I. THE DAILY NEWS: TOO TOUGH TO DIE?   

No strangers to uncertainty, staffers at the New York Daily News and UPI hang on in the face of bankruptcy. Kate McKenna and Diane Bartz report from the precipice.

It was a year ago January that employees of the New York Daily News received notice, required by federal law, that the paper could close within 60 days. That was just the beginning of the most turbulent year yet for the long-troubled tabloid.

In 1991, News staffers saw a March shutdown date set by the paper's Chicago-based Tribune Co. owner, which was losing an estimated $1 million each week during a bitter strike; rescue at the 11th hour by a fleshy, flamboyant upstart from Fleet Street; and the lucky resolution of the strike. Then the new owner, media mogul Robert Maxwell, died at sea under mysterious circumstances, and the massive problems of his publishing empire came to light.

Less than a year after the last near-fatal crisis was resolved, the paper stands in bankruptcy with an uncertain future, unknown financial standing and understandably unnerved employees.

"Maxwell had offered us hope – false hope as it turned out," observes Frank Jackman, Washington bureau manager and news editor and a 23-year veteran of the paper.

So once again news-industry obituary writers are dusting off their keyboards, ready to tap out yet another ode to what was once the nation's largest-circulation newspaper. And, just as in the spring of '91, News employees are hoping for a miracle. But unlike last year, there seems to be more gritty optimism in 1992, more of a feeling that the paper will survive, if only by the sheer force of its employees' collective will.

"We've come out of the strike, got new owners, got back on our feet. It's been no fun, but no one's giving up," says News political writer Frank Lombardi, who with reporter Tom Robbins and others in January created the wildly popular lapel buttons, "DAILY NEWS: TOO TOUGH TO DIE."

Within days the entire supply of 1,000 had disappeared, and News management ordered 10,000 more, then an additional 10,000. The buttons were snapped up by loyal readers ranging from John Cardinal O'Connor to reputed mobster John Gotti's brother Peter. "It was simply an in-house morale booster, and somehow it took off," says Lombardi. "It was very big with the suits around here, but we don't want it to be a management thing. It's for the workers."

James P. Willse, editor and recently named publisher of the News, sees such resolve throughout the paper. "One of the great assets of this place is the people who work here," says Willse, the son of a New York City police detective. "Everybody – from the reporters to the dri-vers – is case-hardened by now. It's a little like what it takes to live in this city in the first place. You've got to be tough."

With projected revenues of $260 million this year, there is no deadline for a prospective buyer, according to News spokesman John Campi. "We've got enough to go this year and beyond," he says.

Even the circulation has rallied, according to News executives, from a daily low of 300,000 to nearly 800,000 and 1.1 million on Sunday, approaching its pre-strike readership. At its peak in the 1940s, the tabloid had a circulation of more than 3 million, the nation's largest.

The city's two other tabloids are still running behind, despite the benefits derived from their competitors' woes: The New York Post has about 600,000 daily circulation and New York Newsday's circulation has slipped from its mid-strike high of 340,000 to 297,000.

The News staff is gratified to have again outpaced its rivals, who were only too gleeful at the News' troubles, and is determined to survive out of sheer revenge against not only its foes but its former owner.

"It's a bit of orneriness, a need to stick it to the bloodless buffoons at the Tribune Company who did this to us in the first place," says Richard Sisk, a reporter in the Washington bureau. "They drained this paper dry, taking all the money back to Chicago. Now at least we've gotten rid of those leeches and can try again."

But times are difficult: a rotten advertising climate, a national recession that is especially tight in the Northeast, and a New York City newspaper war that seems to get nastier each year.

"Bad times used to be good times for papers like the Daily News," says Jackman, referring to discount houses like Kmart and Alexander's that would step up advertising to hit the News' solid middle-class readership. "I hope it still holds true. But I don't know."

N agging worries remain about the newspaper in both the short- and long-term. "What if it gets bought by another megalomaniac?" asks one veteran Daily News reporter. "We still don't know what Maxwell would have done – and he wanted the paper profitable by the spring of 1992."

"Something has to happen with one of these papers," says Kenneth Berents, an analyst with Alex Brown and Sons Inc. "There's not one person in New York City who wants to see [the News] go down, except maybe at the Post." Berents sees the real struggle for survival as being between the two cash-hungry tabloids. Previously, he says, the Post seemed most vulnerable, but the News strike "may have snatched defeat from the jaws of victory."

A heavy burden for the News stems from one of the biggest union concessions to Maxwell: the slashing of 800 jobs – 100 from the newsroom alone – and a talent drain that included the highly visible loss of top writers and columnists to the competition. And still there looms the possibility that, after the final audits and the reorganization under bank-ruptcy, no one will step forward to rescue the paper.

December 18 marked the 10-year anniversary of the day the Tribune Co. first put the News up for sale. That decade has been described variously as "a long roller-coaster ride," "rough sledding with one or two major dips" and "sheer hell." One major dip was the October 1990 to March 1991 strike, which came after months of inconclusive and acrimonious union-management talks. Although the Tribune put out a small paper during the strike, using management and "replacement workers" to compensate for strikers, advertising shriveled and distribution crumbled. Few vendors in the pro-union town would touch the paper; some may have been scared off by threats of violence and the occasional bombing of newsstands. In an unsuccessful move to boost circulation, management even hired homeless people to hawk the paper.

"The Tribune figured they killed the union in Chicago, they could do it in New York," says News reporter Serge Kovaleski, who was covering labor issues when the strike was called. "A huge portion of the sales in New York is newstand, while the reverse is true in Chicago."

