Business News

Newspapers under pressure: KBA scores with innovations

Tuesday 05. October 2010 - IFRA Expo 2010 in Hamburg

While business is slowly picking up, the global newspaper industry has still not fully recovered from the economic and advertising slump triggered two years ago by the financial crisis, which also hastened ongoing structural changes in the media marketplace and intensified competition between print and online media for dwindling advertising spend. The burning debate among newspaper publishers – is print or online the business model of the future? – finally seems to have been resolved. After pursuing a number of experimental courses they have found that printed newspapers, as an established brand, are generally a sounder base for parallel or networked online activities.

With the media landscape more closely resembling an impenetrable jungle in which information-gathering has become ever more superficial, newspaper publishers have started to exploit their manifold strengths: multiplatform competence (print, online, mobile, local radio and television), journalistic skill, editorial independence and credibility. And with today’s extensive online activities largely funded by print revenue, it follows that printed newspapers require investment, too, both in terms of content and production technology. This is the reason given by most European publishers for the recent surge in orders for high-tech newspaper presses from KBA. The US newspaper sector is a good example of what can happen when an industry fails to invest, clings to outdated technology and focuses too narrowly on the internet.
Suppliers to the newspaper industry were hit hard by a slump in investment as ad sales collapsed, and by widespread uncertainty concerning future prospects. Until 2007 the mean annual global market volume for newspaper presses exceeded €1bn, and followed a peak of €1.5bn in 2005. In 2009 it shrank to just €400m, and only modest growth is projected for 2010. There was a correspondingly substantial, double-digit drop in sales by leading vendors. Excess capacity exacerbated the situation, pushing prices down to an unhealthily low level. A Swiss vendor has already given up. Among German suppliers rumours of mergers are making the rounds.

Light at the end of the tunnel
A sharp rise in sheetfed orders since March this year resulted in a return to full production at KBA’s Radebeul plant in June after more than eighteen months of short time. June also saw an upturn in the newspaper press market, with KBA booking a string of orders from the UK, Germany, Austria, Italy, Scandinavia and the Middle East for its compact and highly automated Cortina and Commander CT. While sheetfed sales are primarily driven by unabated brisk demand in China, most of the recent web press contracts originated in Europe. As a result KBA’s market share now approaches 50%. In September a large backlog of unfilled orders allowed the group to end short-time work at its web press production plants Würzburg and Trennfeld.

Printed newspapers can score among retailers and advertisers in the media arena with creative ad forms promoting high response rates to advertising campaigns (photo: KBA) (5)
Printed newspaper aren’t dead…
Welcoming trade journalists to a press conference on the first day of Ifra, KBA deputy president Claus Bolza-Schünemann said: “The shifting media landscape that has forced the newspaper industry to consolidate and reposition, and the enormous productivity of modern web presses, have had a negative impact on sales of new newspaper presses. Even so, we look ahead with much greater optimism than twelve or twenty-four months ago. Printed newspapers are far from defunct: in most media houses they still furnish the financial foundation for online activities. However, we must all face the fact that, with a few regional exceptions, newspaper printing is not a growth market, and we must adapt accordingly. And newspapers will have better prospects than many predict if they focus on high-quality content and visual presentation combined with cost-effective production and distribution. Creative ideas can help raise print’s profile in the media arena. As a press manufacturer our objective is to assist this process to the best of our ability.”

…but are only growing in threshold economies

Christoph Müller, KBA executive vice-president for web press sales, outlined the current situation and future prospects in the newspaper sector. He pointed out that ad revenues from all types of media had not yet returned to their pre-crisis levels and that classifieds had migrated en masse to online competitors. However, many newspaper publishers had perceptibly improved their multimedia competence. According to data published by the World Association of Newspapers (WAN), between 2004 and 2009 the total global circulation of daily titles rose from 496 million to 517 million, an average annual increase of 0.8%. Dwindling circulations in mature European and North American economies contrasted with growth in much of Asia, Latin America and Africa. Ad-funded free titles also suffered during the crisis and some have vanished from the market. Even so, their total worldwide circulation in 2009 of 37 million copies was still more than twice the figure of 19m in 2004. With very few exceptions (eg India), since 2005 online competition has caused a steady decline in newspapers’ share of ad spend, particularly in mature economies, and it now averages just over 20%.
The contrast is just as great in international newspaper press markets, with continued glacial investment in North America, a noticeable upturn in Germany and central Europe and weak demand in southern and eastern Europe. In Asia, demand for new newspaper presses is slower than for sheetfed presses, to which the internet poses less of a threat. Alongside a recent contract from the Jordan Press Foundation for a KBA Commander hybrid press line there have been further projects in the Middle East and North Africa. If the global economy remains stable, Müller foresees an annual global market volume for new newspaper presses of €600m to €650m by 2013, driven by pent-up demand. While this is just 60 to 65% of the previous level, there is a growing market for second-hand press relocations, extensions and retrofits.

