Newsprint inflation puts the press under pressure

In all the years of plummeting circulations, Britain’s newspaper publishers had at least been spared one worry. The exodus of readers to digital media helped contain the cost of paper used in printing presses, among their biggest expenses.

Now, however, inflation is posing a new threat to the declining medium. After more than a decade of cheap newsprint, prices have risen in recent months at the fastest pace since at least the mid-1990s. Higher costs of energy, needed to power printing facilities, are another concern.

Unless the pressures ease, some executives said, publishers will be forced to raise cover prices, reduce page counts or accelerate the closure of more titles. One senior manager in the industry described the rising cost of newsprint as a “crisis” that threatened to spur even more “radical change” over the next five years. “Some titles will not survive,” the person said.

Daily Mail and General Trust, the company behind the country’s best-selling daily, has already said it is reviewing employee numbers in response to higher expenses.

Concerns about input costs have meanwhile weighed on shares in the London-listed publisher of the Daily Mirror, Reach, which have dropped almost a third since the start of September.

People with knowledge of the company, whose portfolio includes about 110 regional titles, said it was holding talks over the terms of twice yearly newsprint supplier agreements that are up for renewal next month.

Henry Faure Walker, chief executive of Newsquest, which publishes 22 dailies including The Northern Echo, Glasgow’s The Herald and The Argus in Brighton, described recent newsprint inflation as “dramatic”.

But he said the shift online meant newsprint costs “have less of an impact today than they would have five or ten years ago”.

Local and national publishers alike are learning to adapt to digital, which at Reach for instance generates about a quarter of revenues. Even after the recent sell-off, its shares are still up fivefold in the past three years as investors have become more confident it can manage the transition.

Susan Panuccio, chief financial officer of News Corp, told a conference this week that digital was now part of the “DNA” of Rupert Murdoch’s global portfolio of publications, which include The Times and The Sun in the UK.

Still, she added: “That’s not to say there’s [not] going to be significant cost cuts in different markets at different times . . . Clearly, print remains challenged.”

Most UK newspapers are produced by three companies — News Corp, DMGT and Reach — to which other publishers subcontract printing.

At the onset of the pandemic, a collapse in newspaper sales caused newsprint prices to weaken. Subsequent supply imbalances have resulted in a surge, however.

Over the past year, according to commodity data provider Fastmarkets, European newsprint prices have increased from about €445 to €535 per tonne. Executives and…