Newspaper Price War Bites Britain's Vulnerable Dailies

BRITAIN'S 12 national daily newspapers and their nine Sunday stablemates are in the grip of an escalating price war, which news media analysts say is likely to end in tears.

Hostilities were opened last year, when Australian newspaper magnate Rupert Murdoch ordered the price of the London Times cut from 45 pence to 30 pence (70 cents to 46 cents) a copy.

Executives of Mr. Murdoch's News International made no secret of their aim to undermine the rival Daily Telegraph.

At first, the Telegraph tried to keep its price steady, but after some weeks, Conrad Black, the proprietor, dropped it to 30 pence as well. The next day, to Mr. Black's dismay, Murdoch retaliated by lowering the price of the Times to 20 pence. The scene, says news media analyst Roy Greenslade, was set for a ``battle of the Titans.''

No country can compete with Britain for the number or variety of national newspapers. In a country of 51 million people, daily sales of newspapers is 14.1 million. Readers buy 15.5 million Sunday papers.

Although the figures suggest a healthy industry, proprietors face serious problems. Over the last decade, sales of daily and Sunday papers have been falling; to preserve advertising revenues, which depend on circulation ``reach,'' managements have had to fight for readers.

By twice cutting the price of the Times, Murdoch hoped to attract subscribers not only from the Telegraph but also from the Guardian and the Independent. Until a few months ago, the Telegraph was selling 1 million copies, compared with 471,000 for the Times, 400,000 for the Guardian, and the Independent's 284,000.

So far, the price-cutting strategy has worked for Murdoch. The Times is selling more than half a million copies. The Telegraph's sales have fallen below 1 million.

The pressure on competitors lacking the muscle provided by Murdoch's worldwide media interests - Murdoch owns BSkyB satellite TV and five national newspapers in Britain alone - is proving severe.

Industry analysts say the Telegraph is likely to continue losing circulation. The Guardian remains fairly steady. But the Independent is in trouble.

Faced with revenue problems, last year it raised its price to 50 pence a copy. Last week, faced with Murdoch's squeeze strategy, it lowered the price to 30 pence. A new editor has been appointed to pump fresh life into its flagging pages.

A basic challenge for British newspapers, says Leo Burnett, owner of a major London advertising company, is the heavy competition from terrestrial and satellite TV, and commercial radio. All are battling for advertising, Mr. Burnett says.

Newspapers have begun producing new color sections aimed at attracting display advertising. The Times, Telegraph, and even the sober pink-paged Financial Times have introduced special travel promotions. The Independent runs a lottery.

Analyst Mr. Greenslade says he sees a trend toward the ``tabloidization'' of quality papers to attract younger readers.

Murdoch is well-placed to reap advantages from his cross-ownership of newspapers and BSkyB television. Executives at the Sun, his mass-circulation tabloid, are reportedly planning to coordinate newspaper and TV advertising sales. If successful, Murdoch's Times, Sunday Times, News of the World, and Today newspapers, may make similar deals with BSkyB.

This leaves quality newspapers that lack a broad media base vulnerable. The Guardian has TV interests and also owns the barely profitable Sunday Observer. The Independent and Independent on Sunday urgently need to increase circulation.

``By next year,'' says Greenslade, a former Murdoch employee, ``it is possible that one title or more will be forced to close.''