Yesterday's competitors are becoming today's allies as newspapers increasingly join forces with other companies to cut down on fixed costs through partnerships that make mutual economic sense. 

Many newspapers that have signed agreements to deliver products for each other are now moving into printing and packaging deals as well.  Some have even agreed to share non-competitive news content.  Determining whether it makes more sense to consolidate services internally or create an alliance with another company, requires consideration of several factors, says Gayle Pryor, vice president for audience growth at Media General.  "The end result has to be seamless to your customers," Pryor says.  "Is there a problem filling positions internally that would make an alliance a good idea?  Will the move improve service to the customer?  Is consolidation the best way, or should you outsource altogether?" 

He notes that while it's important to look for ways to cut costs, alliances should not be pursued if they end up creating extra levels of bureaucracy, which make the process more cumbersome.  "We've always got to keep asking, is there a better way to do something that will help the bottom line, without negatively impacting the customers,"  Pryor adds.

Newspapers have been delivering national publications like The New York Times, The Wall Street Journal and USA TODAY in local markets for more than a decade, but the industry's economic challenges have spurred agreements between local newspapers as well.  Now, when geographic proximity and an overlap in service exists, companies are working together to leverage infrastructure investments like presses and delivery networks.

In Chicago, the Chicago Tribune entered a joint delivery agreement with the Sun Times Newspaper Group in the fall of 2007.  "We expanded our delivery operation to handle theirs, adding about 450,000 copies into our delivery network," says Vince Casanova, vice president of circulation for Tribune Publishing.  "We have large fixed costs to begin with, and it just doesn't make sense to have two carriers driving down the same street.  If you increase the density of carrier routes, you lower your average delivery cost per copy, and pay your carriers more--a win/win for everyone."

Casanova says printing and delivery are standard operations that need to be done well and on time, but don't have to be differentiating characteristics in newspaper competition.  "You can compete on editorial, advertising, marketing and circulation sales," he says.  "There are no rules, traditions or preconceptions that should inhibit folks from thinking through these possibilities.  Even if newspapers weren't dealing with pressures on our advertising rates and revenue, these deals make sense. "Operating efficiently is something all businesses should do.  There's excess production capacity that needs to be taken out of the system.  Each company needs to define what they do best and move forward accordingly."

Other Tribune papers like The Baltimore Sun have begun printing The Washington Times, and The South Florida Sun-Sentinel will begin printing The Palm Beach Post in December.  We have an existing distribution partnership as well as a content sharing arrangement with both The Palm Beach Post and The Miami Herald," says Howard Greenberg, president and publisher of The South Florida Sun-Sentinel.  "This will expand our partnership to handle the printing, packaging and transportation for The Palm Beach Post as well.  It allows both of us to gain significant efficiencies in our operations."

Greenberg says the three Florida papers have an agreement to share selected non-competing content like local news briefs and will evaluate possible expansion of that agreement.  "For newspapers to prosper and be successful in the future, we must eliminate duplication and regionalize operations wherever possible," Greenberg says.  "We also have a limited content sharing partnership with the Treasure Coast Newspapers.  If other newspapers were interested, we'de certainly be interested in talking with them."

John Walsh, senior vice president of circulation for The Dallas Morning News, says The Sun-Sentinel's content sharing agreement with The Miami Herald sparked his newspaper's interest in exploring alliances in the Dallas-Fort Worth area.  "We have a similar arrangement with the Waco Tribune-Herald, which has been delivering our home delivery papers in their area for well over a year," Walsh says.  "That arrangement made even more sense for us because it's in our state circulation area and not in our primary market.  But in these economic times, it makes sense to look at all parts of the market where we have overlaps."

The Dallas Morning News and the Fort Worth Star-Telegram have now entered into a joint distribution agreement to reduce costs.  Under the agreement, The News will deliver about 5,000 daily copies and 7,000 Sunday copies of The Star-Telegram in four Dallas-area counties and the Star-Telegram will deliver about 21,000 daily copies and 20,000 Sunday copies in four counties around Fort Worth.

The agreement covers home delivery and single-copy distribution of the two newspapers, as well as Quick, The News' publication aimed at younger readers; Al Dia, The News' Spanish-language daily; La Estrella en Casa, The Star-Telegram's Spanish-language weekly and The News' third-party distribution of five national publications.

