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Tribune's Path to Cost Savings and Process Improvement through Collaborative Outsourcing

Blue Lynx Media, Dan Sawyers, SVP/General Manager Dentons, Ross Docksey, Partner

EXL, Vince Sparrow, Vice President and Client Executive

LL FA R E V N E

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4 1 0 2 I T SU MM SIG Global Executive Summit

The Rest of the Story:

Speaker: Dan Sawyers, SVP & GM – Blue Lynx Media, a Division of Tribune Publishing Speaker: Vince Sparrow, Vice President and Client Executive, Finance & Accounting COE – EXL Service Moderator: Ross Docksey, Partner – Dentons LLP

Overview of Blue Lynx Media Overview of EXL Service BLM SSC Challenges / Opportunities Scope and Migration Service Provider vs Service Partner Fostering Innovation and Partnering Update – a year in

Company Profile

Tribune Publishing (NYSE: TPUB) is the nation's second-largest newspaper publisher, with ten daily newspapers and commuter tabloids including Chicago Tribune, Los Angeles Times, Hartford Courant, Orlando Sentinel, South Florida Sun-Sentinel and Baltimore Sun, among others. Blue Lynx Media LLC, a subsidiary of Tribune Publishing, provides integrated solutions for clients’ back-office operations including general accounting and reporting, billing, credit, collections, payables and payroll. Blue Lynx handles specialized administrative functions utilizing streamlined processes to minimize transactional inefficiencies and facilitate a strategic advantage in data analysis.

Clients

The Baltimore Sun The Morning Call Carroll County Times Orlando Sentinel The Capital RedEye Chicago Magazine Sun Sentinel Chicago Tribune Tidewater Review Daily Press Tribune Direct Hartford Courant Tribune Digital Hoy Tribune Media Services Los Angeles Times The Virginia Gazette

Our Company Established in 2010 Staff of 190+ including outsourced FTE Our Mission Enable customers, internal business partners and vendors to meet their business needs through continuous improvement by: + Processing financial transactions accurately and efficiently + Ensuring financial integrity + Providing innovative solutions + Making it easy to do business with us + Creating a positive work environment

We drive value for clients by delivering business process solutions that integrate operations management, analytics and technology EXLS Awards & Recognition NASDAQ listed Positioned as a Awarded to our Best Employer - “Leader” for Proprietary Business The Aon Finance and EXLerator framework Hewitt Voice of $490- Accounting Employee Award Our Business 503MM Operations Management Business Impact Delivered for Clients 2014 Revenue Manufacturing Guidance Insurance Healthcare Finance & Accounting $100M 2 D a y s 55% 270+ Banking & Financial Clients Services eliminated in Close cycle Call volume Travel risk exposure time. reduced Transportation, 23,000+ & Logistics Professionals Utilities

Specialized services 50% 50% 36% 25.3% Decision Analytics exception reduced cost productivity Revenue CAGR Finance Transformation rates reduced of compliance improvement from Operations & Process 2006-2013 Excellence

Challenges Opportunities Greenfield Reengineer operation end-to-end High operating processes cost structure Create No SLAs or partnerships with effective KPIs internal customers Operational issues / customer Create partnerships dissatisfaction with critical vendors Service providers vs. service partners + Treated as a service provider by our customers + Treated vendors as service providers

Overall scope Accounts payable for both Tribune Publishing and Tribune Media Accounts receivable for Tribune Publishing + Credit management + Collections + Customer service + Cash applications + Disputes and deductions management General accounting for Tribune Publishing + General accounting + Account reconciliations + Reporting Payroll for both Tribune Publishing and Tribune Media Internal audit / compliance support

Lots of moving parts Outsourced smaller accounting function from Tribune Outsourced payroll Chicago with part of process to EXL on site in Dallas Outsourced Bangalore and part with EXL 50% of general Bangalore accounting from Dallas to EXL Bangalore

Shifted collections and related Shifted cash customer service applications from one provider from the same with operations in provider with Central America operations in to EXL Manila India to EXL Bangalore Implementing new version of collections system

Do your current shared services organization operate globally, including using third party providers

Yes – we manage the overall results the highest level interactions with our internal customers and utilize third parties to provide most of the services

Somewhat – we do utilize third parties but on a limited basis

Not yet – we really haven’t used third parties but are looking to explore that

Not at all – we provide all services internally

Spirit of partnership and openness Communication within broader Tribune – has filtered down well organization

