'Mirror' claims lead in sales war: Michael Leapman reports on an early price-cutting victory in what promises to be a long tabloid circulation struggle (CORRECTED)

CORRECTION (PUBLISHED 14 JULY 1993) APPENDED TO THIS ARTICLE

THE Daily Mirror claimed a short-term victory yesterday after its latest bout of rivalry with the Sun. The Mirror's one-day offer of a 10p cover price - down from its regular 27p - earned it a sales increase of more than 15 per cent over the previous Monday, according to its circulation manager, Nick Thompson.

Mr Thompson claimed that the Sun, which began a summer- long reduction of 5p, to 20p, was up by only about 6 per cent. News International, publishers of the Sun, would not confirm the figure.

The main victims seem to have been the Star and Today, which both stayed at 25p. Today, also owned by News International, is already 5p cheaper than its rivals in the middle market, the Daily Express and Daily Mail - neither of which seems to have been hit significantly by the price changes. Sales of all tabloids were about 8 per cent up on Monday of last week, Mr Thompson calculated, because of the price cuts.

Commentators call it 'an old- fashioned circulation war', but there is nothing old-fashioned about the contest between the Sun and the Mirror. The daily press is in a permanent state of war, constantly updated, over price and everything else.

The latest outbreak is thoroughly modern in that television is a weapon. While the Sun ran jokey commercials on Sunday night portraying its proprietor, Rupert Murdoch, bound and gagged to prevent him vetoing the move down to 20p, the Mirror editor, David Banks, muscled his way on to the news bulletins with his one-day special offer of a 17p cut to only 10p.

Newspapers are less price sensitive than, say, groceries. Most readers become attached to their regular papers and do not switch on a whim. The view in the trade is that, with the Mirror back at 27p today, and the Sun planning to stay at 20p for the rest of the summer, the Sun could eventually gain about 100,000 on its present daily sale of 3.5 million. The Mirror, which with its Scottish sister the Daily Record sells about 3.4 million, is certain to fall back, but probably by a lower amount.

Papers competing in the same market normally shadow each other's price movements closely, as the accompanying table shows. However, when the Mirror went up to 27p last summer the Sun did not follow. As a result, a comparison with the figures for the first six months of this year and last shows that the Mirror's sales down by nearly 200,000 while the Sun's have dropped by only 70,000.

David Banks said yesterday: 'We've done what we set out to do - to spike their guns on day one.' He added: 'There has been a lot of double-buying, which hasn't happened in this country for a long time.' Chris Davis, the Sun's associate editor, conceded the Mirror had won a tactical victory. He said the Mirror had pulled a clever trick with its spoiling exercise but dismissed it as a one-day gimmick.

You have to go back more than 60 years to find a price cut that had a decisive effect on sales. In November 1929, the Daily Telegraph halved its price to one penny and within two months its sale had doubled to 200,000. That was in a period of highly volatile circulations, when readers were being lured from one paper to another by gifts of encyclopaedias and free insurance.

In 1987 Lord Rothermere, chairman of Associated Newspapers, used price to kill Robert Maxwell's London Daily News, launched as a rival to Rothermere's Evening Standard. He relaunched the defunct Evening News and sold it for 10p - half the price of the Standard and LDN. Maxwell matched the price cut, with the result that the new paper made unsustainable losses and folded.

For the past two decades, competition has usually been conducted by promotions rather than price. In the early Eighties, bingo games were introduced, with the tabloids vying with each other to give away the biggest prize. These caused temporary boosts in circulation.

Tabloid papers earn a higher proportion of their revenue through their cover price than through advertising - in contrast to the broadsheets, where advertising is more important. When the Mirror was selling 5 million copies a day in the 1950s, well before the launch of the Sun, it was calculated that it could have made a profit without selling any advertising.

The view in the industry is that the Sun's summer promotion is a loss leader, and that the paper cannot possibly make a profit at 20p unless its circulation climbs higher than anyone expects. Kelvin MacKenzie, editor of the Sun, said yesterday that the motive was to discover whether popular papers were overpriced after a recession.

The timing is almost certainly calculated to wound its main rival when the Mirror is in no position to hit back. The administrators want to sell their shares in September but will not if the share price is too low.

New owners would strengthen the Mirror, so it is in News International's interest to delay the sale as long as possible.

CORRECTION

In yesterday's paper, circulation figures of the Sun and Mirror were incorrectly attributed to the Newspaper Publishers' Association. The figures were produced by the Audit Bureau of Circulation.

(Graph omitted)