ACTING TO SHAPE THE FUTURE: MACHASKEE ADDRESSES WORLD NEWSPAPER CONGRESS
(Extensions of Remarks - June 20, 1996)

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[Extensions of Remarks]
[Pages E1116-E1118]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




    ACTING TO SHAPE THE FUTURE: MACHASKEE ADDRESSES WORLD NEWSPAPER 
                                CONGRESS

                                 ______


                           HON. LOUIS STOKES

                                of ohio

                    in the house of representatives

                        Wednesday, June 19, 1996

  Mr. STOKES. Mr. Speaker, just recently, the 49th World Newspaper 
Congress gathered in Washington, DC. Using the theme, ``Vision for the 
Future,'' the group addressed the challenges which must be met if 
newspapers are to retain their vital place in the world.
  One of the highlights of the World Newspaper Congress was a keynote 
address delivered by Alex Machaskee, the president and publisher of the 
Plain Dealer newspaper which serves my congressional district. Mr. 
Machaskee has enjoyed a distinguished career at the Plain Dealer, which 
spans approximately 36 years, serving at the helm as president and 
publisher since 1990. The newspaper has maintained a daily circulation 
level of approximately 400,000 and a Sunday circulation of 550,000. 
Among major metropolitan newspapers in the United States, the Plain 
Dealer ranks first in circulation penetration in the home county.
  In his remarks at the World Newspaper Congress, Mr. Machaskee 
outlined how the Plain Dealer is meeting the current global 
competition. He said, in part,

       We are exploring and entering new areas to meet changing 
     needs and a changing world. Indeed, in all that we do, we are 
     acting to shape our future so it does not become necessary to 
     react to save our existence.

  Mr. Speaker, I am pleased to share the entire text of Mr. Machaskee's 
remarks with my colleagues and others throughout the Nation. It 
represents worthwhile and insightful reading.

                       Acting to Shape the Future

                          (By Alex Machaskee)

       I want to express my thanks to Donald Newhouse, who 
     addressed this Congress in Berlin in 1993 and ``nominated'' 
     me to provide an update on the message he shared at that 
     time. As you certainly know by now, this year's theme is 
     ``Vision for the Future,'' and those of you who were in 
     Berlin three years ago may recall that Donald conveyed his 
     own ``vision for the future'' at that time. Donald expressed 
     the hope that his young grandson, Andrew, and his peers will 
     still receive their news from newspapers when they are 
     adults. Grandfather Donald expressed another hope for the 
     future as well--that Andrew wouldn't be his only grandchild! 
     Well, I am pleased to report to you that Donald's vision is 
     already coming true. First, as an industry, we are beginning 
     to successfully address the challenges we must meet if 
     newspapers are to retain their vital place in our world and 
     in the world of our children and grandchildren. Second--and 
     of equal importance to Donald--young Andrew now has a little 
     brother, Alexander, giving Donald two grandsons!
       Back in 1993, Donald talked about the need for newspapers 
     to ``constantly reinvent ourselves,'' and he suggested five 
     ``seismic changes'' that all of us in the industry must 
     address. He mentioned (1) competition from mass marketers; 
     (2) database marketing; (3) consolidation among retailers; 
     (4) magazines and cable television focusing on narrower 
     demographic groups; and (5) the multi-year recession which, 
     fortunately, is now behind us. Donald cited The Plain Dealer 
     as a case study in dealing with these seismic changes. Much 
     of what he talked about was still in process at the time--
     most significantly the construction of our $200 million, 
     state-of-the-art production and distribution center. So, 
     Donald suggested that an update of our vision of the future 
     might be in order.
       Before I bring you up to date, I believe we all could agree 
     that since 1993, two additional factors have had a crucial 
     impact on our industry: the dramatic increase in newsprint 
     prices, which have skyrocketed 55% in the United States 
     since Donald addressed the Congress; and the intensifying 
     competition for people's time and attention, especially 
     from the Internet. Nearly 30 years ago, when I was 
     promotion manager at The Plain Dealer, I told a marketing 
     group: ``Intelligent and foresighted planning permits the 
     marketing-oriented newspaper to act to shape its future 
     rather than react to save its very existence.'' That 
     message is really at the heart of the philosophy that 
     drives us at The Plain Dealer. Throughout our 
     organization, we are acting to shape our future--to 
     protect our news-on-paper franchise and to ensure our role 
     as a primary provider of information for my own 
     grandchildren, as well as Andrew and Alexander.
       When we set out several years ago to ``reinvent'' The Plain 
     Dealer, we determined that we needed to produce a more 
     relevant newspaper for current and potential subscribers and 
     that we had to create the capability to provide quality color 
     reproduction for advertisers, better sectionalizing and more 
     zoning availabilities for target marketing. Key to the 
     strategy we developed was the ``reallocation of resources'' 
     from redundant manufacturing and distribution activities to 
     areas that would improve the content of the newspaper. We 
     knew that enhancing our core product was the most essential 
     component of our strategy. After all, the finest facilities 
     and technologies in the world mean nothing unless the quality 
     of the content is there.
       So we adopted the phrase ``Leadership in editorial 
     excellence''--not only as a promotional tagline emblazoned on 
     our trucks

