Post Mortem

If the New York Post should ever close its doors, after a ­two-century-plus history, the man most responsible for this will be Chase Carey, who has been chief operating officer of Rupert ­Murdoch’s News Corp. for a dozen years. Murdoch’s ­company owned 140-odd ­newspapers and publications from England to Australia to New York, and Carey, tightly focused on the company’s ­bottom line, wanted to get all of them off the ­company’s books, since they had been ­underperforming the rest of the assets, and industry signs were ominous.

To Carey, the Post in particular was a ­flagship of “financial irrationality,” in the words of one News Corp. executive. The numbers are stunning. The Post, according to insiders, currently racks up losses of more than $50 million a year, significant even to a company with around $3 billion in annual profits.

Carey’s problem was that, rational or not, 82-year-old News Corp. CEO and chairman Rupert Murdoch loves news­papers. And since he’d relocated to New York in the mid-seventies, the Post has been his favorite—his “baby”—which made it untouchable.

But Carey, a skilled and artful Rupert-whisperer, bided his time, and finally an opportunity arrived. “He saw an opening and drove through it,” said the same News Corp. executive. The precipitating cir­cum­­stance was the scandal that engulfed Murdoch’s British newspapers when, in 2011, it was discovered that his Fleet Street reporters had hacked into the voice-mails of ordinary citizens and bribed government officials. Nearly 40 of his journalists and executives and other employees were arrested, including top executive Rebekah Brooks. Her trial is slated to begin at the end of October. News of the World, one of London’s most venerable papers, was shuttered to try to cauterize the scandal, and Rupert was summoned to testify before a parliamentary committee, where he was forced to declare himself humbled.

Bad as all this was, the most troubling fallout for executives was the scandal’s effect on shareholders—it brought long-held reservations about the company’s unorthodox stewardship into the open. Analysts had for decades grumbled about the “Rupert discount,” as one dubbed it: The chairman’s attachment to the ­newspaper business depressed News Corp. stock by as much as 30 percent, according to some estimates. And now, finally, the scandal had thrown the issue into high relief.

Carey, a low-key Harvard M.B.A. with an antic mustache, had for years casually floated the idea of a spinoff company, and now began a quiet lobbying campaign. His office is next to Murdoch’s at News Corp.’s Sixth Avenue headquarters, and over a period of months, Carey shuttled between them, building an argument for quarantining the newspapers inside a separate company. For Carey, it was a risk—if he lost, it could damage his career in the company. But he knew that the board of directors, heretofore loyal to Murdoch, had moved toward his position.

At first, Murdoch vacillated. As one ­colleague put it, “It’s a big decision, and you can’t undecide.”

Then in mid-June, shortly before the board of directors met in Rome to consider a split, Carey and Murdoch had a climactic discussion in the chairman’s office. Carey had one more bit of leverage: Murdoch’s son James had been in charge of the division that runs the British newspapers as the scandal escalated, and some accused him of complicity in a cover-up. A company split, isolating James, the media empire’s heir apparent, from the ongoing newspaper investigations, might further insulate him from the scandal. “I don’t know if Rupert saw it this way, but James did,” said a person who spoke to Rupert.

Rupert capitulated, though he was far from happy about the outcome. “He felt pushed into doing this,” said a person close to the situation. On news of the split, the stock price immediately jumped 8.3 percent.

Murdoch, who remains chairman of both entities (21st Century Fox, composed of 20th Century Fox, Fox Television, and Murdoch’s portfolio of international broadcasting businesses, and the new News Corp., also a public company, comprising The Wall Street Journal, the Post, HarperCollins publishers, and a sprawling archipelago of international publishing and cable holdings) professes not to view the new company as the poor relative. Instead, he indulged in a bit of his trademark braggadocio. “I have the chance to do it all over again,” he said. “There are opportunities everywhere.”

But in most quarters, the split was seen as definitely a wheat-chaff matter: “Shitco,” the new News Corp. was dubbed by staff at one of Murdoch’s papers. And Murdoch’s triumphal rhetoric belies a new reality: The new News Corp. (the split was made official on June 28) reaps one-sixth the profits of the old, making the Post’s losses harder to hide. The markets immediately took notice, with 21st Century Fox’s stock rising and News Corp.’s falling. The Post may, at long last, be forced to sink or swim. “It’s the first question every analyst will ask on earnings calls: ‘How much is the Post losing?’ ” said one analyst.

