A STRUGGLE FOR DOMINANCE:

THE NEWSPAPER PRICE WAR OF

SUMMER 1994
Group: 2
Aditya Jha
Elisa Sthapit
Hezron BK
Isha Neupane
Prayash Aryal
Sujeep Maharjan
Sunita Poudel

SITUATIONS OF
NEWSPAPER MARKET IN UK
Times

if
Demand d
Insider
Trading
oase)
Predatory
Pricing

Telegraph

Demand
Variation

Guardians
Response

Price war

Stock
Market
Crash

Independents
one day price
policy

WHAT IS HAPPENING ?
Price War :
Times : Sept, 1993- Price reduced
from 45 to 30p

Telegraph: 23rd June, 1994- Price

reduced from 48 to 30p
Times: 24th June, 1994- Price again
reduced to 20p

QUANTITY OF
DEMAND
Newspaper 000/day

September 1993

May 1994

Times

442

517

Telegraph

1008

993

Guardian

404

402

Independent

332

277

Financial times

287

300

STOCK MARKET POSITION

Newspaper

22 June 94

23 June 94

24 June 94

News
international
times

$404.5

$410.5

$399.0

Telegraph

540

349

332

Independent

165

134

130

United
newspaper
daily express

593

510

485

Daily Mail
Trust

1050

903

870

(in pence,

except where
stated)

INSIDER TRADING IN
TELEGRAPH

Conrad Black, chairman of Telegraph sold 12.5m

shares making 73 millions few days before price
cut.
The accusation of insider trading was later
denied by him.

PREDATORY PRICING
AND MMCS
INTERVENTION
Predatory Pricing
- To set low price to eliminate competition
- Times reduction of price from 30 to 20
might be predatory

MMCs Intervention
- Expected to penalize predatory price
makers

ECONOMIC ANALYSIS

Law of Demand (Times Newspaper)

DEMAND CURVE
50
40
DEMAND
CURVE

30
20
10
0
442

517

Cross-Price Elasticity

%change in price of Y
where, X = Telegraph
Y=Times
From the data given, CPE of Telegraph in respect to
change in price of Times equals to 4%
1% change in price of Times will positively affect 4%
change in demand of Telegraph.

RECOMMENDATION TO
GUARDIAN
Scenario 1
Guardian should experiment with lowering its
price for few days just like Independent
If demand increases Significantly price could be
made permanent

RECOMMENDATION TO
GUARDIAN

Scenario 2 (If Demand doesnt increase)

No Price Cut
Already operating profit on the lower side
No significant drop in share price
Brand loyalty of Guardian- evident from the fact
that despite Times and Telegraph lowering its
price, Guardians demand has not dropped

THANK YOU