Everyone is affected by the rising cost of necessities. It’s even worse when you’re already on the edge of bankruptcy.
That’s the case for local newspapers, which were in a tailspin before getting walloped by the pandemic, inflation and now soaring newsprint prices.
Thousands of papers closed and nearly two-thirds of their newsroom staff was let go over the last 15 years. Misinformation, civic disengagement and rancor are filling the void at democracy’s peril.
Now this local journalism crisis is exacerbated by a global plunge in newsprint production. That’s leading to soaring costs for remaining newspapers that are generally hanging on by a thread.
Combined with high fuel prices and delivery labor shortages, this will lead to further cutbacks in distribution, the size of newspapers and potentially newsroom employment.
“More than a quarter of all newspapers have closed in the past 15 years and the recent inflationary pressures are taking a toll,” Dean Ridings, CEO of the America’s Newspapers trade group, said via email.
Newsprint prices rose more than 30% over the last two years. A major factor is mills closing or converting production to packaging materials used by e-commerce companies such as Amazon.
“Mills have been shutting down pretty much everywhere — it’s really a global situation that has been a bit worsened by the pandemic,” said Francois Chastanet, director of graphic papers at Numera Analytics, a Montreal research firm affiliated with the Pulp and Paper Products Council trade group.
In North America, newsprint production capacity declined 28% from 2019 to 2020 and another 18% last year. Demand fell 26% in 2020, 6.6% in 2021 and 5.3% in just the first four months of this year, Chastanet said.
Until recently, Washington state had three newsprint mills with national customers.
The Ponderay Newsprint Mill north of Spokane went bankrupt and closed in 2020. It was partly owned by a consortium of national newspaper chains that contracted, merged and were acquired by hedge funds. In January it restarted as a cryptocurrency mill.
NORPAC, a mill in Longview, converted some newsprint production to packaging material and rumors are swirling that its remaining newsprint line will also be converted. It provided a statement saying that it hopes to continue supplying newsprint customers but has “replaced lost newsprint sales volume with other grades.”
That could leave Inland Empire Paper in Spokane as the only newsprint producer on the U.S. West Coast, according to Stacey Cowles, president of the Cowles family company that owns the mill and The Spokesman-Review newspaper.
That doesn’t necessarily insulate the Spokesman as they are operated as separate businesses.
“We can certainly guarantee a supply but we can’t guarantee ourselves a price,” he said.
The Spokesman may add a gas surcharge for print subscribers. To absorb higher newsprint prices, “we’re going to be able to trim a few pages I think and get through that particular crisis.”
But the larger picture, Cowles said, is that these responses will further test the loyalty of subscribers who have already endured price increases and delivery problems as papers struggle with costs and labor shortages.
This comes as surviving local papers are trying to invest in new digital business models while preserving their cornerstone print businesses as long as possible.
Large and small chains already were cutting the frequency of print editions.
The private-equity firm that acquired the bankrupt McClatchy publishing giant in 2020 converted its “daily” papers to six print editions per week after outsourcing print production across the country.
Gannett, the nation’s largest publisher, recently paused print cutbacks while it assesses customer feedback. In an investor call last month, executives said newsprint, fuel and delivery costs last quarter were $15 million higher than the same period last year. Overall it lost $3.1 million on sales of $748.1 million during the quarter.
In Washington, The Peninsula Daily News in Port Angeles dropped Sunday editions in March. The Walla Walla and Yakima dailies, owned by The Seattle Times, cut print frequency to three days each in April and May.
Executives at the state’s largest independent dailies all told me newsprint prices may force cutbacks. Their price increases vary, as each negotiates separately and costs vary by factors such as volume and proximity to mills.
At The Columbian in Vancouver, Chief Financial Officer Brandon Zarzana said its newsprint prices are up 12% this year which “has definitely impacted our bottom line.” Further increases in newsprint and other costs “may put us in a position where we need to consider options for reducing page count.”
At The Seattle Times, a 30% year-over-year price increase equates to more than a $1 million hit to expenses, President Alan Fisco said. Prices are the highest prices by far according to records going back to 2013.
“The combination of newsprint and gasoline price increases is a double-whammy impacting all print readers,” he said via email, noting that carriers drive about 25,000 miles a day to deliver the Times.
As a result, price increases, surcharges and cutbacks are likely across the industry, Fisco said.
“I would expect to see an acceleration of print frequency reductions across the country at the very least,” he said. “My bigger concern is that this may not be enough, leading to further staff cuts, particularly newsroom cuts, and newspaper closures.”
At a time when democracy is threatened from within and without, one of the last things America needs is to lose even more of its independent, local free press system.
Congress has much to do this summer. But it must also recognize this crisis, agree that local journalism is a civic necessity and help the industry stabilize before it’s too late.