Print media battles raise production costs on rebound path

All print publishers agree that newsprint costs are skyrocketing. Fortunately, publishers using a mix of on-hand stock and newly purchased newsprint can offset some of this increase. While newsprint accounts for about half the cost of publishing, other costs have also increased. The latest is the 6% increase in GST rates on printing ink, which is a small factor but adds to their challenges.

Varghese Chandy

The increase in GST rates on printing ink will have an impact on the printing industry which has already been affected by the sharp increase in the price of newsprint. The price of newsprint has risen from $480 per ton to $1100 per ton over the past year, although a sharp increase has been seen over the past six months,” Remarks Varghese Chandy, Vice President, Marketing and Advertising Sales, Malayala Manorama.

Ranjeet Kate
Ranjeet Kate

Ranjeet Kate, CEO, Vijay Karnataka and Bangalore Mirror argues that although, overall, printing ink represents a smaller portion of the total variable cost, raising the GST would certainly increase the financial burden on newspapers.

Devika Shreyamskumar
Devika Shreyamskumar

Devika Shreyams Kumar, Vice President – Operations, Mathrubhumi Group, argues that increasing GST rates on printing ink from 6 percent to 18 percent will have a serious impact on print media. She points out that since the newspaper industry is not allowed to take full advantage of the input tax credit, it is expected that the printing industry will have to absorb up to a 3% increase GST on printing inks. “This will drive up newspaper production costs and adversely affect the already struggling newspaper industry,” Kumar street.

The Covid-induced economic downturn and the ongoing Russian-Ukrainian conflict are among the macro factors at work. With several newsprint mills closing, there is a global shortage of newsprint and prices have skyrocketed over the past 18 months, she explains.

It doesn’t help that India is the world’s largest importer of newsprint, with 45% of all imports coming from Russia alone – which has ceased following international sanctions against the country.

“Due to all of these factors, there has been an exponential increase in the price of newsprint from $450 per ton to $1,000 per ton. Due to increased pressure on the supply chain, freight costs for shipping have increased by 400%. All of this has led to disruptions in the newsprint supply chain. Newspaper companies have become unprofitable,” explains Kumar.

Chandy from Manorama adds: “The prices of consumables have also increased; shipping charges, rupee depreciation, etc. also contributed to the cost escalation. »

Another multilingual publisher says it would be safe to assume that there was at least a more than 60% increase in the cost of newsprint in FY2023. Regarding the increase in the cost of ink and plates, he says they represent a small portion of input costs and therefore the impact would be nominal. Yet they all add up and businesses will need to take them into account.

The survival of the skinny

Publications have had to innovate to cope with the boom in newsprint and the rising costs of other inputs. Ironically for many publications, the forced drop in page counts and edits during the Covid waves kept overall costs under control.

Prasoon Pandey, Manager: Investor and Media Relations, DB Corp, says his Hindi daily Dainik Bhaskar is one of them. Between the first quarter of FY23 and 2020, there was an increase in the cost of newsprint, which will be offset by a decline in the number of copies and pages. As a result, the share of advertising space in newspapers has increased.

“Furthermore, previously, the newsprint purchase ratio was 50 pc imported and 50 pc domestic. Over the past four to five months we have reduced the use of imported and domestic newsprint increased to 85pc. The GSM of newsprint (grams per square meter) has been reduced to 40 GSM without compromising the quality of the newspaper. We have achieved this by deploying state-of-the-art technologies that allow us to save nearly 15% on newsprint costs. If the strategies mentioned above had not been deployed, then we would have seen a 25% increase in the cost of production,” he explains.

He points out that despite the challenges, print has made a “great comeback” as even digital brands across the country are placing ads in print due to the medium’s effectiveness and ability to catch the eye. .

While everyone agrees that print has made a comeback, they also agree that it started from a low never seen before.

Mathrubhumi’s Kumar points out that the Covid crisis has led to a drastic reduction in subscription and advertising revenue, with readership and advertising revenue migrating to other media, especially digital. According to his estimate, print media revenues have fallen by 40% due to the Covid19 pandemic.

“Most Indian newspapers have either shut down their editions or reduced their distribution area, to stay afloat and survive,” she notes.

Rising fuel prices have increased the cost of other raw materials such as printing ink, fountain solution, chemicals and other consumables. Aluminum plates used for printing saw a 40% increase due to rising metal prices. Due to these many factors, Kumar says the cost of producing newspapers has seen an unprecedented increase.

She also points to the growing losses of domestic newsprint mills, which have converted their mills to produce packaging materials and white paper. Only a tiny fraction of the national mills produce newsprint in India, she observes.

In Kerala, a recent increase in the electricity tariff resulted in a further 10% increase in the cost of electricity.

“The very existence of the newspaper industry is seriously threatened. The newspaper plays a vital role in upholding the freedom of speech and expression guaranteed by the Constitution of India and protects freedom of information by providing curated content. Newspapers have played an important role in the fight against fake news during the lockdowns induced by the Covid19 pandemic. Print media plays an important role in curating content and exposing misinformation primarily spread through online and social media. The Covid19 public health crisis has shed light on the vital role played by free and independent print media around the world,» opines the vice-president of Mathrubhumi.

“There is an urgent need for intervention by the central government and state governments to protect the Indian print media,” guess Kumar.

(With contributions from Neethu Mohan and V Umanath.)

Comments are closed.