An orange crane towers over the soon-to-be-completed, $90 million twin headquarters of the Rocky Mountain News and The Denver Post in downtown Denver.

Just outside the city limits, a $130 million expansion of the former News printing plant on Washington Street promises the newest technology to print the newspapers decades into the future.

On any given day, at least 44 percent of households in the seven-county metro area subscribe to the News or The Post, the industry's best penetration rate among major metros. And both papers are profitable, despite a tough local economy.

Five years after the two newspapers called off their war and entered into a 50-50 partnership, News owner E.W. Scripps Co. and Post owner MediaNews are pumping an unprecedented amount of capital into Denver and acting as if they intend to be around for a very long time.

"It's a story about promises and promises kept," said Media- News CEO and Post Publisher Dean Singleton. "We promised to preserve two independent competitive voices, and we have."

So why isn't everyone happy?

Local advertisers are paying significantly more than they did in the 1990s at the height of the war, although the rates are still lower than in similar-sized markets. Advertising budgets that were based on the ultracompetitive rates have been bruised by the rising prices.

Similarly, some subscribers who can clearly recall the rock-bottom rates during the newspaper war are now paying anywhere from $100 to $150 for their annual subscriptions. While that, too, is below prices in other cities, it's a hard-to-fathom increase for some subscribers.

And a decision to charge for obituaries means that bereaved relatives pay about $500 for a 30-line memorial - an expense that some have been unable to afford.

For loyal readers of either paper, weekend editions have been another not-so-easy adjustment. Per the JOA pact, only the News is published Saturdays - but in a broadsheet format that still sends some tabloid-loving readers into a tizzy.

On Sundays, when The Post is the exclusive paper, they get a second dose of broadsheet reality.

The rising prices have taken their toll on subscriber numbers. Once, more than 800,000 people bought the Denver dailies each day. Today, that number has fallen to 500,000 and continues to shrink with every six-month circulation count.

In short, the steps taken to preserve the two Denver dailies have rankled some of the companies' best customers, who benefited greatly from the competition but have gradually, and painfully, adapted to the new business reality.

They are paying the price to keep Denver a two-newspaper town.

Longtime rivals

Denver, with its booming population and sprawling suburbs, was considered one of the last great newspaper battlegrounds, and in the 1990s rivalry reached fierce - some say absurd - proportions.

Prices on subscriptions were slashed to "penny a day" promotions. Ad rates plunged and kept the competing Saturday and Sunday papers bulging with advertising inserts. Some newspaper delivery teams took to delivering pre-printed sections of the Sunday papers on Saturday afternoon, just to lighten their loads the next day.

The take-no-prisoners strategy for both Scripps and Media- News: Corral the most subscribers at whatever cost until the weakest paper folded, the victor presumably being the one with the deepest pockets or strongest stomach for losses.

As daily subscribers swelled to record highs, Scripps was winning the circulation war but at an enormous cost - $101 million in operating losses from 1991 to 2000, including $24 million in 2000, according to Scripps' 2001 annual report.

The Post has never reported its financial results. But Singleton maintains the paper that he bought from the Times Mirror Co. in 1987 for $95 million has never lost money under his charge.

In May 2000, the two companies made a shocking announcement: They would apply for a joint operating agreement under the Newspaper Preservation Act, seeking an antitrust exemption to preserve competing editorial voices in a city.

Scripps, designated the "failing" paper in the application, paid MediaNews $60 million to enter the JOA, a 50-50 partnership.

"It had to do with revenues," Singleton said.

Advertisers balk

From the start, the biggest JOA opponents were advertisers.

The owner of a Lone Tree car dealership said at the time that he was told a full-page, color ad in both papers would cost $12,000 to $13,000 - a nearly fourfold increase.

Furniture mogul Jake Jabs, whose American Furniture Warehouse reportedly spent $3 million a year at both papers, was so mad he sued to try to stop the JOA.

Jabs said Singleton assured him before the JOA was approved that his ad costs would increase no more than 10 percent. After the Justice Department's approval, Jabs said he was presented with a four-year contract that would double his current rate, followed by three more annual increases of 25 percent.

After U.S. District Judge John Kane refused to grant a preliminary injunction, Jabs withdrew the case. And Jabs soon returned to the fold.

