Wapping crisis claims another casualty

Rupert Murdoch, the media magnate, wrapped up a busy week at his Wapping headquarters by letting go John Dux, managing director of News International - the latest casualty, in part, of an embarrassing and potentially costly newsprint shortage at the publisher.

Mr Dux, a long-time Murdoch loyalist, worked with Mr Murdoch in Australia and was editor of the South China Morning Post. He was made managing director in 1990. The company said he was leaving "by mutual consent and with immediate effect." His deputy, Douglas Flynn, an Australian, has been named to replace him. In what is believed to be a unrelated development, Tim Ovington, personnel director, is also leaving the group.

The departures followed the announcement earlier this week that Gus Fischer, chief executive of News International, would be replaced by a long-time Murdoch associate, a fellow Australian, Bill O'Neill.

The bloodbath was reminiscent of past visits by Mr Murdoch to his many operations. He is renowned for whirlwind visits to outposts on his empire, which sometimes lead to managment shakeups. Mr Murdoch left London yesterday, following a week spent reviewing budgets.

The clearing of senior executives was apparently triggered by a short- term shortage of newsprint. "The newsprint crisis has finally hit home," a senior editor at News International said last night. A company spokesman said last night that News International was experiencing an "unexpected, short-term shortage of newsprint. But we are comfortable with our supply arrangements."

The company has less 45-gram newsprint than it needs, and will have to cut pages and lower print runs over the next two to three weeks in order to restore balance in the supply.

It is thought that Mr Dux had held out for better terms from newsprint suppliers until it was too late to secure backup supplies from other wholesalers or the spot market. One newspaper executive said that "there is absolutely nothing on the market, at any price."

The Sun's sales manager, Ian Jackson, contacted wholesalers on Thursday to announce a 2 per cent cut in supplies of the Sun. Similar reductions in the supply of other titles are likely in coming weeks.

Sources indicated yesterday that the Sunday Times this weekend will be cut by two pages, the largest cut possible given that the ads had already been sold. Next weekend, the paper will shrink by eight pages, with most of the cuts coming in the books section.

At News International's sister publications the Sun and Today, it is thought the weekly women's section inserts would be cut altogether for at least one week.

The company's various sales forces were said last night to be turning advertisers away.

The price of newsprint, now about £450 a tonne, is climbing toward a cyclical high, with further increases of as much as 15-20 per cent still to come. News International spends about £200m a year on newsprint. Large purchasers of the product can normally lock in supply through forward buying. But as markets tighten, negotiating price and amounts become more difficult.