Dramatic increases in the cost of paper are forcing the The Royal Gazette and The Mid-Ocean News to increase their cover prices and advertising rates, Royal Gazette Ltd. general manager Mr. Keith Jensen said yesterday.

The price of both newspapers will increase by five cents to 60 cents at the end of March, Mr. Jensen said. Advertising rates for both publications will rise by an average of about 2.5 percent at the same time.

The increases are being planned to counter the rapid increase in the price of newsprint -- the industry term for paper used to print newspapers -- in the last year.

"Like US newspapers we are faced with galloping newsprint prices,'' said Mr.

Jensen, noting that prices will have increased 65 percent in the 14 months to May 1.

The moves come as the Bermuda Sun announced this week that it would increase the cost of its TV Guide by 10 to 60 cents.

It is not known if the paper's owner, Island Press (Holdings) Ltd., also plans to raise its cover price or rates. Managing director Mr. Randy French could not be reached for comment yesterday.

Toronto-based Abitibi-Price Inc. recently told newspaper publishers it would raise prices effective March 1 to $600 per metric ton from about $550 currently and $411 a year ago.

The company, which is a supplier to Bermuda Press (Holdings) Ltd. -- the owner of Royal Gazette Ltd. -- then announced it would increase prices to about $675 per metric ton effective May 1.

Other newspaper suppliers have followed suit, forcing newspapers around the world to find ways to cut costs and raise revenues.

Mr. Jensen said that of the five cent increase, distributors will get one cent.

"At the end of the day we will try to do a variety of things,'' Mr. Jensen said. "We cannot just pass this whole increase in newsprint costs on to consumers.'' The last hike, also five cents, for both papers, was two years ago.

Mr. Jensen said he anticipated that increases in advertising sales resulting from an improving economy would offset some of the rise in newsprint prices.

He said that publishing, printing and and other businesses that use significant amounts of paper will also be affected.

"And there is a potential difficulty in getting newsprint'' as supply decreases, he said.

"Some paper mills are in the process of adopting allocations meaning their customers have to get orders in advance,'' he added.

According Mr. Jensen, reducing the amount of space in the two newspapers is the "last resort''.

Reports indicate some North American papers may be forced to cut editorial space and reduce employee numbers while there is speculation publishers of some -- to survive -- may have to sell their newspapers larger chains.

A spokesman for Abitibi-Price said the $600-$675 prices are similar to pre-recession rates.

Newsprint cost more than US$600 per ton in the late 1980s and the industry is attempting to return to those levels.

One local weekly newspaper, The Bermuda Times, is taking the opposite approach. The seven-year old publication recently said it will cut its cover price in half to 25 cents.

The move is seen as an attempt to raise, now about 5,000 compared to The Royal Gazette's 16,432.