US newspapers tap readers for cash as ad spending drops

Bloomberg

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New York Times Co.’s flagship newspaper will cost $2 at newsstands as of June 1, a 50-cent increase, and subscription prices also will rise. A.H. Belo Corp. said this month it will consider more increases next year after raising the Dallas Morning News 25 cents to $1 in February.

Price increases at the Washington Post and Tampa Tribune also paid off with higher circulation revenue, a rare area of improvement in an industry that posted declines in advertising and readership in the past year. Ad sales have dropped so low that publishers said they are willing to lose some readers to get more money out of the loyal ones.

"Rate hikes will continue as long as they can keep pushing them through," Alexia Quadrani, a JPMorgan Chase analyst, said in an interview. "Circulation is relatively a positive story, but unfortunately it doesn’t do too much to offset the declining advertising."

In 2007, readers paid 35 cents for the Washington Post, less than half the current newsstand price of 75 cents, and $1 for the New York Times or the Wall Street Journal, which now costs $2.

Raising prices too far may carry unintended consequences, including driving readers to free news Web sites, said Tom Corbett, a media analyst at Morningstar in Chicago. Most publications have battled declining readership as consumers seek more news from the Internet or television.

"Especially in this environment of consumer retrenchment, if your readership is not well-heeled, highly-educated and very attracted to your unique content, there’s going to be a ceiling to your ability to raise prices," he said.