The Two Most Feared Words A Newspaper Employee Will Hear This Year Are “Centralizing” and “Outsourcing” -- Both Are Synonymous For “You’re Fired!”

Ever since the Internet started stealing newspapers’ advertising thunder, the basic strategy of most publishers has been to slash costs and build their own digital operations. But digital is still going to take many years until it can replace the revenue newspapers are losing to the Internet so publishers believe they have little choice but to be even more savage in running their operations as economically as possible, and they are digging far deeper into every conceivable department looking for savings.

Editorial has already been decimated but those cuts still continue – 17 more for the hapless Boston Globe -- newsprint has been narrowed and/or shortened (Wall Street Journal, New York Times), foreign and domestic news bureaus closed (Baltimore Sun), printing plants consolidated all over the place – the list goes on – and there is increased investment digital by most, but for all of that newspapers are barely keeping to their status-quo profits. So now the cuts are reaching into advertising, circulation, finance and the like -- few departments are safe.

Three of the best examples of all this is what the New York Times Company is doing with its 15 regional newspapers and also with its New England division, what MediaNews is doing in the San Francisco Bay Area, and what Tribune is doing all over the country.

ftm background

When Belo Announced That 111 Employees At The Dallas Morning News Had Accepted Buyouts The Reuters Story Was Not Written in Dallas, Nor New York, But Rather In Bangalore, India. Bangalore, India?
Even though Reuters has 350 journalists in the US, it is not enough to report all the financial news that originates there every day. Yet Reuters’ US-based journalists are among the industry’s highest paid, so it’s an expensive proposition to add staff to handle the rewrites of news releases from the multitude of mid and small-capitalized companies. Simple solution: hire 100 journalists where it is not so expensive to handle the overload and with modern-day communications there’s no reason why they really need to be in the US.

New Study Shows That Outsourcing Media Activities Outside of Its “Core Competencies” Can Not Only Save Money But Also Improve Operational Performance
Traditional media is caught in a bind: advertising is basically flat, costs are going up, and with so much cost-cutting going on there are questions of how much fat is left on the bone and whether organizations are not already cutting into the meat.

To The Barracades!!
BBC employee unions and management go to the arbitration table, actually separate rooms. Public service broadcasting faces yet another dilemma.

It’s the reason that the tabloid Boston Herald, in running a story about the cutbacks and centralization projects at its rival Boston Globe, headlined it web story: “The ‘Bangalore’ broadsheet: Globe Union Slams Outsourcing.” And why The LIConnection.com last week in printing a staff notice sent to Newsday employees in New York telling them that their first level help desk calls were now going to be handled by IBM in India, headlined the memo, “Need Help At Newsday? Call India”.

The largest of the New York Times Company’s 15 regional newspapers is the Sarasota (Florida) Herald-Tribune. It told its readers Tuesday that it was outsourcing the department that takes in classified telephone calls and that in the coming months the newspaper will lay off employees. The bonus to the newspaper’s classified advertisers is that now they will be able to place their ads 24 hours a day.

The story summed up the philosophy behind what is going on. “The goal is to keep profits on target as print advertising revenues subside from their real-estate induced peaks during 2006, and also to spend more going after multimedia markets.”

And it’s not just the classified ad department that gets nailed. So does circulation-related marketing. It’s going to be centralized at the group’s Tampa headquarters. In North Carolina the company’s Hendersonville Times-News has announced it is closing its printing plant and the newspaper will be printed instead at its sister newspaper in South Carolina, The Spartanburg Herald-Journal. That’s going to mean 35 people gone in Hendersonville.

By the time the company is done, expected by April, classified ad billing and collection will all be done out of Lakeland, Florida, home to its Lakeland Ledger.

Earlier this month the Times’ New England Media Group – The Boston Globe and The Worcester Telegram & Gazette – announced 125 jobs were to go. Seventeen of those are editorial at The Globe and the newspaper is also going to shrink its news hole more. Some 55 back office and advertising jobs are also to go, and the unions say they believe those jobs are being outsourced to India.

Outsourcing has become a really dirty word to the labor unions and the Boston Newspaper Guild minced few words in saying, “We believe that outsourcing is corporate greed at its best.”

But as far as publisher Steven Ainsley is concerned,” We are in the middle of one of the most challenging periods in out history. One of the first steps we will be taking is to significantly reduce costs to bring them into line with our revenue expectations.”

Apparently, that means there’s not a very positive revenue outlook, even though Company President Janet Robinson said in a speech in Boston last week that “We believe that the Globe is on a very good course and will do very well in the years ahead.” Advertising revenue declined 12.4% in the third quarter.

In Northern California, Dean Singleton’s Media News Group has announced it is expanding its program of outsourcing its ad production to India. The Contra Costa Newspaper Group started the project and the Alameda Newspaper Group is now joining in, meaning 40 newspapers are outsourcing that job to American-owned Express KCS in Gurgaon, India.

And California Newspaper Partnership (CNP), owned by MediaNews, Gannett and Stephens Media, publisher of 34 daily California newspapers with a combined circulation of 900,000, and also 57 weeklies, is opening soon a new business support center. CNP President George Riggs has said he sees the consolidation of jobs as “a way for CNP to take advantage of potential synergies among its various Northern California properties.”

And for Tribune Company, in what seems a never-ending search to boost its margins, it announced last year it was outsourcing 250 call-center jobs to The Philippines. Some 120 full time jobs and 130 part-time jobs will be gone.

Orlando Sentinel publisher Kay Walz said at the time, “The intensely competitive media environment we find ourselves in and the changes happening within our industry make it even more important that we continue to look for better ways to meet the needs of our readers and advertisers.” She didn’t say how someone answering the phone in The Philippines would better server her Orlando readers and advertisers than would someone locally.

And now Newsday in New York has told its employees that the first level help desk that helps them with problems will now answer out of a call center run by IBM in India. “IBM’s familiarity with help desk best practices will help us maintain technical service and reliability,” said Rob Rosenthal, chief technology officer, but “Of course, the major benefit of outsourcing is overall expense reduction.” Second level help desk support remains in-house.

The Reuters News Agency was one of the first news organizations to outsource editorial jobs to India. So it really seems only fitting that in researching this story we found several items from Reuters written about US newspaper outsourcing plans, and, yes, they were written in Bengaluru (Bangalore).

More Centralization (Job Losses) at Dow Jones - January 29, 2007

Dow Jones has announced it plans to centralize delivery operations for the Wall Street Journal and Barrons resulting in administrative job losses.

The company recently started using sub contractors to deliver the two newspapers and has now announced is building a new centralized delivery operations group that will replace certain jobs being duplicated in field offices.