[[Page E1117]]

     but as an attitude. We invested in people, adding 75 
     reporters and editors at a time when other newspapers were 
     cutting back on stall. We added or enhanced a number of 
     editorial features and sections aimed at specific demographic 
     targets, including minorities, women and teen-agers. We also 
     opened three bureaus in outlying counties as part of our 
     commitment to in-depth coverage of the 125 communities in our 
     primary circulation area. We began to provide more local news 
     and features, including increased coverage of scholastic 
     sports at 176 high schools. ``News from around the world 
     and around the corner'' became our hallmark as well as a 
     promotional slogan.
       Not only did we change our product, but we fundamentally 
     changed the way we produce and distribute it. In the late 
     1980's we began a planning process to identify and eliminate 
     contract language that was an impediment to effectively 
     managing the work force and implementing changes in 
     technology. Considerable time and effort were put into 
     developing an operational change plan based on how we would 
     operate if we had no contractual limitations and restrictions 
     to deal with. This exercise was particularly important as we 
     planned our new production facility. The end result of that 
     exercise was a 33-page document that served as our guide for 
     setting bargaining goals and objectives and for implementing 
     and managing change over the next several years.
       In two very successful rounds of negotiations, we won more 
     favorable contract terms and phased in a program of voluntary 
     buyouts in the manufacturing and distribution areas of our 
     operation. The first major component of the ``reinvention'' 
     of The Plain Dealer was the phased-in opening of 19 
     strategically located circulation depots, where newspapers 
     could be trucked in bulk by our drivers for pickup by 
     independent distributors. The distribution of newspapers to 
     depots would allow the use of a two-part run system when the 
     new plant opened, with classified and feature sections being 
     printed early in the evening and main news and sports printed 
     several hours later. The depots were all fully operational a 
     year before the plant opened, giving us ample time to work 
     out bugs in the system.
       This transition, which included a $3.5 million conversion 
     of our fleet, meant we had fewer trucks, going to fewer 
     places--so we were able to reduce our driver work force by 
     about 80 positions. Surely the capstone of our 
     ``reinvention,'' however, was the 1994 opening of our 
     Tiedeman Production and Distribution Center. With this 
     plant, we now have the very latest newspaper technologies 
     and capabilities, including electronic pre-press 
     pagination, high-speed printing and color capability 
     throughout the newspaper.
       The plant brought a high level of automation to our 
     operation, and it resulted in a number of innovations of our 
     own--including the only automated, cart-based loading, 
     storage and delivery system operational in the world today. 
     We are very proud of our facility, and grateful to our very 
     supportive owners. We are also very proud of our people for 
     helping to ensure a virtually problem-free startup. This was 
     a result of the fact that, as I mentioned, we had already 
     converted to the depot system a year earlier. It was also a 
     result of the tremendous effort that went into planning and 
     training.
       To train our pressmen, for example, we erected two Goss 
     press units and a folder next door to our downtown facility. 
     Long before the new plant opened, we conducted test runs and 
     produced live product on the new presses, easing the 
     transition not only for the pressmen but for graphic 
     designers and pre-press personnel as well. We went fully 
     operational at the new plant in early April of 1994--and 
