In yet another seismic shudder in the traumatized journalism business, billionaire real estate developer and media mogul Mortimer B. Zuckerman—the owner of the New York Daily News since 1993—announced on Thursday that he plans to sell the venerable but money-losing tabloid.
“The reaction is utter shock,” a longtime Daily News reporter told The Daily Beast minutes after Zuckerman’s memo revealing his intention to “explore the possibility [of a sale] and talk to potential buyers and/or investors” arrived by email blast in employees’ inboxes Thursday afternoon.
“Everybody knew that someday this might happen, but this is completely out of the blue,” said the reporter, who spoke on the condition of anonymity. “The memo came out, and everybody looked at it and a lot of people said, ‘Holy shit!’”
Former Daily News editor in chief Martin Dunn, who ran the newsroom twice—for three years in the 1990s and again from 2004 to 2010—also expressed surprise at Zuckerman’s announcement. “I’m shocked,” Dunn told The Daily Beast. “Mort was always very proud of the fact that the Daily News had a huge political influence in the city. With the continuing troubles in newspaper circulation, perhaps that influence isn’t as great as it used to be.”
The print edition of the paper, which once sold in the millions of copies, these days has a paid weekday circulation of about 400,000, the sort of precipitous decline in the digital age that has affected nearly every newspaper, including the city’s rival tabloid, the 213-year-old New York Post. Advertising revenue has also plunged, especially because the traditional backbone of newspaper revenue, classified advertising, evaporated with the advent of free online classified sites such as Craigslist.
New York’s tabloid war, said a battle-scarred veteran, has become a pitiable spectacle of “two bald guys fighting over a comb."
Zuckerman, 77, wrote to his employees that after being approached “a few weeks ago” about the possibility of selling his 95-year old newspaper—a favorite of strap-hanging commuters in the working-class precincts of New York City’s outer boroughs—“I have retained Lazard, a leading financial advisory firm,” to help facilitate a sale of the paper or else secure outside investors to help shoulder the costs.
“I have not come to this decision easily,” wrote Zuckerman, who signed his memo “Mort.” “I appreciate that this news is difficult for you to digest. But I want to reassure you that my aim throughout this process will be to do the right thing for the business to ensure the Daily News and its brilliant staff have the best opportunity to achieve all our future ambitions.”
Zuckerman, who didn’t return a phone call seeking comment, didn’t hint at the existence of a potential buyer, but two observers with knowledge of his business practices suggested that he wouldn’t have sent the memo—or, for that matter, hired the pricey advisers at Lazard—if a deal wasn’t already in the works.
“Why would you write that memo unless it’s already well under way?” said a media insider who is intimately familiar with Zuckerman’s modus operandi. A second knowledgeable observer agreed: “Mort would never put out a memo saying negotiations are going to take place unless a deal has been done. That is so blatantly obvious.”
But two other Zuckerman-watchers said it is equally possible that the mogul, whose personal net worth is estimated by Forbes at $2.6 billion, is still actively seeking someone to take the paper off his hand. According to persons with knowledge of the situation, the Daily News is hemorrhaging money at a rate of about $20 million a year.
According to a person who had a conversation about the Daily News with Mike Bloomberg when he was at City Hall, the financial media billionaire once mused privately that if he had not been elected mayor, he would have tried to buy the paper from Zuckerman.
Other possible suitors, according to a report in Capital New York, include the Dolan family—of Cablevision, Madison Square Garden, and Newsday fame—and the newspaper chain-owning Newhouse clan.
But in interviews with media insiders Thursday, the most frequently mentioned potential buyer was 21st Century Fox and News Corp. Chairman Rupert Murdoch, the owner since 1976 of the Post, which loses as much as $70 million a year. According to these observers, it would make business sense for Murdoch, whose personal wealth is estimated by Forbes at $14.1 billion, to purchase the Daily News and simply shut it down, with the Post likely to benefit, at least in the short term, from increased circulation and advertising revenue.
New Yorker magazine media writer Ken Auletta told The Daily Beast: “I know for a fact that Murdoch and Zuckerman have circled each other for years, with each wanting to buy out the other in order to combine newspaper operations and get rid of competition. But Murdoch has deeper pockets than Mort Zuckerman does, and more patience.”
Indeed, Auletta recalled that in the mid-1990s when he was writing a profile of the Australian-born media titan, Murdoch told him that—never mind his Hollywood movie studio and television empire—his biggest joy was owning the Post and toiling in the newsroom over headlines and stories. Murdoch got his start, at age 21, remaking a small afternoon tabloid in Adelaide, Australia, into a valuable and profitable asset; the Adelaide News became the foundation of News Corp.
The Post, on the other hand, has lost money for years—quite a lot of it, actually—“but Murdoch does arithmetic differently than other people,” Auletta said.
“How many capitalists are willing to put up with repeated losses?” he continued. “Some people would buy it [the Daily News] for power or vanity, and you could imagine that happening. Murdoch has lost over a billion dollars on the New York Post since he bought it in the mid-’70s. But he does it because he calculates its value in other ways than financial. It gives him power. It gives him influence—not just political influence over politicians but also over issues he cares about.”
Zuckerman, by contrast, “has real political interests, but he doesn’t do what Murdoch has done. I don’t think he has the same love of newspapers,” Auletta said.
When the Zuckerman memo landed with an ominous thud, anxious Daily News employees were left to their own grim thoughts. The current editor in chief, Colin Myler—the latest in a series of 11 top editors that Zuckerman has hired and fired since he acquired the financially struggling tabloid more than two decades ago—wasn’t in the newsroom.
“His office has been dark all day,” said a Daily News employee. The 62-year-old Myler—a British Fleet Street veteran who was a senior editor at the Post before presiding over the closure of Murdoch’s News of The World tabloid amid the 2011 British phone-hacking scandal—didn’t return a phone call seeking comment. Three years ago, when he appointed Myler, Zuckerman told Newsweek: “I want him to stay there for the rest of his life.”
Presumably, whatever happens, Myler’s life will go on.