September 07-September 08, U.S newsprint demand went down 13%, newsprint prices went up 13%. That's the real number to worry about for the IHT because my understanding is that IHT newsprint is bought off the back of the higher NYT newsprint purchases. But in Europe the price gets worse too. As does demand.
Newspapers face fresh printing pressures (FT)
By Robert Anderson in Stockholm and Christopher Mason in Ottawa
Published: November 16 2008 17:30 Last updated: November 16 2008 17:30
Newspapers, which are already bracing themselves for falling advertising sales as the global economy turns down, face more bad news next year as newsprint producers try to push through steep price increases.
European newsprint producers led by Norske Skog, the world’s second-largest, are currently negotiating with customers to increase prices by up to 20 per cent.
They believe that recent capacity cuts have given them the market power to compensate for years of rising costs, flat prices and falling margins.
“We’ve been under quite a drastic margin squeeze for several years,” said Norske Skog’s spokesman. “We see a momentum now for increased prices.”
All of Europe’s big newsprint producers are currently lossmaking as demand continues to fall because of the switchover to internet publication, while wood, energy and transport costs have risen significantly.
European producers have responded this year by committing to cut some 1m tones of capacity – 6 per cent of the total, according to Norske Skog, double the 3 per cent fall in demand.
As cost pressures start to ease, this gives producers a shot at raising margins.
“In Europe we will see the biggest changes, as we’ve had constant overcapacity for several years,” Norske Skog says.
European producers are also benefiting from a fall in imported newsprint as North American producers turn back to their home markets.
North American producers have suffered even more from falling demand, as the switch to the internet has taken hold faster there, but they have also been quicker to consolidate and cut capacity. In the year to September North American newsprint prices soared 33 per cent while consumption continued its descent, falling nearly 13 per cent over the same period.
North American Newsprint producers AbitibiBowater, Catalyst Paper, and Tembec initially compensated for drops in domestic demand by exporting to western Europe, Latin America and Asia.
But the strengthening dollar and the steep rise in North American newsprint prices have swept away European price advantages.
In the first nine months of 2008, newsprint exports to western Europe fell 20.6 per cent from the same period last year, according to the Montreal-based Pulp and Paper Products Council. Exports to Latin America and Asia grew by 17 and 9.3 per cent respectively in the same period, reflecting producers’ efforts to seek out new growth markets.
Analysts remain doubtful, however, whether newsprint producers will be able to push through the price increases in full without more capacity cuts.
“If [North American] producers don’t come out and shut down more capacity, it looks like prices will peak at the end of this year,” said Rahul Gandhi, a New York-based paper analyst with CreditSights.
“The decline in demand though will not stop, so it’s not looking good for producers if they are unable to raise prices.”
“There is a possibility that [European] prices will go up but demand will also go down,” says Johnson Imode of Standard & Poor’s Equity Research in London. “Clients will be able to strike quite a hard bargain with newsprint manufacturers.”
More housekeeping at the Harbinger (of doom) announced - what exactly is going on there I couldn't tell you - but equity swaps reported at around the $15.00 mark - and the NYT Company share price slips yet further.
I said $10 would be a tipping point, we got there shortly thereafter, and we have tipped. How that re-scheduling of borrowing is going I wouldn't like to say but this is beginning to look a lot like GM. Citibank cut another 24,000 jobs yesterday, taking it to 20% of its workforce, and short of the NYT doing something similar, I can't see a turn around anytime soon.
Even if 2010 (end thereof at best, I might add) sees us come out of the advertising recession, I fear that's too far off for the NYT. Advertisers by then may just have given up on print.
Yesterday, the NYT shuttered its award winning mag PLAY having said it would keep 4 issues in 2009, so there you go.
Talk was up about Play as recently as last October (as was talk of no layoffs) but according to an email to Fishbowl NY, from Play editor Mark Bryant, "The company needs to make some pretty considerable cuts going forward."
There's an understatement.
"It was on the schedule. It was in the budget," Bryant wrote when asked "why the magazine had been shuttered so soon after both he and the Times brass confirmed it would continue next year".
According to Bryant, Play wasn't losing money. "I'm am told that last year we more or less broke even, thanks largely to the Nielsen deal for the Olympic issue," he wrote. ('Nielsen bought out the entire issue. It was, according to Bryant, the "largest single day sale in the history of The New York Times".)
Et alors? More or less break even, even with the single day sale in the history of the NYT. Says it all.
Share price now: $7.10 on a day that hit a low yesterday of, yes, $7.
That's 47% down on three months, 61% down on 1 year. Not that anyone's counting or anything.
Anyone want to buy a GM SUV? But where's print's Toyota Prius? It's hard to find a media outlet, print or Internet, that isn't hacking staff off as fast as it can, and one can't help wondering when this option is put into Play at the NYT.
I still fancy a 'go-private' move - hard pressed to see an alternative; hope there are some rich people who couldn't live without their NYT.
The family could sell some voting stock to Harbinger/The Mexican Gunslinger to get that debt down, but what would be the implications of that? Very ugly.
New York Times Co
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