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Newspapers--Around-the-clock Profits

June 1998
BY CHERYL A. ADAMS


Downtime. Million-dollar web presses standing idle, making no money.

The thought of such lost productivity is enough to make a newspaper printer lose sleep.

Wait! What's that sound? Presses running around the clock?

Emerging from an era where large web presses took naps in between morning, afternoon and/or evening editions, newspaper printers are replacing the sounds of silence with the crinkling of cash.

No longer afforded the luxury of just printing newspapers, newspaper publishers are getting a rude, but profitable, awakening. As publishers fill costly holes in their print schedules, presses are running at far greater capacities, producing far greater profit.

Some newspaper printers are scheduling commercial products to generate new revenue streams for their stagnant retail bases. Others are doing commercial work to supplement their core accounts.

"Our presses are running 24 hours a day, six and a half days a week, since we've added commercial work," says John Disera, director of production at Fox Valley Press, printer of Copley Chicago Newspapers, in Plainfield, IL. "Commercial products are profitable. We wouldn't run them if they weren't. That's the key to commercial printing. You can always rely on it being profitable."

Fox Valley prints four commercial products: two labor union titles; La Raza, Chicago's leading Hispanic weekly paper with 80-plus pages and a paid circulation of 50,000; and the Midwest edition of Investor's Business Daily, a five-times-weekly publication with 40-plus pages and a circulation of 35,000. The company also prints La Raza's total marketing coverage supplement, which reaches an additional 100,000 non-subscriber households weekly. (Fox Valley's core business consists of four daily newspapers, 15 weeklies and three additional weeklies planned for future launch.)

With just under 400,000 commercial pieces per week, Fox Valley, Disera reveals, is going from "press run to makeready to press run to makeready—24 hours a day. If you can keep your presses running around the clock, you're going to be profitable."

Wayne Kasich wishes it were that easy. As the publisher in charge of sheetfed and commercial products for North Star Publishing/Daily Journal in International Falls, MN, he only dreams of running at capacity. Far from it, this small, struggling newspaper relies on its commercial business to survive.

Struggling to Survive
"We're isolated up here. This is 'Northern Exposure'-type living," quips Kasich. "In most cities, [a run of] 10,000 is a piece of cake. Here, we take a bunch of small runs. It's our bread and butter."

Kasich says maintaining the Daily Journal is difficult, but is working, partly because of North Star's sheetfed operation. The company's sheetfed equipment is perfect for its growing amount of commercial work.

"It amounts to half of our total sales," Kasich offers. "In fact, our revenues have doubled since we started growing our commercial work several years ago."

Bidding on sheetfed work has always been an "afterthought," explains Kasich, noting the sheetfed equipment came with the business and was only used occasionally. Almost all incoming work went to the web presses—that is, until there was very little work coming in. When the newspaper's retail base became stagnant, Kasich says the sheetfed presses were forced into action.

The commercial products that roll off those presses come from the only significant businesses in the region: resorts and paper mills. North Star prints postcards and brochures for nearby resorts and prints labels for local paper manufacturers, as well as other commercial jobs when available.

A Bigger Star
Adapting to its commercial success, North Star moved to a larger facility with triple its previous space, and it's running a night shift due to extra volume. Additionally, Kasich says three new staffers have been added.

Imagine the potential increased revenues if North Star would have promoted its commercial sheetfed capability years sooner, collecting cash instead of dust. No longer an afterthought, sheetfed printing is now an integral part of this printing operation.

Commercial sheetfed work has become a crucial component for other newspaper operations, as well. For example, North Carolina's Fayetteville Observer-Times was so successful at filling its web presses with commercial jobs, it purchased sheetfed and mailing equipment in order to grow its commercial line.

"We believe that commercial printing is a logical extension of what we do," says Tony Chavonne, general manager of Fayetteville Publishing, printer of the Fayetteville Observer-Times. "We see the commercial printing component as a vital part of the total solution that we offer our advertisers."

With both web and sheetfed capabilities, Fayetteville can offer its newspaper advertisers and commercial clients a wide range of products. On the webs, it produces everything from community college and municipal park schedules to chamber of commerce newsletters. It even prints a biweekly publication from a competing publisher. On the sheetfed end, the company prints everything from business cards to brochures.

Good Business Sense
"Commercial printing makes good business sense for several reasons," explains Chavonne. "Managed properly, it can allow you to more effectively utilize a significant asset with minimal additional overhead costs. It protects existing business relationships and offers new opportunities to develop customers.

