For you, Piers, the war is over

The war, such as it was, lasted just four weeks. As suddenly as the Daily Mirror had launched a bitter tabloid price fight, it shocked rivals last week by signalling an unexpected apparent U-turn.

In the jargon favoured by the management consultants now advising the paper, by restoring the cover price from 20p to 32p this week it was merely "concentrating its pricing initiative in the third phase of the brand relaunch". David Yel-land, editor of The Sun, offered a more direct interpretation: "We can report white flags flying over Canary Wharf," he gloated. "We are jubilant and are carefully considering our options in light of Trinity Mirror's surrender."

Had the Mirror's editor, Piers Morgan, and its MD, Mark Haysom, made a "massive, huge, gigantic miscalculation" in declaring war on Rupert Murdoch, as Yelland had forecast? Had these "two-bit nobodies", as their rival put it, foolishly miscalculated that The Sun would not respond with its own 20p cover price?

Haysom had always insisted that "price is the most effective way of building purchase frequency and circulation" for the Mirror - which for the moment remains at 20p in selected regions such as London and 10p in Scotland. But with its May national circulation expected to be up just one per cent over April's - despite a weekly subsidy to readers of more than £1 million - are the cuts proving to be a costly mistake?

Morgan insists that the "price war", as his rivals characterise it, is merely an attempt to encourage more frequent purchase. "It's laughable, the idea that we've surrendered," he says. "We're not idiots. We have a long-term plan to build circulation, and it is rolling out exactly as we planned it. We never said how long the cuts would last - how does the £20 million additional investment that we announced translate into a year's price cuts, as some commentators seem to believe?" As Mark Haysom explains: "Our plan has always been to divide the country in two after an initial national pricing burst. This enables us to focus our resources on key regions to get the maximum benefit for the longest time."

The cuts followed advice from consultants McKinsey that falling sales might be halted if readers could be persuaded to the paper every day, instead of only now and then. "We have comfortably, significantly exceeded all of McKinsey's expectations," Morgan insists, rejecting the idea that consultants might not be the best judges of British newspaper buyers' demands.

"We've sold an average of 160,000 extra copies every day. Price-cutting is the most effective way to put newspapers into people's hands."

LES Hinton, executive chairman of News International, which publishes The Sun, remains unconvinced. "You cannot turn a paper around simply by cutting its price," he says. "To do so for just three weeks is a joke." The Sun will be watching its "eccen-tric" rival carefully before considering its options, he adds. "No one's claiming victory here. They started it, and we had no choice but to respond. We don't think it's wise and we don't want it to continue, but we need clear evidence that they're going to stop."

As for whether the cuts have worked for the Daily Mirror, that all depends on how the numbers are presented. Trinity Mirror estimates that its May audited circulation will be 2,130,000 copies, which, on weekdays, represents a nine per cent lift in sales compared with April. This, it says, was "the best performance in the market". Further, the company reports that its strategy has achieved a remarkable reversal in its year-on-year decline, with sales, excluding sampling and marketing promotions, now above those of last May.

But note the careful qualifications. In hard absolute numbers, the Mirror sold just 21,000 more copies - a mere one per cent - in May compared with April. Even discounting those giveaway copies included in April's figures, the monthly rise is only 49,000, about 2.4 per cent. The Sun, by contrast, lifted average sales by 109,000 copies according to industry estimates for May; on weekdays, the paper claims a 250,000 rise. At 3,460,000, its May total was three per cent above April's, suggesting a greater return than that for the Mirror.

It has, however, come at a heavy cost, not least in readers' perceptions of newspapers' monetary value. As another circulation director notes: "In what way can the Mirror see these figures as a success? To cut your price and lose that amount of money, while spending vast amounts on TV - now, that has to be seen as a disappointing result."