The newsprint cost has raised to 7-8% in recent times, crossing $600 USD per metric tonne as compared to $500 six-seven months ago. Following a temporary recession, newsprint prices have once again risen, driven by factors such as rising container freight costs and geopolitical unrest, especially regions like Russia. Recently, the price of newsprint has risen to 7-8%, crossing $600 per metric ton from its previous $500 level six to seven months ago.
The soaring cost of newsprint is rising, influencing the financial strategies within the print sector. Industry leaders show detention that enduring the price enlargement could present frightening challenges to their works and affect business vitality.
However, some industry leaders maintain a guarded optimism, upcoming potential growth opportunities ahead, especially as the festive season reaches and considering that newsprints prices are presently lower than they were at the top of the COVID-19 pandemic.
According to Rakesh Sharama, President of INS, the rise in newsprint costs alongside increasing input and business expenses, will eventually affect the overall incomes of newspapers.
Recommending what the print industry could do to endure the situation, Sharma shared, “Publications can control the cost. The revenues are dependent on the package operations, and everybody has to make a strategy for enhancing their revenues. And if those targets and opportunities are not happening, then they can go in for cost control to keep it high on the bottom line.” According to HT Media Q4 FY24 earning teleconference, their average cost of the newsprint for that quarter was Rs 50,000 per tonne. As per DB Corp Q4FY24 earnings calls, their average cost of the newsprint for that quarter was Rs 49,500 per tonne.
A senior executive of a ruling English newspaper shared that in recent months, newsprint costs have been a notable rise, surpassing $600 per tonne after balancing around $500 six months ago. This sudden rise is assigned to several factors including the escalating container freight costs in the Asian market, especially in Japan, Korea, and China. Container availability has become limited, adding complexity to supply chain operations.
“Despite earlier reports of a decline in prices, recent trends indicate a hardening of newsprint costs, influenced by geopolitical tensions and sanctions affecting shipments from Russia. These developments are expected to impact newspaper operations, potentially affecting pagination and advertising strategies amid rising operational expenses driven by the strengthening US dollar against the Indian rupee,” he added.
Manoj Singh, Buying Director at Madison Communications, says that there have been huge changes in newsprint costs over recent years. Before the COVID-19 pandemic, newsprint prices were around $480 to $500 per metric tonne. Most of India's newsprint comes from Russia, owing to its closeness compared to Canada. However, post COVID-19 and during the Russia-Ukraine conflict, these prices increased to around $1100 per metric tonne. He said, “I don't think it will go down. Now the range would be $650-680. It can increase though because there are various factors. But it is not going to go down.”
Effect on the Expansion of Circulation
Amit Chopra, Joint Managing Director, Punjab Kesari, said the circulation revenue won’t get affected because it completely depends on the cover price.“The point is how much is it going to affect the profitability of a newspaper. The problem is that even though the prices go down by 10-15 dollars, there will not be much difference for us because the dollar has become more expensive. So, the price is almost the same. Indigenous suppliers haven't reduced prices at all.”
He further added “We've not seen any publication increasing the number of pages in the last two years. So, it will not change anything. I don't think this is going to be a factor impacting the pagination.”
Sharma explained that newspapers usually keep a ratio of 60-40 for news and advertising.He added, “So, if the advertising increases, the number of newspaper pages increases. The minimum column for advertising is always capped. Beyond that, it is always ad iteration.”
Singh suggests that simply increasing the number of news pages may not benefit the print industry unless enhanced by sufficient advertising revenue. Typically, editorial content for newspapers maintains a 60:40 ratio for advertising purposes. Without sufficient advertising, expanding the number of pages may not be a sensible strategy.
“Most of the regional papers use domestic newsprint. Even for inside pages, they use domestic newsprint which would be 15-20% cheaper than imported newsprint. Additionally, either they have to increase their cover price or they will have to increase their card rate or operating rate. Otherwise, I don't see any other model as far as print revenue is concerned. There are other revenue models that they can work for digital, but for print, there are only two sources. One is subscription and another is the rate. Either they increase their rate or increase their cover price and both are very tough, both are challenging for newspapers,” said Singh
Forecast for the Next Quarter
According to Girish Aggarwal, Non-Executive Director at DB Corp, in the meaning calls, he said the first half (H1) has been wonderful for them and for Indian Language newspapers. He mentioned that the Indian economy is coming along, and the coming quarters look very promising.
Speaking about the Bhasker group, he said that they would want to accomplish some more circulation growth. He also mentioned that DB Corp was doing different things to increase the circulation revenue, expand the number of pages,and engage with a broader reader base. Agarwal expressed optimism about achieving double digit growth this year.
Another senior executive, explaining unidentified, specified that despite increasing prices, the industry's comprehensive collision could be moderated. He pointed out, "We are seeing a notable uptick in advertising spending on print media following the recent elections. As we approach the festive season, which traditionally boosts ad revenues, the industry outlook for the second half of the year appears optimistic."
