Murdoch revs up for another newspaper war

Murdoch revs up for another newspaper war

New targets: Journalists work at the news hub of the ‘Wall Street Journal’ in New York. APIt might be the last great American newspaper war. And Rupert Murdoch intends to win it.

He has made a career of grabbing readers and advertisers from competing newspapers, and now he is racheting up the challenge his ‘Wall Street Journal’ poses to ‘The New York Times’. On Monday, the Journal launched a metro section that will vie for readers and advertisers on the Times turf.

Although the new section is available only in the New York City area, collateral damage could spread around the country. Both newspapers are jostling with each other, ‘USA Today’ and regional dailies for readers. By dramatically lowering advertising rates in New York to undercut the Times, Murdoch’s assault could leave both newspapers with fewer resources for other expansion plans.

“The Times has a lot of readers and a lot of them are very loyal, long-standing folks. It’s not going to be easy to peel off the Times core constituency,” says Dean Starkman, a former Journal reporter. “As a business proposition, I think I’m with the majority of sceptics who think that this could ultimately damage both papers.”

Luxury retailer Bergdorf Goodman, a longtime prominent advertiser in the Times, plans to advertise in the new Journal section. “We’re going to try it and see,” spokeswoman Ginger Reeder says. “We always look for new ways to reach our customers.” It’s not yet clear whether Bergdorf will reduce its advertising in the Times.

Times President and General Manager Scott Heekin-Canedy says several prominent advertisers have assured him that their promotions in the Journal’s new section will not come at the expense of the Times. He declined to name the advertisers. “We won’t get in a pricing war,” he says.

News Corp said Murdoch, 79, was not available for an interview. But he has been open about his goal of using his media properties to challenge what he considers a left-leaning news establishment in the US.And he took a swipe at the Times in a speech to New York real estate executives last month. “We believe that in its pursuit of journalism prizes and a national reputation, a certain other New York daily has essentially stopped covering the city the way it once did,” he said.

Going after the Times is the fight Murdoch had in mind when News Corp bought the Journal and its parent Dow Jones & Co for $5 billion in 2007.Since then, he has tried to broaden the newspaper’s appeal by remaking the Journal’s front page. Last year it surpassed ‘USA Today’ as the nation’s most widely circulated newspaper.

The new Journal splashes colour photos in place of its customary small, black-and-white renderings and includes more coverage of topics outside of business and finance. One recent edition carried a photo of the volcanic eruption in Iceland across the top of the page.

To fill its new metro section, the Journal has hired several former staffers of ‘The New York Sun’. “They are hiring people trained to compete with the Times,” says one former Sun contributor who was approached about a job with the new section.
Murdoch has relished similar competitions. After buying the ‘Times’ of London in 1981, he grabbed circulation from ‘The Daily Telegraph’ by slashing subscription prices and introducing coupon promotions and prize raffles.

As the owner of the Telegraph, Conrad Black battled Murdoch before Black was convicted of defrauding his own company in 2007. The Telegraph survived, but in an e-mail from prison Black wrote that if his experience is any guide, ‘The New York Times’ could struggle to “absorb the kind of price-cutting and profligate expenses Murdoch will pour on.”

Upswing
As owner of ‘The New York Post’, Murdoch has been willing to cut newsstand prices and lose tens of millions of dollars in his bid to outsell the ‘New York Daily News’. In 2000, the Post sold about 4,35,000 copies on an average weekday, compared with 7,14,000 for the Daily News. By 2009, the Post was up to roughly 5,30,000 copies while the Daily News had sunk to 5,70,000. And Murdoch’s underlings have been accused of using rougher tactics than just price cutting or promotions.

So far, competition between the Journal and the Times has taken a less cinematic course. The newspapers have shadowed each other’s moves across the country over the past year by opening sections devoted to local issues for readers in San Francisco and Chicago.

The Journal is hiring about 35 reporters for its New York section, which will run about 10 pages every day. It will include colour — a critical feature for advertisers who want to stand out. And it will mimic the wide range of coverage offered by the Times, including stories on local politics, culture and sports. Murdoch is willing to put $30 million into the section over the next two fiscal years, according to a person familiar with the Journal’s finances who was given anonymity to speak about internal company figures.
The Times has countered with an ad campaign boasting that twice as many business professionals in the New York market read the Times as the Journal, based on surveys by the research group Scarborough.

The Journal sells almost 2 million copies a day nationwide, and the Times sells about 9,00,000. But the advantage is reversed in the New York market, which includes the city and parts of New Jersey, Connecticut and Pennsylvania. The Times sold an average of 4,06,000 copies in the area on weekdays and the Journal sold 2,94,000 in the year that ended Sept 30, based on Audit Bureau of Circulations figures.

Even so, Murdoch still could reshape the local ad market. News Corp is offering a discount for advertising in both the Journal and the Post and could package ads with other outlets it owns, such as the local Fox TV station. The Times essentially just has itself.
The heightened competition for ad dollars comes as nearly every newspaper has lost advertising to the internet. The newspapers’ own websites haven’t yielded the same kind of income that printed newspapers are used to. The Times Co unit that includes its flagship newspaper lost more than 25 per cent of its overall ad revenue last year and might not see it come back.

News Corp doesn’t disclose the Journal’s advertising figures or profits. But there are clear signs the newspaper has been struggling financially. It cut staff last year. According to the person knowledgeable about its finances, the Journal lost more than $80 million in the fiscal year that ended June 30.

However, if it comes down to who can hold his breath longer while the ad slump continues, Murdoch would appear to have the odds. News Corp has more flexibility. Some of its businesses, such as Fox News and other cable channels, are larger than the entire Times Co. Analysts expect the movie ‘Avatar’ alone will earn News Corp as much as $400 million in operating profit. The Times Co had an operating profit of just $74 million last year.As Starkman, the former Journal reporter, put it, “The Times is a cork bobbing in a pretty big ocean.”

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