A shortage of newsprint is the last thing that News International needs in the middle of a price war, but the crisis is not confined to Wapping

Rupert Murdoch flies into Britain this week to review the newsprint crisis at News International. The worldwide shortage of the newspaper industry’s raw material has hit Murdoch’s empire hardest and print runs have been slashed. Today’s run has been cut by five per cent, or 30,000 copies, while flagship tabloid The Sun has shaved 120,000 copies, or three per cent. The Times has dropped 15,000 copies – 2.5 per cent of its circulation.

You don’t need a newsprint supply crisis in the middle of a price war. Crucially, advertising is being turned away – it is said that the News of the World had to refuse ú100,000 of ads last Sunday.

The crisis is not confined to Wapping. The Guardian has apparently had to take an austere view of its size. But News International is very exposed with tight price-war margins.

Its shares have yet to reflect such concerns – last week, they held firm around the 298p mark. But the City wilI be watching carefully to judge whether the newsprint crisis is rather more than what the company has called a “two-week drama”.

A little up river, if not upmarket, United Newspapers announ- ced pre-tax profits of ú138.2m for 1994, a marginal increase from ú137.7m in 1993. Turnover increased from ú908m to ú1.01bn.

The City is looking for profits of about ú155m for this year, but a prospective profit/earnings ratio of 12 puts United at a discount to the media sector, reflecting concerns about dependence on mature newspaper markets. The company announced last week that it is to change its name to United News & Media. If that implies a move into the New Media and a possible disposal of newspapers, then the City might be about to get what it wants.

As for the New Media, French-owned General Cable last week moved towards its long-awaited flotation, with an announcement that it intends to raise more than ú200m in a simultaneous issue on Nasdaq and the London exchange.

To date, cable companies have favoured Nasdaq, leaving TeleWest the only cable com- pany listed in London and consequently enjoying a higher rating.

Meanwhile, older media interests at The Telegraph continue to cut their corporate links with the City. Conrad Black’s newspaper combine – not known, incidentally, to be short of newsprint – has sold its minority stake in Carlton Communications.

As cable concerns grow on the London market, some newspapers, at least, are quietly taking their leave.

George Pitcher is joint managing director of media consultancy Luther Pendragon.

Latest from Marketing Week

NOT REGISTERED? IT'S FREE, QUICK AND EASY!

Access Marketing Week’s wealth of insight, analysis and opinion that will help you do your job better.

Register and receive the best content from the only UK title 100% dedicated to serving marketers' needs.

We’ll ask you just a few questions about what you do and where you work. The more we know about our visitors, the better and more relevant content we can provide for them. And, yes, knowing our audience better helps us find commercial partners too. Don't worry, we won't share your information with other parties, unless you give us permission to do so.

Register now

THE BEST CONTENT

Our award winning editorial team (PPA Digital Brand of the Year) ask the big questions about the biggest issues on everything from strategy through to execution to help you navigate the fast moving modern marketing landscape.

THE BIGGEST ISSUES

From the opportunities and challenges of emerging technology to the need for greater effectiveness, from the challenge of measurement to building a marketing team fit for the future, we are your guide.

PERSONAL AND PROFESSIONAL DEVELOPMENT

Information, inspiration and advice from the marketing world and beyond that will help you develop as a marketer and as a leader.

Having problems?

Contact us on +44 (0)20 7292 3711 or email subscriptions@marketingweek.com

If you are looking for our Jobs site, please click here