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Propping up papers in the big apple.

The question of the hour in New York--can the city continue to support four daily newspapers?--is a paradox. The city hasn't supported more than one newspaper for a decade.

That New York City today has four dailies is due not to the size or strength of the market, but to the largesse of the owners of every daily there except the New York Times.

If the Daily News had been a bean cannery or shoe company, it would have gone out of business. Until 1991, its losses were underwritten by the Tribune Co.; thereafter, with the financial assistance of Robert Maxwell and now Mortimer Zuckerman, the tabloid has managed to hang on despite plunging circulation, revenues and market prospects.

The New York Post similarly has had to depend on deep pockets, most notably those of Rupert Murdoch, starting with his acquisition of the Post in 1976. He was forced to sell the paper in 1988 because he bought a New York television station. The pockets of the subsequent owner, Peter Kalikow, proved not so deep, and after temporary infusions of cash by two wouldbe buyers, it appears at this writing that Murdoch will return, assuming he can get a waiver from federal regulators allowing him to own both the Post and the television station (see "We Win!" page 24).

New York Newsday, of course, has had its losses covered by Newsday on Long Island and Newsday's corporate parent, Times Mirror Co. Only the New York Times has been successful as a newspaper business, achieving double-digit profit margins in pre-1990 nonrecession periods.

Can it be that not even New York City, the largest market in the nation, can support more than one general circulation, metropolitan daily? That question may be answered by analyzing the history and circumstances of each of the three unprofitable tabloids.

Two of the three, the Daily News and the Post, are to a large extent victims of historical trends they could do little about. Onerous work rules and other contract inefficiencies, wrung from the owners by unions in better times, contributed mightily to the plight of the two papers. But even had the unions been more pliable the papers would still be in trouble.

The decline of the Daily News pretty much coincided with the exodus of the middle class--the paper's core readership--to the suburbs and with the rise of the market's suburban press. The Daily News tried to follow these readers to the suburbs with zoned editions, but in time many of the suburban dwellers gave up their former reading habits and took up the papers in the communities in which they lived.

A newspaper that loses more than a million weekday circulation and 1.5 million Sunday circulation over 20 years, as the Daily News did, is bound to have trouble hanging onto a profitable share of print advertising. The Tribune Co., the owner during most of this period, tried virtually every possible strategy to reverse the trend, going downscale, going upscale, concentrating on the middle, without success.

Zuckerman, the Daily News' most recent owner, has not been in charge long enough to show whether he might have some miraculous strategy to turn around the paper that Tribune did not try. While anyone who loves newspapers must hope he will succeed, history is not on his side.

Before Murdoch bought the Post the first time, it had been a marginally profitable niche paper liberal and crusading with a special appeal to the city's large Jewish population. Murdoch changed all that, creating the kind of screaming, blood-and-gore tabloid that the nation had not seen since television put such tabs out of business back in the 1950s.

Even though that approach, coupled with big-prize contests and hyped-up promotion, more than doubled the Post's circulation to nearly a million, it failed to convince advertisers that the Post's readers represented an attractive audience.

Now that the Post's circulation is down again to about 438,000, the situation with advertisers has not improved. Most of the Post's original middle-class readership also has moved to the suburbs, and its current readership is believed to consist of low-income people who are not as attractive to advertisers and readers of more serious papers who pick up the Post for laughs.

Of the three tabloids, only New York Newsday appears to have a coherent strategy that might pay off in the long run. It was started because growth on Long Island had topped out, and adding upscale readers in Queens and Brooklyn Heights was one way to gain attractive circulation. Moreover, with the problems of the Daily News and the Post seemingly intractable, New York Newsday would be in a good position to pick up huge circulation should either or both of them succumb. In that event, New York Newsday could become profitable because of efficiencies and market leverage inherent in its relationship with its powerful sibling on Long Island.

It is sad that these large and interesting newspapers must rely on handouts to stay afloat, and sadder still that this kind of support is so precarious.
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Title Annotation:New York City's four daily newspapers
Author:Morton, John
Publication:American Journalism Review
Article Type:Column
Date:May 1, 1993
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