Newspaper Economics

There was also bad news on the cost side of the ledger in 2005. Newsprint prices, so soft in 2003 and early 2004 that they may have masked deteriorating fundamentals, were up another 5% to 10% in 2005. More of the same is expected in 2006.13 Watch for a continuing wave of reductions in paper weight, newshole and page width to cushion the cost impact. The Wall Street Journal, for instance, plans to shrink the size of its broadsheet from 60 inches to 48 in 2007.14

Like most American businesses, newspapers also feel continuing cost pressure on health and pension benefits. In addition, public-company results will look a little worse in 2006 because of new accounting regulations requiring that stock options be expensed. Finally, staff cuts and buyouts save money over time, but will turn up as special expenses in 2005 and the first part of 2006.