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By Greg Bensinger and John McCormick

Nov. 20 (Bloomberg) -- The New York Times and Wall Street Journal are pursuing readers from regional U.S. newspapers in their fight to survive the worst advertising declines in the industry’s history.

New York Times Co.’s namesake newspaper took the latest shot today with the debut of two pages of local content in Chicago editions. News Corp. this month told employees of New York-based Dow Jones & Co., which includes the Journal, that the company was considering additional metro coverage in Chicago and Los Angeles, two people with knowledge of the situation said last week.

Publishers are increasing newsstand and subscription prices as ad sales slide. Third-quarter circulation revenue exceeded ad sales for the first time at Times Co.’s New York Times Media Group, which includes the International Herald Tribune.

“The natural audience for these newspapers is fairly rarified in terms of education and income,” said John Morton, president of Morton Research Inc. in Silver Spring, Maryland. “It’s an effort to bring to a market, as a complete package, what a lot of these local metropolitan newspapers have sloughed off: national and international coverage.”

Tribune Co. has been cutting jobs, bureaus and news space at the Chicago Tribune, the largest newspaper in that city. The paper’s readership dropped almost 10 percent in the six-month period through September from a year earlier.

San Francisco Showdown

The Chicago push follows a similar effort by the Times and Journal in San Francisco, where New York-based Hearst Corp. this year threatened to shutter the Chronicle after disclosing it lost about $1 million a week last year.

Times Co. Chairman Arthur Sulzberger Jr., 58, and News Corp. Chairman and Chief Executive Officer Rupert Murdoch, 78, are seeking new readers in a market that shrank industrywide 11 percent in the six months through September from a year earlier.

“The potential payoff, we hope, is in circulation growth and retention,” Bill Keller, New York Times executive editor, said in an e-mail. “Depending on how it plays in San Francisco and Chicago, we’ll consider rolling out more local supplements.”

Robert Christie, a Dow Jones spokesman, said the company was looking at other markets where it could introduce regional editions, declining to give specifics.

News Corp.’s 6.4 percent bond maturing in December 2035 rose 0.35 cent to 102.35 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The yield fell to 6.22 percent, compared with 6.54 percent at the end of last year.

Local Content

“Readers are looking for more local content in the paper, especially as local newspapers become weaker,” Christie said.

Times Co., based in New York, fell 19 cents, or 2.2 percent, to $8.65 at 4:01 p.m. in New York Stock Exchange composite trading. The shares have risen 18 percent this year. News Corp., up 32 percent this year, dropped 46 cents, or 3.7 percent, to $11.98 on the Nasdaq Stock Market.

U.S. newspaper publishers lost 28 percent of their print and online ad revenue in the third quarter, a narrower decline than the previous period, the Newspaper Association of America reported yesterday.

The Journal is taking the fight to the Times’ backyard. Plans for increased coverage of New York City could comprise eight pages or more and may be a stand-alone section, according to a person familiar with the discussions. In October 2008, the Times folded its stand-alone metro pages into the front section of New York-area editions.

New York Circulation

The Times derived almost half, or 444,533, of its national weekday circulation of 1.04 million from its hometown, according to Audit Bureau of Circulations data from September 2008, the most recent available. The Journal’s 303,820 New York-area circulation in the period compares with 2.04 million nationwide, which includes paid readers to its Web site.

The Journal’s circulation in the Chicago area was 93,678 versus 25,243 for the New York Times, ABC data show.

“We will elevate our performance and cover this market better than anyone else,” said Kate Mersman, a Chicago Tribune spokeswoman.

The fight for readers has turned personal in some newsrooms.

A Tribune reporter has occupied one of the steel desks in Chicago’s City Hall press room for at least four decades, so the valuable real estate posed a dilemma when the newspaper’s top beat reporter resigned last month to join the Chicago News Cooperative. The venture is providing the stories for the Times’ new Chicago pages.

‘Civic Asset’

Dan Mihalopoulos, 35, consulted City Hall staff, pushed the metal hulk a few feet away and put his old employer’s computer on a smaller desk in the corner.

“News gathering is a civic asset,” said Peter Osnos, 66, founder of New York-based PublicAffairs books and chairman of the Chicago News Cooperative. “If the market won’t support it, then the community has to.”

The cooperative, with $500,000 in seed money from the John D. and Catherine T. MacArthur Foundation, follows similar efforts around the country. What sets it apart is its contract to provide the two new pages of Chicago content for the Times’ Friday and Sunday editions.

Tribune alumni fill the cooperative’s ranks, including Jim O’Shea, who served as the Tribune’s managing editor. The cooperative’s creators say they’re sensitive to the impression that it’s a government in exile.

“That’s inevitable because the leaders in Chicago journalism -- many of them -- came from the Tribune,” Osnos said. “And the Tribune jettisoned them.”

To contact the reporters on this story: Greg Bensinger in New York at gbensinger1@bloomberg.net; John McCormick in Chicago at Jmccormick16@bloomberg.net.