That’s Not A Newspaper War In New York – At Best It’s A Border Violation

Philip M. Stone April 28, 2010 Follow on Twitter

For all the hoop-la in the US media, that is not a newspaper war that has started in New York between The Times and The Wall Street Journal; at best it’s a skirmish and after the noise dies down the WSJ will soon learn what the new section does for its New York circulation numbers. Whether it grows into a war will depend on the high-end department stores like Macys, Bloomingdales, Saks Fifth Avenue and Bergdorf Goodman really paying close to rate card for a full page Journal ad, and reducing their NYT spend as a consequence, and that’s not going to happen for some time, if at all.

What is really going on is that Murdoch petty cash (around $15 million a year that added some 35 journalists to the WSJ staff and budgeted for at least a couple of years) will support what could well be a pretty neat idea to increase the base readership of the Journal by adding a daily New York section. But that’s not about to drive the New York Times out of business, and The Times apparently feels safe enough that it claims it is not discounting its ad rate card. Mind you, that didn’t stop it from giving away copies of the newspaper outside the Plaza Hotel that hosted the WSJ breakfast launch party just as a reminder to the attendees about the product the Journal is going up against.

But if the Journal can build on the New York experience to find a economical way of adding such local sections around the country (and when it comes to Murdoch there’s no telling the definition of “economical”) then that should increase the total circulation of the all-important mother ship – The Wall Street Journal – and with overall higher circulation for the mother ship comes higher advertising rates.

There is, however, a strategic flaw. Cost. Metropolitan newspapers tried this technique long ago – remember when the Los Angeles Times, for instance, had its own Orange County section, even a San Diego section, and when newspapers across the country had similar within what they saw as their circulation areas? But most of that is gone today. The advertising didn’t really support the editorial, printing and distribution costs and most metropolitan newspapers have retrenched to very select centers of coverage and advertising. On the other hand, Murdoch has a reputation for not letting cost get in the way of a good idea.

It is this very local section strategy that Murdoch and his arch-enemy New York Times want to use as their competitive highway into all of America -- stay national but somehow have the look and feel of being local. They are experimenting with it in San Francisco but Murdoch has now ratcheted up the editorial product with his New York section.  The economics have not supported those sections before and doubtful they will now, but perhaps the accountants at both newspapers know things we don’t on how financially such a strategy can work today.

So back to New York. Out comes The Journal’s new section and on Day-1 there were full-page ads by the likes of Macys and Bloomingdales (same ownership) and a one-third page ad for Saks. But those full-page ads came real close to being freebies. The word on Madison Avenue is that the WSJ was offering not only up to 80% discounts on full page ads to select prospects but also offering an additional free full page ad in the Murdoch-owned New York Post, too. That’s what you really call synergy! It’s amazing really there wasn’t a rush by many more to get in on that but apart from the two department stores only Delta Airlines, The New York University School of Continuing and Professional Studies, and the Jersey Boys Broadway musical took out full pages on launch day.

Leaving the editorial product to one side, the current financials show that the WSJ is really going to have to increase its New York readership by more than 50% to become a serious buy proposition. It’s all in the numbers. The Times, according to the latest ABC, has a weekday circulation of 951,000 and there seems to be consensus among those who do such research that about half of that is in New York City for some 475,000 circulation there. The Journal, now the highest circulation US newspaper at 2.09 million is thought to have only about 15% of that in New York, giving it around 300,000 circulation there. There is probably a heavy overlap.

Mind you, those NYT numbers are not the way Murdoch’s Post sees it.  “The Times does not break out circulation data for the city's five boroughs, preferring a much broader scope in its so-called Newspaper Designated Market to include New Jersey's and Connecticut's suburbs,” the Post said. “However, industry sources (hmmm, who are they?) said the last known figure for the Gray Lady's circulation within the city boundaries was 217,000, and that their most recent circ slide had pushed that figure to around 180,000.”  Makes one ask if that is really the case then why aren’t advertisers flocking to that new WSJ section?

Can the Journal’s new 16-page section do enough to draw overlapped NYT readers away? Doubtful, especially since Mediamark Research and Intelligence says that the NYT’s female readership is about 50% while it is 38% for the WSJ. Murdoch isn’t having any of that, however, and at the opening night launch party he stormed, "BS. We have more women readers -- total -- than they do nationally."  But who has the most in New York?

The high-end department stores seem to believe the NYT delivers them women for Kantar Media reports Saks spent $6.5 million in the NYT last year but only $353,000 in the WSJ. Similarly, Bloomingdales spent $19 million in the NYT and just $217,000 in the WSJ while Bergdorf Goodman’s NYT spend came in at about $1.4 million with apparently nothing in the WSJ. Robert Thompson, WSJ editor, wasn’t joking when he told advertisers and journalists at the breakfast launch, “If you really must read the New York Times read it on the Web for free and then buy The Wall Street Journal.”

Near free ads may pull in some advertisers but they don’t bring in the necessary revenue. To do that the editorial product has to entice additional readers. Well, the first edition of the New York section may be printed as a broadsheet, but it had a real Murdoch-tabloid feel to it. It talked about rats – no, not politicians or lawyers but real rats invading New York’s Upper East Side. Its top story was about police letting a terrorist slip through their hands.  And if ever there was a new look to show that this wasn’t really the Wall Street Journal in disguise there was a big color baseball picture right in the middle of the page. The front page reminded one a bit of the look and feel of the broadsheet Times of London of which Thomson was the editor when he oversaw its transformation to compact size in 2003-2004.

Coincidence or not, the NYT seemed to go down market a bit headlining that Mayor Bloomberg spends two weekends a month at a home he owns in Bermuda. The mayor is not allowed weekends off like reporters and editors? The mayor got his own back – he was the star attraction along with Murdoch at a Monday night launch party. It all has a feel of the New York Post and the New York Daily News battling it out rather than two quality New York newspapers.

And that’s the additional rub here. It’s not that New York doesn’t already have newspaper competition, albeit tabloid. The Post and The Daily News are still fighting it out, with the Post spinning on the latest ABC numbers, “The Daily News and The Post were in a virtual dead heat again, with the News dropping 11.6% to 535,059, while The Post was off 5.9% to 525,004.” A newspaper  “war” seems to take on different perspectives apparently when two broadsheets go at it.

The real pleasure from all this is that at least someone is investing again in print. Not often that one gets to write about that. And no matter how much of the high-road NYT management might take the fact is more editorial competition in New York will sharpen the NYT’s local product, and after the cutbacks and the section changes of the past years, that’s no bad thing.