In addition to this latest distribution agreement, Walsh says the Morning News is working with Ryder, its delivery transportation provider, to find ways to leverage that relationship.  "Simply put, the trucks we lease from Ryder aren't fully utilized," Walsh says.  "We want to leverage Ryder's logistics expertise and client base to find other businesses in the Dallas area that might have use for our trucks during off or non-peak hours."  Walsh says a local grocer and a smaller entrepreneurial company have used some of the News' fleet in off-hours for several months now, and he believes this has worked well for all parties.  "While it's not significant income to The Dallas Morning News at this point, it's part of a longer term effort to more fully utilize our assets," Walsh says. 

Conserving resources prompted an agreement for the Sarasota Herald-Tribune to print McClatchy's Bradenton Herald, says Diane McFarlin, publisher of the Herald-Tribune.  "It's all about the need for all of us to find more economies and efficiencies," McFarlin says.  "We're talking more and more with our competitors about various options because we've realized that in a time like this, we all need each other."

She notes that the Herald-Tribune has shared some content with The Tampa Tribune ( a Media General newspaper) for several years now as readers who live in Sarasota are often interested in Tampa activities, and Tampa residents frequently enjoy visiting Sarasota.

In the Denver market, alliances among the Denver Newspaper Agency, The Daily Camera in Boulder, The Grand Junction Free Press, The Greeley Tribune and The Gazette in Colorado Springs has resulted in savings and additional revenue for all. 

In September 2007, The Gazette took on home delivery distribution of the Denver Newspaper Agency's products in Colorado Springs, generating a new revenue stream for The Gazette and cuttings costs for Denver.  "That spring, gas prices started to go up and we were seeing increased down routes," says Cory Arcarese, vice president of circulation for The Gazette.  "We had already begun talking about a possible partnership, and the climbing gas prices added some urgency.  Bill Reynolds (senior vice president of circulation for the Denver Newspaper Agency) and I put the deal together by mid-summer.  We went delivering one product to 10 products that included The Denver Post, Rocky Mountain News and the national publications." 

Working together, the DNA sent The Gazette some of its employees on loan in the pre-launch stage to help guide the transition, several of whom were later added to The Gazette payroll.

"It was a big change for our customers, as the timing of delivery changed for some," Arcarese says.  "Some people got their papers either earlier or later, depending on where they were on the route, and we had many complaints.  The carriers also had to learn new address-specific software since their routes changes every day.  This initially slowed them down, but things have normalized now."

Collapsing the two carrier forces into one created some pushback from independent contractors who were already delivering for both companies under separate contracts, but all of the issues were resolved. 

Arcarese says the partnership has improved route profitability for carriers because of the increased penetration and subsequently improved customer service for subscribers.  The Gazette has also been able to launch more of its own internal products using carrier delivery rather than mail because of the address-specific software.  In addition to home delivery, The Gazette has also taken over single-copy delivery of DNA products in Colorado Springs. 

Alliances in printing and distribution have resulted in several partnerships for the DNA, which prints The Denver Post, The Rocky Mountain News and several other periodicals.  Last year, the DNA began printing The Daily Camera for the Boulder newspaper and this year began printing The Wall Street Journal.

On the distribution front, DNA has been distributing the Grand Junction Free Press for about five years, says Bill Reynolds, DNA's senior vice president of circulation.  "Since we have low penetration there, adding on the Free Press brought in more revenue to us and our carriers in that area," he says.

As it does in Colorado Springs, the DNA outsources its home delivery distribution in Greeley to The Greeley Tribune, owned by Swift Communications, cutting down its costs in that market.

"When Boulder started their TV book opt-in program, they were mailing the books out," Reynolds says.  "We suggested that we deliver them on Sundays to save them the postage.  Any good partnership starts with a good relationship between parties during the contract negotiation process.  There's got to be give and take on both parts.  Alliances are all about relationships and trust."

Editor's Note:  This story by Dinah Eng was written as part of an NAA initiative titled: Improving Operational Effectiveness: Restructuring the Circulation Department for Operational Efficiency and Audience Development Goals.