World War Free

It's the 'News,' the 'Post,' and Some Swedish Guys in the First Skirmish of a Global Journalism Battle

The global newspaper war—the biggest conflagration you never heard of has finally reached New York city. You can blame the Swedes for it.

Typical of its inability to solve a decades-long circulation slide, the New York Daily News tried to throw the first punch by announcing late last month that it would launch a free afternoon version on September 12. Rupert Murdoch immediately threw a counter-punch: a 50 percent slash in the price of his New York Post in Manhattan before rival Mort Zuckerman's Daily News Express even began.

As News honcho Les Goodstein hinted to the Voice last week and confirmed in an interview in Monday's New York Times, the handout of 75,000 Daily News Express copies five days a week was itself a preemptive strike to try to keep Swedish media mogul Jan Stenbeck from launching a New York City version of his worldwide Metro freebie.

Only a global golem like Murdoch is assured of surviving a New York City newspaper war. Stenbeck, however, has already been dubbed "the Swedish Rupert Murdoch," and for good reason: He forced commercial television into Scandinavia and now has a worldwide empire of satellite and cable systems. And he lives in New York.

It's not just the Swedes' presence that makes this war global, however. And the war is not just about newspapers.

Murdoch owns some of the most well-known entertainment commodities on the planet—like The Simpsons—and his vision is starting to resemble that of his cartoon character C. Montgomery Burns, the evil mogul who tries to stretch his tentacles into every aspect of the lives of Homer Simpsons everywhere.

"Our reach is unmatched around the world," Murdoch crowed in his Chief Executive's Review in the News Corporation's 1999 Annual Report.


"We're reaching people from the moment they wake up until they fall asleep," he wrote. "We give them their morning weather and traffic reports through our television outlets around the world. We enlighten and entertain them with such newspapers as the New York Post and The Times [of London] as they have breakfast, or take the train to work.

"We update their stock prices and give them the world's biggest news stories every day through such news channels as FOX or Sky News. When they shop for groceries after work, they use our SmartSource coupons to cut their family's food bill.

"And when they get home in the evening, we're there to entertain them with compelling first-run entertainment on FOX. . . . Before going to bed, we give them the latest news, and then they can crawl into bed with one of our best-selling novels from HarperCollins."

This real-life Mr. Burns went on to tell his shareholders and investors that "achieving more meaningful relationships with our customers is so important to the company" that News Corp. has created "a new structure called E-Direct."

And this is the scary future, at least for people concerned about privacy in the newly interconnected world. E-Direct, he wrote, "is responsible for developing one of the most sophisticated databases of customer information ever assembled by a corporation, telling us not only who our customers are, but what they buy, what they watch, what they read and what they want. The e-commerce opportunities in book, video and merchandise sales already flowing from this knowledge are just a trickle of what they will be a year or two from now. Such is the potential from fully activating our media and leveraging our potent brands in the new media world."

All of that makes Zuckerman's real estate empire seem like just a fiefdom. On a recent list of zillionaires, Murdoch ranked 36th and Zuckerman ranked 456th. So how can Zuckerman survive a battle with the likes of Murdoch and Stenbeck?

Don't feel sorry for Zuckerman. Even if you don't read the Daily News, you may be helping to prop up his money-losing paper. Only four months ago, State Comptroller H. Carl McCall agreed to pour $270 million of public employees' pension funds into Zuckerman's real estate investment trust, Boston Properties Inc. The first phase of the deal called for Boston Properties, the moneymaking center of Zuckerman's life, to receive $47 million in cash and for the New York State Common Retirement Fund, of which McCall is the sole trustee, to assume $126 million of debt. If you're one of the 880,000 state and local public employees with money tied up in the $127 billion pension fund, you now are invested in Zuckerman's development plans. Good thing the real estate market is booming.

Zuckerman has personally spent millions on the Daily News to keep it afloat. But even with the help of millions of dollars from Joe and Jane Average's pension funds, he doesn't have Rupert Murdoch's money.

Did the News think Murdoch would do nothing when it announced the afternoon freebie?

"We knew there would be some reaction from that camp," Goodstein, the Daily News president and chief operating officer, told the Voice last week. "We didn't know what it would be. What it was surprised us somewhat."

Looks like some News executives haven't been keeping up on their reading. In 1993, Murdoch started a price war in England, slashing prices on his London papers and pounding the opposition into submission. All observers say that Murdoch will spend as much money to keep the Post going as he needs to.

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