August 29, 2018

The newspaper industry won an important victory in the International Trade Commission today, voiding so-called "dumping" penalties that had raised the price of Canadian newsprint as local papers are facing huge financial challenges.

In essence, the commissioin reversed a previous ruling on a complaint brought by a single U.S. paper company called NORPAC that claimed unfair competition from its Canadian rivals.

Paul Boyle, who has led the News Media Alliance's lobbying on the question, hailed the action. 

But in an email to Poynter, he cautioned: "It is hard to gauge what will happen now that the newsprint tariffs are reversed. We won’t have the ITC’s reasoning until September 17."

NORPAC has a right to appeal the ruling and most likely will.

Boyle added that the impact on prices will be delayed rather than immediate. And it is not even certain that big reductions in paper costs will happen at all. As with energy costs, what goes up in times of a fuel shortage does not necessarily come down when that eases.

Newspapers were joined in an effort opposing the tariffs by a wide coalition of paper users, who raised the profile of the issue in pitches to Congressional representatives.

Two separate kinds of tariffs were involved. A ruling earlier this month from the U.S. Department of Commerce left another set of penalties on Canadian paper in place but reduced the levy from a maximum of 32 percent to 20.

For many reasons, Boyle said, it is impossible to say how much of the price increase damage has been mitigated. Fifty percent? Thirty percent? Seventy percent?

That will become clearer later.

Boyle added that there is no consensus figure on how much newsprint prices have gone up this year.  One analyst's estimate put it at about 29 percent, he said.

The impact was different for different papers. Ones like the Minneapolis Star Tribune and the Tampa Bay Times, which still maintain high print circulation, especially on Sundays, felt the worst of it.

Chain papers and others further along in a transition to a mostly digital revenue base fared better.

But they too were beginning to feel the pinch. For instance, Gannett executives said in a recent earnings conference call that they had kept print costs down last quarter because they were using stockpiled newsprint they bought at pre-tariff rates.

But the situation looked worse for this quarter, the Gannett execs added, as the company's 110 papers began printing on more recently purchased pricier stock.

A common response for affected papers has been to shrink the size of the daily and Sunday editions, combining or discontinuing some sections.

And many papers had been doing layoffs in newsrooms and other parts of their operations in response to tumbling print advertising revenue (down 15 to 20 percent compared to 2017 most places). Paul Tash, chairman and CEO of the Poynter-owned Tampa Bay Times, said in a letter to readers and later in interviews with national reporters that the much higher newsprint costs precipitated his decision to eliminate 50 jobs.

Boyle had told me earlier that these tariffs could not really be blamed on President Donald Trump, who has since declared a trade war with punitive tariffs on products coming in from Canada and Mexico.

The ITC is largely independent of the administration. And at most, you could say that Wilbur Ross's Commerce Department was sympathetic to calls for higher tariffs even before Trump's actions. The Commerce tariffs and the ITC's were imposed in late fall of 2017 and early 2018.

Of course, President Trump has escalated his hostility to most news media in speeches and tweets over the last several months. It is probably fair to infer that Trump does not care much if the two forms of tariffs are hurting newspaper organizations.

"Newspapers remain a rough business, but I am glad the ITC saw the case for what it was" and ruled in the industry's favor, said Tash, who has led U.S. publishers speaking out on the problem, in a phone interview.

As for restoring some of the 50 jobs being eliminated at the Tampa Bay Times, Tash said no. At least not yet. 

"It is unlikely," he said, "especially since (newsprint) prices remain high right now."

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Rick Edmonds is media business analyst for the Poynter Institute where he has done research and writing for the last fifteen years. His commentary on…
Rick Edmonds

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