Yesterday, the Wall Street Journal launched a frontal assault on the New York Times with the introduction of a metro section covering local New York City news. The managing editor of the Wall Street Journal made some harsh remarks about his rival in the UK's Guardian yesterday:
He lambasted the journalism of the New York Times, citing an average piece as one that began with a theme and then worked backwards to facts. "Themes should emerge after a thorough going-through of the facts, not the reverse, and readers can see through this sort of journalism which is why so many have lost faith in it." He dubbed NYT journalism as "social activist journalism", complaining it had done much harm. "If you want to be a social activist, join Amnesty International." And he went on to castigate the "journalistic elite" which he said had "all the ossification of the traditional bourgeoisie".
From a business standpoint, the key question is: What will happen to advertising rates in the New York metro area? Here, economists and business strategists like to use game theory to think about the answers to that sort of question. After all, we have a competition between two rivals, each trying to anticipate what the other will do in response to a particular action. Game theorists might speculate, for instance, on the likelihood that both parties would engage in a price war, or perhaps avoid one and come to a more cooperative solution.
However, this particular rivalry poses a problem for game theorists. Why? Murdoch and his team clearly aren't thinking "rationally" from an economist's perspective. By that, I mean that they aren't necessarily thinking purely in terms of near-term profit maximization. Murdoch and his team, as evidenced by the quotes above, may have some other non-economic motives in this fight. Moreover, Murdoch tends to take a long term view in his competitive battles, which means he has a history of taking less profit for long stretches so as to damage an opponent. Having considered Murdoch's motives and personality, we now might come to a very different conclusion than the pure game theory models might predict. Will this be an aggressive battle? Almost assuredly. Will it be fun to watch? Absolutely!