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The New York Post - the feisty tabloid that seems to thrive on adversity - is now facing perhaps its greatest challenge: A federal bankruptcy court this week will be forced to determine if the Post should continue publishing or be liquidated, with the paper's remaining assets used to pay off creditors.

Late last week media mogul Rupert Murdoch, who has been publishing the 192-year-old paper under management authority from the bankruptcy court, announced that he would cease publication. Mr. Murdoch's News America Publishing Corporation was unable to reach a cost-cutting settlement with the paper's 11 labor unions.

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Murdoch, who is currently traveling in Europe, left bargaining talks with his New York staff and had given the unions a deadline of 4 p.m. on Friday. Union leaders, however, insist that the two sides were close to a settlement and argue that Murdoch's shutdown is actually a negotiating ploy.

Murdoch, who says that the Post is losing $300,000 a week, wants to take stern measures to slash costs, including eliminating job seniority. The Post has some 725 workers. Both New York Gov. Mario Cuomo and Mayor David Dinkins are now helping to prod a settlement. Murdoch could possibly still reach a formal settlement with the unions, perhaps as early as today.

Murdoch owned the Post from 1976 to 1988, converting it from one of the city's most politically liberal papers into its most politically conservative press voice. But he was forced to sell it because of federal communications rules prohibiting cross-ownership of a television outlet and newspaper in the same city by any one entity. Murdoch owns a local New York City television channel. The cross-ownership rule was recently waved by the Federal Communications Commission to help Murdoch acquire the ailing P ost.

Murdoch stepped back into the spotlight last winter, following the bankruptcy of current Post owner Peter Kalikow, a real estate developer who had acquired the paper from Murdoch. Two other suitors had also appeared, although both efforts to buy the paper failed.

The Post was founded in 1801 by Alexander Hamilton, the first United States treasury secretary. In addition to the four other prominent daily papers in New York, more than 10 foreign-language papers are published here.

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