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."