NEWSPRINT PRICES UP 50 PERCENT FROM YEAR AGO

The skyrocketing cost of newsprint, which typically accounts for 20 percent of a newspaper annual budget and is generally a newspaper's second-largest expense behind payroll costs is spurring some harsh measures in the $40 billion newspaper industry.

Newsprint prices are up almost 50 percent from a year ago and a new round of increases will bring the annual increase to 62 percent by May 1.

"The best scenario of this is that we may not have another raise in newsprint before September," said Wally Lage, chief operating officer for Rust Communications.

Lage, like newspaper officials across the country, has been looking into means of coping with the newsprint problem.

"We have no choice but to eventually pass on these increases to our customers," he said, adding that the newspaper has been patient in watching the soaring newsprint prices.

"Our business has been good," he said, "but, effective June 1, we will have a high single-digit increase in advertising rates."

Some newspaper publishers have already raised advertising and subscription rate prices. The Memphis Publishing Co., which published the Commercial Appeal, increased the newspaper's price in January, because of the newsprint increases.

The St. Louis Post-Dispatch raised both its advertising and home-delivery rates in January, and in an Associated Press release, Gannett, the country's largest newspaper publisher with 82 dailies, reduced its news columns by 4 percent.

Gannett uses about 800,000 tons of newsprint a year, said Pulp & Paper Forecaster, a San Francisco-based trade publication that monitors the paper industry.

"Gannett is the largest user of newsprint in the nation," Pulp & Paper editor Jim McLaren said Tuesday.

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, McLaren said, and almost 7 million tons are produced in the United States.

Rust Communications, which includes five dailies and a number of weeklies in Southeast Missouri and Northern Arkansas, uses about 4,500 tons of newsprint a year, and purchases both from Canadian and U.S. producers.

"We use a lot of recycled paper," Production Manager John Renaud said, adding that currently Rust Communications uses 51 percent of recycled newsprint.

The Southeast Missourian, a Rust Communications daily, also recycles newspaper. The company uses a special baler to package the old newspapers into 1,300-pound bales that are sent to St. Louis where it is sold for $90 a ton.

"Newspapers are utilizing a number of alternative ways of doing business to offset the increase in prices," McLaren said.

Some newspapers are discontinuing some editions. Some newspapers in Atlanta and Los Angeles have withdrawn their suburban editions.

Newsprint price ups and downs aren't new to the industry. The prices usually fluctuate in five to seven-year cycles, McLaren said.

In 1991, there were at least 160 paper machines at 69 mills across the United States and Canada. Today, at least 30 of those machines are no longer in operation.

"Pulp and paper mills were depressed throughout the early 1990s," McLaren said, adding: "Newspaper publishers had it good until, the North American newsprint producers discovered the foreign market, finding lucrative markets."

Exports, however, account for only about a fourth of newsprint sales from North America, McLaren said, but, those consumers are willing to pay more for newsprint.