CommunicationCommunication ofof ownershipownership UseUse ofof EXLEXL FinanceFinance TransformationTransformation –– thisthis isis youryour teamteam andand youyou areare teamteam earlyearly onon toto digdig intointo oneone responsibleresponsible forfor theirtheir successsuccess concerningconcerning areaarea Relatively large migration teams to Strong PMO team from both BLM and facilitate a lower risk migration EXL

Significant investment in sending Good communications between teams Significant investment in sending Good communications between teams ongoing BLM managers to be with EXL has already yielded process ongoing BLM managers to be with EXL has already yielded process teams at Go Live improvements and improved reporting teams at Go Live improvements and improved reporting What could have been better Understanding cultural differences Mid level management buy in

Training -- could have used more

What level of communication have you engaged in when you were trying to improve processes? Active and frequent engagement at all levels of the organization, particularly with internal customers, using multiple communication media (meetings, emails, postings) Regular “town hall” meetings with key executives outside of the shared services organization to understand their concerns and share developments Occasional meetings only as issues came up and emails / postings primarily related to policy and process changes Very infrequent communications of any kind

It’s been busy!! Completed implementation of SunGard GETPAID system for AR / Collections Managed impact of several acquisitions Tribune Publishing spun out of Tribune Company, with significant impacts to AP and Payroll teams Going live very soon on new HRIS system Worked through transition speed bumps and some related personnel changes – on both sides Dug much deeper into existing processes and, particularly, the up stream processes

What has worked well Spirit of partnership and openness Communication within broader Tribune – continues and has generally filtered organization has continued to get down well even better – partnering with Sales on collections as an example

Communication of ownership Use of EXL Finance Transformation – this is your team and you are team to dig into up stream order entry responsible for their success processes and planned visit with ad agency

Remote migration for some follow on Continued regular discussions with expansions senior management from both BLM and EXL

Continued investment in sending BLM Good communications between teams managers to be with EXL teams as well continues to drive process as bringing senior EXL manager in improvements Manila to Dallas

What could improve Encourage “partner” mentality Management incentive alignment

Navigating cultural issues Monitoring external customers

Key Highlights

Handled 50% volume increases due to acquisitions. Average accuracy in the past 11 months period was 99.81%. Identified inappropriate use of company Corporate card – driving higher compliance . Created email template in the Vendor Master area increasing efficiency. It helped to save around 36 hours annually.

Trend Analysis

Volume Trend Accuracy and Error trend

14,000 100.00 25 99.95 12,000 99.90 20 99.85 10,000 99.80 15 99.75 10 8,000 99.70 99.65 5 6,000 99.60 99.55 0 4,000

2,000

0 Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Oct,20 Nov,2 Dec,20 Jan,20 Feb,20 Mar,2 Apr,20 May,2 June,2 July,20 Aug,20 13 013 13 14 14 014 14 014 014 14 14 13 13 13 14 14 14 14 14 14 14 14 Volume 7,692 6,712 7,495 8,901 7,601 9,536 10,717 9,814 10,800 11,320 12,009 Accuracy % 99.69 99.72 99.76 99.79 99.71 99.85 99.80 99.83 99.86 99.95 99.98 Error Count 23 19 18 19 22 14 22 17 15 6 3

Highlights Implemented automation to save 116 hours per month. Successfully transitioned work of 6 resources through MS Lync® Live Meeting . Streamlined the quarterly reporting process for Fixed Assets accounting. Robust cross training plan helped to mitigate contingencies.

Trend Analysis

Journal Reconciliation 1000 1200 1000 950 800 900 600 850 400 200 800 0 750 Oct, Nov, Dec, Jan, Feb, Mar, Apr, May June July, Aug, Oct, Nov, Dec, Jan,2 Feb, Mar, Apr, May, June, July, Aug, 201 201 201 201 201 201 201 ,201 ,201 201 201 2013 2013 2013 014 2014 2014 2014 2014 2014 2014 2014 3 3 3 4 4 4 4 4 4 4 4 Journal 897 832 920 893 956 901 910 866 867 935 949 Reconciliation 993 1,0161,016 985 856 757 804 815 1,057 898 825

