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EXTRA! Wall Street Journal heads into NY hyperdrive

By Jennifer Saba

NEW YORK (Reuters) - The Wall Street Journal is offering some businesses firesale prices for full-page ads in its highly anticipated New York edition to seduce advertisers away from The New York Times.

Wall Street Journal Managing Editor Robert Thomson and other executives plan to unveil the edition during a press briefing on Monday morning.

The section will cover local news, culture and sports, and will be incorporated within the Wall Street Journal. It will be circulated in the New York area.

Rupert Murdoch, whose News Corp owns the Journal, is betting that New Yorkers want an alternative to the Times, and he is willing to risk the ire of any shareholders not interested in pulp and ink.

David Joyce, an analyst at Miller Tabak, said investors "tend to hate" the newspaper assets of News Corp.

"They wish it could be spun out, but you have to go into News Corp assuming they're going to be around. Newspapers, the power and influence that come along with (them), are integral to the News Corp strategy."

To entice advertisers onto the pages of the New York edition, the Wall Street Journal is deeply cutting the cost of a full-page ad and, as a bonus, throwing in a full-page ad in the New York Post, also owned by News Corp.

Some local businesses can buy a full-page ad for $19,000, according to a Wall Street Journal presentation to advertisers that was shown to Reuters by a source. That is a steep discount to full-page print ads in large newspapers that can cost up to

$90,000.

A Dow Jones source, who spoke on condition of anonymity, said only a few New York area businesses not currently advertising in the Wall Street Journal or the New York Post were being offered the discount.

"With News Corp having a vast array of diversified assets, they can afford to essentially buy market share in the New York newspaper market by offering cut-rate advertising," said Miller Tabak's Joyce. "That could perhaps hurt New York Times' finances."

WHACKED BY RECESSION

The newspaper industry, already weakened by a migration of advertising to the Internet, has been roiled by one of the worst economic downturns in generations.

Days before the new edition of the Wall Street Journal was due to hit the streets, several newspaper companies, including the New York Times Co, published quarterly financial results that revealed it could be a long road back to ad revenue growth.

The Wall Street Journal, however, showed advertising revenue growth in the first quarter.

"Competitors have been accusing each other of rate cutting since the beginning of time," Michael Rooney, chief revenue officer of the Wall Street Journal, said in an emailed statement. "The simple fact is that the Times' ad revenue is down 12 percent and our ad revenue is up 25 percent in the latest quarter."

Scott Heekin-Canedy, president of the New York Times, told analysts and investors on an earnings call on Thursday that the newspaper was feeling some heat in the New York advertising market. "We are seeing pressure, but we don't believe it's so far having any effect on our business," he said.

On the call, Times Chief Executive Janet Robinson ticked off a litany of strengths, including higher online traffic and national advertising share, to explain why the New York Times was prepared to do battle over the city's newspaper market.

"We don't shy away from competition," Robinson said. "We never have, we never will."

In an interview on Friday, Heekin-Canedy said the New York Times relies on the strength of its relationships with advertisers. "We do smart discounting and come up with ways besides price to achieve objectives."

HELLO AMERICA

The Wall Street Journal has long been viewed as a vehicle to reach national audiences.

"A number of our clients that run in the Wall Street Journal are happy for the broad reach against that core audience," said Scott Kruse, managing director of GroupM, an advertising agency that places ads for clients such as Sprint Nextel Corp and Volkswagen. "A lot of our clients don't just want New York."

Kruse said the New York edition of the Wall Street Journal would have a daily circulation of 235,000, which he described as a small add-on for Journal advertisers. "The question is do you really need a local overlay on top of what you are doing."

Sharon Enright, associate media director for advertising agency RPA, said the Wall Street Journal had approached them about the New York project but, "It doesn't make sense for us." Enright said that she and her colleague Marie Zymkowitz buy ads in the Wall Street Journal to reach a national upscale audience.

TODAY NEW YORK, TOMORROW?

Under Murdoch, the Journal has the coffers to fund the experiment. The newspaper already produces a weekly section dedicated to San Francisco and it cranked up distribution in Detroit when the Detroit Free Press and the Detroit News cut home delivery.

"I would not underestimate Mr. Murdoch because he is playing with a large sum of cash," said Benchmark analyst Edward Atorino.

"Some people are waiting with bated breath, including Janet."

(Reporting by Jennifer Saba, additional reporting by Yinka Adegoke; Editing by Tiffany Wu, Toni Reinhold)

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