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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