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OPERATIONS Quarterly Update September 2011 – Issue 1

Christopher Longcroft Managing Director Operations

CONTENTS Logistics DTR Operations

Welcome to the first Operations quarterly update, which I hope will provide some interesting reading on what’s taking place across our part of the business. As mentioned in Tom’s note two weeks ago, these have been testing times for us all within News International. The closure of NotW was both sudden and unexpected and has had far reaching implications for Operations. With no plans for a replacement, we are required to find sensible and cost effective ways of utilising our capacity on Saturday nights, whilst maintaining the flexibility to meet the business needs of the future. The recent announcement on the structural changes within Commercial, Marketing and some of the other support functions has added to our current challenges, but as stated by Tom, there are also a number of positive changes taking place within the company and I have no doubt that these, along with our day to day achievements will provide a platform for future growth.

Wholesale Planning & Products Publishing & Business Continuity Newsprinters Procurement & Environment

There is nothing new about sending out a newsletter, indeed the Newsprinters sites have been doing this for years, however, to be able to give a wider coverage of what’s taking place within Operations can only help improve our communication across departments and provide an opportunity for the department heads to showcase some of the initiatives they’ve been working on. The newsletters will be issued quarterly in September, December, March and June and if you have any feedback or suggestions for future issues, please feel free to send them to me at chris.longcroft@newsint.co.uk

Human Resources GPS Projects

This edition contains an array of interesting articles on what we currently do across Operations and some of the challenges we face. The “nightly miracle” that gets our papers to 55,000 retailers across the UK and a further 5,000 across Europe is testament to hard work and detailed planning which has taken place over past years and still takes place every day and night by many of you. Kate’s article on our archives and Nigel/David’s on wholesalers are a useful reminder of where we’ve come from. These will be evolved in future issues, with Kate explaining how we need to protect our content in a world of “free” and Nigel/David covering how we will assess our future distribution options as we near the end of our wholesale contracts, which expire in July 2014. In order for us all to meet our full potential, we need to continue to work collaboratively across departments and functions to seek out new opportunities for generating revenues and improving our operational efficiencies. I hope that this newsletter helps further this collaboration.

Operations Quarterly Update

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LOGISTICS Logistics – The Nightly Miracle September 2011 – Issue 1 Andy Says…

Andy Roberts Head of Logistics

So what is Logistics all about in News International ? We are unlike any other consumer goods business, as we don’t have any stock. At 22:45 each night we have no product, but by 06:30 the next morning we have delivered 4 million newspapers to 55,000 outlets in the United Kingdom and Southern Ireland and across the globe. This is a remarkable achievement done 364 days a year whatever the weather. There are two main methods of distribution – Primary Distribution and Direct to Retail (DTR ). Primary distribution is moving product from our print centres through to a network of wholesale branches operated by WHS News and Menzies. This is undertaken by DHL in England and Wales, and Menzies in Scotland. Additionally, we use CM Downton to deliver magazines from our printer, Prinovis. DTR distribution is where we deliver directly to retail outlets. This method of distribution has been pioneered by NI over the last 11 years and is unique to us in the industry. DTR allows us to have a direct relationship with the retailer and not be constrained by wholesale demands. We deliver to 25% of Great Britain by this method, some 11,500 retailers. Two Principal Contractors operate this service for us, AJK Distribution and JSK Distribution. They operate 325 vans all provided by self-employed contractors, typically delivering to up to 50 retailers each night. This method of distribution is very cost effective and provides an unparalleled service to the retailer. Detailed plans are being developed to extend this service nationally. What makes this all happen is the combination of systems, processes and most importantly our people. We have a relatively small number of skilled personnel managing a massive undertaking. Our aim is always logistics excellence, and in simple terms we are split between planning and execution. Planning operates at two levels. Firstly strategic planning for the future and secondly daily planning for both Primary and DTR. Key initiatives currently centre around improving our route planning capability for DTR, where we use sophisticated computer modelling and optimise our Primary routes. Our Operations team then execute the plans with excellence, ensuring that all our papers are delivered to every part of the country on time. We are proud of our reputation in the industry and our ability to make it happen every time and I would like to take this opportunity to thank everybody involved in Logistics for the brilliant job you all do !

Operations Quarterly Update

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DTR OPERATIONS Creating new standards in customer service September 2011 – Issue 1 Darren Says…

Darren Barker Head of DTR Operations

The DTR Ops team provides the back office functionality and services that support our ability to supply and invoice our 11,500 retailers directly. We have 69 staff spanning three sites: Broxbourne (LSC), Birmingham and Peterborough.

