Vibe Magazine to Return

As we reported in May/June, Vibe Media Group closed their doors, blaming the poor economy and a decline in ad spending. Vibe and Vibe.com recently announced that InterMedia Partners, a private equity firm founded by Leo Hindery, Jr., purchased the publication.
InterMedia is combining Vibe with the operations of another urban lifestyle magazine it owns, Uptown.

Catalyst Paper to Restart Pulp Mill

Catalyst will restart pulp production at its Crofton NBSK kraft mill on Vancouver Island, BC in October if market conditions continue to improve. The line will add 210,000 TPA.

Palm Paper's Newsprint Machine Starts up

The industry’s newest paper machine started up three weeks ahead of schedule. Palm Paper’s facility, on the River Great Ouse in the UK, will produce up to 400,000 tons of newsprint paper each year.

Reader's Digest Officially Files

As we reported late last week, Reader's Digest was evaluating a move to file for bankruptcy. This just became official. The filing will assist in reducing the $2.2billion in debt to $550million.

Another Reason for Fewer Newspapers

Just reading a piece from Jeff Jarvis (past editor of NY Daily News) and he outlines the fact that coupons are now available on line for free and listings for movies are now easily attainable online - this has hurt newspaper demand. He believes there was a large population that purchased newspapers for only the coupons. Many would also purchase a newspaper for the local movie listings – all now available online – for free. Certainly, two more factors leading to fewer newspapers is less disposable income for purchases such as a newspaper and electronic news seems to be picking up readers.

Pulp Shipments continue to Increase

Perhaps the only shinning star in the industry is market pulp; whereby, reports for July shipments confirm an increase of nearly 4% from July of 2008. China continues to buy pulp and is certainly assisting the demand.
Worldwide inventories have decreased and we hear pulp is now under 30 days (versus 36 days at this time in 2008). Pulp prices are witnessing increases as a result from companies such as Canfor Pulp, Domtar, Aracruz, Suzano, Arauco, Botnia, Donghae Pulp, Mercer Intl, Tembec, VCP, Sodra, West Fraser and Winstone (price inceases ranging from $30-50/ton).

Is Digital Better?

I just saw an interesting report on the International Paper website comparing the ‘green’ factor of digital / electronic media and traditional paper. The document confirms paper being more environmentally friendly.
A few highlights
-Sustainability – Paper industry plants 3 trees for every one forested – trees are renewable. Computers are made from environmentally unfriendly materials that cannot be recycled.
Energy – Most paper producers today have power supplied from carbon neutral resources. Powering up a PC comes from electricity, which is produced from nonrenewal fossil fuel.
Recyclability – Paper is completely biodegradable and the paper industry recycles and reuses nearly 60% of paper that has been returned from the market. Computers, servers, cables, and monitors continue to end up in landfill......and are not recyclable.

Update on Newsprint Market

Difficult for me to report an optimistic future for the Newsprint Market. I suppose one glimmer of bright light is that the balance of the world has not experienced as deep nor as fast a decline in Newsprint demand. Newspaper advertising in the USA continues to fall, and the trend does not appear to be stopping (FYI, advertising down 30% in the first quarter alone!).
USA newsprint demand for 2009 is forecast to be 5.3million tons. Production for North American producers was 10.4million tons in 2008 - the forecast 2009 is 7.6million tons.
Individual companies are particularly hurt; AbitibiBowater (world's largest producer of newsprint) lost $100/ton on its current shipments. Mr. Mark Wilde reported average selling price was $581/mton, while AbitibiBowater's average cost of manufacture was $688/mton. Note, larger buyers are reported to actually be purchasing paper at less than $400/mton. Again, not a rosy picture!

Market Pulp Prices Continue to Increase

Pulp prices in North America continue to increase with the latest announcements for NBSK list price in August heading north for the third month in a row, up $30/ton to $730/ton.
Currently, this market is witnessing reduced inventories - given strong demand from China and shuttered equipment reducing over all capacity.
Note, SBSK list price also increased $30/ton to $680/ton

More College Students Using Digital Texts

Notes from a report by Jim Milliot of Publishers Weekly

Many anticipate that 40,000 college students at over 400 colleges will use open source digital textbooks from Flat World Knowledge this fall. Flat World went live in spring 2009 with 1,000 students from 30 colleges using its offering.
The Flat World’s pricing/business model students allows access entire textbooks for free online; pay $19.95 for a PDF download; pay $29.95 for a black and white printed version or $59.95 for a color version, or pay $39.95 for an audio version. Books are available by the book or by the chapter. Study aids or also available for purchase.
Eric Frank, a cofounder of Flat World believes a quantum leap will occur for fall 2010 when he thinks the number of students could be between 120,000 to 200,000.
If more books are read digitally, this means less text paper sold ..... another challenge for the paper industry.

