Cover Price War Has Peaked – Conference

At the Marketing Week Conference on the National Newspaper Cover Price War held on Monday, Derek Terrington of Kleinwort Benson Securities predicted that the national cover price war has reached a peak, and is now entering a second phase.

He warned that this second phase would be very expensive for the industry; price will go up slowly, together with heavy promotion, to soften the blow for the consumers. He forecast that the Times will raise its price once the gains become too small; the latest ABC figures seem to indicate a levelling out of circulation increases, and if this proves to be the case he predicts an increase from the Times in November to 25p.

He outlined the background to the price war; the newspaper industry has beenin long term decline since the 1960s. In 1964 16.3m copies of daily newspapers were sold on average; in 1993 this figure has dropped 15% to 13.9m. Among Sunday titles the fall has been more substantial, down 35% from 24.5m copies per day to 15.9m per day in 1993.

Revenue from cover price is something newspapers rely on heavily, Terrington added; in 1993 57% of newspapers’ revenue came from cover price; advertising revenue however, is cyclical.

The enormous increase in pagination has led to increased competition, as has the growth in supplements. None of the supplements make money on a stand-alone basis, they are there to push circulation. The Independent’s new London supplement is so flimsy it will be scrapped soon, he also forecast. The future of the industry depends on diversification, he said, citing the Mirror’s move into Cable Television.