Newsweek Spending Millions in Paper Money

Newsweek unveiled, among other things, a multimillion-dollar investment in upgraded paper this week just when the coated-paper industry most needed good news.

In its effort to recast itself as an upscale title, the iconic but money-losing magazine introduced its new design this week to, at best, mixed reviews. But everyone seemed to notice the improved paper in what Folio: magazine is calling “The Newsweek”.

Newsweek’s U.S. edition switched from 30# LWC and SCA+ to 36# coated #4 as its main body stock, reliable sources tell Dead Tree Edition. For those of you who aren’t paper geeks, that means a 20% increase in the paper’s weight and a substantial gain in brightness and print quality.

It also means about $3 million more in paper and postage costs during the next 12 months, excluding the impact of circulation reductions, Dead Tree Edition estimates. Even after Newsweek gets its paid circulation down to its target of 1.5 million (from the current 2.6 million) in a year or two, the paper upgrade will cost it at least $2 million more than if it had stayed on 30#. (Key assumptions: Average of at least 72 pages per issue to be economically viable; paper cost per page increased 15% with the upgrade because of a slightly lower price but a large yield loss; combined postage and freight cost of 24 cents per pound on U.S. subscriber copies.)

There wasn’t much other good news for the North American coated-groundwood paper industry this week: The official April statistics came out, showing that one-third of capacity was idle and that sales were down 42% versus April 2008. And even Newsweek's increased paper usage is only temporary -- until it can start slashing its circulation significantly.