Hewlett Packard Concerned less People Printing

Hewlett Packard just reported a significant decline in ink cartridge sales. The challenging economy has resulted in massive layoffs and therefore fewer office workers producing printed copies. HP is evaluating a new environment upon which corporations are reducing costs and asking workers not to print unnecessary documents. This could be long lasting as the world is becoming increasingly more comfortable with digital documents.
Note, HP printing group accounts for nearly 25% of the total corporate revenue.

Several Shuttered Reed Publications back to the Presses!

Recall that Reed Business Information closed 13 publications in April and this week, John White announced his company will acquire these titles White will re-launch all by September, published under Associated Construction Publications Group (ACP), expecting collective revenue of $5 million in 2010.

Recycled PaperBoard Pricing 'on the move'

The industry just announced price increases for September shipments of $40/ton for all grades of coated and uncoated recycled paperboard by nearly all major North American producers to offset raw material cost increases. These producers include Strathcona Paper, Graphic Packaging, RockTenn, Sonoco, PaperWorks Industries, Caraustar, Newark Group and Ox Paperboard. Challenge is two fold - demand remains poor and most end users can not pass an increase through to their respective end users. Lots of resistence here .......

New Paper Mill in South Korea

Moorim announced a new Voith Paper paper machine to their DongHae site to manufacture woodfree coated, woodfree uncoated and machine finished coated paper with an annual capacity of 450,000 tons. This will be the 1st integrated pulp & paper mill in South Korea and is scheduled for start-up in spring 2011. It will be environmentally friendly, using the steam incurred during pulp production instead of fossil fuels.

Stora Enso to Shrink Workforce

In past releases, we had reported that Nordic paper companies experienced losses at the end of last year given slow demand from customers for newspapers and magazines. This year has not proven to yield any improvement and total production in the forest sector has slumped by some 30 percent.
On Finnish company, Stora Enso, will now lay off off up to 1,100 workers, cut production and close mills in Finland as the paper maker continues to struggle with dwindling revenue.
Stora Enso is one of the world's largest forest product companies making magazine paper, newsprint, fine paper, pulp and packaging boards.

Many Pulp, Paper and Board Companies Show Improvement

The Pulp & Paper Week publication just reported most US pulp and paper companies had higher earnings in the second quarter vs. first 3 months of this year. Lower input costs certainly assisted, but a major factor was from alternative energy black liquor credits (+$1.6 billion), which offset losses.

It's Chapter 11 for Reader's Digest

Household publication, Reader’s Digest, will restructure to reduce it's debt under a voluntary Chapter 11 filing. This will only affect their US businesses. The senior lenders will exchange much of their debt for equity.

Financial Times will charge per online Article

Financial Times, which has charged a fee for online news since 2002, announces model to accept 'micropayments' for individual articles. Many of the major newspapers are now reviewing models to generate revenue beyond online advertising as reported in past releases. Currently, most newspapers do not charge for online news.

July Paper Shipments look Promising

The American Forest & Paper Assn.just published the preliminary report for printing and writing paper shipments in July. The report outlined 1.464 million tons, down 15% vs. July of 2008, but up 5% vs. June 2009.
Results as follows-
Coated mechanical: 258,939 tons, down 19.1% vs. 7/08 and down 3.7% vs. last month.
Coated freesheet: 281.964 tons, down 16.2% vs. 7/08 and up 13.6% vs. last month.
Uncoated mechanical: 142.418 tons, down 25.1% vs. 7/08 and up 15.5% vs. last month.
Uncoated freesheet: 780.238 tons, down 11.2% vs. 7/08 and up 3.2% vs. last month.

Online Spending declined

Like printed advertising spending, online retail spending is starting to decrease. On line spending totaled $30.2 billion in the second quarter, a 1% decrease from $30.5 billion in the prior year. All advertising dollars are effected by the nearly 10% unemployment rate, rising gas prices, and consumers attempt to increase savings, - all contribute to reducing consumers’ discretionary spending.

Newspapers to soon charge for News on their websites

The Boston Globe and Herald as well as News Corporations’ New York Post and Times of London has announced it will start to charge end users to access their websites for news. All newspapers are aggressively seeking additional revenue.

Is the Economy bottoming out?

It is said the paper industry still follows the economic indicators, so it was good news to hear the Federal Reserve stated that the US recession was ending, due to consumer spending, financial markets and corporate inventory building stabilizing. The Fed cautioned that it would be a slow recovery and that they will keep short-term interest rates at virtually zero. Many economists believe we will not see any continuous signs until beginning of 2010.

Fraser Papers Will re-Open Pulp Mill

Reversing a news release we published earlier, Fraser and their union forged an agreement, which will allow Fraser to reopen the pulp mill in Edmundston, New Brunswick, Canada by the end of August.