Key Highlights Brought down unapplied cash from $7.2million to $2.6 million. Analyzed pre payments which helped to identify the actual unapplied cash balance. Created master file for the roll over unapplied items and shared with Collections team on regular basis. GETPAID implementation increased the coordination between cash application team and Collection steam. Weekly calls with Collections team helpedTrend in faster Analysis issue resolution. Unapplied Cash trend analysis $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 Opening Oct,2013 Nov,2013 Dec,2013 Jan,2014 Feb,2014 Mar,2014 Apr,2014 May,2014 June,2014 July,2014 Aug,2014 Balance Amount $7,146,18 $7,080,87 $5,228,79 $4,880,79 $4,493,28 $3,947,52 $4,082,39 $4,183,65 $4,697,28 $3,024,52 $3,046,99 $2,599,02

Significant initial headwinds: Management changes required at operations level in both parts of the team Initial expectations set too low Initial collections strategy was inappropriate + Very high percentage of accounts with no contact information + High percentage of accounts without an email contact Initial reluctance by sales team to allow us to contact customers + Frequent discussions between BLM and sales management and fact based approach to specific concerns “won over” sales management Significant balances in old unapplied cash created a lot of confusion with customers and extra reconciliation work

14,000 12,785 12,000

10,000 8,182 8,000 6,381 4,541 6,000 4,979 4,798 4,000

2,000 694 - Q4 - 2013 Q1 - 2014 Q2 - 2014 Q3 - 2014 Accounts Worked 4,979 4,541 6,381 8,182 Total OB 357 5,709 12,998 12,785 GP Emails & Letters 529 1,283 517 4,798 In Coming Calls 37 410 749 694 Manual History Entries 3,474 4,800 6,450 7,560 Highlights: Improvement of 87% in Account worked as compared to Feb’14 + Average monthly accounts worked for last 2 months is ~ 8200 Improvement of105% in Outbound call volume as compared to Feb’14 + Average monthly OB call volume for last 2 months is ~12,800 Improvement of 3 folds in GP Email sent as compared to Feb’14 + Average monthly GP emails sent for last 2 months is ~ 4,800

Focused Drive partnering in part with on what matters shared risks and shared incentives picture KPI Only 17 developed together that Service Level Agreements – focus on the end to end prior provider had a lot of process and delivering SLAs but missed big picture value to BLM’s internal – we’ve modified 3 of the customers – included in 17 to make them more regular call with focus on relevant “what does it mean?”

Service Provider Responsible for goals - exclusively to process steps performed at the SSC + Strong task level controls and metrics on the task performance + Optimizes tasks (production model, highly specialized) + Reactive + Provides data points to customers Service Partner Responsible for goals that involve the entire process - even outside the SSC + Strong process controls, metrics on tasks and the end-to-end process + Optimizes processes (business model, strategic asset) + Proactive + Provides information to decision makers Both parties benefit and improve

How have your relationships with your key outside providers matured? We have a true partnership, with regular and open dialogue and shared goals and objectives We have a number of metrics that the providers use to track their performance and we also consider our own performance Our provider shares a number of detailed metrics with us on a regular basis, but these are fairly detailed and seemed more focus on showing that they are doing their job. We keep few metrics of our own performance

Lessons Learned Choose business partners carefully Set common team goals and rewards and don’t set the goals too low Don’t overly focus on individual errors Treat all team members as valued members of the team Don’t “legislate” behavior to micro level Reward overall process efficiency and effectiveness, not work efficiency Customer councils are extremely beneficial Over communicate + Customers will know they are better when you tell them and can demonstrate they are better + Communication between partners is critical as well – at all levels + To have a partner, you have to be a partner!

Dan Sawyers, SVP and General Manager, Blue Lynx Media [email protected] (469) 528-9220

Vince Sparrow, Vice President, Client Executive, EXL Service [email protected] (773) 354 7817

Ross Docksey, Partner, Dentons LLP [email protected] (312) 876-8171

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The Rest of the Story: Tribune's Path to Cost Savings and Process Improvement through Collaborative Outsourcing

Dan Sawyers, SVP and General Manager, Blue Lynx Media [email protected] (469) 528-9220

Vince Sparrow, Vice President, Client Executive, EXL Service [email protected] (773) 354 7817

LL Ross Docksey, Partner, Dentons LLP FA R E V N E [email protected]

4 (312) 876-8171 1 0 2 I T SU MM