It never stops at the LSC, from 5am when our call centre opens to 7pm at night when we finish printing pack sheets, we constantly strive to provide a first class service to our retailers. Every day we:        

Support delivery of around 860,000 newspapers Process claims from retailers for less than 0.1% of our papers Receive and resolve on average 850 calls into our call centre Print and process 17,500 pieces of driver delivery/returns paperwork Investigate over 240 retail queries Invoice NI Products to the equivalent of £250,000 to retailers Scan 22,500 unsolds newspapers Process 23,300 vouchers from retailers We have just implemented a new supply chain system which has significantly improved our customer relationship management functionality, and will enable us to work with retailers more efficiently. Over the next couple of months we’ll also be rolling out scan guns which our drivers will use to record delivery times, and unsold newspaper returns figures. This will improve the way we operate and reduce the amount of queries we receive from retailers.

Operations Quarterly Update

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WHOLESALE Why do we have Wholesalers? September 2011 – Issue 1 David Says…

David McLean Head of Wholesale NI

Nigel Says…

Nigel Lomas NI Supply Chain Director

The answer to this question, as with many things, can be traced back through time to its origins. The Times was first published in 1785 (as the Daily Universal Register). Initially this title was distributed and sold in London only. In 1792 Henry Walton Smith and his wife formed a news agency in London selling newspapers and journals to an increasingly news hungry public. In 1812 following the death of H W Smith the business was taken over by their son William Henry Smith and in 1846 the company W H Smith was formed. This was the Industrial revolution. As well as bringing us the powered newspaper press, which delivered mass publication newspapers, this era was also the age of the railways. Railways opened up the country to personal travel and to the carriage of goods at speeds never known before. W H Smith (and Son) capitalised on both the popularity of newspapers and the speed of railway travel by opening news kiosks in all major towns and cities. These kiosks were the first true newsagents outside of the capital. In parallel, operating out of Edinburgh with the new Scottish titles, John Menzies in 1833 at the age of 25 formed a similar business. These railway news kiosks soon found themselves selling newspapers in bulk, to grocers, post offices, tobacconists, publicans and a myriad of small businesses in the surrounding territories. Initially these small traders would collect their supplies every day from the railway stations but as the popularity and profitability of newspapers increased, these newspaper kiosks started to provide delivery services to the provinces. It was in this way that the now familiar network of newspaper wholesalers (who grew out of railway kiosks) and newsagents (who sprang from other small traders) was formed. John Menzies and W H Smiths weren’t the only entrepreneurs but they were the biggest and their businesses survive today as Menzies Distribution and Smiths News. They handle over 3000 different titles and deliver to 54000 retailers every day their newspapers and magazines. Next issue, how NI trades with its Wholesalers and the shape of the future.

Operations Quarterly Update

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PLANNING & PRODUCTS September 2011 – Issue 1

Alan Says…

NEWSPAPERS Forward planning has already commenced for key events next year: Euro 2012 Finals Poland/Ukraine 8th June - 1st July

London Olympics 27th July to 12th August

MAGAZINES The past year has seen considerable changes across our magazine portfolio with 3 weekly magazines changing format and the closure of Playlist, with listings content moving to the new newsprint Saturday Times Review section. Alan McCann Head of Production Planning NI

INNOVATION IN PRINT We’ve been working with NI Commercial, Marketing and NPL to promote the availability of various manufacturing enhancements for our newspapers and magazines.

Examples include higher grammage newsprint, translucent paper, scented inks, half-page strips, ink-jet numbering, tip-on inserts, multi covers and gate-fold covers in magazines.

PRINT SITE CONNECTIVITY & PREPRESS DEVELOPMENTS We recently completed a programme to migrate our International print centres from fixed MPLS/ISDN links to Internet only connectivity – delivering a considerable cost saving with no loss of service. Working with Technology, we have introduced a PDF workflow for our International Editions and completed the migration of International print sites from TIFF files to PDFs. This enables us to send our International Editions to locations anywhere in the world, allowing files to be customised at the print site to suit the individual press specifications, increasing our ability to respond promptly to requests from the business and providing an increased contingency. We have also introduced an Electronic File Transfer (EFT) facility to enable print centres to collect files from a remote NI FTP server - providing further contingency for print site connectivity failures. Operations Quarterly Update

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PUBLISHING & BUSINESS CONTINUITY September 2011 – Issue 1 Wendy says…

GOS Publishing

Wendy Showell Head of Editorial Publishing NI

Working with their colleagues in GOS Logistics and Planning, the Editorial Publishing team assist editorial to manage their edition requirements, including workflows, page transmission, edition structures, advertising planning and technical troubleshooting. Broadly speaking they consist of two teams, Reprographic for the magazines and the Editions Coordinators for newsprint products.

Hazel says…

Recent innovations from the International team have allowed us to print daily titles on board a cruise ship, currently sailing the Mediterranean – using a Toshiba photocopier and EFT file transmission. Other editions include the E-bluey, which contains a selection of pages taken from the daily titles and sent using the hybrid mail system E-bluey, which is usually used by the MoD to send messages to troops deployed abroad.