In-Plant Printers Report on Recession

The MindFireInc just reported on results from a survey which included many of the In-Plant printers. During these difficult economic times, survey results reported-
-Two biggest challenges for the printers included reduced budgets and difficultly attracting new business.
-Most believe that ‘things will get worse before they improve’
-All agreed that to grow revenue requires new services, self promotional marketing, adding new equipment and visiting end users.
-When asked about reducing costs, all reported they would renegociate prices with suppliers, cut internal staff, and change suppliers

Paper Companies are beginning to Report Results

The USA paper producers are beginning to report results for the second half of 2009, and most are announcing losses.
-Cenveo reported quarterly net sales of $397.6 million, down from $524.5 million for the same period last year. Cenveo recorded a net loss of $18.3 million
-NewPage, USA largest producer of coated papers, net loss of $6 million in 2Q was an improvement over the $21 million loss in 2008,
-AbitibiBowater reported a net loss of $510 million in 2Q, double 2008. Sales only $1.04billion.
-Domtar Inc. turned a net profit in its second quarter
-UPM-Kymmene Corp. , the world's largest magazine paper maker, reported a second-quarter net loss of euro8 million

Time Magazine closes Southern Accents Magazine

The Southern Accents magazine issue will print the final issue with the September/October edition. Time Inc., publisher of the magazine, announced advertising pages had declined by 37.4% in the first half of 2009. This magazine was a bimonthly with a circulation of 400,000.

AbibtiBowater Shutters 2 more machines

AbitibiBowater will shut down 2 more machines, both at the Thunder Bay, Ontario mill. Paper machine #4, which produces 146,000TPA of uncoated mechanical paper (publication), and #5Paper Machine , a 250,000TPA newsprint machine. Both will remain down until the markets improve.

Update on Market Pulp

Notes from report by Deutsche Bank
North American NBSK list price rose for the second month in a row by $40/ton to $700/ton. This increase resulting from worldwide inventories for market pulp having declined, producer downtime and closures, as well as strong demand in China .
Local producers that have announced increases so far include
Canfor, Domtar, Northern Pulp, Tembec, and West Fraser slated domestic NBSK prices at $730/ton.
Other North American producers that have announced a $20-25/mton price hike on key hardwood grades include Alberta-Pacific, CENIBRA, Sappi NA, and VCP.
Meanwhile, in Europe, Botnia, Mercer Intl., Stora Enso, and Sodra have announced a $30/mton price hike on NBSK and hardwood grades.
Note, even spot price levels are expected to increase from the $560-590/ton net delivered from the July prices.

Market update on Containerboard

Containerboard prices, assisted with good demand, remain steady after falling $70/ton since its peak, last fall.
Note, it has been reported that spot prices for 42-lb linerboard range from $450-470/ton in Central US, and $410-440/ton in the Northeast region. Recycled spot prices are below $400/ton. US kraftliner export prices are still around the $320/ton FAS level.
I think these spot prices have remained constant for last 60 days, as well. (I welcome comments here)
Additional comments
-June box shipments down 6.5% from 2008
-Producers continue to streamline inventories and operating rates
-International Paper took 580,000 tons (21% of capacity) containerboard out during second quarter.
-Renew will restart 500TPD linerboard in St Francisville, LA

AbibitiBowater cuts Staff and Sells Timberlands

AbibitiBowater, North America's largest newsprint supplier and operating under chapter 11, reported it will eliminate 25% of its employees in its headquarters as well as sell $25.7million worth of timberland These are part of the $100million cost reduction plan we announced in previous release on this blog.
Meanwhile, Smurfit - Stone Container - another bankrupt company, will sell 1million acres of timberland.

More Downtime for Kruger

Kruger will reduce production at both its Trois-Rivières and Wayagamack mills for balance of this summer. Trois-Rivières will reduce coated paper production by approximately 7,500 tons and Supercalender Paper will be reduced 4,500 tons. Directory paper will be cut 2,000 tons at Wayagamack; note, coated manufacture at Wayagamack will not be affected.

Magazines Report less Sales at the Newsstand

Single copy sales for magazines sold at newsstands are predicted to be down for first half of 2009 (ABC audit not confirmed until late August). While some of this decline is a result of our poor economy, the majority resulted from publishers’ refusal to pay the increase for ‘per copy’ fees the distributors’ demanded. Statistics on specific magazines will be announced in coming weeks.

Coated Paper Prices Still in the Basement

Buyers and mills alike wonder when the decrease in coated paper prices will stop. For the mills, the black liquor credit, reallocating production to uncoated grades, and taking equipment out of production are all assisting; BUT, demand continues to shrink and buyers continue to deplete inventory already on floor. Unless magazine advertising increases, postal fees stabilize, and retailers boost catalogs – not much short term hope remains. One would assume the manufacturers are close to cash cost and, therefore, for survival ‘ have found the floor’.

StoraEnso Makes Loan to NewPage

NewPage is negotiating for a loan of $575million from StoraEnso. Note, StoraEnso already owns nearly 20% of NewPage (Cerberus Capital Management owns the balance). Recall, in 2007, NewPage purchased StoraEnso’s facilities in Wisconsin Rapids, Biron, Whiting and Stevens Point.