New York Post publisher and CEO Jesse Angelo: “We have one of the best brands in the business.”Photo: WireImage

The truth is that the New York Post has been happily existing on life support for a generation. As long as Murdoch has owned it, it’s never been a business. “The Post lived in a world where it didn’t have to do things a business has to do,” said one recently departed executive. “I don’t think it ever made money.”

For Murdoch, that mattered little, since the Post had any number of other functions. In New York City, it served as his clubhouse, where he could plot his attacks on all manner of enemies.

Murdoch weaponized the Post, skewering adversaries and elevating friends, and playing games with the city’s most illustrious personages. In 1977, shortly after he bought the paper, Murdoch gave little-known congressman Ed Koch crucial support, waging a campaign in the paper’s news pages that propelled him into the mayor’s office.

Murdoch likes nothing more than to get ink on his hands, and in the Post’s newsroom, he loved to play journalist, pulling up a chair to make headline suggestions, occasionally phoning his reporters with stories, which were duly published and attributed to anonymous sources. Reporters didn’t always know if they were true. Famously, in the summer of 2004, the Post trumpeted on the front page that Democratic nominee John Kerry had selected former House Minority Leader Dick Gephardt as his running mate, when in fact the next day it was revealed that Kerry had selected former North Carolina senator John Edwards; the source for the un-bylined story was said to be Murdoch. The Post denied this.

Partly because “Page Six” was the New York Times of insider and celebrity gossip, the paper managed to set the talking points for a certain kind of New Yorker well into the aughts, which was, for Murdoch, much better than profits. In 2001, Murdoch brought in Col Allan, a fiery Australian with a chip on his shoulder, to edit the Post. You could disagree with its politics, and much of its audience did, but Allan’s Post was a pure distillation of the tabloid spirit, gleefully pounding its enemies or sticking animal heads on them (SURRENDER MONKEYS; AXIS OF WEASELS), throwing fuel on New York’s bonfire of the vanities. A great tabloid has a relentless comic ­cruelty, which is what Allan brought to his job. Most recently, Anthony Weiner engendered an endless series of penis puns. Ugly as the spectacle could sometimes get, it is hard to imagine New York City without the Post’s scabrous running commentary.

Allan was never burdened by financial concerns—no one in the newsroom could remember his ever bringing them up. And so much fun was being had at the Post that the changes in the media business over Allan’s tenure barely intruded. Even as the Post moved from front-page triumph to triumph, newspaper readers were migrating from newspapers to the Internet. But Allan held the line, and its website was mostly a balky afterthought. “Col hated digital,” says a former employee. He couldn’t fathom why reporters would want to put their Twitter handles next to their bylines, raging loudly at their self-­indulgence. And he lobbied Murdoch not to overinvest money in the web. Allan’s position was: Let’s not abandon what we have.

It was never abandoned, but it was eroded. From a high of 700,000, achieved in 2007 when the paper dropped its newsstand price to a quarter, print circulation plummeted to under 300,000 last year (Rupert Murdoch, by comparison, has nearly 500,000 Twitter followers). A sense of desperation seemed to drive some of its coverage as it clawed to get a piece of big stories. The Post had never observed Columbia Journalism School rules—but recently there have been a series of glaring howlers. The Post labeled Nafissitou Diallo, the African woman who claimed she was assaulted by Dominique Strauss-Kahn while cleaning his hotel room, a “hooker,” which caused her to sue, and led the Post to settle. And after the Boston bombings in May, the Post featured a fuzzy photo of two unnamed bystanders carrying backpacks, with a headline blaring bagmen. The two men, who were of Moroccan descent, turned out to be running enthusiasts.

Another factor in the Post’s current situation is that Rupert Murdoch for the past several years has been in the midst of another newsprint passion. In 2007, he paid the outlandish sum of $5.6 billion for The Wall Street Journal and its parent, Dow Jones. News Corp. soon wrote down the investment, conceding in effect that it had paid almost twice what the ­or­gan­­­izations were worth, but to ­Murdoch it didn’t seem to matter. With the Journal, he could go head-to-head with the New York Times, long his personal bête noire and one that he knew the Post could never take down, no matter how entertaining its headlines.

