Green Business

Kill a Newspaper, Save a Tree? Not Quite


Editor's Note: An earlier version of this story incorrectly stated the circulation drop for U.S. newspapers, as well as the source of the data.

As print media collapse, they're dragging the paper and logging industries down as well. But if dying newspapers are saving a few trees now, the long-term environmental gains of media going digital are less clear.

Newspapers have been steadily losing subscribers for years—total paid U.S. daily circulation has dropped 23% from a peak of almost 63.3 million in 1984 to 48.6 million in 2008, according to the Editor and Publisher International Yearbook. That includes some high-profile closures: More than 200,000 Coloradans haven't woken up to the Rocky Mountain News on their doorsteps since it folded in February. A month later the Seattle Post-Intelligencer became the nation's largest daily newspaper, with more than 117,000 weekday readers, to become solely digital. Magazines are also disappearing; Condé Nast on Oct. 5 axed four titles, including Gourmet and Modern Bride.

That implosion is a big reason why the $200 billion wood-and-paper industry is hurting, with the newsprint sector in particular suffering its own mini-depression. The American Forest & Paper Assn. estimates that newsprint production in 2009 will fall by one-third, or almost 1.5 million tons, from the previous year, and magazine print by 1 million tons, or 25%. August was the 18th consecutive month of double-digit declines in U.S. newsprint consumption, according to research firm CreditSights. The paper-products industry now employs 37% fewer people than in 1990, while the forest-products industry as a whole has 34% fewer workers.

But there's more ailing the wood-and-paper industry than digitalization, of course. The battered housing sector has slammed new-home construction, and consumer cutbacks sharply reduce the need for packaging materials. The forest-products industry has been one of the hardest-hit throughout the economic crisis, says Bill Imbergamo, director of forest policy at the AF&PA. "Together the decline in demand for wood building and paper products threatens the viability of a key manufacturing sector—and its investments in the long-term health of our forests," Imbergamo told the U.S. House subcommittee on interior, environment, & related agencies in June. The industry says it accounts for approximately 6% of total U.S. manufacturing gross domestic product, similar to the automotive and plastics industries.

Big Bankruptcy Some of the biggest paper companies are reeling. After a $2.4 billion debt recapitalization plan failed, AbitibiBowater, which calls itself the largest producer of newsprint in the world by capacity, filed for Chapter 11 bankruptcy in April. The company markets its annual 5 million metric tons of paper in more than 90 countries, with half of sales coming from newsprint. Faced with assets of $9.9 billion and debt of $8.78 billion, the company had been "adversely affected by industry pressures and the inability to raise new capital in the current capital market," AbitibiBowater President and CEO David J. Paterson said in a message on the company's Web site. In September the Montreal-based company announced an indefinite idling of 1.3 million tons of production. "We have a very difficult road with significant challenges ahead of us," Seth Kursman, an AbitibiBowater vice-president, said in an interview. "But we believe we can emerge [from bankruptcy] a leaner and more sustainable organization and that there's a future for the forest-and-paper industry."

Many of AbitibiBowater's rivals "are losing money or breaking even," and have had to shutter operations temporarily, if not permanently, says G. Scott Vallely, CEO of Coy Paper, a specialty-paper distributor in New Canaan, Conn. "They're surviving by issuing more bonds and taking on more debt, which isn't sustainable."

North American mills are operating at 65% capacity, compared with 97% a year ago, according to CreditSights analyst Rahul Gandhi. Current newsprint prices of $435 a ton are down from their most recent peak in November 2008 of around $775 a ton. At these historically low levels, "even the most cost-efficient mills are likely operating below cash cost levels," he says, forecasting that most producers will face mounting operating losses through the third quarter. Gandhi predicts that Catalyst, another large Canadian paper company, is in for an "extremely gloomy" year as well. "The newsprint industry has never been this weak," he says.

Despite the doom and gloom, Gandhi expects newsprint prices to rise as production capacity continues to fall and inventories need replenishing. A strengthening Canadian dollar and rising pulp prices, stimulated in part by strong demand from China, are good bargaining tactics for newsprint producers to start charging higher prices, he says. A majority of them, representing 89% of North American capacity, have announced a price hike of $70 a ton over the next two months. Since most are already posting negative margins, Gandhi says, they have little to lose by further chopping capacity. Of course, if prices rise, that might push publishers to cut back even more, simply exacerbating the downward spiral.

What's the Environmental Tally for Digital? If demand for paper products has decreased so much, couldn't this be a good thing for the environment, a silver lining to the anguish over print media's demise? Factor in the environmental costs of production, printing, and delivery to your local newsstand, and it may seem that consuming news online is the "greener" choice.

But it's not that simple. To measure the carbon footprint of digital news delivery, one must take into account the metals and minerals mined to build computers and networks, as well as the consumption of electricity, much of which is produced by burning coal. And those are just a few of the factors in the equation. "Neither print nor digital media as currently structured is better" for the environment, says Don Carli, an analyst and senior research fellow at the Institute for Sustainable Communication. The institute says advertisers and media companies don't face enough public pressure to determine how much energy print and digital each consumes, so people can't make informed decisions about which is better.

Meanwhile, private landowners—who own the majority (57%) of the country's 755 million acres of forest, according to the U.S. Forest Service—contend that actively managed and certified sustainable forests are the best conservation option. "Basic economics dictates that markets sustain the viability of forests, just as they would a farm," says Dan Whiting, a spokesman for the National Alliance of Forest Owners, a Washington (D.C.) trade group. "If a farmer can't grow crops, that land is going to go elsewhere." Replantable forests will be replaced with parking lots, strip malls, and condominiums, the group warns.

According to the Paper Industry Association Council, about 57% of the paper consumed in the U.S. was recovered for recycling in 2008. Two-thirds of that is used domestically, 6% of which goes toward newsprint production. But environmentalists aren't hailing the death of newspapers as a planet-greening development. "Less newsprint means fewer trees harvested, and that's certainly a good thing for the environment," says Shannon Binns, program manager at the Green Press Initiative, a San Francisco-based environmental nonprofit that tries to minimize the impacts of publishing and advocates for greater forest conservation and sustainability. Still, he says, "we don't advocate that newspapers going away would be a good thing."
Deprez is a reporter for Bloomberg News in New York. Follow her on Twitter @esmedeprez.

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