Black Liquor Credit Helps End User

The black liquor tax credit (a result of the Obama administration energy package) is driving down paper prices, according to NewPage, North America’s largest maker of coated paper. They claim the average selling price for coated paper probably declined by $40 to $50 per ton.

Fraser Paper Announces Changes

Jeff Dutton, Fraser Papers's president and COO has appointed Jim Gehrman to the position of vice president, Sales with responsibility for all of the company's paper product sales.

More Paper Mills May Close

from RISI report
Beyond announced shuttered machines, John Maine of RISI forecasts additional 3.6M tons of closures are likely around the world. John Maine, VP - Pulp and Paper at RISI, Inc and Project Team Leader, noted, "The market for uncoated freesheet in North America has been in decline since 1999, falling 5% and 8% for the past two years, and the drop is certain to accelerate in 2009.

USA Post Office Continues to Loose Money

As we reported in past, the USPS forecasts mailing approximately 175 billion less pieces and will loose as much as $7billion for 2009. USPS continues to review cost cutting measures such as only delivering mail 5 days/week; closing offices; and future payments for retirees.

Bigger trucks requested by International Paper

In order to cut costs and become more efficient delivering more goods in fewer trips, International Paper Company is pushing to allow bigger trucks on U.S. highways over the objections of road-safety groups. This would keep shipping costs down for all companies that ship full truck loads, such as Coy Paper Company.

Paper Distributor Xpedex to buy Gould Paper

Gould Paper (Canada), Ltd., a subsidiary of privately held Gould Paper Corporation, headquartered in New York City was sold to xpedx, a business of International Paper. Gould Paper (Canada) is distributor serving western Canada .

After 174-Year Run Michigan Newspaper Closes

The last edition of The Ann Arbor News will be printed this week, ending its 174-year history of delivering the news to Michigan's fifth-largest city.
The Ann Arbor News will be replaced with a website, AnnArbor.com, which will also produce a print edition twice a week.

Gannett Shuts Down Plant

Gannett Media is closing a printing and production plant by September in Wisconsin. The plant currently prints the Fond du Lac Reporter. Production of that paper will be shifted to Gannett's Appleton, WI, facility.

NY Times Reports Profit

After all the depressed news we report on the newspaper market, the New York Times reported a profit of $39.1million for the quarter (up from $21.1 million last year - and up from a loss of nearly $75million 1Q09). Although advertising revenue continues to trend down, the company has been successful in aggressive cost cutting. The company reported a 31.9% decline in ad dollars last quarter, while circulation rose 1.5% (due to increase in price). One important note, even the NYT internet ad dollars fell last quarter (down 4.3%).

Coy Paper now on Twitter

If you enjoy reading these current releases, Coy Paper Company LLC in now updating the company's Twitter account daily with all the current trends on the Pulp and Paper Industry. You may wish to follow the very latest at http://twitter.com/CoyPaper.

Stora Enso Announcing it will Close Mills

Stora Enso, largest papermaker in Europe, will stop production at unprofitable mills as demand and pricing for paper remains weak. In a related announcement, UPM-Kymmene Europe’s second- largest papermaker, is also reducing capacity in Finland for the same reasons.

Advertising Forecast to Fall for September Publications

September issue magazine ad pages totals are beginning to be revealed. Most numbers are down versus September of 2008.
Conde Nast ad pages in W declined 53% Allure fell by 52%, Self by 51%, Glamour by 42%, Vogue by 37%, Details by 35%, GQ by 32% and Teen Vogue by 32%.
Hachette Filipacchi announced Elle’s ad pages down 21%.
Hearst reported Harper’s Bazaar advertising pages fell 23-26% and Cosmopolitan 18%.
Time Inc.’s Essence ad pages decreased by 16%.

Another Large Coated Woodfree Paper Machine for Asia

Moorim Paper in Ulsan, South Korea ordered a 430,000-450,000 ton per year coated woodfree paper machine. The unit will be supplied by Voith Paper and is scheduled to start in June of 2011. Half of the production will be sold domestically and half exported to the U.S., Europe and to other countries in Asia.
Just last week, Shandong Huatai ordered a 500,000TPA coated and uncoated woodfree machine, which the company plans to install in Shandong, China and start in the first quarter of 2011.

Pulp Prices Increase

Tembec announced to all its customers that they will be paying an additional $30/ton ($730/ton) for its Northern Bleached Softwood pulp. This is effective immediately. The increase includes exports. Many of Tembec's competitors are forecast to follow this increase.

Canadian Printer Exists Bankruptcy

After one year operating under Chapter 11, Quebecor World announced it will exit bankruptcy protection. The company secured $800million in financing. The new name of the printer will be World Color Press.

2009 Mid-Year Economic Report for Tag & Label Industry

notes from a report by Jack Kenny
Label & Narrow Width Association staff conducted a survey, converters reported a mixed bag of results. While most commented on sales declines as deep as 30 percent a few boosted increases as high as 50 percent. Profits were down for most, but up for others. Printers vented strongly against price increases by material's suppliers. The majority of them said they were unable to pass along those increases to customers, instead focusing on internal changes to reduce operating costs.
Yet the companies that buy labels still must buy labels, and they have been keeping the industry pumping along. Competition, by all accounts, is more fierce than ever. Clearly, converters directly tied to industries such as the automobile market continue to be hurt the most.