     things went so smoothly that it was almost a ``non-event.'' 
     The changeover happened to coincide with the similarly 
     exciting and successful opening of a new ballpark for our 
     red-hot Cleveland Indians in downtown Cleveland. To most of 
     our readers, our front-page headline the next morning seemed 
     to refer to the opening of the ballpark and Cleveland's 
     opening-day victory: ``Just perfect,'' it said. But for us at 
     The Plain Dealer, the headline had a second, more personal 
     meaning.
       As proud as we are of the Tiedeman facility, we know that 
     shaping the future requires doing much more than building a 
     new plant. That is why we are constantly ``reinventing'' and 
     fine-tuning our primary product and the way we produce and 
     distribute it. In the editorial area, we introduced a major 
     graphic redesign in 1994, including not only easier-to-read 
     body type, but a completely new headline face designed for 
     us specifically for offset reproduction. We also 
     continually develop additional features that target 
     specific demographic groups. Over the past 18 months, for 
     example, these have included weekly sections devoted to 
     Family, Personal Finance/Personal Technology, On Campus, 
     Driving and others, as well as Community pages twice a 
     week.
       Our teen section, which we call ``NEXT,'' was redesigned 
     and expanded by editors who involved teen-agers extensively 
     in the process. We also have undertaken a number of major 
     special sections for such events as the Major League Baseball 
     playoffs, the opening of the Rock and Roll Hall of Fame and 
     Cleveland's bicentennial celebration.
       One project we are especially proud of is ``What Makes 
     Cleveland, Cleveland!''--48 pages of color photography 
     featuring our metropolitan area through the eyes of our 
     photographers. This was a very special section for several 
     reasons. For one, it was a great device for showcasing our 
     color capabilities and the talents of our photo staff. Even 
     more importantly, it was great testimony to Editorial and 
     Advertising working together. At the time, a major national 
     retailer, Target stores, was entering the Cleveland market 
     and was looking for a way to top off its marketing plan. 
     Target became the only sponsor of the section, which later 
     earned a major local advertising award as well as the 
     National Printing Industries of America award for best four-
     color printing on newsprint. All in all, while color is very 
     important, our primary focus is on creating an excellent 
     product, day in and day out.
       In ``reinventing ourselves,'' to use Donald's phrase again, 
     The Plain Dealer is rediscovering something that the best 
     community-oriented newspapers of the past knew and 
     practiced--that it is possible to be an aggressive watchdog 
     while simultaneously recognizing pride and achievement in a 
     community. Such undertakings as ``What Makes Cleveland 
     Cleveland'' and the extensive coverage of the Rock Hall 
     opening and the baseball playoffs come from a newspaper that 
     has also been recognized as a civic watchdog. Our coverage 
     of government investment practices, for example, was 
     credited by banking experts with forestalling an Orange 
     County-style bankruptcy in our home county. And 
     editorially we have been aggressive in demanding reform of 
     the Cleveland public schools.
       Our goal is to create an information resource that 
     competitors cannot match in terms of breadth and depth. At 
     times, we can even hold our own against television in terms 
     of timeliness. One of the best examples of that came last 
     fall, when the Cleveland Indians brought our city its first 
     post-season baseball game in 41 years. Things seemed to be 
     working against us all night--the game was delayed several 
     hours by rain, and on top of that it went into extra innings, 
