PRESS WATCH

SBHD: Although David Montgomery is to raise the price of The Independent and IoS, it is doubtful whether this signifies an end to the price war

Last Friday The Daily Telegraph announced David Montgomery’s decision to raise the cover price of The Independent after it and its sister Sunday title posted losses of £40m.

But it is doubtful whether this move will prove instrumental in bringing an end to the price war. With the present paper cost problems, questions must be asked about the relative profitability of increased circulation figures resulting from a price cut.

In circulation terms, the clear casualties are the Daily Express and Sunday Express, down 7.45 per cent and 10.98 per cent year-on-year, respectively. However, both titles recorded a small month-on-month increase.

The apparent winners are the Telegraph and The Sun. Telegraph sales have increased by 4.73 per cent year-on-year – marginally up month-on-month and successfully holding its 1 million-plus level. Sales of The Sun are continuing to climb. The title has increased it circulation by 4.65 per cent year-on-year, which is more impressive when you consider that the March 1994 figure followed the title’s cover price reduction.

The Independent and IoS continue to struggle, down 4.43 and ten per cent year-on-year, respectively. Even so, there are signs of recovery with two consecutive monthly increases for the IoS and two static months for the daily, bringing circulation back up to the level of last November.

In the advertising market, there was a significant difference between colour and mono display pagination from the first quarter of 1994 to the same period in 1995. Newspapers need to maximise their yield to subsidise rising paper costs, so mono is being sacrificed in favour of full-colour display revenue.

With the exception of The Daily Star and The Mail on Sunday, there has been a significant fall in the black and white market – down 13.3 per cent, though his has been more than made up for by an overall year-on-year increase in colour display pagination of 36.8 per cent during March alone.

Worthy of particular note are The People and the Sunday Mirror – with increases of 200 per cent and 166.7 per cent, respectively in March. However, The People was recovering from an arguably artificially low base in January.

The latter part of 1995 will see further rises in paper costs. This, in conjunction with continuing pressures on overall revenue – including cover price – will probably mean that the emphasis on colour will continue. And this may well affect the availability of all space, particularly short-term black and white – bad news for smaller press advertisers, although the lost mono revenue will be more than offset by colour increases.