AP cuts rates 20pc to help bottom lines

ASSOCIATED Press has promised to cut its rates by 20 per cent to help newspapers struggling in the economic downturn and with the increasing pressure from the Internet.

The move comes just a few months after AP reduced rates by 14 per cent for 180 American newspapers.

The not-for-profit company announced at the recent conference of the Newspaper Association of America that it would reduce rates further but stopped short of saying how deep it would cut.

Currently, the company makes a US$25.1 million profit from a revenue of a little more than US$740 million, which in the scheme of things does not leave much margin for error.

To avoid going into the red itself, AP may have to look at further increases in efficiency to be able to afford a 20 per cent reduction.

Its chairman, Dean Singleton, has said the rate reduction would vary, depending on the volume of material taken from AP.

It is not clear that rate reductions will be made available outside of the United States. Newspapers across Europe are hurting, too. 

Its national and metropolitan titles may not be attracting the threatening headlines and closures of US counterparts, but regional and local newspapers are closing at an alarming rate.

Some 57 local newspapers have closed in Britain alone.

In France and Germany, most of the major metropolitan and national newspapers have reported falling advertising revenues of 20 per cent and more.

This region is fairing only slightly better. Ad revenues for Fairfax Media in New Zealand have slumped 29 per cent, according to figures to December 31, 2008. 

Australian revenues have held up well but are said to be struggling right now. The quarterly numbers to March 31, 09, will be an important milestone for its local industry. 

The CEO of Singapore Press Holdings, Alan Chan, recently reported his company still in profit, but advertising in his publications fell a combined 19 percent. The biggest increases in revenue came from SPH’s property portfolio.

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