     ending after 2 o'clock in the morning. Many Clevelanders 
     didn't get to bed until 3 o'clock or later. But thanks to the 
     flexibility of our plant, some latitude in our deadlines and 
     a lot of hustle on the part of our staff and our independent 
     distributors, most of our readers woke up just a couple of 
     hours later to the complete game story and color action shots 
     in The Plain Dealer.
       The power of color is the big story in Advertising. Major 
     retailers tell us that, without question, color ads move more 
     product. One of the most dramatic results, in fact, came from 
     a department store that directly linked a color ad to a 45 
     percent increase in sales of a particular fragrance. 
     Timeliness of advertising, too, can be dramatically 
     effective. One Friday night last September when the Indians 
     clinched the division championship, The Plain Dealer had 
     special advertising pages ready to put on the presses--IF the 
     Indians won. This required reconfiguring the presses on 
     deadline, but planning and teamwork by Production, 
     Advertising and Editorial and the capabilities of the new 
     plant combined to make it possible. As a result, advertisers 
     found crowds of baseball fans waiting for their doors to open 
     on Saturday morning. And within hours, those customers 
     snatched up millions of dollars' worth of championship 
     jackets, T-shirts and caps.
       Advertisers are very pleased with results like these, and 
     so are we. In fact, in retail display alone, our color ad 
     revenues were up 17 percent from 1994 to 1995. Color revenues 
     from national advertising, while starting from a smaller 
     base, were up 90 percent. And classified advertisers--
     particularly auto dealers--are seeing the benefits of using 
     spot and full color. But color isn't the only story, as we 
     continually work to identify appropriate new products and 
     services in an effort to provide marketing solutions for our 
     advertisers. Our Marketing Database now has well over one 
     million names and addresses, appended with a broad array of 
     demographic and lifestyle information from quality sources. 
     In a joint effort between Advertising and Circulation, we are 
     working rapidly toward the day when we can actually deliver 
     an address-specific product. In the meantime, we are 
     constantly exploring opportunities to utilize this wealth of 
     information to help our advertisers achieve their marketing 
     objectives.
       Over the winter, for example, we put it to use for a 
     heating and air conditioning distributor. This advertiser was 
     running a print and broadcast campaign focusing on the theme 
     of cold-weather pet care, and he wanted to supplement the 
     campaign with a direct mail piece. His target consisted of 
     dog and cat owners with specific income and demographic 
     criteria. Using our data base, we were able to identify more 
     than 10,000 readers who met these requirements. In our effort 
     to be full-service providers and to develop marketing 
     solutions for our advertisers, we are offering new options 
     that go beyond traditional newspaper advertising. One such 
     option is PDQuickline, our audio-based system that puts an 
     array of information--including information about 
     advertisers' products and services--at callers' fingertips.
       Another new product is Star Watch, a non-proprietary, 
     entertainment-oriented publication that carries single-sheet 
     and other inserts to non-subscribers and enhances the 
     effectiveness of advertising in the Plain Dealer. Being a 
     full-service provider also requires the capability to compete 
     successfully for advertisers' commercial printing 
     business. This is a relatively small but growing part of 
     our business, primarily involving supermarket preprints. 
     Speaking of supermarkets, while many newspapers have all 
     but lost food advertising, the leading supermarket chains