And thus Murdoch’s clubhouse ­relocated. He installed the Journal on the third floor of News Corp.’s headquarters and soon began roaming the Journal’s newsroom, huddling with its editor and helping to direct its coverage. And, if one overlooked Murdoch’s overpayment, the Journal actually made some financial sense. Insiders claim that the paper and its website make a profit, and its circulation is now the largest of any American paper.

As a further indignity, Murdoch agreed in March that the Post had to at least genuflect to the notion that it was a business. Amid the tumult of the aughts, with newspapers and magazines relentlessly pruning their newsroom, Allan hadn’t ever had to lay off people. “We have the only newsroom that’s grown in the past decade,” one executive told me. But in May, Allan announced plans to reduce the editorial staff by 10 percent. The cuts were largely symbolic—the Post saved perhaps a few million dollars a year. But the meaning was plain—at long last, the Post had to bow to reality, gesture though it was. “Everybody does it in the business, and we did it,” said the executive.

Allan didn’t relish the role of Post hatchet man and occasionally mused out loud about retiring and returning to Australia. His once-happy newsroom seemed confused and sad. Its marquee journalists, unsure of the paper’s future and finally impatient with the mood swings that had come with Allan’s swagger, headed for the exits. Some of the mainstays, those who helped define the Post, are gone. ­Controversial cartoonist Sean Delonas took a buyout in June. Dan Mangan and Josh Margolin, two of the paper’s most productive journalists, left for other media jobs. Andrea Peyser announced in her column that she was taking a leave of absence. She had personal reasons, but the symbolism was striking.

“The newsroom was a ghost town,” says another reporter who departed recently.

In the spring, Allan, 60, sent an e-mail to the staff in effect announcing his defeat. “We will begin our transition to a truly ­digital-first newsroom … This organization is going to change fundamentally … I will be giving my full cooperation and attention. I ask you to please do the same.” To those who knew Allan, it read like something a hostage might recite.

In a sense, the person who took Allan hostage is Jesse Angelo. Angelo, 39, is everything Allan is not. He’s a son of privilege—his father is a hedge-fund tycoon; his godfather is Michael Eisner, the former CEO of Disney. And where Allan, a college dropout, had a mordant, fight-till-the-last-man sense of outrage about the world, Angelo is a pragmatist—discreet, focused, and relentlessly optimistic. You listen to him and you think maybe it’s possible to give the New York Post new life.

Angelo’s arrival marked a new chapter for Allan’s Post, which had long embraced its image of troublemaking outsider. Angelo is an insider, not only to the ­manner born but also, from his earliest days, almost a member of the Murdoch family. He attended the Upper West Side private school Trinity with James Murdoch, after which the two roomed together at Harvard.* Over the years, he made an impression on the patriarch. “Rupert just likes him,” says a News Corp. veteran.

Allan is said to have resented the fact that because Angelo was a Rupert favorite, he had to cater to him too. But Allan also recognized his talent, and in 2001 appointed him city editor—at age 27, he was the youngest one in the history of the paper. Now he now runs it.

I meet the youthful new face of the New York Post in a conference room on the third floor of News Corp. headquarters. There is something pristine about Angelo’s appearance, as if a couple of decades in the news business haven’t left a mark. Once chubby, he’s assiduously remade himself. He now looks fit, and stylish in a downplayed way. He wears casual tan pants and a blue button-down shirt. He’s cordial but not exactly friendly, and delights in batting back or dismissing my questions—like a disciplined diplomat sticking to talking points.

“You have a healthy distrust for the media,” I finally say.

“No, I distrust you,” he responds, half-joking.

“Why did you decide to talk to me?” I ask.

“Because of your bullshit premise,” he responds pointedly. He’s referring to my assertion that the Post’s future is limited. “Many people have wanted to write our obituary in the past, and it is wishful thinking. We’re not going anywhere,” he says. “We have one of the best brands in the business.”

Angelo’s bet is that he can rescue the Post by embracing the Internet, transferring its voice and wit and scoops and delicious inside-baseball tone to the place where the eyeballs now reside. “To unleash the full power of the Post on the web is going to be phenomenal,” he tells me.

*This article has been corrected to show that the Trinity School is on the Upper West Side, not the Upper East.

