Vol. 3, Issue 11, April 12, 2005
New York Daily News and New York Post Simultaneously Buy Each Other Out
The owners of two rival New York newspapers found themselves in an unprecedented situation last week when each managed to obtain a controlling interest in the other's company nearly simultaneously, effectively swapping papers.
The New York Daily News and the New York Post are tabloids with a long history of conflict. Each regularly accuses the other of shoddy journalism, inaccurate reporting and frequent editing mistakes.
"They're both right, of course, "said NYU professor of journalism Artie Stockman. "It's unusual, however, that they would resort to business-related attacks rather than simply lambasting each other in print. It's much easier to do the latter."
Apparently, the papers were both in significant debt as they leveraged their assets to buy each other out. Unbeknownst to the management of either paper, the resulting debts of each were snapped up by the opposing tabloid. This simultaneous and apparently uncoordinated exchange of assets is a rare business phenomenon which has occurred only three times in New York history.
Former Daily News owner Mort Zuckerman was reportedly stunned at the news that he would have to run his once-hated rival, rather than shut it down.
"Aw, crap," said Zuckerman. "We just did a whole expose on the unsanitary conditions in the Post offices. Let me tell you, I'm not touching the phones until the cleaners go through there first."
The Post, the oldest paper in New York, has logged huge circulation gains lately through slashing its price and aggressive marketing tactics, escalating 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. However the Daily News remains the leader in circulation and is still profitable, unlike the Post which has long run in the red.
"You have to remember that Rupert Murdoch owns the Post - owned the Post I mean, and was letting his son Lachlan run the show," said Stockman. "His assumption was that the paper could become profitable if he could force the Daily News to fold, and Murdoch had deep enough pockets to float the Post until that happened. Now, of course, all bets are off."
Indeed, Rupert Murdoch is reportedly so furious at his son for losing control of the Post that he has cut him off, leaving the Daily News "on its own, financially."
As a result, Lachlan Murdoch has seemed far less sanguine about the swap than Zuckerman, even though Murdoch ended up with the more profitable paper. While Zuckerman and his team immediately announced a business plan to deal with the Post's languishing finances, including moving its popular Page Six gossip feature to the front page, Lachlan, in contrast, has been frantically coming to terms with having to run a newspaper as a self-sustaining business, rather than an arm of a large corporation with deep pockets and no accountability.
"Does anyone know how to balance a budget?" he half-jokingly asked reporters at a press conference yesterday. "No, seriously. I'll hire you on the spot. Please? Money's no object! Oh, wait, yes it is. Damn!"