Containerboard Market sees Some Hopeful signs

Deutsche Bank reported stabilized pricing and recovering volume trends
prices have dropped $70-80/ton off last autumn's cyclical peak. However, prices were reported stable in June and appear stable again in July. Moreover, most industry players remain reasonably profitable at current price levels, despite a sharp drop in volumes. Industry consolidation, a proactive approach in managing supply & avoiding inventory overhang, and a weak US Dollar have all played a role in this performance. Additionally, domestic and export volume trends are recovering. June box numbers represented a first real sign of domestic volumes starting to improve.

Magazine Mergers Slow Down

There were only 129 media transactions reported for the first quarter of 2009, down 36 percent from the first quarter of 2008; values, meanwhile, plummeted 91 percent to a combined $1.3 billion.
The second quarter did not fare much better and most transactions were a result of distressed situations. Market valuations have been under pressure due to the lack of debt capital and a general perception of the M&A market as being a ‘buyer’s market’. The largest issue facing magazine M&A is the lack of senior bank financing.

Cox Enterprise Sells Three Newspapers

Cox Enterprises has sold three of its papers in Texas and Colorado. The Waco Tribune-Herald went to the Robinson Media Co. The Daily Sentinel and The Nickel went to Grand Junction Media (owned by Seaton Publishing). Cox is still seeking buyers for its newspapers in North Carolina and Texas including the Austin American-Statesman. Review other releases by Coy Paper for additional market information on the News Paper industry.

Fraser Closing Pulp Mill

Fraser will close its pulp mill in Edmundston, New Brunswick. The company must now buy pulp for its 475,0000 ton per year uncoated freesheet and mechanical specialty paper mill in Madawaska, Maine. Fraser filed for bankruptcy on June 18 as reported by Coy Paper earlier..

Forecast for Printing Industry

The forecast is for print advertising to fall 22.8 percent to $9.8 billion between 2008 and 2010 but will rise 14.3 percent to $11.2 billion by 2013, according to PricewaterhouseCoopers. However, circulation spending will continue to fall to $8.4 billion in 2013, down from $9.7 billion in 2008.
But a number of individual segments, including b-to-b publishing (-3.3 percent) and consumer magazine publishing (-1.7 percent) are expected to decline.
The current economic slowdown has acceleration digital migration. The report went on to comment on digital spending continuing to be the industry’s main source of growth, with revenues accounting for 25 percent of total sales in 2013—up from 17 percent in 2008.

Obama administration Reviewing Tax Credits

The Obama administration continues to review the enormous tax credits the pulp and paper industry is enjoying. The new found money (which is badly needed) was discovered when executives in the industry learned that by adding diesel fuel to the black liquor already recovered and reused in the paper making process – the industry is entitled to the alternative fuel tax credit.

RISI names top 50 Paper Executives

The annual RISI ‘power’ list of paper executives was recently published. Many from Asia make the list.
Top 10 include
1 Jose Luciano Penido / Votorantim Celulose e Papel (VCP)
2 Chen Hongguo / Shandong Chenming Paper
3 John Faraci / International Paper
4 A J Devanesan / ARIL
5 Jose Honorio / Portucel Soporcel
6 Dr Wolfgang Palm / Palm
7 RR Verderah / BILT
8 Teguh Ganda Wijaya / APP
9 Duncan Pollard / WWF
10 Cheung Yan / Nine Dragons Paper
Notable mention at #50 was the Christian Church – the bible is the best selling book of all time. An estimated 100 million copies are sold every year.

June Figures Out for Paper Industry

The American Forest & Paper Association reported early estimates for June paper shipments in the U.S. as follows: coated mechanical shipments fell 17.7% in June, as compared to June 2008, and declined 33.5% year-to-date, as compared to the same period last year. Coated freesheet (woodfree) shipments were down 23.9% in June and 29.3% year-to-date. Uncoated mechanical shipments decreased 30.3% for the month, 29.7% year-to-date. Uncoated freesheet (woodfree) shipments dropped 16.7% in June and 15.6% year-to-date.

CEPIFINE Reports Decline in May Woodfree Paper Shipments

report from CEPIFINE
The Association of European Fine Paper Manufacturers announced a 24.3% decrease in European coated woodfree paper shipments in May, as compared to the same month in 2008. Year-to-date shipments fell 26.6%. Exports declined 43.1% in May, 46.8% year-to-date. CEPIFINE reported uncoated woodfree paper shipments were down 16.1% in May, 17.4% year-to-date. Exports, however, were up 3.5% for the month, but fell 15.8% year-to-date.

