THE latter half of 1994 saw the start of hard times for the newspaper business in Hong Kong. The soaring cost of newsprint and a fall in advertising income put tremendous financial pressure on the 20 or so daily newspapers competing in the local market. In the past 13 months, four newspapers have closed. The Modern Daily went first, in November last year, followed a couple of months later by the 70-year-old Wah Kiu Yat Po. Last weekend saw the demise of Express News and Hong Kong United Daily News. The last two dailies are generally seen to be casualties of the price war that started 10 days ago among local Chinese-language newspapers. However, while the ongoing circulation battle may have precipitated their closure, both papers had problems of a more fundamental nature. Express News had been in financial difficulties for some time. According to one of its directors, the newspaper had lost $200 million since 1991. One of the most popular dailies during its heyday in the mid-1970s, in the last 15 years the paper had lost a considerable proportion of its readers to more innovative competitors. Despite some admirable rejuvenation efforts in recent months, it was unable to attract new readers and boost its circulation. Media people were therefore not surprised at the decision of Express News to suspend publication, even if many of them had not expected it to come so soon. No doubt the folding of Taiwanese-funded Hong Kong United Daily News was also a commercial decision, although political as well as economic factors may have been taken into consideration. When the paper was launched in Hong Kong in 1992, its parent group in Taiwan had an eye on the mainland market. For various reasons, however, the Hong Kong paper failed to secure a satisfactory circulation in the local population. Meanwhile, more recent assessments of Beijing-Taipei relations and the political climate in China must have convinced the Taiwanese investors that it was more difficult than they had thought for a Taiwanese newspaper to enter China. This disillusionment, together with economic problems at home, caused the Taiwanese group to abort the ambitious plans to establish their newspaper here. The price war prompted the two papers to take decisions which otherwise could perhaps have been postponed for a few months. But even if all the Chinese-language newspapers agreed to stick to a uniform cover price, it is unlikely that all of them would survive the current economic downturn. The price war is a result rather than the cause of bitter competition, in an adverse period when companies are cutting their advertising budgets and ordinary people are looking for ways to economise on their everyday spending. We are witnessing the relentless and effective forces of the free market at work. Newspapers are businesses, and must obey the same economic rules as other businesses do. Large department stores and restaurants have been hit by the slacking economy and closed down. There is no justification for the newspaper industry being specially protected. MARKET competition benefits consumers. Readers are now paying less for the most popular Chinese-language dailies, while papers that have decided against cutting their price are working hard to improve their quality and maintain their competitiveness. It is a premature judgment that states the present form of competition will lead to a monopoly in the newspaper market and harm the long-term interests of consumers. The Consumer Council has frowned before on the uniform price of Chinese-language dailies, and criticised the Newspaper Society for forming a cartel and preventing competition with its price agreement. It is rather strange, now that the agreement has been broken, that the chairman of the council is worried about the competition and suggests the Government should intervene. We have every reason to lament the loss of the two papers, both of which made serious efforts to contribute to our multifarious media business. Their closure reminds us, if that is necessary, that newspapers are subject to the same market forces as other commodities.