Murdoch Era at N.Y. Post Near End

Media baron Rupert Murdoch is close to selling the New York Post, once the gem of his American media properties, to a Manhattan real estate developer named Peter S. Kalikow, both sides said Friday.

“A deal is likely,” said Howard Rubenstein, Murdoch’s longtime spokesman.

Talks, which became serious earlier this week, continued Friday without agreement and were expected to go through the weekend.

A major obstacle is that Murdoch must negotiate concessions with the newspaper’s unions satisfactory to Kalikow. Murdoch is scheduled to meet with the unions Monday.

Those talks could prove difficult, however. Similar stipulations scuttled an agreement between Tribune Co. of Chicago and Joseph L. Allbritton in 1982 to sell another struggling New York paper, the Daily News.

Sources close to the unions said labor leaders could ask Murdoch to lower his asking price to finance worker concessions and to establish an employee stock ownership program.

“The unions are players here,” said one source familiar with the unions’ plans. “It is just beginning now.”

On the other hand, the source said, “I think there will be a deal down the line.”

The price, which includes the Post’s real estate in lower Manhattan, is roughly $40 million, about $9 million more than Murdoch paid in 1976 for the paper, founded in 1801 by Alexander Hamilton.

One of Murdoch’s conditions is that Kalikow must continue to operate the troubled tabloid, the nation’s oldest continuously published paper. Kalikow reportedly will install Peter Price, owner of New York’s glossy Avenue magazine, as the Post’s new publisher. Price’s office referred all calls to Kalikow’s spokesman, Martin McLaughlin.

Kalikow may appeal to Murdoch, sources said, in part because he may be politically more conservative than another key suitor, Leonard Stern, who owns the Hartz pet products company and the Village Voice weekly newspaper. Kalikow is said to be a political ally of New York’s Republican senator, Alfonse M. D’Amato.

If the Kalikow deal fails, however, sources said Stern is still interested.

Murdoch must sell the paper because of federal regulations that forbid anyone from acquiring a newspaper and television station in the same city.

In 1985, in an attempt to build a fourth television network, Murdoch purchased WNYW-TV in New York as part of his $2-billion acquisition of Metromedia Inc.

The TV deal, which already has forced Murdoch to sell the Chicago Sun-Times, put an end to the Australian-born publisher’s brash attempt to defy conventional wisdom and revive second newspapers in this country using British-style sex and scandal tabloid journalism.

Mixed Signals From FCC

Unfortunately, the British formula so profitable for Murdoch in London derived most of its revenue from circulation. It failed to prove profitable in America, where newspaper economics are based largely on advertising.

When Murdoch won a temporary waiver from the Federal Communications Commission allowing him to own both the Post and the New York TV station, many suspected he hoped eventually to convince the FCC that no one wanted the paper so he might be allowed to keep it permanently. Then, last year, the FCC began considering doing away with the so-called cross-ownership rule altogether.

Those plans were snagged late last year, when Sen. Edward M. Kennedy (D-Mass.) inserted an amendment into a catch-all spending bill forbidding the FCC from changing the cross-ownership rule or granting new waivers to Murdoch. Murdoch has brought suit calling Kennedy’s amendment unconstitutional. That suit is pending.

If Murdoch was stalling to keep the Post, “it all sort of backfired,” said Wall Street analyst Edward J. Atorino of Smith Barney, Harris Upham & Co. “He should have sold the paper a year ago. The paper has deteriorated, the stock market has gone down and the competition from the New York Daily News, and now Newsday from Long Island, has gotten stronger.”

Known for Its Headlines

Only a few weeks ago, indeed, Murdoch said publicly that he wanted closer to $55 million for the paper. Now he may be willing to settle for significantly less.

It would prove the last of many financial miscalculations with the paper. In his nearly 12-year tenure, the Post gained Murdoch fame but no profit.

The Australian publisher became a New York power by taking the last surviving afternoon paper in New York, the paper of the liberal Jewish middle class, and turning it into a blue-collar tabloid best known for headlines such as “HEADLESS BODY IN TOPLESS BAR.”

With the help of a lottery promotional game called Wingo, Murdoch boosted Post circulation from 489,000 in 1976 to a high of 962,078 in 1983.

But Wingo was expensive, and the Post’s bulging circulation failed to win enough advertisers, who preferred the more affluent readership of the New York Times. Murdoch never turned a profit with the Post, which last year lost an estimated $17 million, despite a rise in advertising linage in 1987.

“If a new publisher can reposition the Post and carve out a segment of the market that would be attractive to advertisers and somehow reduce costs, it’s possible” the Post could turn a profit, Atorino said. “But those are a lot of ifs.”

Thomas B. Rosenstiel reported from Los Angeles and John J. Goldman from New York.