Magna Forecasts 2009 Ad Revenue Decline

Another reference on the advertising revenue for 2009-
Interpublic Group’s Magna Global, the second largest owner of advertising agencies in the U.S., has predicted that ad expenditures will fall 14% in 2009 and not recover until late 2010. (Competitor ZenithOptimedia Group, a division of Publicis Group, forecast a decrease of 10.6% for the U.S. in 2009.) Magazine advertising revenue was projected to decline 18% this year, continuing to fall at a compounded annual basis of 3.3% per year from 2009 through 2014. Magna forecast growth in direct mail, however. Though the sector is predicted to loose 11.2% in 2009, it is seen as increasing 2% annually between 2009 and 2010.

More Bad News for Coated Papers

Shipments and pricing remain depressed for publication coated papers. Most buyers report prices fell $15/cwt in June (note, May also saw $15 decline - April down too). Printers report reduction in orders BUT, also they trimmed of inventory - this should help - but year to date demand is down approximately 35%. The catalog season should help.

Magazine Ad Revenue Falls 21% in First Half

As reported by MediaWeek July 10,2009
Magazine ad revenue tumbled in the first half of 2009 as the recession continued to take its toll on marketing spending, according to new figures from Publishers Information Bureau, a service of Magazine Publishers of America.

Rate-card reported ad revenue declined 21.2 percent to $9 billion on a 27.9 percent decline in pages in the first half, reflecting declines across the 12 categories that make up more than 85 percent of total magazine ad spending.

Categories seeing the sharpest declines were finance (down 48.8 percent), auto (off 47.8 percent) and retail (down 34.2 percent).

The scant good news: within the broader ad categories, there were upticks in ad spending for certain food products; soaps and hair products, which benefited titles with a focus on lifestyle, fitness and celebrities.

McGraw Hill may sell BusinessWeek

The struggling BusinessWeek Magazine is looking for a new owner. This is the last of McGaw Hill’s portfolio of magazines. Recent circulation is slightly under 1million and advertising pages has fallen 37% so far this year. Given the fact the publishing industry is doing poorly – school is out as to who might have the cash to purchase BusinessWeek.

Canadian Government asking Catalyst Paper for Taxes

Catalyst Paper has fallen behind on paying its taxes to four of Canada’s municipalities. The government is demands it must pay its full taxes.

Maine Stronger Paper Producers

Bangor Daily News recently released an interview with Keith Van Scotter, the CEO of Lincoln Paper and Tissue. He commented on the paper industry and specifically which facilities in Maine will survive. His picks included Verso of Jay and Bucksport – producer of supercalender and coated publications papers; SAPPI in Skowhegan and Westbrook – producer of coated free and technical papers; New Page of Rumford – producer of coated papers; and of course his mill Lincoln (in Lincoln)– producer of tissue paper.

Kruger Shuts Down Coated Machines

Kruger will shut down three machines and two coaters at its Trois-Rivieres mill in Quebec. The machines had a capacity of approximately 230,000 TPA of coated publication papers. Newsprint and supercalendered paper production will continue at the mill and Kruger will also keep making approximately 258,000 short tons per year of coated mechanical paper at its Wayagamack mill.

Buyers say no to Newsprint Price Increase

Beyond the struggle for revenue that most newspapers currently battle, purchasing departments site resistance to a price increase for the paper - one of their biggest costs. Most confirm that even though the trend continues for decreased readers and all agree supply from newsprint producers is down - but they have been unsuccessful reducing inventory. That is, demand for newsprint is falling faster than manufactures can curtail production.

International Paper sees Pulp Demand Growth

International Paper Co. Chief Executive Officer John Faraci , stated he expects a “modest” increase in pulp demand this year as Chinese orders make up for declines in most other markets, “Most of the growth is being driven by demand in China,” Faraci said. The growth will be in the “single digit” percentage range, he said.

Will the Newsprint Increase Happen?

AbitibiBowater still not joining others in advancing newsprint price increase - I would assume without AbitibBowater - the August increase is a goner!

Advertising Dollars Remain Depressed

Nielsen’s Global AdView Plus reported that ad expenditures decreased by 7.2% for the first quarter of 2009, as compared to the same period last year. Spain, with a 28.2% drop in ad spending, led the way in making Europe the hardest hit region. Sales in the U.S. fell 12.7%. The Asia Pacific area announced a decrease of only 2.3%. Magazine advertising was down 17.4%, 22.2% in North America, and newspaper ad spending fell 9.1%.

St Mary's Paper Continues Shut Down

We reported earlier this year, St. Mary’s Paper was closing two of three paper machines in their Sault Ste. Marie, Ontario mill in May. These machines remain curtained. The company produces supercalender paper.

Top Print and Online Catalogers

Most catalogers report flat sales for 2008 versus 2007, top print and online catalogers include (account/catalog sales)-
Dell $51,936,000
Thermo Fisher Scientific $10,500,000
IBM $9,076,000
Staples $8,900,000
CDW $8,100,000
Henry Schein $6,400,000
Wesco $6,110,000
United Stationers $4,986,900
OfficeMax $4,310,000
Office Depot $4,145,700

Will Paper Industry Level Off?

