Award-Winning but Unprofitable, New York Newsday to Close Sunday : Media: The newspaper won three Pulitzers but was unable to gain a solid financial foothold in the crowded market.

NEW YORK —  Times Mirror Co., seeking to cut costs, announced Friday that it will close New York Newsday, a 10-year-old daily that had enjoyed journalistic success but couldn’t gain a profitable foothold in the city’s intensely competitive newspaper market.

The closing will lead to the elimination of 700 to 800 jobs, including positions both in New York City and Long Island, home of the paper’s sister publication, Newsday. Combined, the city and suburban papers employ 3,200 workers.

Times Mirror, whose publications include the Los Angeles Times, said it would incur a restructuring charge in its third-quarter financial results to reflect the closing, but did not estimate the amount. New York Newsday’s last day of publication will be Sunday.

During its relatively short tenure, New York Newsday won three Pulitzer Prizes, the highest honor in U.S. journalism. However, the paper never turned a profit in heated competition with the New York Post, New York Daily News and New York Times.

Mark H. Willes, who became president and chief executive of Los Angeles-based Times Mirror on June 1, said, “The decision to discontinue the publication of New York Newsday is in no way a reflection on the management of Newsday, which I believe is both excellent and very dedicated, nor on the quality of New York Newsday, which is an excellent newspaper.

“The particular situation in New York Newsday’s market led us to conclude that we would not be able to earn an adequate rate of return. We intend to continue to produce quality newspapers and be competitive and the best way to do that is to have strong financial performance.”

Raymond A. Jansen, publisher and chief executive of Newsday, and Steven L. Isenberg, publisher of New York Newsday, said in a news release: “This is a sad day for everyone at New York Newsday and for hundreds of thousands of New Yorkers who were our regular readers. . . . However, the economics of producing a separate daily edition have been difficult, and we now will devote our resources to strengthening our core franchise.”

Newspaper industry analysts lauded the move as a necessary business decision.

“No one likes to see a newspaper go down, particularly a good one. But something had to be done, particularly in a year where newsprint prices had gone up so dramatically,” said Kenneth T. Berents, research director for the Wheat First Butcher Singer Inc. securities firm.

Most recent figures put New York Newsday’s circulation at 216,000. Before the New York edition was launched in 1985, Newsday was selling 40,000 daily copies of the paper in the city limits.

Berents said Times Mirror launched the New York operation in 1985 on the expectation that one of its principal struggling competitors, the Post or Daily News, would go out of business.

In fact, he said, New York Newsday might have eventually become profitable if either of those competitors pulled out of the market. But, he added, “neither of them did.”

James C. Goss, an analyst with Duff & Phelps Investment Research, said Times Mirror’s decision reflects the outlook that “the profit motive is paramount, and that certainly is the direction Mr. Willes is taking the company in.”

Times Mirror stock fell 38.5 cents on Friday to close at $23.75 in New York Stock Exchange trading. News of the closing came after the end of trading.

Upon learning of the closing, New York Mayor Rudolph W. Giuliani phoned Isenberg. “I am very, very sorry about this,” Isenberg said the mayor told him. “This is a big loss for the city.”

Jansen told the decision to the staff, which was gathered in the paper’s ninth-floor newsroom in a lower Park Avenue office building. After the news took hold, reporters and editors stood in small groups trying to put the paper and their lives in perspective.

“The city lost a newspaper that spoke to all New Yorkers that was questioning and highly critical and educational and enlightening and people responded to that,” said Debbie Henley, the city editor.

New York Newsday columnist Murray Kempton, who won a Pulitzer in 1985 for commentary and has been a voice of conscience and concern in New York for decades, struggled to write about the closing.

“The sad thing is we have all these wonderful reporters,” Kempton told a visitor. “I won’t have my family.”

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Goldman reported from New York and Silverstein from Los Angeles.