• by Erik Sass  @eriksass1, March 23, 2010

The fragile truce between The New York Times and The Wall Street Journal has ended, with the WSJ set to introduce a local New York-focused section on April 12. The goal is "killing" its rival, according to one Dow Jones "insider" cited by the NYT.

While this is doubtless hyperbole, WSJ clearly intends to compete closely with the NYT for local ad revenue, threatening to take as much as 10% to 20% of its Manhattan-focused retail advertising.

Dow Jones (acquired by Rupert Murdoch's News Corp. in 2008) is prepared to spend $15 million on the new, 12-page New York section, including salaries for about 35 editorial staffers, according to the NYT, with plans to cover real estate, culture, business, sports and metro news.

The move effectively ends a longstanding, tacit agreement dividing the journalistic world into two domains, with the NYT dominating general news -- including local and metro reporting -- and the WSJ dominating financial news and business information.

In the heyday of print newspapers, this division of the market allowed both newspapers to excel in their respective arenas, while sharing the small but highly desirable audience of business professionals. Now, with the new local section, the WSJ is going after two key NYT demos: female readers and home subscribers.

The new competition from WSJ has spurred major activity at the NYT, which can scarcely afford to lose more print ad revenue. In the fourth quarter of 2009, print advertising revenues at NYTCO's News Media division fell 20%, contributing to an overall 24.5% decline in ad revenues from $1.77 billion in full-year 2008 to $1.34 billion in full-year 2009. This compounded a 13.1% decline in advertising revenues in 2007-2008, which in turn compounded a 4.9% decline in 2006-2007.

Scrambling to fend off the challenge from WSJ, the NYT has mounted a major marketing campaign in trade publications, targeting advertisers with messages highlighting the newspaper's strength in areas like female readership, high culture and the WSJ's own bailiwick, the business world.

The NYT is also moving to introduce more digital content offerings and services, including a new mobile real estate app to match its redesigned online real-estate listings. The online real estate listings and the iPhone app, both announced Tuesday, offer users more market data and search capabilities. The iPhone app also features a GPS-enabled feature for locating property based on proximity to the user.

The NYT's vulnerability to the WSJ attack is due, at least in part, to its own aggressive cost-cutting campaign over the last couple of years. In September, the paper axed its stand-alone "Metro" section, which began publication in 1991, but dwindled in size in recent years. "Metro stories" are now appended to the paper's first section, after international and national news.

Then in March 2009, it stopped publishing its stand-alone "City" section, but said the content would still appear in the paper's "New York" section.

Finally, in September 2008, it cut weekly sections covering New York City, Long Island, Westchester County, New Jersey and Connecticut, consolidating all these stories in a new, single section that appears on Sundays. The newspaper also eliminated the stand-alone "Escapes" section, consolidating this with its "Weekend" section.