After six straight quarters of paper price increases in 2007 and early 2008, we than witnessed aggressive discounts through the first half of 2009. Many now are beginning to think that inventories are low, manufacturers have curtailed production, and the catalog season is about to begin. If the paper companies maintain a policy of balancing supply with demand, ship dates and prices could advance. Perhaps by Spring of 2010?

Report on Paper Industry

Paper Industry Magazine just published a survey on the paper industry and highlights included
Paper and Paperboard capacity has contracted 7.3% since its 2000 peak.
-18 USA mills were permanently closed in 2008; shuttering 27 paper machines – 14 more machines were shut down at other mills
-In 2007, 17 mills and 38 machines were permanently closed.
-Paper and Paperboard are forecasted to decline another 1.8% in 2009

Magazine Closings Outpaced New Launches

Magazine closings outpaced launches in the first half of the year as publishers were squeezed by the advertising recession. A total of 279 folded while only 187 made their debut.

Top Book Publishers

I was doing some research of the Book Publishing Industry, a few notes of interest -
Of the 2600 book publishers in USA, the five biggest command 45% of the market share
15.5% Pearson
9% Houghton Mifflin
9% McGaw-Hill
6% Scholastic
5% Bertelsmann

Major American Book Segments

Major American Book Segments
The major Book Segments by revenue include
71% Trade Book
10% Professional Books
9.5% Religious Books
6% Elementary / High School Books
2.5% College Books
1% University Books

Paper Industry Continues to Recycle

The AF&PA confirmed that in 2008, the paper industry recovered 57.4%, up from 56% in 2007. The trend has been up for years; however, the current recession is allowing for less paper demanded and therefore, less paper will be available. The value of recycled paper has also declined. Note: paper and paperboard capacity in USA has decreased nearly 1% to 96.3million tons. AF&PA forecasts capacity will drop another 1.8% in 2009.

Domtar's Pulp Mill to Restart

Following a seven-week shutdown, Domtar is restarting its 398,000TPAnorthern bleached hardwood market pulp mill in Woodland, ME. All of the Woodland NBHK output for at least the next three months has been sold to China.

China’s Largest Newsprint Producer will Produce Coated

Shandong Huatai Paper, China’s biggest producer of newsprint, has ordered an 800,000 TPA coated woodfree paper machine from Metso Paper. The machine, will be 9.9 meters in width with a design speed of 2,000 meters per minute. A late 2010 start up is planned.

Newsprint Market in Confusion

As reported in our past releases, newsprint prices have fallen around $195/ton or 28% so far this year. Demand has also steadily declined, but, Kruger, Catalyst, Tembec, and White Birch announced a $50/ton increase for August shipments, despite the weak market.
Newsprint demand in North America fell nearly 29% in May – vs. 2008 and 31.7% so far this year vs at this time in 2008. Furthermore, consumption at US dailies fell 26% and paper mills only are operated at 67% of capacity (vs. 94% in May 08).
Note: we continue to report producers continue to take downtime (693, 000tons or 27% of North America quarterly capacity during 2Q2009), the reality is that more permanent closures are
inevitable.

USPS Reports Loss for May

The U.S. Postal Service reported a $677 million net loss for May which yields a year-to-date loss total of $3.4 billion. Also, reported was a 20% drop in overall volume for May and a 13% decline year-to-date. Periodicals volume dropped 13% for the period and 7% year-to-date.

Gannett Reports more Challenges

The Gannett Co. confirmed it will reduce its workforce. The company is preparing to lay off more than 1,000 employees as the largest newspaper publisher's workforce continues to shrink along with its advertising sales. Note, we reported in past that Gannett reduced its workforce 3,600 from 2007 to the end of 2008.

Vibe Magazine Folds

Vibe, a staple of music journalism since 1993 and one of the most influential publications has folded. The company was unable to secure financial backing, or to restructure its debt. Declines in the music industry and in advertising worked against the business. It had been a tough year for Vibe, which faced a steep drop in ad pages and circulation. The magazines circulation base was 600,000 from 800,000. Vibe also had reduced its frequency from monthly to 10 times a year.

Kimberly-Clark Slims Down

The maker of Kleenex tissues, Huggies diapers and many other household items plans to cut 1,600 jobs, of its global work force, as it slims down in the tough economy.
Kimberly Clark does not plan on closing any plants.
Shoppers have cut back on spending because of the recession, high unemployment and the housing downturn. Meanwhile revenue, which had been steadily rising, began to fall late in 2008.

Top Tag and Label Converters

Although the USA tag and label segments fared better than most in the Pulp and Paper industry, with 2008 growth at 2.1% - this was down from forecasted 5%. Many believe this segment will begin to witness consolidation. Top ten converters include-
RR Donnelly
Avery Denison
CCL
WS Packaging
Fort Dearborn
Multi Color
Nashua
York
Spear
MPI Labl

Erving Paper Operates under Chapter 11

The Erving Paper Company, which has a 40,000TPA operation in Massachusetts, continues to produce recycled tissue under Chapter 11. Management sited increased competition, and an underfunded pension plan as reasons for this protection.

