Newspaper price war takes to TV (CORRECTED)

CORRECTION (PUBLISHED 28 JUNE 1994) APPENDED TO THIS ARTICLE

A NEW phase in Fleet Street's price war opens today with several newspapers spending heavily on television advertising. Meanwhile, the Independent confirmed it was asking the Office of Fair Trading to intervene.

The Daily Telegraph, which cut its cover price from 48p to 30p last week, plans to spend an estimated pounds 800,000 on television advertising this week. It has bought a number of 20-second slots at short notice and at premium prices. The Times, which reduced its price of 30p to 20p in response to the Telegraph's move, has also booked television space - at a cost of between pounds 200,000 and pounds 300,000 - this week.

Although the middle-market titles have tried to keep clear of the price war, the Daily Mail is spending pounds 650,000 this week on an advertising campaign, centered on its current mortgage game. Industry analysts say that may be an indication of mounting pressure.

The war has only slightly boosted the sales of the Telegraph and the Times. Before the cuts, the circulation of the titles was, respectively, about 990,000 and 515,000 a day. By the end of last week, they were estimated by industry sources to be 1,020,000 and 530,000.

The Independent and the Guardian have, according to these estimates, been only slightly affected by the cuts. The Independent, which cut its price from 50p to 20p for one day last week, was estimated at the end of last week to be selling about 270,000, the same number of copies as before. The Guardian is thought to have dipped slightly by about 10,000 copies to 400,000.

Analysts believe this week will be critical in showing which titles will be long- term losers in the circulation contest.

The Telegraph and the Times, which first reduced its cover price to 30p nine months ago, are both making large losses because of their reduced cover prices, and share prices in most newspaper groups have slumped since the cutting started.

Andreas Whittam Smith, editor of the Independent, said yesterday that no decision had been taken on the future pricing of the paper, but added: 'We are naturally watching circulation very closely.' He confirmed that the Independent is to make a new submission to the Office of Fair Trading to ask for its intervention on the grounds that the Times and the Telegraph are guilty of predatory pricing.

The OFT rejected a claim made by the Independent last October that the Times' decision to initiate its first cover price cut was commercially unfair.

CORRECTION

In yesterday's Independent, it was stated that the Daily Telegraph was losing money as a result of its recent price cut. While it is estimated that annual profits could fall by up to pounds 40m as a result, the Daily Telegraph is not making losses.