Scott Robinson, owner of Argonaut Liquors, suspects the outcry from advertisers tempered plans to hike rates even higher. The triple-digit increases anticipated by local advertisers never materialized.

Nine months into the JOA, the September 2001 terrorist strikes in New York and Washington set off a chain reaction that included a dramatic slump in newspaper advertising throughout the U.S.

Robinson says the $3,500 to $4,000 it costs to run his store's weekly full-page ad in both papers is up about 35 percent from pre-JOA days.

"Obviously prices have gone up, but I can't say it's gotten out of hand," he said. "I guess the biggest issue I have now is that the number of subscribers continues to drop every quarter."

At the News' request, the ad-buying staff of the McClain Finlon advertising agency recently examined rates in Denver and other cities. They looked at Seattle, where the two daily newspapers are in a joint operating agreement, and Chicago and the Dallas-Fort Worth metro area, where two separately owned papers compete.

Cathey Finlon, president of the agency, was surprised to learn that an advertiser who buys both papers in a market can save roughly 20 percent in Seattle or Denver, compared with Chicago or Dallas-Fort Worth, on a per-subscriber basis.

"I would not have suspected that," she said.

Circulation declines

Measuring today's circulation against the "penny-a-day" circulation doesn't make sense, says Kirk MacDonald, CEO of the Denver Newspaper Agency, created by Scripps and MediaNews to run the combined venture.

"Should it be any surprise to anybody that when you charge a penny a day or $3.12 a year, the circulation skyrockets to a historic high? That was the purpose of the pricing," MacDonald said.

In November 2000, the News boasted a weekday circulation of 446,465, outselling The Post by nearly 33,000 copies. The latest figures available from the Audit Bureau of Circulations, which tracks newspaper circulation figures, show The Post and News with matching weekday circulation, each paper posting roughly 264,000 paid subscribers.

That's down 4 percent in a year for the period ended Sept. 30, a decline faster than the national average for the period.

MacDonald said that roughly 30 percent to 40 percent of readers at the peak circulation read both papers. That's not what an advertiser wants, he says, because they're paying twice for the same readers. The rising subscription prices were intended, in part, to force people to choose, he said.

The agency Web site now offers an annual subscription to either paper for $99.95, way up from the rock-bottom rates of the war. At that price, however, it's $20 cheaper than any of 10 major metro papers surveyed by the News this week. The average subscription price of the 10 was $163.67.

Readers-per-copy is the measure that MacDonald focuses on, using it to craft an "audience" measure for advertisers and compare newspapers with television and radio.

John Murray, vice president of circulation-marketing for the Newspaper Association of America, says MacDonald's strategy is a good one.

"The truth is that newspapers have been using readership data for 20 years when they make presentation to advertisers," he said.

"Advertisers don't buy circulation. They buy who is going to see my ad. Readers are the bottom line."

And the agency is able to tell local advertisers that Denver newspapers still reach more than 40 percent of households during the week and 57 percent on Sundays. Those figures place the Denver papers at the top of the heap nationally.

Add in the Internet sites of the two newspapers, which have 3 million unique visitors a month, and if they choose a print-and- Web campaign, "they get the largest media audience, hands down, in the state of Colorado," MacDonald said.

Reviews mixed

So what does that audience think of the two papers five years later? Reader opinion is all over the board - and often intensely personal.

"We think we have a better newspaper, but the Rocky thinks they have a better newspaper, and that's OK," Singleton said.

Patty Calhoun, editor of the weekly Westword, was sure the News would not survive the JOA. Now, she thinks it has emerged as the "stronger voice" of the two papers thanks to a redesign and "feistier" reporting.

"I assumed within five years the News would be dead," she said. "Not only was I wrong, wrong, wrong, I've been pleasantly surprised."

But many loyalists to the News' tabloid format hated getting the paper in broadsheet format on Saturday mornings. They aren't too fond of having The Post on Sundays.

"I just hear a lot of people saying, 'Bring back the Sunday Rocky,' " said Stephen Allen, who worked for a vendor who sold Post and News subscriptions in grocery stores and at sporting events. "They don't like the Sunday Denver Post - it's too big, they don't like the size."

Gerald Armstrong, a well- known activist shareholder in companies such as Xcel, Qwest and Wells Fargo - says he's been hooked since college on the city's daily newspapers and still gets both each day.

