NEW YORK (AdAge.com) -- The New York Post has reversed its price hike of two weeks ago and will go back to selling for a quarter today.

Newsstand sales at certain high-volume outlets in Manhattan have plummeted in the days since the News Corp.-owned paper raised its price to 50 cents on April 30. Sales in key locations have fallen by as much as 20% since then, according to an executive at a competing paper who has been monitoring newsstands.

Slight circulation lead
Post executives were confident the paper could hold on to the slight lead in circulation it eked out over the Daily News in the last two Audit Bureau of Circulations reporting periods, even at double the price. Apparently, they were wrong.

The Post confirmed the move yesterday but insisted the price change was not related to sales.

"This is a business decision and part of a well-planned strategy," said Post Editor in Chief Col Allan. "We're proud of our sales, and the numbers being thrown around by our competition are pure fantasy and wishful thinking."

Price war
The Post started selling for a quarter in 2000, adopting a price-war strategy that News Corp. Chairman Rupert Murdoch has used with newspapers the company owns in London. The move helped it nearly double its circulation and climb over the Daily News, which held its price at 50 cents.

But on the day the Post went to 50 cents, the News halved its price to a quarter. Its sales have since spiked 30%, according to the industry source. The Daily News, owned by real-estate mogul Mort Zuckerman, has told newsstand dealers it will go back to selling for 50 cents next week.

If the Post's circulation losses were to continue, it could fall behind the News in the next reporting period. Weekday circulation for the Post rose 7.6% to 724,748 copies for the six months ended March 31. The News' circulation was up 1.4% to 718,174.

"Based on what we hear in the market, even when the News moves back to 50 cents, it'll still have a formidable lead over the Post in the end," says August Fields, general manager of the New York Sun.

Reader loyalty
The Post's latest move calls into question the loyalty of the paper's readers and the wisdom of using a price cut to build readership. It also gives the News a rare victory in the tabloid war.

"We've been at 50 cents for seven years without batting an eyelid," says Martin Dunn, deputy publisher and editor in chief of the News.

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Matthew Flamm is a reporter for Crain's New York Business.