The Thinking Behind the 'Post's' Price Hike

Rupert Murdoch must be as confident of winning Newsday as he claims to be. Why else would he be ceding the New York tabloid circulation war when victory is so tantalizingly close?

In yesterday's News Corp. earnings call, Murdoch made a surprise announcement that the New York Post will increase its cover price from 25 cents to 50 cents. (A spokesman says the change will take effect May 19.) Of course, this is not unprecedented, but the precedent is exactly what makes it surprising: A year ago, the Post raised its price, but reversed course 10 days later, apparently after suffering major sales declines. (Of course, the Daily News did its part to maximize the pain by halving its own 50-cent price for the duration of the Post's hike. I'm told the News has no plans to do it again this time, though.)

But last time the Post increased its price, it had just topped the News in the semi-annual reporting of weekday circulation. This time around, the News edged the Post by a scant 649 copies -- hardly an insurmountably lead, but one that will surely widen when the Post no longer costs a quarter.

Murdoch says the move is about reining in the Post's losses, estimated at around $50 million annually, but it's widely thought that putting the paper into a joint venture with Newsday would wipe out its red ink overnight by virtue of reduced back-end costs and joint ad sales.

So why now? My guess: because Murdoch has his sights set on a higher target. He thinks a Post-Newsday tag team might eliminate the News from the picture altogether. And it just might.