Times Closes Distribution Organization; 550 Employees ‘Affected’

times090808 Times Closes Distribution Organization; 550 Employees AffectedOn Friday, The New York Times announced that it was cutting the number of sections it has in its newspaper, and today the paper announced its shutting down the wholesale distribution business center that delivered it, and about 200 other newspapers.

The release:

NEW YORK—(BUSINESS WIRE)—Sept. 8, 2008—The New York Times Company announced today that in January it will close City & Suburban, its distribution organization that delivers The New York Times and approximately 200 other newspapers and magazines to newsstands and retail outlets in the New York metropolitan area. Going forward, The New York Times will be distributed to newsstands and retail outlets through a combination of third-party wholesalers and the Company’s own drivers.

"We have made the decision to exit the wholesale distribution business," said Scott Heekin-Canedy, president and general manager of The New York Times. "This was a difficult decision to make since it affects a large number of dedicated employees. But the business environment has changed dramatically since 1992 when City & Suburban was formed and wholesale distribution is no longer an economical business for the Times Company. With this change, we move to a distribution model similar to that of our national edition, which is delivered by third-party organizations. We expect that this will have no effect on retail availability of The Times, and it will allow us to improve our financial performance."

Approximately 550 full-time equivalent employees will be affected by the closure and the Company plans to ease the change by providing severance packages to them.

The closure of City & Suburban will result in additional severance costs as well as cost savings and the Company plans to update its guidance on both items in the fourth quarter.