Press feels the pinch as papers downsize

Press feels the pinch as papers downsize

The monetary crisis of the past seven months has threatened to
kill off all economic sectors, including the press industry. The
Jakarta Post's team of reporters -- Imanudin, Christiani S.A.
Tumelap, Ivy Susanti, Aloysius Unditu, Reiner Simanjuntak and PJ
Leo --- explores the impacts of the crisis on the press industry
and measures taken to cope with the crisis.

JAKARTA (JP): Soemarto, a newspaper and magazine seller at a
bus shelter on Jl. Pramuka, East Jakarta, keeps grumbling to
himself because his sales have dropped by around 40 percent in
the past few months.

He now only brings home between Rp 20,000 (US$2.22) and Rp
25,000 a day compared to his previous daily earnings of Rp 35,000
to Rp 45,000.

However his complaints at the lack of customers are tempered
by his understanding of the reasons for the quieter times.

"I understand why they stop buying papers at my kiosk," he
told The Jakarta Post Friday, "it's because of the monetary
crisis."

The crisis, which has seen the rupiah's value plunge by almost
72 percent against the greenback to around 9,000 from 2,450 in
early July last year, is now becoming a dreadful monster
threatening to kill off all economic sectors and walks of life,
including the press industry.

National Press Day, which falls on Feb. 9, was observed in a
simple style as the industry was concerned with soaring price of
newsprint. The different members have one thing in common: the
pinch of the monetary crisis.

Publications are working hard to cope with the double blow of
the escalating price of newsprint and declining advertising
revenue, which forces them to subsidize printing costs every day.

There are 289 print media publications with about 4,500
employees across the country. About 20 dailies, 24 weekly
newspapers and 30 magazines are published in Jakarta and control
between 60 percent and 80 percent of the national circulation in
each category.

Nobody can predict how long the troubled times will last. Many
believe the crisis will in fact worsen in the coming months, so
bold efficiency measures and drastic cost-cutting action are
becoming compulsory.

Several publications have been forced to close down, while
others have survived thus far by publishing less frequently,
reducing the size and number of pages, increasing the selling
price or laying off some employees.

Corporate spending on advertising -- the lifeblood and main
source of revenue in the media industry -- has fallen drastically
since the beginning of the crisis in July last year.

Decline

According to data from the Indonesian Advertising Association,
advertising spending is expected to decline by around 30 percent
this year from Rp 4.96 trillion in 1997.

Worse still for the print media is that an increasingly large
chunk of firms' advertising budgets has been targeted at
electronic media, especially television, in the last three years.

Of the Rp 4.96 trillion spent in 1997, for example, television
accounted for Rp 2.77 trillion (55.8 percent), newspapers Rp 1.34
trillion (27.1 percent), magazines Rp 325 billion (6.6 percent),
outdoor Rp 307 billion (6.4 percent), and radio Rp 206 billion
(4.2 percent).

The revenue of Kompas, the country's most established daily,
has declined by 50 percent. In order to survive, it cut the
number of pages from 24 to 20 last month, and to 16 last week.
Femina weekly, which has suffered a 40 percent drop in its
advertising revenue, is now 130 pages, almost half its previous
250.

Despite all steps taken to cut costs, publishers still have to
allocate sizable funds to subsidize printing costs.

Leo S. Batubara, the secretary-general of the Association of
Indonesian Newspaper Publishers (SPS), said that the ex-factory
price for newsprint was Rp 1,530 per kg in July when the rupiah's
exchange rate stood at Rp 2,460 to the dollar. By Dec. 16, when
the exchange rate was Rp 6,025 to the dollar, the ex-factory
newsprint price had jumped to Rp 3,545 per kg.

For a 24-page newspaper with 500,000 copies in circulation
like Kompas, this meant additional expenses of Rp 4.7 billion per
month. And with the exchange rate rising to around Rp 7,000, the
additional cost climbed to Rp 12 billion.

Things are even worse as the price of newsprint is still high
at US$505 per metric ton, excluding import tax.

SPS has urged the government to exempt newspaper publishers
from paying the 10 percent value-added tax to enable them
survive. The government has yet to respond to this suggestion.

Paper producer PT Aspex Paper, a joint venture between a South
Korean group and timber tycoon Mohamad "Bob" Hasan, says it
cannot reduce the price.

"Around 90 percent of the component is still imported," Lee
Won Je, managing director of Aspex, was quoted by Kontan as
saying.

With the uncertain volatility of the rupiah against the
dollar, it is almost impossible for Aspex to reduce the price, he
said.

Other paper producers, like PT Kertas Letjes or PT Adiprima --
owned by the Jawa Pos group -- tend to follow the price set by
Aspex. Adiprima for example, has to supply the paper demand by
its subsidiaries within the Jawa Pos group.

Around 70 percent of the domestic supply of newsprint is
provided by Aspex with the remaining 30 percent by other small
producers.

Contrary to Aspex signaling it might reduce prices in the
coming months, it is likely to raise them as it is tantalized by
higher newsprint prices in the regional market.

And if local publishers cannot afford Aspex's newsprint, the
company will simply market its products regionally at a higher
price.

In Australia, for example, newsprint is US$555 per metric ton,
while Malaysia and India have set the price at $530 per metric
ton.

Eight local publications have closed and many others will
succumb to the same fate if the current situation remains
unresolved.

"Around 70 percent of the 289 publications in Indonesia will
be closed down if the situation continues," Batubara said.

M. Budyatna, a communications expert and former dean of the
School of Social and Political Sciences at the University of
Indonesia, said only the best companies would survive due to the
natural selection of the market.

"To survive, a company must have three strong elements: human
resources, finance and technology," he said.

The closure of publications will affect not only the
publishers and the workers who will lose their jobs, but also the
readers as their access to information will become increasingly
limited.