Angelo received his hands-on Internet education when Murdoch plucked him from the Post to edit the Daily, an iPad-only hybrid of magazine and newspaper to which Murdoch gave a $30 million annual budget. Angelo had developed the Post’s iPad app, but creating content for an omnivorous stand-alone daily publication was terra incognita. Still, Angelo tells me, “I jumped at it. How many times in your life do you get to do a start-up?” He set up a command post in a corner of the Post’s newsroom, tucked behind a little wall with shiny new computers, the envy of the newsroom. He was, for the first time in a decade, out from under Allan’s direct control. Some said that Allan appeared irritated at Angelo’s elevation—addressing a group of editors at the time, Allan remarked with mock formality, “Mr. Angelo couldn’t be with us today. He’s working on a special project.”

But it didn’t take long for the number crunchers to rebel. “The finance people told Rupert he couldn’t keep losing money on all these things,” says a News Corp. insider. “He wasn’t going to close the Post, so he closed the Daily.” In its 22-month life, the Daily claimed to be the most-subscribed-to publication in the Apple Store’s newsstand, though when it came to actual business, its principal boast was, We lose less money than the Post. “The business didn’t turn out to be what we and many other publishers thought it was going to be,” says Angelo.

But the demise of the Daily was barely a speed bump in Angelo’s ascent. Indeed, the Daily proved a career accelerator, helping Angelo rebrand himself—he was now a digital guy, something that the Twitter-loving Murdoch realized he desperately needed.

A month after the Daily’s demise, Angelo was named CEO and publisher of the Post, and as he moved to the top of the masthead—in front of his former boss, Allan—the tenor of the Post’s newsroom changed. Allan was a fierce, caustic boss who preferred ruling from his office—“You can call Col feisty,” allows Angelo. With a hangover, he was the scariest thing many a Post employee had ever seen, regularly booting editors out of editorial meetings for any perceived infraction.

Angelo is his diametrical opposite. He is even-tempered and private—he lifts his bottle of Poland Spring as we chat about Allan’s penchant for nighttime revels. Angelo doesn’t yell—“Jesse doesn’t like to be seen as bad guy. Ever,” says one of his employees. Reporters who have worked for Angelo admire him, even if he doesn’t inspire love. He is the hardest-working editor, says one colleague. Most important to journalists, he “didn’t let the shit roll downhill.” Some editors passed Allan’s abuse along to their journalists. Angelo insulated them.

Once installed, Angelo quickly adjusted the Post’s course. His watchword was “web-first.” Allan was resigned to the digital future but hardly happy with the development and irritated at the new balance of power. “You’re not my boss,” he once told Angelo, according to several sources, though Allan denies making this remark.

In July of this year, Allan was shipped off to Australia, where he was supposed to energize the company’s 120 newspapers and in particular the papers’ campaign to dump Prime Minister Kevin Rudd, a onetime Allan friend who’d fallen out of favor with Murdoch—which he did successfully. During this period, Angelo temporarily served as editor-in-chief, and with Allan gone, Angelo accelerated the pace of change. He hired a national sales manager, a web-only creature who’s “never sold a newspaper ad,” he boasts. He re­organized the newsroom around the rhythms of the digital world. Angelo moved the morning editorial meeting from 11 a.m. to 8:30 a.m., since morning readership on the web spikes at about 9:30. Angelo thinks of readers as “clients” and makes sure that his journalists are attuned to client needs.

“We have screens up in the newsroom showing in live time metrics on the site,” he says. In this, Angelo is representative of the new News Corp. executive class. Allan viewed himself as a pirate who went with his gut. Angelo prides himself on being competent and prescient, not bucking the tide but getting ahead of it. For him, it’s “metrics and analytics” that ought to guide editorial coverage. “Using metrics as part of our editorial conferences is being implemented too,” he tells me.

Angelo hired Remy Stern, a Gawker alumnus, to help relaunch the Post’s website, which Angelo described as “without great design or back end.” Angelo’s digital Post is designed as a visual rather than reading experience, and it’s an impressively radical transformation. It resembles a movie poster more than a newspaper, a series of photographs with headlines. “If you look at the data, if you look at what readers want, they want photos. Sometimes video,” explains Stern. Stern was encouraged by the early response. In the past year, has been visited by about 7 million people per month, according to Comscore, a web-traffic service. After the September 5 relaunch, traffic jumped more than 12 percent, according to the Post’s internal tracking. It was a good early showing, though rival ­ still attracts about twice as many online visitors as the Post.

