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.