Murdoch Seeks Riches From Rag - TheStreet

Murdoch Seeks Riches From Rag

The News Corp. head raises the newsstand price of his money-losing <I>New York Post.</I>
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Rupert Murdoch stirred up the New York newspaper market again Monday with his announcement that the newsstand price of his iconic tabloid,

The New York Post

, will double to 50 cents for its weekly edition starting April 30.

With the newspaper industry reeling from revenue and circulation declines,

News Corp.'s

(NWS) - Get Report

spunky but money-losing daily newspaper has bucked trends by growing its readership. Earlier this year, it announced that it reached a circulation of 704,000, overtaking its archenemy,

The Daily News

, to become the nation's fifth-largest newspaper.

Meanwhile, its success has come at a price.

The Post

sells on the streets of the Big Apple for 25 cents on weekdays, while

The Daily News

costs commuters 50 cents. The newspaper also loses an estimated $70 million a year, raising questions about its future as a viable enterprise. The coming price hike sets up a critical test for the tabloid in its long-term mission to bury what it calls "The Snooze."

"One of the things that's fueled

The Post's

rapid circulation increase was its low price, but that's not the only thing," says John Morton, a newspaper analyst with Morton Research. "At the very least, this is probably going to blunt their growth and cause their circulation to slip some. It's hard to predict how much, but I suspect it will have some impact."

In a statement,

The Post's

publisher, Paul Carlucci, pointed to the price hike as a sign of confidence based on the newspaper's recent gains in circulation and advertising.

"In the next several days,

The Post

will again report substantial circulation growth," says Carlucci. "Given this success, we are confident in the paper's future."

While

The Post

has been a small financial drain on its parent company, analysts on Wall Street say its impact on News Corp.'s financials is negligible given its size, and the price hike is of little importance to investors.

"As far as News Corp. goes, this is such a small thing that it really doesn't matter much," says Michael Nathanson, analyst with Sanford C. Bernstein.

The move presents an opportunity for

The Daily News

, which is owned privately by publishing magnate Mort Zuckerman, to gain back market share, but it also reflects some confidence on the part of

The Post

in its position as New York's top tabloid. For the

New York Times'

(NYT) - Get Report

signature paper and

Dow Jones & Co.'s

(DJ)

Wall Street Journal

, both of which sell for $1 on New York newsstands during the week, the price hike could have an impact, but for the most part, those broadsheets hold sway over a different audience.

Murdoch, News Corp.'s chairman, has said publicly that he expects

The Post

to be profitable someday, but he also relishes the tabloid's influence and its ideological tilt to the right, which complements the company's cable news channel, Fox News. In the build-up to the U.S.-led invasion of Iraq,

The Post

famously parodied French diplomats at the United Nations as a pack of weasels on its front-page for their lack of support for the mission.

"I guess Murdoch wants to lose less money now," says Edward Atorino, analyst with The Benchmark Co.