US: Print price to decrease?

Posted by Jean Yves Chainon on February 19, 2007 at 10:03 AM

Goldman Sachs analyst Peter Appert projects that newsprint prices will decrease in 2007, as a result of print edition trims, themselves a result of circulation declines. Good news for newspapers, though it derives from a negative symptom.

“Our sense is that both publishers and newsprint producers would like to see greater stability in newsprint prices, but neither side knows how to achieve this goal,” wrote Appert.

Appert’s forecast could be hindered by the merger of Bowater and Abitibi, North America’s two largest newsprint producers. If they did merge, they would control hald of the industry’s newsprint supplies and force a price increase.

“For publishers, the tug-of-war between greater long-term cost visibility through more stable prices versus the short-term earnings benefit of cyclically depressed paper prices always seems to favor short-term earnings.”

Whether short term earnings are privileged over long-term, analysts and investors are still cautious.

“While stabilization in newsprint prices is clearly a positive, in the absence of an uptick in revenue trends, we’d continue to avoid newspaper stocks,” wrote Appert.

Source: Editor & Publisher