The High Cost of Publishing

In Atlantic City, N.J. last week, Richard W. Slocum, executive vice president of the Philadelphia Bulletin and president of the American Newspaper Publishers Association, stepped up before 1,000 newspaper production men and said sternly: "The day of easy money [for newspapers] is gone . . . Some newspapers have shrunk, and more have died than we like to talk about. More will shrink and die if we do not meet our present-day problems." Publisher Slocum was gloomy about the newspaper business with reason. All over the U.S., rising costs have squeezed profit margins of newspaper publishers to the lowest point in years.

Even though circulation, ad revenue and total income last year were at an alltime high, costs have shot up still faster. Two biggest cost factors: 1) newsprint, which accounts for about 15% of the total costs for smaller papers and as much as 55% for big dailies, has risen from $50 a ton before World War II to $126 a ton this year; 2) labor costs, especially for mechanical workers, have gone up as much as 140% in the same period. The average daily, says Editor & Publisher, "has not gone through a year [since 1946] when expenses have not risen at a higher percentage rate than revenues."

Consolidation. As a result, the era when newspapers produced some of America's great fortunes (e.g., Hearst, E. W. Scripps, Pulitzer, et al.) is past. Publishers who like to consider themselves primarily "editorial men" find themselves spending more and more time on business affairs. Even such dailies as the wealthy, institutionalized New York Times, which has about 4,700 employees on its payroll, have been hard hit. Last year's ten-day newspaper strike (TIME, Dec. 7 et seq.) says Times Publisher Arthur Hays Sulzberger, wiped out "virtually all, and I mean that literally, of the anticipated profit from 1953 operations." The Times has also been forced to pare down its voluminous news space, e.g., it recently cut its foreign news 10%.

One of the few U.S. newspaper companies that publicly report their profits, the Boston Herald-Traveler Corp. has seen its profits fall off from $1,270,813 in 1946 to $526,283 last year. In cities where there are monopolies, the papers are doing better. Greensboro, N.C.'s Jefferson Standard Life Insurance Co., which helps finance 23 papers all over the U.S., reports that the profit margin of its papers in competitive cities has slipped to less than 5%, while in monopoly cities it is nearly 18%.

High costs have already taken their toll. Last year 22 dailies were suspended or merged, leaving 82% of all U.S. towns and cities that have newspapers with only one daily (v. about 40% in 1900). The Washington Times-Herald recently found rising costs too much to bear, sold out to Eugene Meyer and Philip Graham of the Washington Post. High costs have also made starting a big, new daily virtually impossible without millions in reserve capital.

In the last ten years only one big, new daily has been launched, the Los Angeles Mirror. It has cost Publisher Norman Chandler millions already, and is still losing at the rate of an estimated $20,000 to $30,000 a week. Last week the Mirror, along with Hearst's Los Angeles Herald & Express, raised its street-sale price from 7-c- to 10-c-. But publishers have found out that price increases are no solution to the cost squeeze (only two U.S. dailies still sell for 2-c-, only 22 for 3-c-), since circulation accounts for only about one-third of an average daily's income.

With revenue from circulation and advertising bumping the ceiling, many a publisher has looked for income from new sources. The Dallas Times-Herald receives one-third of its income from its profitable TV station, and the Washington Post and Times-Herald has found that earnings from its TV and radio stations provide a valuable cushion against the shocks of newspaper expenses. Publishers are also installing expensive color-printing equipment that enables them to earn more money from advertisers for the same amount of newsprint. But improvements run high. "I bought the Free Press [for $3,200,000]," says Publisher John Knight, who controls the Akron Beacon-Journal,

Miami Herald, Chicago Daily News and Detroit Free Press, "but now I'm having to buy it again" by paying $3,500,000 for new equipment.

Revolution. Publishers rightly feel that because of competition, increases in advertising rates and the sales price of their papers are fast approaching the limit, that the only recourse is to cut costs more. In the last two years hundreds of dailies have trimmed the size of their pages by an inch or more. By doing so, the New York Herald Tribune has made an estimated saving of more than $400,000 a year in newsprint.

More than a dozen dailies in smaller cities have combined with their competition to print in the same plant, thus cutting production costs while keeping editorial staffs separate. Marshall Field's tabloid Chicago Sun-Times has begun to stay in the black by adding a sixth column to its five-column page, thus crowding more news into less paper. Pittsburgh's three dailies are getting ready to make a similar move by adding a ninth column to their eight-column pages. Says one publisher: "The ninth column is here to stay."

But it is on the production side that the biggest savings can be made, and there newspapers have been much too chary of research. Nevertheless, more than half of all U.S. dailies have adopted wire-service Teletype-setting (TTS), which is causing the biggest revolution in newspaper production (TIME. July 13) since the invention of the Linotype machine. Other papers are experimenting with electronic and photographic typesetting devices. Last week in Atlantic City, newspaper production men got their first view of new electronic and chemical processes that may be cheaper and faster than the antiquated engraving and etching methods used by most dailies.

Mechanical unions still resist production change, e.g., a publisher who buys a new. high-speed press often finds that the union requires so many unnecessary men to run it that he loses rather than saves money. But even such diehards as the International Typographical Union have begun to give in to progress. I.T.U.. which opposed TTS circuits at first, now goes along with TTS. simply tries to acquire jurisdiction over TTS men.

Survival. Most publishers, even those who have been squeezed hardest, hope that the worst is over. After its long and uninterrupted rise, newsprint is probably at its peak price, and unions have been scaling down their annual demands. The 25,000-member American Newspaper Guild has taken the stand that "whenever a publisher can show that the survival of his newspaper is in danger, the Guild stands ready to cooperate in any way possible to keep the paper alive." Nevertheless, more deaths are in the offing. Says George C. Biggers, boss of the Atlanta Journal and Constitution, which have the biggest combined circulation (430,171) in the South: "In every city of half a million population or less where there is more than one newspaper ownership, consolidation may be expected."

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