’s commercial business and an important new revenue source.

“The whole idea is to get less dependent on print advertising revenue that has not been growing and get more revenue that can grow,” Klingensmith said.

The Star Tribune and Pioneer Press were unable to comment on the five-year agreement, but Pioneer Press publisher Guy Gilmore told the Star Tribune, “There is an industry wide effort to sell newspaper production facilities and consolidate production operations in a manner that better suits our needs.”

The Chicago Sun-Times and Chicago Tribune recently renegotiated a print and distribution agreement, which was set to expire next year. The Tribune had been printing the Sun-Times and several of its suburban sister newspapers since 2011. In October, it was announced that Sun-Times Media’s parent company, Wrapports LLC, had sold its 32 suburban weeklies and six daily newspapers to Tribune Publishing Co.

In September, it was announced in Texas that the Amarillo Globe-News and Lubbock Avalanche-Journal, were going to undergo a nine-month process in order to purchase a new press and consolidate production operations. Both newspapers are owned by Morris Publishing Group. According to Amarillo Globe-News publisher Les Simpson, the new printing and packing operation will be located at the Lubbock newspaper building because it was “much friendlier and more efficient” for its planned operations and new press.

“Consolidated operations allow us to become more efficient, which will help us pay for a new press and provide investment opportunities in other parts of our operation as needed,” Simpson told his readers.

Also in Texas, The Dallas Morning News entered into an agreement in November 2013 to print the Fort Worth Star-Telegram. Implementation took place in phases: first with packaging and the mailroom in mid-February 2014, and then into printing the following month.

William May, vice president of production at The News, said initial consolidation conversations began in 2009.

“It was like, ‘I’m feeling the pitch of the economy. Do you feel it too?’” he said when talks began between the two neighboring newspapers.

Star-Telegram publisher Gary Wortel said there were several lengthy conversations with The News about which publication would take on the additional workload. In the end, The News’ printing facility in Plano was chosen.

Even though the age of the equipment at both facilities were around the same, May said their facility was twice the size of the Star-Telegram’s site, which would be unable to accommodate The News’ projects.

The Plano facility is a 710,000 square foot building and currently houses six TKS presses and one Wifag press. In addition to The News, the plant prints regional editions of The New York Times, The Wall Street Journal and Investor’s Business Daily, along with several local community papers. May said he employs 295 workers, and as a result of the additional work brought on by the Star-Telegram, 20 part-time employees were hired in packaging and printing.

Wortel told The News that because of this move, about 75 full-time and 200 part-time employees at the Star-Telegram printing plant lost their jobs. Severance packages and benefits were offered. The printing plant’s 35-acre site also recently sold; Wortel declined to say for how much, but commented it sold faster than he anticipated.

Taking on a project with this kind of scale came with some challenges. Wortel explained how The News had to reconfigure two of their presses in order to accommodate the Star-Telegram’s 44-inch web width.

The first 30 days of the print run were challenging, May said. “There were several operations nuances that you can’t tell on paper, but we lived it and survived it. Thankfully, Gary was patient and understanding. His team was embedded with us and we worked through a lot of issues.”

During this process, Wortel said there was no interruption with the workflow or delivery times.

“We consider the deadline structure very carefully. Whatever we do for ourselves, such as holding the press for an election or late night sporting event, we also afford others the same opportunity,” May said. “We don’t do anything that will impede the success of the many publications we serve.”

Both publications have benefited from consolidation. “Certainly there’s a revenue play, but we also want to keep our equipment at maximum capacity,” May said. “By adding new customers, we add on a new set of expectations and challenges. It stretches you and makes you better at your craft.”

For Wortel, he has seen cost savings, now that he no longer has a printing facility and press equipment to maintain. “In the long haul, I think we will see dramatic results,” he said.

Wortel and May agreed that consolidation has been a necessity for many in the industry, and they expect to see more of it.

“Equipment can be very expensive, between 40 to 50 million dollars for one machine. Making an investment like that is very unlikely,” May said. “It’s our goal to position ourselves to become that printer that provides a service with reasonable rates.” He added he is open to more consolidation opportunities and providing a “high quality product with low expense” to other papers.

“We’re not the first market to consolidate,” Wortel said. “It’s been going on for a number of years, but it has now accelerated. To those publishers considering consolidating, he said, “The logistics have to work and the finances have to work for both parties.”

 

 

Consolidation Lessons

 

Gary Wortel, Fort Worth Star-Telegram publisher

    You can never plan enough. Create time tables.

    Make adjustments as you go along.

    Whatever you do, make sure it doesn’t impact your readers and advertisers. It should be seamless.

 

William May, Dallas Morning News vice president of production

    Find a tight grip on what you do.

    Embed yourselves in the production side and watch what happens closely.

    Gather strong data and numbers so you can be more effective with your planning.