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The idea of newspaper owners locked in Citizen Kane-style circulation contests seems anachronistic. Yet, the good citizens of New York are being treated to an old-fashioned battle between two genuine publishing heavyweights.

"It's shaping up to be the last great newspaper war in the US," Rupert Newton, a partner at Michaelides & Bednash's New York office, says. "It's two old newspaper families and it's about to really kick off. There's something almost Byzantine about it."

In the left-hand corner stands Mort Zuckerman, the respected publisher of the New York Daily News, for years the undisputed leader of the city's tabloid market. On the right (pretty far right, in fact) stands a challenger who needs little introduction: Rupert Murdoch. Or, more precisely, his son Lachlan, the publisher of the New York Post, America's oldest and fastest-growing newspaper. At stake is one of the most lucrative prizes left in American newspaper publishing - the ability to take Manhattan and deliver it, for a price, to advertisers.

The commercial strategy followed by Lachlan will sound very familiar to anyone with a working knowledge of the Murdoch family playbook. The Post has slashed its weekday cover price to 25 cents, half that of the Daily News, and has invested heavily in improving its product, introducing new colour presses and a range of supplements designed to appeal to advertisers. It's a strategy that has traded revenue for spectacular circulation growth. While the Daily News grew by 1 per cent over the past three years to 737,030, the Post shot up 42 per cent to 620,080.

"They've established a strong product and now want to turn it into a business," Newton says. "They talk a lot about leveraging skills from overseas in New York and the business strategy is what they did with The Times in London."

At first glance, there's an argument that the brewing showdown in New York has "made in London" stamped all over it. Aside from the Post's commercial strategy, there's its editorial positioning: a boldly conservative agenda that marries well with News Corp's Fox cable network and a reputation for witty, bombastic headlines that generate grins and water-cooler buzz in equal measure.

Under the Australian editor Col Allan, a News Corp veteran, it's tempting to see the Post as a US version of The Sun. And that's not the only echo of the London newspaper market that's threatening to make life difficult for the Daily News. This year saw the launch of AM New York, a daily freesheet backed by the Tribune media group. There are rumours that the Metro network could be planning a rival launch. In these circumstances, the News' recall of its British former editor Martin Dunn, in an editorial director role, appears an admission that the New York tabloid market is taking on a British shape. But appearances can be deceptive.

"Culturally, New York is extremely different and people have to get used to that," David Pattison, the chief executive of PHD Group, says. "The newspaper market is fundamentally different over here. There's no national newspaper network but there are very strong city and regional ones. The New York Post and the Daily News are local papers."

That means Lachlan Murdoch is competing for readers and advertisers on very different terms to his father, when he revolutionised UK newspapers in the 80s.

"In the UK, the papers carve up the population by establishing an almost tribal sense of identity," Bartle Bogle Hegarty's global head of planning, Emma Cookson, says. "But if you're a city paper, you have to appeal to a broader constituency because your remit is narrower."

New York is a broader constituency than most cities and, in a way, the Post and the News have carved it up but on geographical rather than political lines. The News' stronghold is in the outer boroughs - Queens, Brooklyn, The Bronx and Staten Island - where it has a substantial lead over the Post. Its rival's strength has always been in Manhattan, where it outsells the News and its credentials for celebrity and media gossip find a willing audience.

Manhattan's advertiser-friendly audience tallies almost perfectly with Lachlan Murdoch's commercial strategy, as does the fact that the Post's ratecard, though recently raised, still undercuts that of the News. An ad revenue increase of 13 per cent for the Post last year suggests that there's room for growth. However, the circulation maps raise another question: are these two papers really competing head to head?

The fact that both are showing circulation increases - and that the News remains profitable- suggest that the answer is no. Indeed, the evidence suggests New Yorkers pick up the two papers for different reasons and advertisers may well learn to as well. For its core readership, the News is a complete news source, an alternative to the New York Times. For almost all its readers, the Post is a source of buzz, gossip and entertainment and the evidence suggests that it's picked up along with the local broadsheet.

This is bad news for somebody - but that somebody isn't necessarily Zuckerman.

When Associated Newspapers launched Metro in London, it profited from two factors in favour of daily freesheets - an appetite for quick, easily digestible news among commuters, and an obvious distribution network.

The New York freesheets don't have the latter (the subway plays a smaller role in commuting), and, given the current positioning and price of the Post, they may find the former already satisfied. The biggest casualties of the New York tabloid war may turn out to be the city's newest arrivals.

HOW THEY STACK UP
NEW YORK POST
Publisher: Lachlan Murdoch, News Corp
Single page black and white: $17,500
Cover price (weekday): 25c
Average weekday circulation: 737,030
Ad revenue (2002): $125 million
NEW YORK DAILY NEWS
Publisher: Mort Zuckerman
Single page black and white: $24,000
Cover price (weekday): 50c
Average weekday circulation: 620,080
Ad revenue (2002): $410 million