Agencies are predicting chaos in the national press market if News International’s newsprint supply crisis is not alleviated quickly, following its decision to reduce pagination in its titles last week.
The paper crisis is understood to have been caused by NI’s failure to renegotiate a price with paper suppliers when its three-year supply deal ended at the beginning of this year. “If a group like NI can get it wrong, how many others are in trouble?” says Optimedia business development director Peter Russell.
Press buyers are concerned that a shortage of ad sites will increase rates and allow NI to pass on some of its increased newsprint costs to advertisers.
Reduced sites will also harm tactical advertisers, such as retailers and direct response advertisers, which operate on short lead times for promotions.
“In a tight market the media owner will be in a position to dictate to the advertiser on rates and position. Many advertisers will have to consider their use of the press,” says Helena Hudson, press buying manager at Ogilvy & Mather Media.
Agencies believe the paper-supply problems are pushing publishers further towards a yield-based advertising sales strategy and away from a share of volume strategy.
NI has claimed production will only be cut for the next three weeks and has denied its chief executive Gus Fischer and managing director John Dux left the company because of the crisis.
Industry sources believe Fischer and Dux disagreed with proprietor Rupert Murdoch over his price-cutting strategy. Fischer has been replaced by Bill O’Neill, a former managing director of NI, while Dux has been replaced by deputy managing director Douglas Flynn.