Greater substrate, format and ad form flexibility
In his briefing KBA marketing director Klaus Schmidt made it clear that cutting makeready times and production costs by automating manual tasks wherever technologically and economically feasible remains a prime focus in the newspaper industry. However, there is no point in automating at any price, and manual input will still be required in the future. KBA provides proven technology that delivers the substrate and format flexibility demanded today by supporting inline finishing and new, creative ad forms for newspapers, the tools for which can often be retrofitted. They include NaturalPrint, Zip’n’Buy, half covers, half flyers, four-page spreads and spadias with different ribbon widths.
Demand for newspaper presses with dryers for semi-commercial and hybrid production varies considerably from one region to another. According to Schmidt, hybrid press lines are more popular in the Middle and Far East, Scandinavia, the Benelux states and southern Europe than they are in Germany, Austria and Switzerland. This is largely due to cultural and aesthetic preferences. Last year five big Commander 4/1 hybrid presses came on stream at a new Turkish title, Haberturk; this year Canadian contract printer Transcontinental fired up four KBA Commander CT 6/2 hybrid press lines with a total of 16 four-high towers and six thermal dryers at three different locations. In the investment-shy North American newspaper market this was an impressive – and prophetic – move.

Brisk demand for compact Cortina and Commander CT
In recent months KBA’s groundbreaking compact presses, the Cortina and Commander CT, have been selling like hot cakes, particularly in Germany and the rest of Europe. KBA unveiled a single-width prototype of the waterless Cortina at drupa 2000, at a time when the printing press market was booming. The Cortina’s many unique features include automated plate changing and a four-high tower that splits down the middle at the touch of a button. In early 2005 the first double-width version went live at Rodi Rotatiedruk in the Netherlands. In autumn 2007 a wet offset counterpart, the Commander CT, was unveiled at the Main-Post in Würzburg, Germany. Since then growing numbers of newspaper publishers in what is widely considered a conservative industry have discovered the benefits of these compact press lines, and KBA now boasts 33 reference installations with a total of 166 4/1, 4/2 or 6/2 towers (84 Cortina, 82 Commander CT).
In the past four months KBA has extended its market lead still further. A major contract for four double-width Commander CT presses with a total of 22 towers, signed shortly before Ipex 2010 by Express Newspapers Group (West Ferry Printers) in the UK, was followed in the summer by orders from three German newspapers (Der Neue Tag, Weiden; Badische Neueste Nachrichten, Karlsruhe; Rhein-Zeitung, Koblenz) and one Austrian (Salzburger Nachrichten) for triple-width Commander CT presses with webs up to 2,100mm (82.67in) wide. As an early pioneer of nine-cylinder satellite presses KBA also offers 4/2 and 6/2 configurations of these, and shipped a Commander satellite press to longstanding customer Parzeller in Fulda just a few months ago. But compact presses already account for the lion’s share of web press sales at KBA, and their technological, economic, ergonomic and ecological credentials are winning converts even among satellite fans.

Waterless offset can compete on cost efficiency
At the press conference Klaus Schmidt also discussed the ongoing debate on the relative economic benefits of conventional and waterless offset – a debate that is often subjective and poorly argued. According to Schmidt, the Commander CT’s recent success in no way implies that the Cortina is less cost-effective: alongside a superb print quality, high level of flexibility and proven benefits in terms of handling, maintenance, ecology and waste, the sixteen Cortina users are delighted with the economic efficiency of waterless offset. The higher cost of waterless plates – now down to around €10/m² – and inks is balanced by savings elsewhere (dampening, waste, cleaning, maintenance personnel) and the expanded options available in product layout and diversity, so total costs are not necessarily higher. This is confirmed by users who operate both types of press.
In an interview for German trade magazine Deutscher Drucker, Matthias Tietz, managing and technical director of Rheinisch-Bergische Druckerei (Rheinische Post) in Düsseldorf, where the most recent Cortina was installed, made what may to some be a surprising comment: “Harping on about plate prices, ‘sky-high’ ink prices or energy is wrong. You have to look at the whole – and this we did with a bachelor thesis. If you read it you’ll notice two things: that the Cortina has the edge over a satellite Commander in short-run production, ie 10,000 to 50,000 copies, and that it’s safe to say there’s not a jot of difference between them for 50,000 to 500,000 copies, since the cost structures are virtually the same. In other words, claims that high plate and ink costs make a waterless press uneconomic are totally unfounded. It’s the bottom line that counts, and our purchasing criteria were fulfilled one hundred per cent.”

Klaus Schmidt also furnished further details of KBA’s PressNet, an intelligent workflow networking system for compact presses which addresses an emerging demand for enhanced productivity and cost efficiency.