PREVIEW-Newspaper cos Q1 net may have risen marginally

By Jasudha Kirpalani

MUMBAI, July 25 (Reuters) - Newspaper publishers Deccan Chronicle Ltd (DCHL.BO: Quote, Profile, Research) and HT Media Ltd (HTML.BO: Quote, Profile, Research) are likely to post a marginal rise in net profit as higher newsprint costs ate into margins during the quarter to June, analysts said.

A shortage of newsprint supply because of a consolidation in the global newsprint industry and higher demand because of the U.S. presidential elections and the Beijing Olympics has pushed up prices of the raw material, analysts said.

The two events see higher advertisement and news coverages requiring more usage and demand for newsprint, analysts said.

"There has been a demand-supply mismatch for newsprint... these prices will have an effect on this quarter and the pressure will only increase in the following quarters," said an analyst with a local brokerage, who declined to be named.

A shortage of waste print used in China's newsprint plants, rising fuel prices and a volatile rupee during the first six months of 2008, which pushed up import costs, also affected newsprint prices, analysts said.

Newsprint cost has increased by 45 percent in the year to the beginning of July to $975 a tonne from $675 a tonne, brokerage Pradhubas Lilladher said in a report.

Deccan Chronicle imports all its newsprint requirements while HT media imports 70 percent of newsprint requirements, a report by brokerage Motilal Oswal said.

Deccan Chronicle is expected to post a net profit growth of just 4 percent to 872 million rupees while net sales will grow 43 percent to 2.48 billion rupees in April-June, according to a Reuters poll of brokerages.