Hazel Marsden Head of Business Continuity NI

Operations Quarterly Update

Business Continuity (BC) For those of you who haven’t encountered us yet, there are two of us in the Business Continuity team – me, Hazel Marsden and my deputy Claire Phipps. We are responsible for establishing BC plans across the whole of NI. Our core objectives are to protect staff well-being and ensure NI keeps running in spite of an incident (fire, flood, snow, power cut, pandemic, etc). Business Continuity… Disaster Recovery… Incident Management… we do them all. Once a plan is agreed with a team, it must be tested and kept updated. Assuming it will work is not the same as knowing it does & as our business changes, so should our plan. Business Continuity planning is a challenge. It’s never high on the priority list when you have a day job to do, but BC is not just a manager's issue, it's everyone's job. Everyone should know what their teams plan is, so ask your manager today what the BC plan is for your team, and if you don’t have one, ask them to contact us and we’ll get your plan moving

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NEWSPRINTERS Group Forums /Closed Loop Total Productive Maintenance/Industry News September 2011 – Issue 1 Brian says…

Brian McGee Managing Director Newsprinters

Industry News… We have been advised of the possible sale of 6 regional titles which are currently printed at Broxbourne during the day. A&N Media (Daily Mail) are in the process of selling these publications to the Kent Messenger Group. The sale is being considered by the OFT and if approved it would give the Kent Messenger a virtual monopoly in Kent. This is the first real test of the regulator’s potential relaxation of competition rules for the Regional Press and could lead to a major reshuffle of titles between the large groups and further consolidation. We should know the outcome early in October.

Group Forums In July and August the latest ‘Group Forums’ were completed at the three Newsprinters sites. There are three forums held at each site, two on the day shift and one on nights. Staff from all companies employed on site were invited with approximately 30 to 40 people attending each meeting. The format was a management business update presentation given by Chris Longcroft and followed by a Q&A session.

Closed Loop

Total Productive Manufacturing (TPM)

We are trialling three ‘closed-loop’ image control systems at Newsprinters, two at Broxbourne and one in Knowsley. These systems are being developed to automatically control colour ink density and identify printing faults in production, a function currently carried out manually. We expect to complete the evaluation by the end of this year and determine if there is a business case to invest in this technology for our presses.

As the next part of our continuous improvement strategy we are implementing TPM across all sites. Effectively this will consolidate our previous continuous improvement initiatives (5S, Kanban, PDCA, ISO etc) under one banner and will actively engage staff in all areas in the systematic improvement of our performance using methods proven in industry throughout the world.

Operations Quarterly Update

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PROCUREMENT & ENVIRONMENT Newsprint Purchasing Update & Energy Initiatives z

September 2011 – Issue 1 Jonathan says…

Newsprint Purchasing Update The newsprint market has seen another challenging quarter from a News International perspective. This is the first year that the entire European market has moved from 12 monthly to 6 monthly pricing. As a result we have just completed the mid-year price negotiations against a backdrop of aggressive supplier price expectations and significant reduction in our tonnage due to the loss of a title. Since January 2011 the newsprint market has seen increases of some 25% across Europe. Working closely with colleagues in NPL we are now developing a proactive approach through a series of initiatives and projects to offset the significant increase to the Company’s cost base. Over the next year we will be working even more closely with our key paper suppliers to develop new ways of driving efficiencies through the supply chain. .

Jonathan Erven Procurement Director

News International’s annual energy consumption is…

Kevin says…

Kevin Agnew Energy & Environment Manager

In recognition of the successful energy initiatives at NI, the company was awarded the Carbon Trust Standard- a mark of excellence given to businesses with an impressive record of managing greenhouse gasses. NI was ranked in the top 5% of all certified businesses for the scale of its carbon reductions.

Operations Quarterly Update

NI’s carbon footprint is shrinking despite output from our print sites increasing against 2006

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HUMAN RESOURCES September 2011 – Issue 1

Mark Says…

As Chris has said, this is a challenging time, whether directly or indirectly affected by the closure of the News of the World, the recent announcements over efficiencies, or looking ahead to industry-wide changes in printing and media organisations. However in Operations we have an excellent record of change, we have facilities which are the envy of our competitors and we are part of brands which remain at the forefront of national media. Results from the 2011 Your Voice survey give us reason to retain a level of confidence as we undergo change, and I have picked out some highlights below.

