Media sees respite from rising paper cost

Media sees respite from rising paper cost

By Anil Penna

SINGAPORE (AFP): Asian publishers whose earnings have been
squeezed by soaring newsprint costs are seeing a welcome respite
from the price spiral as they prepare to tap rising regional
incomes and literacy.

Thai publisher Sondhi Limthongkul, who last week launched
business daily Asia Times from three regional locations, said he
was betting on newsprint prices coming down and remaining stable
for some time.

At about US$800 per ton now, the price of newsprint has
already fallen from the prohibitive level of $1,200 per ton it
reached over the past 18 months, and could drop another 10-to-20
percent, Sondhi said.

"You should be able to see the newsprint price go down roughly
to about 700 dollars next year," said the 48-year-old
entrepreneur, predicting that prices would stay stable for the
next two to three years before shooting up again.

"But having said that, it doesn't mean that we are going to
see the old era of pricing like before -- $450 (a ton). That is
long gone, that is history, that is passe," Sondhi told reporters
here Monday.

Media magnates from around the region who gathered here last
week for the inaugural Asian Newspaper Publishers Conference were
held out a reassurance that newsprint prices were stabilizing.

John Hood, chief executive of Pulp and Paper, a division of
New Zealand-based Fletcher Challenge, told the convention that
North American paper manufacturers had agreed on one final price
hike in February or March and then to hold the price steady for
the next year.

He said the price could go up to a little more than $800 a
ton when the increase comes into effect.

Analysts say that high newsprint costs had prompted newsprint
manufacturers to raise production and led to the entry of new
producers while curbing demand, leading spot prices to fall from
a mid-year peak of about $1, 300.

"The biggest problem for publishers has obviously been
newsprint price, but that problem is probably peaking though
prices will remain higher than in the past," said Shane Matthews,
a media analyst with Kay Hian James Capel.

That is welcome news for regional publishers who saw the cost
of their main raw material more than double in a year amid tight
supplies.

Some closed down. Many were forced to raise advertising rates
and cover prices, cut the size of their editions, trim travel
budgets and lay off staff. In Hong Kong, vendors started renting
out newspapers.

The price surge was blamed on a supply-demand imbalance after
overcapacity led paper manufacturers to cut back production.
But when capacity shrank, demand was boosted by an economic
recovery in the West and the Asian boom.

The expected respite from the price spiral comes at a time
when publishers seek to tap growing opportunities from the
region's economic growth, which has led incomes to shoot up along
with a rise in literacy, turning Asia into the world's largest
media market.

According to organizers of the newspaper industry convention
here, every percentage point rise in literacy means 20 million
potential new readers.

"The high literacy rates in Asia obviously lends itself to the
printed medium," said Matthews of Kay Hian. "Obviously TV is a
big competitor, but occasionally the printed press can be more
informative. There will always be a demand (for newspapers)."

The growth of the Internet and other electronic media presents
both opportunities and challenges, but newspapers will always
have a future, publishers feel.

Singapore's leading daily, The Straits Times, recently joined
a growing list of Asian publications to take the plunge into
cyberspace.

As Asians become more computer-literate and get onto the
internet, "a certain amount of newspapers will become obsolete,"
said Matthews.

But newspapers would have loyal readers so long as they
remained the best information medium, he said.

"Printed newspapers and magazines have always a place in your
heart," said Thai publisher Sondhi. "I mean you cannot literally
carry your computer as you take care of your small chores in the
morning in the toilet."