Paper Company expects to complete construction of a recycling plant that is
designed to provide at least 20% of the pulp used by the mill.
The announced price of newsprint (excluding discounts which decreased
before rising during the second half of the year) was approximately $620 per
ton throughout 1993. The Post believes it has adequate newsprint available
through contracts with its various suppliers. About 50% of The Post's current
newsprint consumption consists of newsprint with some recycled content, and the
use of recycled newsprint by The Post is expected to increase in the future.
During 1990 the Company acquired 90% of the stock of Capitol Fiber Inc., which
handles and sells to recycling industries old newspapers and other paper
collected in Washington, D.C, Maryland and northern Virginia.
In 1993 The Herald consumed approximately 5,900 tons of newsprint supplied
by four different suppliers, the largest of which furnished about 35% of the
newspaper's total requirements. Approximately 70% of the newsprint used by The
Herald includes some recycled content.
The domestic edition of Newsweek consumed 31,480 tons of paper in 1993,
the bulk of which was purchased from eight major suppliers under long-term
contracts at prevailing market prices. The current cost of body paper (the
principal paper component of the magazine) is approximately $870 per ton.
Over 90% of the aggregate domestic circulation of Newsweek is delivered by
second class mail, and most subscriptions are solicited by either first or
third class mail. Thus substantial increases in postal rates for these classes
of mail may have a significant negative impact on Newsweek's operating income.
On March 8, 1994, the U.S. Postal Service proposed a rate increase for all
classes of mail averaging 10.3%. This proposal, which would take effect in
January 1995 at the earliest, is subject to review by the Postal Rate
Commission and then to approval by the Board of Governors of the U.S. Postal
Service. If approved, this proposal would increase Newsweek's annual postage
costs by approximately $4 million. On the other hand, since advertising
distributed by third class mail competes to some degree with newspaper
advertising, the Company believes the increases in third class rates included
in this proposal could have a positive impact on the advertising revenues of
The Washington Post, The Herald and The Gazette Newspapers, although the
Company is unable to quantify the amount of such impact.
The Washington Times, a newspaper published since 1982 in Washington,
D.C., began publishing Saturday and Sunday editions in competition with The
Washington Post in September 1991. The Washington Times previously published
only on weekdays. The Post also encounters competition in varying degrees from
newspapers published in suburban and outlying areas, other nationally
circulated newspapers and from television, radio, magazines and other
advertising media, including direct mail advertising.
The Herald circulates principally in Snohomish County, Washington; its
chief competitors are the Seattle Times and the Seattle Post-Intelligencer,
which are daily and Sunday newspapers published in Seattle and whose Snohomish
County circulation is principally in the southwest portion of the county.
Since 1983 the two Seattle newspapers have consolidated their business and
production operations and combined their Sunday editions pursuant to a joint
operating agreement, although they continue to publish separate daily
newspapers. Although The Herald's principal circulation is in Snohomish
County, it is also distributed in two other nearby counties (including King
County where Seattle is located) in