NEW S PRINT AND NEWSPAPERS
Rather belatedly, the rise in the cost of newsprint has hit newspaper shares. The immediate cause of the fall has been the announcement that the proprietors of the big newspapers have arranged to raise their purchase price from Bowater's for next year's supplies by 3os. per ton, a substantial increase on the Li() per ton previously agreed as the basis of next year's contracts. As a rough estimate, the extra cost to the newspapers as a whole may be put at L750,000 a year. What are the chances of offsetting this burden by gains in other directions ? My own view is that shareholders may safely count on some relief, but that it will be only partial. Savings may result from the use of lighter weights of paper, smaller type and fewer pages, but these will not solve the problem. The main potential source of relief, apart from the possibility —I do not think it is a probability—of increasing prices, is the £1,750,000 which is annually spent on canvassing for circulation. Conditions may now compel the newspaper proprietors to co-operate with a view to cutting down this expenditure. Meantime, shareholders might consider switch- ing into more promising securities.
As for Bowater's, the promised rise in its selling prices is welcome indeed, but I doubt whether it does more than afford moderate relief from this group's problem of rising costs. Increased pulp prices already' threaten to irripose an- exiia buiden of some L1,500,000 a year, so- that prospects for the--
ordinary shareholders cannot be viewed with enthusiasm Fortunately, the company has attempted to protect itself for the future by acquiring control of two pulp mills in Sweden and purchasing options on timber righis in Newfoundland. i * * * *
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