Newspaper cost structure

December 10, 2008

Newspapers by istockphotoBeing a TV person, I’m curious about the cost structure of print newspaper operations. Over at the Monday Note, Frédéric Filloux writes:

In a typical operation, the biggest costs are industrial ones: around 25%-35% for paper and printing; another 30%-40% for distribution; around 18-25% for editorial; the remaining 10-15% are for administrative and marketing expenditures.

It varies from country to country but we can safely assert most of the costs — at least 60% — are industrial in nature. Evidently, that part disappears when going online.

Robert Ivan updated my query from a previous post about print costs making up 35% of newspaper cost structure. Here’s how he got his number:

“Going totally online eliminates the cost of paper and circulation delivery and radically reduces production cost. By my back-of-the envelope calculations, based on Inland Press survey data, that might be about 35 percent of expenses.” —from Dec. 2007

“Paper and production costs account for nearly 25% of total expense. Circulation sales and billing together with fleets of trucks and delivery employees throwing papers on the front lawn account for 10% more.” —from March 2008

I think the big disparity in our distribution numbers come from figuring in Circulation revenues. which typically accounts for 30% to the top line. In the case of NYT Q3 2008, circulation represented 32.8% of total revenue. Production costs however consumed ~48% of total revenues. The difference is roughly a 10% cost, or in this case 16%.

This leads in to a whole other problem that newspapers are fighting with. Newspapers are losing money delivering newspapers (circulation wise). June 2002. They relied on print advertising to make up the difference and it worked until now.

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