More Downtime for Catalyst

Catalyst Paper will extend downtime at its recycled newsprint mill in Arizona by an additional 10 days. Catalyst’s Snowflake mill consumes more than 480,000 tons/yr of recycled paper that would otherwise end up in landfills

Chicago Tribune Makes Changes

The Chicago Tribune Magazine will cease as a weekly publication after July 28, as part of a series of changes to the Sunday paper to cut costs.
In a note to readers, Tribune editor Gerould W. Kern said the magazine will "appear as a series of themed magazines throughout the year—roughly once a month beginning in September."
Kern said declining advertising and high cost made weekly publication "unsustainable."

International Paper certifies most Plants with FSC

International Paper announced the expansion of its Forest Stewardship Council (FSC) Chain-of-Custody certification to include a majority of its U.S. pulp and paper mills. The company will be the largest FSC manufacturing platform across the globe..
With its expansion, International Paper's FSC Chain-of-Custody certification worldwide includes: three Coated Paperboard mills and its six converting facilities; four Pulp operations; six Industrial Packaging mills; seven Printing Papers mills and its sheeting operations; and a number of Foodservice and Shorewood manufacturing facilities.

Less Discounting for Uncoated Free Sheet

Although Coy Paper Company continues to witness price corrosion for Uncosted Free, the price declines appear to be leveling off. So far, for June, we only hear $5-10/ton discount from May. This results in 50lbs roll price $810-855, with spot pricing slightly below $800/ton,. Cutsize office paper transacts $120-1080/ton (spot below $1000). The two major producers of this grade, International Paper and Domtar, continue to take down time. May demand was down nearly 15% from May of 2008.

Containerboard Prices Remain Stable

Recent reports on market pricing for Containerboard point to staple pricing of approximately $540/ton for June shipments. The major manufacturers are closely monitoring inventory levels (actually down 96,000 tons) and lower production to keep pricing in check. Further, industry analysist Mark Wilde comments, additional permanent closures appear inevitable given the the weak domestic demand and estimate of over 4Million tons of excess capacity. He also reported box shipments declined 10.7% .
Producers continue to take extensive downtime. Coy Paper estimated 1.4Million tons in Q2
(1.7million tons in Q1). Smurfit recently announced 524,000 downtime at its Jacksonville, FL plant.

Tembec Cancels Downtime

Tembec canceled plans to take market related downtime at its Skookumchuck pulp mill in Canada. The mill was to be shutdown for a two-week period beginning June 29. Reversed decision was based on modest improvements in pulp pricing.

Crain’s New York Business Reduces Issues

Crain’s New York Business is reducing its print issues to 46 times this year from 51. They join the other publications on searching for efficient ways to cut costs.

Reader’s Digest Makes more Changes

Reader’s Digest Association will reduce the publication frequency of its magazine to 10 times a year from 12 beginning with the February 2010 issue. It will also reduce its rate base to 5.5 million from 8 million over the next 10 months.

AF&PA Reports on First Quarter

The AFPA released figures showing that the value of pulp and paper produced by its mills in the first quarter was $292.1 million versus $373.2 million in the corresponding period last year – a 22% decline.

Fraser Paper Seeks Bankruptcy Protection

Fraser Papers Inc. announced restructuring for both Canada and the United States. Fraser said weak lumber and pulp markets have led to losses and offset profits in its paper business. The company also cited a pension-funding shortfall as a reason for the Chapter 15 bankruptcy filing. The company's two paper mills in Madawaska, Maine and Gorham, N.H. will continue to operate without disruption, manufacturing specialty paper products for existing customers.

Newspapers looking at New Models

The forecast for printed newspapers continues to be doom and gloom and many publishers are exploring alternative business models. Most now offer the news in an electronic version – for free. This will change. Newspapers are reviewing applications that allow a charge to end users. The companies are also designing personalized emails that forward focused news along with banner ads and RSS feeds for additional fee based programs.

More Newspapers Join Yahoo

Five more newspapers have joined the Yahoo Newspaper Consortium, according to Reuters. The new additions bring the consortium to 814 newspaper members, which Reuters says accounts for 51 percent of all Sunday newspaper circulation.
The Yahoo alliance has been one of the few bright spots for newspapers. A recent estimate by Ad Age found that the two-and-a-half year-old consortium sold $50 million in Yahoo ad inventory, with about 'several million' dollars in sales being added each week."
FYI. 592 newspapers in the consortium rely exclusively on Yahoo's HotJobs for help-wanted ads.

Web Browser's Ranking

Since my other company is Paper.com, I thought I would share recent ranking of web browsers. In order of popularity-
Microsoft – Internet Explorer
Mozilla Firefox
Apple Safari
Google Chrome
Netscape
Opera
Other
AOL