"It makes us do our job better with an increased emphasis on quality and efficiency. It leverages the reputation and services of the daily newspaper in a related business field, benefitting both."

Chavonne says commercial printing has aided the core business in several critical ways.

"It has supplemented press time, contributing significantly to fixed costs and newspaper overhead," he explains. "It has also allowed us to solidify our relationship with key advertisers. We're able to offer them a total solution to their needs and help manage their advertising and promotional budgets."

In addition to a sales staff dedicated to commercial printing, Fayetteville also trains its newspaper sales representatives to seek commercial opportunities wherever they exist.

"We're aggressively growing this part of our business and have increased the sales staff this year," says Chavonne. "We've just contracted for a new [KBA Colora] offset press expected in 1999 that has been configured to offer tremendous commercial printing flexibility with consecutive pages of color and variable web width.

"We're planning a commercial printing market study for later this year," he continues. "Our goal is to have the press time on the new press equipment completely filled between our daily newspaper, three weekly publications and commercial printing. We also plan to add to our existing sheetfed equipment in order to meet the needs identified in the market study."

Not only does Fayetteville study its product market, it also studies its marketability as a commercial printer. According to Chavonne, there have been some "learning opportunities" and challenges.

"We learned very early that commercial printing and newspaper printing are very different," he says. "You don't have the opportunity to rerun the ad the next day when you've made a mistake on a large commercial printing job. You also don't enjoy the margins that a typical newspaper publisher enjoys. There is more competition and greater demand for quality. This increased attention to quality and detail that comes with being in the commercial printing business makes us better newspaper publishers as well."

As North Carolina's oldest newspaper publisher, the Fayetteville Observer-Times has also enjoyed great success in positioning its operation as a direct marketing company, rather than just a commercial printer.

"We bring the reputation and business relationships of a newspaper with a 200-year history in this community," Chavonne says. "It helps separate us from the other commercial printers in this highly competitive arena."

To compete in the commercial print market, Fayetteville offers other services that include graphic arts design, database list management, direct mail, newspaper insertion, list fulfillment and information management.

Crossing the Line
By offering such services, Fayetteville is unconventional in its approach to commercial printing. As a traditional newspaper publisher, it has crossed that invisible line in the dirt. In the past, printers produced either commercial products or newspapers, but usually didn't capitalize on their capabilities to provide both. However, newspaper publishers like the Fayetteville Observer-Times and the Columbus Dispatch have become profitable by straddling the line.

As more companies take on this dual role, serving as newspaper publishers/commercial printers, presses keep busy. For example, Chavonne says his web presses were running about five hours a day printing the daily edition of the Observer-Times. He claims commercial work has increased run times to about 12 hours per day.

While Newsprint Manager Bruce Merriman won't disclose exact capacity information, he does say the Columbus Dispatch has seen significant growth in its commercial line.

"Commercial printing is something we felt we needed to do," he notes. "We got into it to continue being a force in the community."

The 127-year-old, privately owned newspaper started printing commercial products in 1996 when it relocated to a new facility and had the room to grow. Grow is exactly what it did.

The company currently produces This Week, a community newspaper and shopping guide (circulation 280,000); a biweekly 40-page, four-color real estate section (circulation 400,000); Sunday comics (circulation 400,000); advertisements; ad inserts; and other miscellaneous jobs, such as in-store circulars, whenever available.

"Babystepping," as Merriman calls it, the company started taking one commercial job at a time. It slowly increased the volume of its commercial work as the production staff gained more experience and confidence.

"There are always problems when you try something new," contends Merriman. "Preparing for the run, getting the presses ready to roll, learning how to lay the work out, how to package it.

"It's a whole new ball game, a whole new changing zone. Having plates ready to go for a new run, being able to keep waste to a minimum, getting comps correct right from the start. Everything's been a learning experience."

Everything except color, that is. Merriman claims the newspaper's color quality is "second to none," and he believes that's a big reason his commercial business is growing.

"Color is excellent all through the paper, not just on the front page," he boasts. "We take a lot of pride in our quality. Quality is why we've been successful in both our mainstay and supplemental business."

The Dispatch grew a commercial reputation based on the established quality of its newsprint product. As a quality newspaper printer, the company knew it could produce a high-quality commercial product, so it proceeded to grow the idea.

Whether they're printing the newspapers, the inserts or any number of products in between, newspaper publishers are hustling to fill their press schedules with commercial work. "It's imperative to keep your presses operating," says Merriman. "When they're running, you're making money. And that's the bottom line."
 

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