Billionaires Battle Over Pennies
by Dan Walsh
How W.R. Hearst convinced J. Pulitzer to give up half his revenue.
W.R. Hearst turned the San Francisco Examiner into a publishing powerhouse. He wanted to repeat this success in New York. He bought the one-cent Morning Journal and set his competitive sights on Joseph Pulitzer’s higher-brow, two-cent New York World, which was the dominant paper at the time. Hearst had deep pockets, so he wasn’t afraid to outspend Pulitzer on better printing presses, illustrations, advertising, etc. There was no denying that the Hearst designed Journal was more beautiful than the World, but Hearst had a hard time competing on quality. The best journalists in New York had already been snapped up by Pulitzer, which left Hearst with a rag tag group of reporters. Pulitzer also had a decisive advantage in his genius editor Morrill Goddard, who practically invented the oversized Sunday paper. Unable to compete on merit alone, Hearst pulled one of the greatest business coups of all time and forced the invincible Pulitzer to dig his own grave.
Instead of searching for an editor to match Goddard, Hearst hired him. Goddard was reluctant to leave his team behind, so Hearst hired them as well. Until then, Pulitzer had considered Hearst a young upstart – not worth the attention. In Hearst’s mind, he was competing with Pulitzer for circulation, but Pulitzer didn’t even have Hearst on his radar. After Hearst hired away Goddard and his team, Pulitzer was forced to take notice. The coup was crippling to the Globe. Pulitzer met with his top officers to formulate a plan.
…they had decided that the best way to destroy Hearst and the Journal was to drop the price of the World to a penny. No New Yorker in his right mind would buy Hearst’s Journal when, for the same penny, he or she could have Pulitzer’s World.15 The decision was made hastily and would turn out disastrously. In dropping the price of his paper, Pulitzer played directly into his young competitor’s hands.
Not only did Pulitzer effectively cut his revenue in half, but his reaction to Hearst’s antagonization brought him down to the same level as Hearst. Pulitzer had occupied a lofty position as a two-cent paper – the high ground – but now he was willingly in the swampy lowland with Hearst. It was the beginning of the end for Pulitzer.
Before the hiring coup, Hearst wasn’t able to effectively engage Pulitzer. He wanted nothing more than to pit his Journal against the Globe, but Pulitzer wouldn’t engage. So Hearst went around the typical tactics of business competition, and hit Pulitzer where it hurt. It was a dirty move, admittedly, but it forced Pulitzer to engage. Angry enemies make hasty choices. Whether he intended for all of this to happen or not, in one bold move Hearst increased the quality of his paper, lessened the quality of the Globe, and crippled his competition financially.