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Most Chinese-language newspapers will today raise their cover prices HK$1 to HK$6, ending a five-year price freeze.

Since September 1994, newspapers have either maintained or cut cover prices, following the 1995 launch of Apple Daily and the onset of consumer price deflation in the wake of the 1997-1998 Asian financial crisis.

'Since the cost of newsprint has substantially increased from about US$500 a tonne to US$660 in the past 12 months, the increase is well expected,' said Vickers Ballas investment analyst Tommy Ho Kin-tak.

However, industry players said the price rise had been initiated by news vendors rather than the newspaper proprietors.

By convention, the newspapers received HK$3 out of the old HK$5 price per copy sold, with the remaining HK$2 split between distributors and vendors. The vendors got about HK$1.70 per copy.

Hong Kong Newspaper Hawkers Association vice-chairman Tang Yup-ming said the rise was 'the product of negotiation' between newspapers, distributors and vendors. Mr Tang said the vendors' return would increase to about HK$2.10 per copy with the rise in cover price.

Analysts said the increase was unlikely to reverse poor sentiment towards the stocks of Chinese-language newspaper companies.

'Most of the newspapers' revenue comes from advertising. Raising the cover [price] does not help much,' Indosuez W I Carr analyst Alan Wong said.

Since newspapers had to share the cover price revenue with vendors, the increase was relatively insignificant to their finances, he said.

Investors appear to share that view. Of the four listed Chinese-language newspaper companies, three fell yesterday ahead of the price rise.

Ming Pao dropped 1 per cent to close at HK$1.98, Oriental Press fell 3.16 per cent to 92 HK cents, and Graneagle Holdings, which owns the Hong Kong Daily News, lost 5.56 per cent to close at 1.7 HK cents. Sing Tao remained unchanged at HK$1.12.

Meanwhile, Next Media, the listed arm of Jimmy Lai Chee-ying's Next Media Group, fell 6.94 per cent to close at 33.5 HK cents.

Next Media is subject to frequent speculation that Mr Lai will inject his privately owned Apple Daily into the company.

Newspaper stocks have been languishing since the market turned down earlier this year.

For example, Oriental Press has slumped 70 per cent since hitting a high of HK$3.062 in February. SCMP Holdings, which publishes the South China Morning Post, closed at HK$5.40 yesterday, down 38.63 per cent from its February high of HK$8.80.

Mr Wong attributed the downturn to the bursting of the technology bubble.

Media stocks had been perceived as new economy companies since they provided content to Internet-related businesses, he said. An overcrowded market also contributes to the gloomy prospects.

'The industry is serving a population of about 6.5 million, but there are about 10 players here,' Mr Wong said, pointing out that even international cities such as New York had only three to four.



Chinese papers costing an extra $1 today