Meanwhile, every Post reporter is being trained in how to use Twitter to extend “the brand,” as Angelo calls it, and their tweets will be embedded in stories. “We have been training the editorial staff to create its own presence in social media so they have their own voice.” In this regard, Angelo is leading the way. His Twitter feed is the first thing he reads when he wakes up at six each morning.

Angelo’s business model is dependent on attracting national advertisers. Part of his strategy is to translate the newspaper’s sensibility onto the Internet—to create at last the national online paper the Daily was supposed to be. To do that, he is betting that “Page Six” can lead the way, breaking stories, driving traffic, and attracting those coveted car-company advertisers.

Transplanting the Post brand into this new terrain is by no means a sure thing. To start with, the Post has been historically, and gloriously, rooted in New York City. Even Post partisans concede it is not a brand with national reach. “There are probably only three national newspaper brands in America: the Times, The Journal, and USA Today,” says Barry Lucas, an analyst with Gabelli. “Everything else is kind of a local franchise.”
And the Post is getting a late start in a very crowded marketplace. In the days before the Internet, it could be argued that “Page Six” owned gossip—it was the most important outlet in the country. Now there’s TMZ and Gawker and Drudge Report and the Daily Mail and Huffington Post and even the Daily News, run by a former Allan protégé, and a thousand other sites, all chasing the same eyeballs. “Maybe five years ago you could say the Post was sensational,” says Ed Atorino, a newspaper analyst with Benchmark Company LLC.* “Now there’s so much sensational on the Internet that it’s hard to stand out.”

Tabloids, snappily toned and visually driven, may have an advantage in translating themselves to the Internet. And, as analysts point out, the Post may have as good a chance as any media outlet at succeeding on the web, though few newspapers have found the Internet truly transformative to their business. “Anyone betting on digital to save a newspaper franchise will likely find it tough going,” said Craig Huber, an independent media analyst with Huber Research.

But when I mention this kind of thinking, Angelo raises his eyebrows and launches into his argument for the Post’s future. “There are so many new sites that say, ‘Our voice is going to stand out.’ ” He answers his own charge. “We are known for being bold, irreverent, funny, for applying a certain wit and verve to our news coverage. Our voice stands out. It has stood out for 212 years.”

And so Angelo is moving swiftly ahead, doing the types of things that all media executives now do—offering its editorial talents to advertisers, along with its editorial real estate. He has launched a division that he calls Post Studios to work with advertisers to create content. “I would say, ‘You, dear advertiser, want to create content. Come to us; I can help you create better content than you can perhaps do on your own. We are the New York Post. We create content.’ ”

Allan returned from Australia last week to his position as editor, but no one doubts that, as one observer explains, “the Post belongs to Jesse.” And Angelo won’t admit to any doubts. “I think we can be a better, stronger business. And we will be,” he tells me. “It’s going to take time.”

Murdoch may be the last newspaper sentimentalist—he still talks of a mission to “inform and educate.” And he still has boundless pride and optimism for his paper. “The New York Post is one of the best media brands in the world,” he e-mailed me. “It’s got bite, spirit, a fun, big voice, and is loved by many for good reason.”

But in the current world, these aren’t the only requirements for a News Corp. newspaper. Robert Thomson, the former Journal editor who now is the CEO of the new News Corp., bills himself as a by-the-­numbers businessman. “Journalists,” he told shareholders, “must have a clear understanding of the value of the story to the reader and the client.” He emphasizes the “time value” of news. Reporters break a story. “For a minute, that story is worth tens of ­millions,” he said. Thomson insists that content must pay its way. The days of subsidizing money-losers may be drawing to a close, which isn’t exactly uplifting news for the Post. As Huber says, “One has to think that News Corp. senior management will think harder and harder about whether to continue to bankroll the Post’s annual losses, with no end in sight, unfortunately.”

I ask Angelo how much time he thinks the Post has to show results. He shrugs. “No one’s given me a time frame. We are here to stay. We’re not going anywhere, as much as our competitors wish we would go away.”

But at 82, even Murdoch recognizes that time is a factor. “My goal for the new News Corp.,” he told shareholders, “is to compress the success time line of the original News Corp. from 60 years to ten years.” At the Post, in typical Post fashion, that thought has been reduced to a snappy headline. “We’re fine until the day after Rupert dies.”

*The original version of this article incorrectly identified Ed Atorino of Benchmark Company LLC as Ed Antorino of Benchmark Capital.

Post Mortem