NEWSPAPER HIT BY HIGHER PAPER COSTS

TV Guide has increased it price.

The National Enquirer has shaved a half-inch trim from its publication.

Money and Martha Stewart Living magazines have jumped their advertising rates.

Students are paying more for their notebooks.

Newspaper publishers are realizing more costs for newsprint.

The cost of paper is going up.

Consumers can expect to pay more this year and next for paper products.

Paper costs are running much higher than a year ago at this time, say officials of various industries that produce or use paper in some form or other.

Hardest hit over the past two years have been the nation's newspaper and magazine publishers, who have experienced price increases of more than 70 percent, with more than 50 percent hikes in the past year.

The latest newsprint price hike came this month, when paper mills boosted their prices 9.5 percent, to an average of $685 a metric ton.

"Our cost is over average," said John Renaud, production manager of the Southeast Missourian newspaper in Cape Girardeau. "At today's prices, Rust Communications' cost for newsprint is about $3.9 million a year. The same amount of paper in January of 1992 would have been $2.2 million, a 73 percent increase, and a difference of $1.7 million. That comes right off the bottom line."

Rust Communications, with five dailies and a number of weeklies in Southeast Missouri, Northern Arkansas and West Tennessee, uses about 5,500 tons of newsprint a year. Half of the newsprint is used by the Southeast Missourian, and its commercial printing division.

Paper price increases are also affecting other businesses, including magazine and book publishers, which have resulted in increased prices of these items on the retail market.

Print companies are also experiencing increases in their uncoated and fine paper.

"We've experienced a 63 percent increase in uncoated paper since last year," said Barry Thornton, general manager of Concord Printing Services in Cape Girardeau. The slick, or fine paper, increases are about 25 to 30 percent over the past year.

Thornton is expecting another increase in his paper costs soon.

"Newsprint prices went up Sept. 1," he said. "We usually receive increases within a month of newsprint increases."

Southeast Missouri State University students are experiencing increased prices at the Southeast Bookstore.

"Paper costs are running much higher than they were a year ago," said Janet Chisman, manager of the store. "Book prices and spiral notebooks, filler paper and note pads are up."

Chisman expects paper prices to go even higher.

Paper prices are also up in other markets.

"I've talked with a couple of manufacturers," said Dennis Marchi, manager of Schnucks Markets here. "There appears to be a paper shortage and the prices of most paper goods are going up."

The JCPenney Co. doesn't sell many paper items, said Harry Rediger, manager of the store in the West Park Mall. "But we use a tremendous amount of paper in computers and for wrapping purposes," he said. "We've noticed paper price increases."

Newspapers had a smashing earnings year in 1994, pulling down total advertising revenue of about $30.2 billion -- up 7.5 percent from 1993.

Readership also remained strong. Surveys reveal that 128 million Americans read a Sunday newspaper every week.

But, the skyrocketing cost of newsprint, which typically accounts for 20 to 30 percent of a newspaper's annual expense budget and is generally a newspaper's second-largest expense behind payroll costs, has become a big concern in the newspaper and magazine industry.

Newspaper officials say the cost of newsprint is likely to remain increasingly expensive through 1996.

"The cost of newsprint is high and it's likely to remain expensive through 1996," said John Morton, a newspaper analyst and columnist in Washington.

Since early 1992, newsprint costs have jumped from an average of $425 to the current level of about $685 a metric ton, and is expected to peak at more than $800 by the end of the 1996.

Worldwide demand for paper has not eased during the first half of 1995, as publishers had hoped, triggering a new round of price hikes that have resulted in 53 percent increases since Sept. 1, 1994.

"1996 could present a more difficult year than 1995," said H. Charles Berky, founder and general manager of PAGE Co-op, a newsprint purchasing cooperative that served more than 375 publishing locations in 44 states. Rust Communications is a member of the Page Co-op. Wally Lage, Southeast Missourian publisher, has been a member of the Page Board of Directors for years.

Berky said that with western newsprint mills converting some of their production to other paper grades as well as increasing their shipments to the Pacific Basin, the newsprint supply to the United States may be reduced, "thus creating the tight market that supports higher pricing," he said.

Newspapers printed in the United States use about 80 percent of the more than 16 million tons of newsprint consumed annually.

About 9 million tons of newsprint is produced in Canada, and almost 7 million tons are produced in the United States.

A fine paper production facility is closer to home. Westvaco Corp. of New York has major fine paper mill at Wickliffe, Ky.

Westvaco prices to customers have increased about 25 percent during the past year. "But, we had a couple of years, 1989 and 1990, when prices were down," said Sandra S. Wilson, a spokeswoman from the Wickliffe facility.