[[Page E1118]]

     in our market rank as our number-three and number-four 
     advertisers. Our success in retaining these important 
     advertisers is clearly a result of our ability to provide 
     more than ``traditional'' newspaper advertising services. 
     Circulation is an area that poses a special challenge for 
     us, because we are in a shrinking marketplace--with a 
     trend of outmigration of people from our core market. Even 
     so, among major metropolitan newspapers in the United 
     States, we rank first in circulation penetration in our 
     home county--with 54% penetration daily and 72% on Sunday. 
     And despite three suggested retail price increases in 
     three years, we have maintained circulation levels of 
     about 400,000 daily and 550,000 Sunday. This is largely a 
     result of gearing the Circulation Division's efforts 
     toward establishing a productive and efficient 
     distribution system that provides both outstanding service 
     and professionalism. Going forward, it requires building 
     our ability to distribute an evermore narrowly targeted 
     product.
       We are also working to create an environment that enables 
     our independent distributors to succeed, by improving 
     communications, offering incentives and sponsoring seminars 
     to help them run their operations profitably. And, to reduce 
     the handling of money, we worked with Diebold Incorporated, 
     the nation's leading maker of automated teller machines, to 
     develop an ATM-like machine in which independent distributors 
     can deposit their receipts at the depots. Considerable 
     attention is being focused on single-copy sales, as well. We 
     have worked hard over the past several years to improve our 
     relationships with vendors and to develop the capability to 
     determine by computer just how many newspapers should be 
     placed at each location each day to avoid sell-outs and 
     reduce returns. Our continuing community outreach efforts are 
     helping us learn the concerns of various ethnic and 
     nationality groups as well as young people, our readers of 
     tomorrow. And within The Plain Dealer, we are working hard 
     to get every one of our more than 1,600 employees 
     committed to our vision of being the finest newspaper in 
     the United States. Over the past 18 months, I have met 
     with virtually every one of our employees, usually in 
     groups of no more than 25 over breakfast or lunch. I have 
     found these sessions insightful and invaluable in truly 
     keeping a finger on the pulse of our newspaper.
       As I mentioned at the outset, two significant factors have 
     emerged during the past couple of years--newsprint costs and 
     the Internet. In addressing these factors, it is interesting 
     that we find ourselves dealing with ``webs'' in both cases. 
     At The Plain Dealer, part of our efforts to reduce our 
     newsprint consumption was a reduction in or web width this 
     past February. The conversion went without a hitch, and the 
     change in widths is imperceptible. Nevertheless, we expect 
     savings of upwards of $1 million a year in our newsprint 
     costs. The other ``web,'' of course, is the burgeoning World 
     Wide Web. As part of our vision for the future, we formed a 
     wholly owned subsidiary this past year that specializes in 
     developing Internet sites. In connection with this, we are 
     actively working with advertisers and potential advertisers 
     to identify opportunities for increased business. For 
     example, recently we worked with the local Auto Dealers 
     Association to provide a web site in connection with a major 
     Auto Show.
       Our first venture onto the Internet was rockhall.com, our 
     very successful Web site for Cleveland's new Rock and Roll 
     Hall of Fame and Museum. The site has recorded more than 20 
     million ``page impressions'' since its debut last August and 
     has been named a ``cool site'' by many publications. In 
     addition to features about the Hall of Fame and its 
     inductees, the site offers a link that features information 
     on Cleveland restaurants, hotels and museums. At The Plain 
     Dealer, our vision of the future is very clear--the newspaper 
     will remain our core business for as long as we can foresee. 
     In fact, with the support of the Newhouse organization we are 
     betting more than $200 million on this vision, represented by 
     our new plant.
       On June 5, 1994, at the formal dedication of The Plain 
     Dealer's Tiedeman Production and Distribution Center, the 
     symbolism was reassuring: it was young Andrew Newhouse who 
     pushed the button to start the presses! Yet, like most of 
     you, we are exploring and entering new areas to meet changing 
     needs and a changing world. Indeed, in all that we do, we are 
     acting to shape our future so it does not become necessary to 
     react to save our existence. Most of us in this room have 
     dedicated our lives to newspapers. For us, nothing beats the 
     roar of the presses, and we believe nothing can ever replace 
     the depth and breadth of information newspapers present. In 
     the current environment, however, we need to work harder than 
     ever to ensure that newspapers remain a vital part of our 
     children's lves--and our grandchildren's lives--as well.

                          ____________________