MEDIA: Is cost sharing the key to survival for newspapers?

While all the talk is of cross-media ownership, takeovers and the forthcoming explosion of digital television, we should keep our eye on the ball, and watch what the real players are doing. Exploring radical cost-cutting options is the short answer.

While all the talk is of cross-media ownership, takeovers and the

forthcoming explosion of digital television, we should keep our eye on

the ball, and watch what the real players are doing. Exploring radical

cost-cutting options is the short answer.



For example, this week sees the introduction of a significant new phase

of co-operation between the Telegraph and United News & Media, owners of

the Daily and Sunday Express. Together they jointly operate the huge

West Ferry printing plant on the Isle of Dogs, the most efficient in the

land.



Now the two companies are taking a further step, merging their

distribution systems, the complicated delivery network which helps

produce 14 million national newspapers each day.



This was one of the last cost-saving deals negotiated by Stephen

Grabiner, the former MD of the Telegraph, who has been lured away from

the broadsheet group to run all of the print titles owned by the merged

MAI/United company.



Sharing distribution is in fact one of the easiest steps to take after

joint production, in the ongoing search for economies. It is especially

appealing to those who recognise that investment and future

concentration of resources must be directed both at editorial, to

staunch the drift away by readers, and marketing - the promotions and

advertising to exploit that hard won audience.



This is why no one really expects the Guardian to refurbish its London

print works. Since its plant was badly damaged by the Canary Wharf bomb

in February, the paper has also been contract-printed at West Ferry. It

is an open secret that what was at first sight an emergency solution has

become custom and practice. The paper has benefited from the process.



Handing your production to a professionally run factory can be

liberating, provided you know you will be fairly treated by an utterly

professional operation. The Financial Times, also withdrawing from its

own London print works, recently reached the same conclusion, without

the intervention of the IRA.



But the next question is whether it is possible to merge other so-called

back office operations: should newspapers follow ITV and commercial

radio, and form a few large and effective sale houses, to sell

advertising space?



The difference is that ITV companies, except in London do not compete

head to head for revenue. On the other hand, despite the price war most

papers have a set of core readers, and two streams of funding: cover

price and adverts. And for all their ability to set agendas, they are

smallish businesses with a shrinking readership. Faced with the tough

choice of closing down foreign bureaux or sharing an advertising sales

team is not easy. But the best brains in the business suspect that is

what lies ahead.



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