PAPER: Norske Skog 30% Boyer rise could be fatal

Local newspaper publishers say they may have to close titles, as Norske Skog tries to push through cost increases of 30 per cent for newsprint, and up to 45 per cent for other papers, from its Boyer mill.

Norske Skog says it needs the rises to keep operating the mill profitably. Boyer, in Tasmania is now its only one in the region –  it closed its New Zealand mill, and it faces soaring energy and shipping costs, and reduced demand.

Industry sources say profitability has been an issue for the mill for the past decade, and now its parent company has reportedly said there is no future if it cannot beocme profitable. Norske Skog is aiming for 1 July for the price rises.

The mill supplies paper for most of the local newspaper publishers, proving both newsprint for the papers and coated stock for the supplements and pull-outs. Without the Boyer mill the Australian and New Zealand newspaper industries would struggle to get newsprint, as mills around the world have closed or been converted because of the collapse in newspaper printing.

In recent years Boyer has had to compete with cheap Asian imports, which has meant its prices were low. Now those imports are drying up, Boyer is finally in a position to adopt a more sustainable pricing model. The big question is whether their customers, or more correctly their customers' customers, will pay the price, which will translate into higher advertising costs in newspapers. 

Tony Kendall, managing director of regional publishing company Australian Community Media (ACM) doesn't think so, he told MPs that, “These increases will likely cause the closure of titles that are teetering on the edge of profitability, and will put even our biggest publications under significant cost pressure."

He said, “We will have no choice but to increase the cover prices for all our newspapers while at the same time reducing paging. This in turn will reduce circulation and put further pressure on our ability to sell advertising."

Kendall said that already a large proportion of the ACM portfolio is operating unprofitably, and is only sustained by the larger group

He said "Printing and production, including newsprint, is the biggest single input to our business after labour. A massive increase in newsprint prices will affect publishers globally this year. It is perhaps the single biggest threat to the viability of our publishing business, after Covid and its economic effects. ACM will be heavily affected by this rise because of the number of publications we produce and the high volume of newsprint we require.

Regional and community newspapers have been smashed over the past two years, with News and ACM closing more than 100 titles between them, and sending more to online only, and a plethora of smaller publishers sending titles to the wall. Now the move by Norske Skog at the Boyer mill could prove fatal to some remaining smaller publishers.

The country’s biggest newspaper publisher, News Corp, will suffer the knock-on effects on any newspaper closures by smaller publishers as it prints virtually all the nation’s newspapers, giving its print plants a handy income stream. It has just opened its new newspaper print plant on the outskirts of Melbourne.