We’re Probably Going To See More and More ‘Price Increase, But Still Great Value’ Headlines As Newspapers Raise Their Newsstand Prices To Claw Back Revenue

Philip M. Stone January 10, 2008

The Financial Times, The Washington Post, and the Chicago Tribune are just three major newspapers that within the past couple of weeks have raised their newsstand prices, primarily because they saw that recent price increases by others, or in the case of the FT by itself, have helped the bottom line without losing many readers.

The biggest surprise came from the UK’s Financial Times that it was raising its price yet again, having just done so just six months earlier, and with the 50% increase over both raises it became, by far, the UK’s most expensive newspaper, at £1.50 during the week and £2 on Saturday.

And yet if there was any newspaper that should be able to get away with those types of increases it has to be the FT – its readership demographics would be the envy of any media, and, let’s face it, an extra 50p a day to makers and shakers of the world of finance doesn’t really mean anything. The FT tested the waters last June with a 30p increase, actually saw circulation increase, so it’s up another 20p to start 2008.

The FT is coming off four years of large losses starting in 2001 with relatively small profits the past three years and a 50% increase of its cover price, even if it lost a few fringe readers,  makes a major impact on the bottom line.

The other interesting point for the FT is that it has decided to hit that £2 mark for Saturday, the day it distributes its How To Spend It glossy paper magazine aimed at the well-to-do with loads of ads from the luxury trade. The only other newspaper to try £2 is Murdoch’s hugely profitable Sunday Times and it cost that newspaper more than 100,000 lost circulation (it still has some 1.2 million who buy every Sunday and only the accountants know if at the end of the day the increased price versus the lost circulation versus lower costs for newsprint and ink etc., was a win or a loss.) But again to the wealthy does it really matter if they don’t get change from their £ coins?

The pink-paper FT’s broadsheet daily price increase now puts it 20p more expensive than Murdoch’s tabloid Wall Street Journal Europe which has never really been able to make big inroads into the UK market. Considering News Corp. president Peter Churnin’s statement last year when asked if the company wanted to buy the FT in addition to Dow Jones, “We don’t want to buy the FT. News Corp will crush it,” it could well be that the FT is building its war chest to improve its foreign news coverage and overhaul its web site as it gears up to fight off whatever Murdoch may throw at it.

In the US The New York Times tested the waters last July raising its newsstand price 25% to $1.25 and increased home delivery rates by 3-4%. Management was pleasantly surprised to see sales did not suffer as expected and the company reported a 4% circulation revenue gain in the third quarter.

If it worked for the NYT then why not for others, senior newspaper managers must have asked themselves, and so the Washington Post and Chicago Tribune announced their increases as 2007 ended.

The Post had actually been a bargain for many years at just 35 cents a copy, so raising its price to 50 cents brought it up to the norm for most metropolitan US newspapers. Circulation at the 35 cent price accounted for about 20% of the newspaper’s revenue, but with circulation down and advertising down, the Post needed to claw back somewhere and its 35 cent newsstand price made that a natural for an increase.

ThePost announced really bad figures for its last reporting period, Q3, 2007, with operating income down 50% from the year before. The newspaper estimated that its operating income for 2007 would be some $63 million – compare that to the $176 million it earned back in 1989.

In Chicago, the Tribune raised its newsstand price to 75 cents from 50 cents – see what a great bargain the Post is! The newspaper said it had nothing to do with Sam Zell’s takeover, it was something managers had been looking at. The newspaper told its readers that it was the first newsstand increase in 15 years “and will help offset cost escalations over that extended period.” It did not hike the price of the Sunday paper but did warn that sometime this year it would increase home delivery subscription rates.

All of that was fodder for arch-rival tabloid Sun-Times’ cannons.  That newspaper wrote, “Like most American newspapers, the Chicago Tribune has been reducing the space for news in its print edition. But unlike most papers, it plans to charge more for less.”

Now that’s a bit rich coming from a newspaper that has cut back its editorial staff severely and it has announced another 35 editorial cuts already for this year -- indeed one could argue that the Sun-Times now is charging the same (50 cents) for less because this week it reduced the length of its page by about one inch (2.5 cm). A spokeswoman said it was part of the company’s efforts to save $50 million in operating costs this year.

But before one cries about the price of a 50 cent or 75 cent newspaper of many sections and loads of pages, spare a thought for newspaper readers in ftm ’s hometown of Geneva, Switzerland. All of the paid-for newspapers announced price increases ranging from 8% to 25% for their tabloid and A5-sized papers which seldom offer more than 40 pages. The cheapest now costs 2.20 Swiss francs ($1.95) per copy, and the most expensive 2.80 Swiss francs ($2.50).

If anything puts a $1.25 New York Times, a 50 cents Washington Post, or even an 80p Guardian, the UK’s most expensive daily general interest newspaper, into proper perspective, then that should!