As 'Daily News' Exec Bolts to 'Post,' Advertising Is the New Battle

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NEW YORK ( -- Executives at the Daily News have been watching in horror for years as their paper’s archrival, the New York Post, has closed the yawning gap in the circulation divide. But they could always take comfort in another set of numbers: Advertising billings at the News remained far ahead.

That equation may be subject to revision now that Les Goodstein, former chief operating officer of the News and a major architect of its ad sales operations, has gone over to the Post. He started work last week as a senior VP of News Corp., the parent company of the Post, where he will serve as an adviser.

Inside story
“Les is now playing poker knowing what cards are in the other guy’s hand,” said Mitchell Modell, chief executive of the Modell’s sporting goods chain and an advertiser in both papers. “That makes for an interesting game.”

The city’s two tabloids have been playing a high-stakes version of Texas Hold ’Em ever since rival billionaires purchased the papers in the early 1990s. But News Corp. chairman and veteran newspaperman Rupert Murdoch has been playing by his own rules, adhering to practices that are unusual for a business concern. He has been willing to lose tens of millions of dollars annually in a long-term bid to win the circulation war.

The moneymaking News, meanwhile, has been hamstrung by the unpredictability of its owner and publisher, real estate tycoon Mort Zuckerman, whose tenure has been marked by unending turnover among top editors and now the defection of his No. 2 business executive.

Last week, the Daily News scored an impressive hire, nabbing Marc Kramer, former senior VP-circulation at The New York Times, to be its new chief executive. But that announcement was overshadowed by the Christmas-week defection of the veteran who was passed over for that position, and who can now help the Post in the one area in which it has always lagged.

“Les knows where all the bodies are buried, and he has very good relationships in the market,” says Gary Mathew, director-print marketing at media buying agency JL Media. “There is no doubt in my mind that he will be able to use his relationships to turn people into advertisers at the Post.”

Advertising champ
For now, the News remains the undisputed advertising champion, with billings of $491 million through November 2005 vs. $244 million for the Post in the same period, according to TNS Media Intelligence. But the Post is growing much faster: Its billings rose 23% during that time, compared with the News’ 2% gain.

According to Mr. Zuckerman, all that matters is which paper delivers for advertisers, and in that category, the News wins. Retailers including P.C. Richard & Son, Sleepy’s and Macy’s, eager to reach the News’ working-class audience, have helped the News remain profitable, despite its stagnant circulation in recent years.

The publisher expects his new CEO, Mr. Kramer, to help the News keep its edge with advertisers by improving its circulation. He also insists that Mr. Goodstein, a onetime associate publisher of the News, did not play a key role in ad sales in recent years.

“Yes, personal relationships play a part, but the people who are making the sales calls are still at the News,” Mr. Zuckerman says. “And what works for them is that the advertisers know the Daily News works.”

Mr. Zuckerman also denies claims that he is a mercurial meddler, prone to shuffling top management. He points out that Mr. Goodstein lasted 28 years at the paper, reporting to Mr. Zuckerman for the past 13.

Rotating door at the top
Other staffers have not lasted as long. Former editor in chief Michael Cooke, who was hired after a yearlong search following the resignation of Ed Kosner, quit in December after less than a year on the job. Mr. Kosner had lasted only three years, as did his predecessor, Debby Krenek. A string of senior executives on the business side have gone out the door in the past two years as well.

Some people who have worked for Mr. Zuckerman praise him as a smart, tough businessman, but say that his staff changes hurt the paper.

“He’s the Ponce de Leon of New York journalism, always looking for the fountain of circulation,” says Lou Colasuonno, senior VP-public relations firm Financial Dynamics and a short-lived editor in chief of the News. “That’s unsettling, and undermines even the most competent management.”

Traditionally, the News has been the bedrock paper for advertisers looking to reach the middle- and working-class shopper. But as the paper’s longtime circulation lead has dwindled to fewer than 20,000 copies, some of its most loyal advertisers -- including Modell’s and Macy’s -- have added the Post to their schedules.

With Mr. Goodstein on its rival’s payroll, the News may find the advertising game tougher than ever.

The Post has never had the retail impact or the array of ads that the News does,” says Russell Pergament, publisher of giveaway paper and rival daily amNewYork. “Les may be able to change that.”

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

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