Extra! Dynasties Duel!

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The crowd was looking for a show-down when Arthur Sulzberger Jr., publisher of the New York Times, and Donald Graham, his counterpart at the Washington Post, shared a table — and later the podium — at a long-scheduled media-industry gathering in New York City last week. Just a day earlier, Sulzberger had essentially made Graham an offer he couldn't refuse, and seized control of a newspaper the two had published as partners since 1967.

That paper, the Paris-based International Herald Tribune, is little known in the U.S. but prized by Americans who live and travel abroad. The tug-of-war over it won outsize attention for the glimpse it offered into the leading families of America's media royalty — and into the divergent growth strategies pursued by their companies.

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Graham, 57, is the son of the late publishing legend Katharine Graham. Sulzberger, 51, is scion of the family that has run the Times since 1896. The two minded their manners at last week's dinner, offering jokes "about that IHT stuff," as Sulzberger put it, and chatting amiably and at length even when the evening's agenda didn't require that they be together. But bitterness clearly lingers after the several months of what a Post insider called "highly painful negotiations."

The Times had offered to buy the Post's 50% stake in the Herald Tribune, but the Post didn't want to sell. Then the Times made like Don Corleone: it threatened to start a competing international edition and choke off any further subsidy of the Herald Tribune, which lost about $5 million last year. Graham responded with an indignant internal memo accusing the Times of "threatening the future of the newspaper and its staff." Graham concluded, however, that continued joint ownership of the Herald Tribune was "untenable." The talks ended with the Times's signing a letter of intent to buy the Post's stake in the paper for just under $75 million.

On its face, the Herald Tribune wouldn't seem worth the heartburn. It sells just 264,000 copies, spread thinly over 180 countries. Investors were happy to see Graham shed the money loser; the Washington Post Co.'s shares rose on the news. "Who cares about it except some guy in a bar in France?" said Ed Atorino, newspaper analyst at Blaylock & Partners.

In elite publishing circles, though, prestige matters. "The IHT is one of the great newspapers in the world, and we valued it as a way for an audience around the world to see the best of Washington Post journalism," Graham said in an interview. Post executives acknowledge that the Times's aggressiveness caught them flat-footed. But the bottom line is, says Graham, "you can't be successful with a partner that does not want to be your partner."

This nasty breakup would have been unthinkable before Katharine Graham's death last year. She ran the Post for three decades and was a close friend of Arthur Sulzberger Sr., whose leadership of the Times spanned nearly identical years. Nodding to the publishing blood he shares with Don Graham, the younger Sulzberger says, "We're brothers under the skin."

But these brothers have far different ambitions for their companies. The Times is on a mission to create a global brand. Its national edition is winning new subscribers and advertisers across the U.S., and it wants to extend that growth abroad. The Post has excellent national and foreign news coverage but has prospered by focusing on circulation and ad growth in the Washington area. Both strategies are working. But only one would benefit from control of the Herald Tribune. And that, more than heritage or prestige, may have determined the winner.