Mark Beesley HR Director Operations

The Your Voice survey tells us that:  We retain a sense of pride and purpose in our jobs  Team working is very important  We know what is expected of us at work and we continue to improve processes like personal reviews  As a company we help good causes, we feel we can make a difference.  We are generally more positive than other parts of NI when we think of our brands and values  We excel in embracing new business platforms  There is a 13% increase from 2009 on employees feeling that they are being rewarded and recognised. And there are things we can work on:  There remains a desire for greater collaboration  We should extend training of management skills through all levels of management. And specifically regarding communications:  People have the opportunity to express their views and opinions upwards.  Improvements could be made in terms of communications being more timely, trying to ensure all staff receive the same message at the same time despite the challenge of being in regional offices and working shifts  When we communicate effectively as a business we see the results  Operations staff are aware of many of the challenges ahead and this gives us the opportunity to plan where we need to be as an organisation and how we get there. Over the coming year, as well as helping to deliver change within the business the HR team will look at ways of improving communications and devote more time to the development of management skills at all levels. If people have ideas to share about these or any other themes please don`t hesitate to tell your HR person.

Operations Quarterly Update

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GPS Decamp of The Archive, Information & Picture Library September 2011 – Issue 1

Kate Says…

Kate Morgan Director of Group Publishing Services

The first image published in The Times in 1914, was Velasquez' Rokeby Venus. Famously slashed as it hung in the National Gallery by suffragette Mary Richardson

The first image to appear on the front page of The Times was in 1966. James Callaghan - Chancellor of the Exchequer

NI has a wealth of historical content and GPS acts as its custodian. GPS has embarked on the largest move of its libraries within NI’s history, making improvements to how it is stored, ensuring it will be available for at least another 200 years. Archive - On 5 July 2011, 5k boxes of historic material were decamped off-site to Crown Records Mgt in Enfield. The archive is by far the largest collection of its kind in the British newspaper industry and includes material relating to all our current and passed titles. The archive contains material dating back to 1784 when John Walter I bought the King's Printing House in Blackfriars (we have the title deeds) from where he began to publish The Times in 1785. It also includes correspondence from famous people, such as, Charles Dickens & Joseph Stalin. Across Operations, you might also be interested to know that we hold the contractual documents relating to the purchase of the Koenig and Bauer steam printing presses by The Times in 1814, along with matrixes, printing plates and even linotype machines. Information & Picture Library - In a digital age when information is at our finger tips, it is important not to discount the importance of the information we hold. In order to ensure that we continue to produce quality journalism, it is key that we use all the resources available to us. In addition to Bound Volumes dating back to the start of all our publications, there are over 10m cuttings of both NI and our competitor’s publications going back as far as the 1920's. Having boxed these up over the last year, we can vouch for the fact that they occupy 5,004 boxes and if each box was laid side by side they would equal the length of 227 double decker buses! In addition to managing over 4m digital images Picture Services also manage a hard copy library of over 75m prints ,negatives and glass plates. This is a unique resource which differentiates us from our competitors and is irreplaceable. It captures historic periods of our history such as the funeral procession of King Edward VII in 1910, the D-Day Landings and even Hitler’s meeting with the British Prime Minister, Neville Chamberlin in 1938. With combined resources from the Archive and Libraries we can pull together a package of content such as the contract between The Times and Lord Carnarvon for syndication of news and images on the excavation of Tutankhamun’s tomb, how it was covered and images of the expedition, including the opening of the tomb itself. The move of both libraries will be completed at the beginning of October and would encourage you to come for a visit.

Operations Quarterly Update

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PROJECTS September 2011 – Issue 1

Liz Says…

Who we are: James Atkinson Georgie Bell Nicola Dobson Liz Minshaw The Change and Integration department has been extremely busy over the last year and it looks like the trend will continue.

What we do: Liz Minshaw Head of Change & Integration

In his recent email to staff, Tom makes reference to the trying times we have faced recently as a company. However these are also exciting times. Looking at the years ahead we are investing a lot of time and effort into designing a future we will all be proud of, be that through changes in technology, the way we are organised, the way we distribute our products and the suppliers we choose to partner with. Our diverse dynamic team focuses on the delivery of project and programmes as well as enabling the development and implementation of new processes and systems building on the skills and capabilities of the team.

Our focus in Operations: We are working on a variety of projects across the business and within Operations our focus at the moment is twofold: 1) We have recently replaced all of our legacy IT distribution systems with an integrated ERP solution - SAP - which has enabled us to streamline our processes, future proof our organisation and give us the flexibility we require in this constantly changing environment. In just under a year we have transformed our distribution systems from a spaghetti junction resembling that in Birmingham, to an information superhighway 2) The RTM 2014 Programme draws under one umbrella a number of strategic and tactical projects across Logistics, DTR Ops, Wholesale and Sales areas. The aim is to ensure that the way in which we transport and offer our products to the customers – both retailers and readers – is as effective, flexible and cost efficient as possible, both now and from 2014 when our contracts with the current Wholesalers come to an end.

Operations Quarterly Update

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