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Newsprint price hike threatens industry recovery

The prospects of recovery in the regional newspaper industry over 2011 are being threatened by a sharp rise in the cost of newsprint.

Manufacturers are currently seeking increases of 25pc or more for contracts with newspaper groups in 2011.

Industry experts are predicting that coupled with a fall in advertising spend as a result of the government’s austerity measures, the price hike will place further pressure on newspaper groups’ profitability.

Some regional daily editors are privately admitting it could even lead to frequency changes, with more daily titles following the example of the Bath Chronicle and going weekly.

The expected rise in the costs of paper has already been referenced in two recent financial statements by leading regional publishers.

In its interim management statement earlier this month, Trinity Mirror said: “Whilst newsprint prices for the full year have fallen, we experienced an increase in prices in the second half of 2010 with further pricing pressure anticipated for 201.”

Group finance director Vijay Vaghela said: “As a result of newsprint prices and nothing else, we could see pressure on profits.”

Last week’s annual results from DMGT also predicted that the outlook for its regional arm Northcliffe Media “will also be affected by higher newsprint costs.”

Gary Cullum, editor and publisher of the Newspaper Society-owned publication Production Journal, said: “Newsprint price increases of between 25pc and 30pc are being asked for by all paper producers for 2011, with no guarantees that the price can be held for 12 months.

“Sensitive negotiations are under way that could have far-reaching impacts on the industry.”

He added: “Publishers have been hurting through reduced revenues and fast-moving business models and have little left to cut by way of reduced paginations and smaller formats.

“With such potential increases in the pipeline adding perhaps £80 to £100 a tonne to current prices, this would place a huge burden on consumers.”

Fears about the rise in newsprint costs were being aired behind-the-scenes at the Society of Editors’ conference earlier this month.

One regional daily editor admitted it was making his proprietors “jittery” and that the end result might be that his title moved to weekly publication.

Another senior executive from one of the ‘big four’ publishing groups predicted that some of the smaller titles in his own group might go down the same route.

“They are only just washing their faces now. 30pc increases in newsprint would mean serious consideration of which days were worth publishing,” he said.


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