It’s Morning in Dallas
The Dallas Morning News
Situation: Stop the Presses?
The rise of the Internet as a conduit for news and advertising and the Great Recession of 2008 — which depressed advertising and caused industry revenues to drop more than 20 percent — may have knocked newspapers down, but it has not knocked them out.
“FTI Consulting’s systemwide evaluation of production and distribution, including integration of our commercial printing operation, has created new insights into press crewing, state delivery costs, rack performance and overall field optimization. Combined, these changes will deliver annualized savings measured in millions of dollars, which, of course, provided an outstanding return on investment for us.”
James Moroney III, President & CEO
However, while many industries have recovered since then, print media has continued to struggle. From 2008 to today, industry revenues have declined more than 50 percent nationwide. Revenues from classified advertisements, which used to be a significant profit center for newspapers, essentially have disappeared as those advertisers have shifted to online job boards and sites such as craigslist and Autotrader.
The Dallas Morning News (“The DMN”), a major daily with one of the 20 largest paid circulations in the United States, has not been immune to these headwinds. Although the company has won a string of Pulitzer Prizes and in 2014, had close to 2 million readers of its print and digital editions every week, it faces the same challenges as other metropolitan dailies: declining print circulation and falling revenues.
FTI Consulting’s Role: Control Costs, Prepare for Success in the Digital Era
Beginning in 2010, the A.H. Belo Corporation, which owns The DMN, hired FTI Consulting to undertake a number of engagements focused on improving operational efficiency, reducing costs and laying the groundwork for The DMN to succeed in today’s challenging publishing environment.
Working with The DMN’s leadership, FTI Consulting focused its efforts in four different areas:
- Benchmarking and optimizing the production and distribution network that takes the newspaper from the press to the consumer
- Consolidating production facilities
- Redesigning the sales support organization while outsourcing ad production
- Rationalizing and improving discipline around advertising pricing
Outcome: Lower Costs, Greater Efficiency
By 2012, FTI Consulting had helped The DMN find millions of dollars in sustainable annual savings by optimizing its production and distribution network. Newspaper distribution relies on third-party independent contractors. In 2012, FTI Consulting worked with The DMN to rebid those contracts and create new distributor networks. This campaign yielded millions of dollars in sustainable annual savings.
A.H. Belo had two production facilities: one south of Dallas and the other north of the city. Based on FTI Consulting’s assessment, The DMN consolidated operations in 2014 at the northern facility and sold the southern plant. This move allowed A.H. Belo to reduce costs associated with production, maintenance, trucking and utilities, ultimately enabling the company to achieve a positive return on investment in less than a year.
FTI Consulting later advised A.H. Belo and McClatchy (which owns the Star-Telegram daily newspaper in neighboring Fort Worth) on printing the Star-Telegram at The DMN’s newly consolidated production facility. This saved the Star-Telegram the expense of running and maintaining its own production facility, and generated extra revenues for The DMN while optimizing the plant’s press capacity.
FTI Consulting also performed an analysis of sales operations effectiveness that allowed A.H. Belo to improve its workflows and redesign its sales organization to optimize support for advertising sales while lowering costs. As part of this engagement, FTI Consulting moved DMN to modular ads of standard sizes and shapes (offering economies of size that made the ads more attractive to advertisers) and later helped The DMN outsource its ad production.
Most recently, FTI Consulting has conducted an analysis of advertising pricing by product and category. This analysis revealed a need to improve pricing discipline. To that end, FTI Consulting offered The DMN a web-based pricing tool, FTI:cP, that combines proprietary demographic data with regression analysis to permit The DMN to rationalize its advertising prices and ultimately improve yield and maximize revenues.