Armstrong, who needles chief executives at annual stockholder meetings, is critical of both The Post and News. He says he's seen little, if any, improvement in news coverage and quality. Armstrong faults the papers for being "too soft" on corporate chiefs and politicians and not aggressively investigating community issues. He's says he sees a "sameness" in coverage and editorial attitude.

Alma Markoff, a longtime resident of Coal Creek Canyon in Jefferson County, took both papers for years until, she says, the new rates caused her to drop The Post. She said she opted to keep her News subscription in part because of its tabloid format.

"There are a lot of things you just hate to do without, so you go ahead and pay for it," she said.

Despite her allegiance to the News, Markoff complains it's become a smaller paper over the years, sacrificing news space for advertising.

MacDonald believes the two newspapers had a greater -newshole, as it's called, in 2004 than they did before the JOA. But -newshole at both papers was trimmed 5 percent last year, and the same will happen this year, he said. There are fewer ads running in the main sections of the newspaper, MacDonald said. Many advertisers switched from display ads in the regular newspaper to separate inserts that are instead tucked inside.

The newspaper industry as a whole has also suffered from a slow advertising environment, brought on by the recession that hit Denver particularly hard.

Both papers say they are spending more on their newsrooms. Singleton said that since 2001, the Post's newsroom budget increased 50 percent to $30 million, roughly $6 million more than the News' budget.

Scripps has not reported full-year earnings. Denver newsroom expenses were $18.2 million through the first three quarters of the year, according to the company's filings, putting it on track to record about $24 million in expenses for 2005.

News Publisher and Editor John Temple declined to estimate the budget growth, saying "it's not apples to apples" because of things such as the expansion of the newspaper's Internet department.

Singleton promised at the time of the JOA he'd hire 100 additional newsroom staffers, but only half have arrived, a development he attributed to a downturn in ad sales. He said he employed 229 full-time equivalent workers when the JOA started, and now it's 279.

Temple said, "We are the biggest we've ever been."

Singleton said he expected more from the JOA than it has delivered. The advertising recession took everybody in the industry by surprise, he said.

Hardest hit was the combined papers' help wanted ads.

"Our employment advertising declined by about $75 million within two years of the JOA," he said. "And it probably isn't coming back."

A changing world

As Denver's two newspapers head into the sixth year of the joint operating agreement, they are addressing the challenges of a slow local economy and a sea change in the way people consume news.

YourHub.com, started last April, is a citizen journalism effort that combines Web sites and print products and allows citizens to post their own stories and photos.

YourHub.com has community-specific Web sites for 42 metro communities, as well as 15 zoned print sections delivered to home-delivery customers of the News and Post in the seven-county metro area.

The project, which is produced by the News but appears in both papers and on their Web sites, has been "a home run," MacDonald said.

Also being considered is a free daily newspaper targeted at readers in the 18-to-34 age range. The Post would produce that product.

Meanwhile, the News is shifting some newsroom resources to its Web site in an effort to capture a bigger audience.

MacDonald said the challenges make it "a more exciting time" than in 2000.

As the papers look forward, a vocal critic of JOAs says that - in this case - it's been a good thing.

"I hope (Denver) is the last JOA, but it's turning out to be the best JOA," said Mark Fitzgerald, editor at large of the trade magazine Editor & Publisher. "Everyone seems to be on equal footing."

Sticker shock

While subscription prices for The Denver Post and Rocky Mountain News have skyrocketed in the past five years, from $3.65 to nearly $100 per year, the cost of newspaper subscriptions in other major metros makes Denver prices seem cheap.

Rocky Mountain News or Denver Post   $99.95

Houston Chronicle    $204.00

Cincinnati Enquirer    $195.00

(Phoenix) Arizona Republic    $195.00

(Cleveland) Plain Dealer    $182.00

Seattle Times    $176.80

Albuquerque Journal    $171.00

Pittsburgh Post-Gazette    $156.00

Atlanta Journal-Constitution    $120.00

St. Petersburg Times    $119.88

Chicago Tribune    $117.00

Average   $163.67Sample: Four Metro Areas Closest To Denver In Population, Plus Six Other Cities That Compete With Denver For Economic- Development Projects. Price ...

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