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.

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