R obert Maxwell, owner of Britain's second-largest paper, the Daily Mirror, arrived on the scene days before the Tribune's deadline and sealed a deal with the unions in record time. "Whatever else he may have been, he was a masterful negotiator," says Willse. "We'll never know what would have happened if he had not arrived. All we know is he did, and pulled the paper out of the big hole."

In the months to follow, there was a genuine rebuilding effort at the paper, with the News concentrating on hiring good people, beefing up coverage and recouping circulation. Then, in a dramatic twist that few scriptwriters would have risked, the savior of the Daily News was reported missing at sea, only to turn up dead hours later.

"It had just gotten to a point where it was normal again," says Kovaleski. "Then the bottom fell out."

Kevin Maxwell, Robert Maxwell's youngest son and heir, immediately came forward to pilot the paper, reassuring many. But it was the ensuing revelations about the elder Maxwell – his apparent siphoning of $1 billion from his U.K. companies, including pension funds – that rocked the paper to the core.

Executive Editor Matthew V. Storin says the staff was shaken not so much by anger at Maxwell but by "a feeling that there was nothing – nothing – behind us."

The only plus from such a crisis was that it helped close the door on the previous one. Maxwell's death and its aftermath helped melt some of the divisions remaining since the strike.

"The current crisis is something everyone is sharing equally, whether you were a striker or a non-striker," says Storin, former editor of the Chicago Sun-Times and managing editor of the Boston Globe, who came to the paper right before the union contracts expired.

O ne of the last icebreakers was a Christmas party held at Donahue's, one of three bars across from the News building that had long been known as striker territory. Although the event was organized by Newspaper Guild members, it was made clear that non-strikers were also welcome.

"It was not a large affair, but it was as diverse a social event as had been held at the News for nearly two years," says Storin, who had not ventured inside these convenient watering holes for a year and a half.

Sisk, who with Capitol Hill reporter Susan Milligan formed a small picket line outside the News' Washington bureau, says he's sorry now for those who crossed the lines, because he says "they lost their self-respect."

Although he says he's tried to let bygones be bygones, he is aware that some problems linger. "There were friendships that just went out the window, people who only speak to each other now on a business basis: 'Did you get that release from City Hall?' or whatever," says Sisk. "It's sad."

The post-strike revival of the Daily News makes the ongoing tab war that much more bloody, and dwelling on the paper's problems that much more attractive. A dead Daily News would brighten the financial picture for the Post, which has come close to going out of business more than once, and New York Newsday, which was launched in 1985 by Times-Mirror under a 10-year plan and is closing in on its 10th anniversary.

D uring the strike, nearly every newspaper account foretold the paper's imminent death. With the latest troubles, the doomsday reports are back. The taunts from competitors, which routinely refer to the "ailing" or "dying" paper as they trumpet the News' latest travails on Page One, have been annoying but also motivating.

"People feel very feisty at the Daily News, and the best morale-booster that happened here was the coverage in other papers," Storin says.

Despite its seemingly endless woes, the Daily News will prevail, Willse says. "This is a paper designed to be successful at a time when other papers are having trouble engaging readers," he says.

"We have two kinds of readership: the basic Daily News franchise of middle-class New Yorkers and the tremendous influx of new arrivals in the city from other countries," he says. That melting pot readership, which in the 1930s and 1940s was mainly Italian- and Irish-Americans, has broadened in the 1980s and 1990s to include huge waves of immigrants from Asia, South America and the Caribbean.

"We got our start by being sort of the welcome wagon of New York City," says Willse. He points to a recent New York Times piece on the vast increase in the number of small businesses owned by new immigrants. "This is a new middle class, and they read newspapers."

That market could be attractive to the right investor. Several potential buyers have surfaced, including U.S. News & World Report owner Mortimer Zuckerman, who showed brief interest during the strike; a group assembled by Minnesota multimillionaire Percy Ross, whose syndicated "Thanks a Million" column appears in 300 papers nationwide; West Coast billionaire Marvin Davis and New York jeweler David Cornstein. Campi says there are several other interested buyers, but the paper won't name them.

"Right now we're more optimistic than we have been because of the buyers sniffing around the papers – and most of them know something about newspapers," says Jackman. "That gives us hope, tangible hope, which is more than we've had since Maxwell died."

And the list of interested parties could conceivably grow, once analysts count the numbers and review the accounts – or it could disappear entirely, de- pending on the outcome of the audits. Most observers agree that the Daily News is a more solid newspaper since the union concessions and the cuts made by Maxwell.

Others are counting on the "Citizen Kane" factor. "A newspaper is more than a bottom line: There are people who are interested in buying it even if it's not making money," says Frank Lombardi.

"If you buy it, you're not just John Doe, developer, anymore," he adds. "You're John Doe, developer, owner of the New York Daily News."

So while it's a waiting game these days at the News, life is a little easier compared to the strike and to the days immediately after the bankruptcy. "Maybe it's like the lull before the next storm," says Lombardi. "There is a feeling of waiting for the other shoe to drop, which we expect to be salary cuts or similar concessions."

But there's another reason for optimism: the loyal Daily News readership. "Despite all the ridiculous things that have happened, and all the rest of it, these people love the paper and they just would not buy a scab newspaper," says Sisk. "They stood by us, and we're going to stand by them."

"I hope we'll survive, and I think we will," says Lombardi. "The newspaper itself seems to have a life of its own. It's like the Empire State Building – you know eventually that building's going to come down, but you just can't envision it." l