Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, February 16, 1995 TAG: 9502160063
SECTION: BUSINESS PAGE: B-5 EDITION: METRO
SOURCE: FROM STAFF AND WIRE REPORTS
DATELINE: LENGTH: Medium
The law of supply and demand has sent newsprint prices soaring, putting the squeeze on newspaper publishers to implement conservation measures and raise advertising rates.
``It's going to make changes in the way everybody publishes,'' said Harry Nanney, president of the Virginia Press Association and publisher of a weekly newspaper in rural Southside Virginia. ``If it cuts your profit, not too many years down the road you're not in business.''
A year ago, prices of the huge rolls of paper that feed into newspaper presses were as low as $365 a ton. Now, they have climbed to about $550 a ton, and another increase this spring will push invoices to more than $600 a ton.
``You can't blame anybody,'' said Lawson Grant, publisher of the daily Register & Bee in Danville. ``It's just the dynamics of the free-enterprise system, supply and demand. There's less supply than there is demand now.''
For several years, paper manufacturers have faced losses caused by dwindling demand. A consolidation in the North American newspaper industry led some papers to shut down and others to merge. Meanwhile, older pulp processing facilities were idled to cut costs.
In the past year, U.S. demand for newsprint has picked up again, while overseas demand has grown at double-digit levels, said H. Charles Berky, general manager of a newspaper materials purchasing cooperative.
``The export market for American and Canadian newsprint used to be a dumping ground,'' said Berky, whose cooperative buys supplies for small to medium dailies and weekly newspaper chains in 42 states. ``Now, it's a solid, attractive alternative to the U.S. market.''
Berky, who founded the Wayne, Pa.-based Publishers Associated to Gain Economies - PAGE - a decade ago, said that a couple of years ago there were approximately 2 million tons more newsprint than the market demand. Now there is a balance, he said.
A series of price increases that began last May will raise prices more than 45 percent by this May 1, he said. All sizes of papers are affected, from the large metropolitan dailies to rural weeklies.
``It's a huge expense for us,'' said Nanney, co-owner of the weekly South Hill Enterprise. ``It'll translate into tens of thousands of dollars a year.''
"We expected newsprint prices to increase when capacity came back into balance with demand," said Carl Wright, treasurer of Times-World Corp., which publishes the Roanoke Times & World-News. "We did not expect the price increases to come nearly so fast or so large. It presents a major expense increase over which we have very limited control.
"We have worked extremely hard to minimize rate increases to our customers," Wright said. "Advertising rates have not been increased across the board since April 1993. Increases in home-delivery subscription rates have been kept at or below inflation rates throughout our primary market.
"Major price increases in newsprint will make this much harder to continue. However, we have already taken quite a number of actions to help offset this added expense, starting with a reduction in newsprint waste, unsold copies and promotion and filler space," he said.
Newsprint accounts for up to a fifth of the cost of producing a paper. One way to cut consumption is to trim the number of published editions, since starting each press run generates dozens of throwaway copies.
Other paper-saving measures include running fewer pages, reducing the number of free-delivery copies and cutting back on in-house promotional ads.
"As long as our newsprint supplies hold up, we plan no cutbacks in the space we devote to news content," Wright said.
"We will work even harder in 1995 to continuously reduce all of our operating expenses so we can avoid passing price increases along to our customers if at all possible," he said.
Across the country, Berky said, publishers ``have a tight fist on the desk trying to figure out what to do. It's going to be very rough. I think we'll see shrinking news holes. Some are talking about reducing widths. All kinds of conservation is going on, reducing waste to the absolute minimum.''
Any rate increases among the 30 dailies and 94 weeklies that belong to the VPA probably would force out marginal advertisers and mean smaller ads being placed by those that remain. Yet most papers have shied away from trimming payrolls or raising subscriber rates.
by CNB