Is the Indian newspaper business model workable?

Many Indian newspaper owners who could afford to, have partly averted their newsprint supply and price crises by buying continuously in the past year even when they were using less because of fewer pages and reduced circulations. They have stocks for a few months and plan to use the newsprint bought at US$ 600 first and gradually dip into their inventories bought at US$ 720 and US$ 800. 

The purchasing and imports happened in the past two years when Indian newspapers were aware that publication paper machines were being shut down in Europe and being rebuilt to produce packaging boards which continue to be in high demand. It preceded the UPM strike that began this January and is now likely to go on till April. In a statement released on 16 March 2022, Paperiliitto, the Finnish Paperworkers’ Union said it has extended its strike action at UPM’s premises again, for another ten days till 16 April, ‘until the outcome of the negotiations has been reached.’ 

And this was before the war in the Ukraine and the sanctions against Russia although Russian newsprint which at one time represented a lifeline to Indian publishers had in any case dried down to a trickle with that country’s industry tying up with Chinese importers of corrugated liners. With the current imported newsprint prices being quoted at US$ 1,100, news publishers are hopeful of making their next deals at perhaps US$ 1050. 

For the slightly more than dozen newspapers that use double-width presses, imported newsprint is crucial for survival or the continued use of their aging presses. Very few Indian mills manufacture newsprint and of these, even fewer supply double-width reels with 1200 mm diameters for efficiency.

Nevertheless, the dependence on Indian newsprint has increased for big and small publishers, although it has several seemingly unsolvable problems at least without significant structural investment. Indian manufactured newsprint prices have risen from Rs 42,000 (US$ 560) to Rs 56,000 (US$ 750) in the past year but their actual cost to publishers is much higher because they are only available in 46 gsm. Newspaper printers have been able to use 40 gsm imported newsprint and some have been experimenting successfully with 39 gsm also. 

Technical problems with Indian newsprint

The technical problems of Indian newsprint greatly affect output quality, efficiency, and cost. These begin with the higher basis weight (gsm) of the paper and continue with the other characteristics of paper that is relying on scarce waste paper at a high price. Few if any of the Indian manufacturers can provide reels with 1200 mm diameters that are fit for modern reelstands and autopasters. 

Multiple joints in newsprint reel mean slowing down presses for automated splicing that in turn lead to the huge variation in print quality. The dust and fluff in the newsprint require stopping the press after 40,000 copies while imported newsprint can run 200,000 copies without blanket and plate cleaning. The ink penetration and see-through characteristics are extremely poor and many newspaper printers have had to reduce tack and dilute their inks with an adverse effect on print quality especially of full-page high saturation advertisements.

Makeready for a full color daily on Indian newsprint requires as many as 800 waste copies wasted in contrast to about a tenth of that number on imported newsprint. Thus the need for better quality newsprint is paramount, especially for the larger newspapers. With paginations returning but still low, and circulations not nearly back to 2019 levels, (no matter what publishers say in public forums), there is a bit of time before inventories run out. 

What happens if the price of newsprint remains above US$ 1,000? Perhaps this is why some major newspapers have been publishing articles in their pages about the rise of newsprint prices and the Ukraine war.

Large dailies, DAVP advertising and raddi economics 

It is well known that the largest newspapers are subsidized and patronized by government advertising which includes DAVP advertising, quasi-government advertisement, and political advertising disguised as public institutional advertising. By and large, this subsidy is cornered or dominated by the largest dailies who seek to print a certain number of monochrome pages to increase their bulk for the sake of new circulation categories that circumvent or side-step the ABC circulation figures. 

Often, these multilocational papers will have ABC circulation figures for certain cities or editions, NRR or net realization rates for other editions with a lower newsstand price, and figures attested by chartered accountants for yet other editions. Since some of the dailies that have published these general news stories about the increasing prices of newsprint are themselves reluctant to raise their cover price what is their motive for putting out these kinds of stories? 

The purpose could of course be for getting better subsidies by way of increased advertising rates from the DAVP even though the leading dailies’ circulations have shrunk since the last rate enhancement. Or it could be to influence the finance minister to do away with the minimal duty on imported newsprint that they require more than the medium and small dailies. 

At this juncture, when newsprint is becoming a niche commodity everywhere in the world, and prices of all inputs are rising, the newspaper business model has to change and get away from dumping more pages in readers hands. Newspapers are being delivered for less than the cost of newsprint and distribution – let alone the cost of editorial content and production. There are several other anomalies in the situation but what the government needs to look at first, is a solution for both the Indian newsprint mills and the medium and smaller daily newspapers.