Deadly duel for N.Y. tabs
While a beefed-up Murdoch presence in the New York market undoubtedly would cause new troubles for the already troubled New York Times Co., the publisher with even more heartburn than Arthur Sulzberger Jr. has got to be Mortimer Zuckerman, the owner of the Daily News.
The extent of Mr. Z’s concern may be revealed shortly, if he comes forward as widely expected with an offer to top the $580 million that Mr. M reportedly has offered Sam Zell for the Long Island tabloid. Tribune Co. is being forced to sell Newsday to scrape up cash to service its hefty debt.
As the biggest-selling daily paper in metropolitan New York, the Daily News – not the Times – would have the most to lose if the Post and Newsday were successfully teamed under News Corp. Indeed, a well-executed combination of the Post and Newsday could pull enough money out of the metro advertising market as to literally suck the life out of the Daily News, which, like the Post, is known to make little or no money.
While the consolidated daily circulation of the Post and Newsday would power the two papers into unrivaled leadership in the market, the potentially decisive factor in the life-and-death battle among the tabloids would be the huge lift in Sunday circulation enabled by the combination. Sunday matters above all else, because it’s the day of the week that typically generates about half of the advertising revenue for a newspaper.
As you can see from the circulation figures in the graphic below, the combined Sunday sale of the Post and Newsday (less a bit for overlapping circulation) would put the papers in some 44% of the middle-income households in the market. The broadest and deepest penetration in the metro area would give News Corp. a major advantage in selling advertising at a time when newspaper revenues are generally contracting.
By successfully shifting sufficient market share away from the Daily News to its twinned-up tabloids, News Corp. could put the Daily News in the position that it could not survive without an ever-growing subsidy from its owner, Mr. Zuckerman.
As the 188th wealthiest man in America, Mr. Zuckerman is estimated by Forbes Magazine to be worth $2.4 billion, so he could prop up the Daily News for quite some time. But Mr. Z would be going up against Mr. Murdoch, who, as the 33rd richest man in the country, has not only $8.8 billion in personal wealth but also heads News Corp., which puts another $16 billion in cash and other assets at his command.
Sunday circulation wouldn’t be the only factor in a war of attrition between the billionaire publishers. Another major weapon in News Corp.’s arsenal would be the 314.2k copies of AM New York that Newsday distributes every weekday. The free tab would enable News Corp, to gnaw away at Daily News circulation sales while consolidating an ever-larger portion of the available advertising dollars.
If you reverse the circumstances and postulate that the Daily News bought Newsday, the outlook would be nearly as dire for the Post – but for the fact that Mr. Murdoch appears to have the resources and determination to keep his paper alive for as long as he pleases.
With the fate of each of the other tabloids depending on who wins Newsday, Mr. Z and Mr. M are likely to up the ante for a few more rounds before the matter is decided. Nothing would make Sam Zell happier.