Murdoch hints at price rises for newspapers

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Rupert Murdoch, chairman and chief executive of News Corp, hinted yesterday that higher newsprint costs may force up the cover prices of titles in his News International stable, possibly signalling the end of the vicious price war in the British newspaper industry.

Addressing a news conference at the World Economic Forum in Davos, Switzerland, Mr Murdoch said that 30-40 per cent rises in the cost of newsprint had significantly altered the "economics of newspapers".

"If you're in mass media you need to be able to get to the public at a fairly inconsequential price. I believed that newspapers were too expensive in London, so I reduced the price. With the cost of paper going up now, that will probably have to be corrected to some extent," he said.

However, Derek Terrington, media analyst at Kleinwort Benson, said: "It's a bit optimistic to call it the end of the price war. Without the cost of newsprint rising we wouldn't be talking about it at all."

If Mr Murdoch does act, he is expected to focus on the Sun, which now sells at 22p - 5p cheaper than its nearest rival, the Daily Mirror. Colin Tennant, of the brokers UBS, estimated a 3p increase in the tabloid's cover price would raise £45m; 5p on the Times would raise £10m.

Analysts say there is little short-term prospect of a price rise at the Times, placing further pressure on rival broadsheets.

Fierce discounting began in July1993 when the Sun dropped its cover price from 25p to 20p, the Times following in September with a 15p cut to 30p. The Times' circulation moved ahead quickly from 363,000 to 517,000, prompting the Daily Telegraph to slash its price from 48p to 30p last June. Two days later the Times responded with a further 10p cut to 20p. The Independent was forced to follow two months later, reducing its price to 30p.

Despite circulation gains the price cuts cost News International about £45m a year,prompting the company to raise advertising rates by 15 per cent last August.

Last October the Office of Fair Trading rejected complaints from the Independent that the Times and Daily Telegraph were trying to drive it out of the market with predatory pricing.