The Orange County Register has found a way to save more than $1 million a year while still providing its product to customers. The only catch: The newspaper will be distributed by its biggest competitor, the Los Angeles Times.
Larry Riley, the Register’s vice president of circulation, announced July 30 that the paper will turn over delivery to homes and businesses to the Times starting in September.
The arrangement includes all papers delivered to homes or businesses in Orange County and about a dozen ZIP codes in nearby areas. The Times will also deliver the Register to newsstands, retail stores and vending machines.
By shutting down its in-house distribution system, Riley said the Register’s saving will reach seven figures – sufficient justification for the paper to make a deal with its long-standing rival.
“We will remain stiff competitors in securing advertisements and in the newsroom,” Riley said. “But every day our carriers drive 24,000 miles – roughly the circumference of the Earth – so it makes sense to shake hands and just have one company handle the delivery.”
The Register and the Times have long battled as the largest daily publishers in Southern California. The Register has a weekday circulation of 231,000, with most of that in Orange County. The Times’ weekday circulation in Orange County is 119,000 out of a total of 723,000.
The Register is the flagship paper of Irvine-based Freedom Communications Inc.; the Times is owned by Chicago-based Tribune Co.
The only worrisome issue for Riley is that the Times will have access to the Register’s subscriber list – a major asset for any publisher. However, he said there’s a clear understanding that the list is for delivery purpose only, not for poaching subscribers.
The combined delivery system “is a distribution deal and does not affect advertisers,” said Nancy Sullivan, a spokeswoman for the Times, in an e-mail response to questions submitted by the Business Journal. “Contracting with the Orange County Register, which will be our largest commercial delivery customer, allows us to maximize the strengths of our vast independent distributor structure.”
The Register started as the Santa Ana Register in 1905, when Orange County had only 20,000 residents. That was 24 years after the launch of the Los Angeles Times, which by then had a market of 170,000 people.
In the 1960s, Orange County started turning farmland to bedroom communities, and by 1980 the population reached 2 million. The Register became a countywide paper in 1985 and launched an aggressive campaign to lure away Times advertisers who wanted to reach the new suburbanites. The fierce competition between the papers for readers and advertisers reached its peaked in the late 1980s and early 1990s, but has cooled amid the decline of print since the early part of this decade.
The new delivery plan is the second agreement between the rival papers in the last month. On July 21, they announced a program that allowed advertisers to place inserts in both papers as a package deal.
The Register’s new arrangement will result in job losses for 55 full-time and 143 part-time employees. In addition, about 720 independent contractors who deliver papers every morning will have their contracts terminated as the new system is phased in, Riley said.
Low-cost publishing
Shared distribution agreements have become increasingly popular as newspapers cut costs to compensate for falling ad revenues. The Chicago Tribune, a sister paper to the Los Angeles Times in the Tribune Co. portfolio, signed on to distribute cross-town rival Chicago Sun-Times in 2007. The South Florida Sun-Sentinel has a similar partnership with the Miami Herald. And last fall, the Dallas Morning News and Fort Worth Star-Telegram started distributing the other paper in their respective cities.
Matthew Egol, a partner in the media practice of consulting firm Booz & Co. in New York, sees a future of digital distribution for newspapers. But in the short term, publishers must hold on to subscribers while cutting costs, an objective accomplished by the Register-Times deal.
“There’s a lot of pressure on newspapers in general, but the real pressure is on the advertising side, not the circulation side,” said Egol. “Since the latter half of last year, many papers have seen a 30 percent decline in advertising revenue. But because newspaper readers skew older, the migration online has been gradual and the readership erosion has been moderate.”
Both Egol and Riley see the Kindle, an electronic reading tablet from Amazon, as a model for newspapers’ future.
“Twenty to 30 years from now, all papers like the Register and the Times will be distributed predominantly in a digital way,” Riley said.
