Once upon a time, the newspaper war was as common a ritual of civic combat as the mayoral election or the crosstown high school football game. The inexorable decline of newspaper reading has left even most big U.S. cities with a single daily. The glaring exception is New York City, home to four of the 15 largest papers. The huge circulation gain logged of late by the oldest of them -- the New York Post -- has escalated its archrivalry with the Daily News into the sort of apocalyptic struggle not seen since William Randolph Hearst and Joseph Pulitzer locked egos a century ago.
This latter-day war also features two high-profile personalities: Rupert Murdoch, chief executive of News Corp. (NWS), owner of the Post, and real estate developer Mortimer B. Zuckerman, owner of the Daily News. This is a mismatch. Zuckerman is a billionaire, but his pockets are not nearly as deep as Murdoch's, and neither is his media expertise. With $22 billion in revenues, News Corp. is so big that the Post's budget amounts to a rounding error. Even so, the tabloid looms large in Murdoch's calculations as News Corp.'s print megaphone in the media industry's capital city and as a proving ground for his son and heir apparent, Lachlan K. Murdoch, the Post's 33-year-old publisher.
The Daily News remains much the stronger paper financially, earning in excess of $15 million on revenues of about $340 million in each of the past two years, according to an authoritative source. The Post has lost so much money for so long that it would have folded years ago if News Corp. applied the same profit-making rigor to the tabloid as it does to its other businesses. Could the Post turn a profit if the Daily News vanished? Daily News executives and many neutral observers believe the Murdochs are determined to find out. Says Martin Dunn, who long worked for News Corp. before joining the Daily News in 2003 as editorial director and deputy publisher: "I've been on the other side. I know that when News Corp. sets out to destroy someone, they go all out to do it."
As deputy operating officer -- News Corp.'s third-highest position -- Lachlan Murdoch oversees a far-flung mix of businesses, including dozens of newspapers in Australia and Fox TV's (FOX) 35 stations in the U.S. Yet he devotes one-third of his time to the Post, compelled both by affection for the feisty tabloid and its home city and by dynastic ambition. What better way for the son to prove he's deserving of the crown than to do something that the father never could: turn the Post into a money-maker? (News Corp. bought the paper in 1976, sold it in 1988, and reacquired it in 1993.)
Lachlan Murdoch refuses to disclose the Post's annual loss -- pegged by outsiders at $15 million to $30 million -- but acknowledges that it widened when the weekday cover price was halved, to 25 cents, in 2000. It's all part of the plan, says Murdoch, who intends to restore the 50 cents cover price if and when the Post passes the Daily News in circulation. "We love the Post, but it's not a hobby," he says. "We very much care that it make money one day, and that it become as great a business as it is a newspaper."
Lachlan struggled in some of his earlier News Corp. postings, but at the Post he has engineered a rise in readership of a magnitude that few thought possible in the Internet Age. In the five years ended on Sept. 30, the Post boosted its average weekday sale by 49%, to 686,207 papers. Meanwhile, the Daily News saw its circulation fall slightly, to 715,052. Leave off bulk sales to schools, retailers, and the like, and the News's lead of some 29,000 papers shrinks to 6,000.
However, on Sunday -- payday for most papers -- the News retains a commanding lead of 786,952 to the Post's 452,871. What is more, the Post has not been nearly as successful in attracting advertisers as readers. The 753,116 column inches of display advertising the Post ran in 2004 amounts to just 45% of the linage of the Daily News and 18% of Newsday's, the metro area's third major tabloid, according to TMS Median Intelligence CMR.
How did the Post, founded in 1801 by Alexander Hamilton, become America's fastest-growing weekday newspaper in the 21st century? The 25 cents price had a lot to do with it, but no more than did a new $250 million printing plant that greatly enhanced the paper's look and kept ink on the page -- instead of readers' hands. In 2001, Murdoch installed a new editor, Col Allen, a famously brash News Corp. veteran steeped in the cutthroat London newspaper market. "I took the view that the paper was ponderous and needed to be made edgier," says Allen, who cut story lengths, doubled story counts, devoted more space to photos (especially color ones), and upped the Post's daily quota of sex, celebrity, and scandal.
VULNERABLE TO FREEBIES
"The Post has done everything I would prescribe that a newspaper of its sort do to build circulation," says Robert Broadwater, a managing director of Veronis Suhler Stevenson, a New York merchant bank specializing in the media business. "Above all, it has a distinctive personality. It's not one of those squishy, one-size-fits-all suburban papers."
However, Broadwater and other media mavens doubt that the Post can ever be securely profitable as long it coexists with the News. Only 26% of Post readers buy it exclusively; for the News the figure is 60%. In effect, Murdoch has succeeded only in making the Post New York's favorite extra read. This leaves the paper particularly vulnerable to the two free dailies launched over the past 18 months -- amNew York and Metro. More important, it is the Post's also-read status that puts off advertisers above all else.
The question ultimately is whether the Post can drive the News into the red and induce Zuckerman either to fold the paper or sell it to News Corp. Zuckerman may not be a megamedia mogul, but he didn't get to be a big-time developer by being a pushover. Says Zuckerman, 67: "If there's any business I'd like to have my daughter become involved in, it's the Daily News." Abigail Zuckerman is 7. This is one fight to the finish that appears to be a long way from over.
By Anthony Bianco in New York