Business - INS urges 20% cut in newsprint consumption

The Indian Newspaper Society (INS) has issued an advisory to all its member publications to reduce their newsprint consumption by 20 per cent. The INS note urges the members to “take immediate steps to reduce newsprint consumption by 20 per cent in the shortest possible time…”

The need for such an advisory has arisen because of the extraordinary hike in newsprint prices. According to INS Deputy President Paresh Nath, the newsprint cost has jumped by about 50 per cent in the last six months.

“Though newspapers are attempting to cut costs on their own, the advisory puts them in a comfort zone that they are not facing the crisis alone,” said Nath, publisher, Delhi Press.

However, he observed that there was no reason for indigenous newsprint prices to spiral upwards. The advisory is aimed at curbing cartelisation of the domestic newsprint manufacturers as lower demand could improve the prices.

“Since imported newsprint prices have shot up, the local manufacturers are blackmailing the publishing industry to maximise their profits,” said Sanjay Gupta, CEO, Jagran Prakashan Limited that publishes India’s largest-read newspaper Dainik Jagran.

The “unprecedented” price increase in newsprint prices is forcing the industry to take steps to keep costs under control. For a start, newspaper rivals are talking to one another to arrive at a consensus to cut pages.

“We are talking seriously as the industry is left with little option. It is going through a huge turmoil. We are already cutting down our pages,” said Ravi Dhariwal, president (publishing) at Bennett, Coleman & Co Ltd.

Newspaper companies are also looking at increasing their ad rates. Bennett, Coleman has already taken a 40 per cent rate hike. However, such steep hikes may not be possible for papers who are not leaders in their markets. In such a scenario, newspaper owners have suggested putting a newsprint surcharge both on the cover price as well as on billings to advertisers.

The INS is also said to be pushing for a hike in the DAVP rates, that is, prices at which space is sold for government advertising. Currently, DAVP rates are said to be one tenth of the price of commercial rates. The INS is lobbying for a 15 per cent rate increase on government advertising, to begin with.

“If the top 10-12 newspapers come together and decide that we will not accept government ads at the current rates, it may work,” said a newspaper proprietor. Newspapers also need to increase their cover price. “However, no consensus has been reached we compete with one another in different markets. But we are talking to each other,” said Sanjay Gupta.

Most newspapers work on about a 10 per cent margin. “If costs go up by 40 to 50 per cent, it can destroy the newspaper business,” said Dhariwal.