Mr. Sulzberger approached Mr. Thomson and introduced himself. The two spoke for a few minutes. They laughed a couple of times, chatted and “then sat down, as all the guests were seated for a small dinner to honor courageous journalists from two continents,” Mr. Thomson told The Observer.

And that’s all about that night that they seem to agree on. 

An old-fashioned, honest-to-God press war is unfolding in our town, revitalizing the local media scene after months of torpor. In a few weeks, on April 26, The Journal will begin its clearest attack on The Times ever, right in its own backyard.

The conversation between Mr. Thomson and Mr. Sulzberger was bound to be fraught. Only weeks earlier, Mr. Thomson sniped to New York magazine that The Times was vulnerable in part because Mr. Sulzberger was in charge. Then, on March 27, the front cover of the Weekend Journal section included a cropped image of the lower part of Arthur Sulzberger’s face, in a graphic that accompanied a story on how women from healthier populations prefer feminine-looking men. The implication seemed clear enough. Mr. Sulzberger had a girly face! A gag, sure, but nonetheless an unusual move by a Journal editor to bring a corporate fight into the paper’s news pages.

Mr. Thomson said the two men laughed about it at the Sorrell dinner. “We had a good giggle about it,” he said. “It wasn’t about masculinity. If you looked at that mosaic of masculinity, Arthur’s jaw was on the masculine end.”

He said Mr. Sulzberger Jr. understood that he was being portrayed as masculine and “there was immediate empathy when we were chuckling.” He referred to everyone’s interpretation that suggested otherwise as an “eccentric exegesis.”

The thing is, according to Mr. Sulzberger’s spokesman Bob Christie—who bolted The Journal for The Times only a few weeks ago—that is not how it happened. At all.

Mr. Christie’s account? While it is true that Mr. Sulzberger greeted Mr. Thomson and the two men exchanged pleasantries, Mr. Thomson left the conversation for a few minutes, before returning. Upon his return, he said that the image that looked like Mr. Sulzberger’s face in that graphic on the Weekend Journal front wasn’t his at all. Mr. Thomson, according to Mr. Christie, told the Times publisher he wasn’t even aware of the image until he read blog posts about it. When Mr. Sulzberger asked Mr. Thomson to run a clarification, the Journal editor declined and said he didn’t want to escalate the issue.

“We have moved on,” said Mr. Christie, the Times spokesman. “And we are focused on the high-quality journalism that we produce every day and that’s why we won three Pulitzers on Monday. The readers and employees of The Wall Street Journal deserve much better than this type of juvenile behavior from its editor in chief.”

Fight!

And it’s likely to get more intense as The Journal approaches the launch of its New York section. In his first extensive interview on the subject, Mr. Thompson sought to dig further under Mr. Sulzberger’s skin. “My advice to New York Times readers is cancel your subscription, read it on the Web for free and buy The Journal,” Mr. Thomson said. “You’ll be impressed by how the coverage broadened out, even if you aren’t a businessperson. There’s a great opportunity for New Yorkers to sample The Times for free, and for less money than a Times subscription, you’ll get The Journal for six days.”

Here is the plan. Mr. Thomson and Mr. Murdoch will lure you into the New York section because you like New York news. And then you will love the new paper and start buying it.

Mr. Thomson, a rail-thin, hunched-over, 49-year-old Australian, was dressed in a charcoal suit with a skinny black tie and stuffed in a booth at Cafeteria on Seventh Avenue on a Friday morning. An empty espresso cup, a bowl of fruit and a half-filled cup of black coffee sat in front of him. For an editor starting a New York section, his choice of restaurant was remarkably free of self-consciousness—Cafeteria’s heyday dates back to sometime about a decade ago. (It is, however, located close to Mr. Thomson’s Chelsea home.)

He explains the rationale behind the new section. Maybe you haven’t noticed, he says, but The Journal, now 28 months into Rupert Murdoch’s ownership and nearly two years into Mr. Thomson’s editorship, has changed over the past couple of years.

He believes there are New Yorkers who aren’t aware of its “evolution” and that’s why they’re still there, on the subway, reading The Times. But now Mr. Murdoch and Mr. Thomson are going to provide those New Yorkers a daily section dedicated to local news, and an entirely new option for a broadsheet in the city. 

“Obviously, our ambition is that people will come in through New York and they’ll take a look at us, they’ll sample us and then they’ll discover how much we’ve broadened the national and international coverage,” he said.

They won’t, in other words, see that old, stodgy Journal their father stowed away in his briefcase. “They may be surprised—because there are preconceptions about The Journal—at how satisfying that experience is, how interesting the writing, how creative and clever it is,” he said. “People know what the reputation is, and reputation and prestige are wonderful things to have, but a reputation also embodies preconceptions about who you are, and we’ve already changed the paper in a way that if you read The Journal, your preconception would be challenged.”

Starting in 12 days, The Journal will include a pull-out local report in all of its New York editions. There will be “12-ish” pages every day, and will run six days a week. The paper has already expanded its coverage of international events and politics. Now it will move the paper straight into The Times’ turf, covering local politics, news, sports, culture, gossip and real estate.

You won’t read it online without paying, because almost the whole New York section will be behind a paywall. “Nothing,” he said, when asked what would be free to readers online. “Virtually nothing.”

In Mr. Thomson’s estimation, there is no such thing as a “second read” anymore. You’ll eventually buy one paper only. It has to be The Journal. “The New York Times is a difficult paper to read,” Mr. Thomson said. “Navigation is not easy. So clearly, we have a much easier paper to read and to understand. We don’t have as many stories jumping from place to place. It’s an opportunity for people who have been frustrated by the very act of reading to read again. We have an accessibility that will make sense to people.”

When we asked Mr. Thomson to describe his reader, he said, “If you sit on the subway and look around the carriage, there are many various types who are potential New York readers of The Wall Street Journal.”

There are students. There are professional types. There are people in media. There are people in advertising. There are educators.

These are the people who will shift the balance of power. These are the people who will buy a printed Wall Street Journal or a subscription online. These are the people that will make sure Rupert Murdoch’s $15 million is well spent.

By The Journal’s own projections, the prospects of turning a profit on the New York report in the next couple of years are remote. Despite the fact that people aren’t buying newspapers the way they used to, Mr. Thomson and Mr. Murdoch want you to buy their printed paper. It is a crazy-like-a-fox strategy, or it’s just plain crazy. Either way, it’s undeniably Murdoch, joyfully defying the odds.

The only audience Messrs. Murdoch and Thomson crave are the people who read the paper. “We will be judged rightly and harshly by readers,” said Mr. Thomson. “That’s the only judgment that counts. And we’re about to give them a choice.”

Plans for the New York section go back to at least last summer, when The Journal drafted a plan, at Mr. Murdoch’s insistence, to create a weekly culture section for New York.

That effort quickly grew. Dow Jones executives listened as Kelly Leach, then the vice president of business management at the paper, presented two plans, according to a source familiar with the discussion. The Journal could expand its Saturday paper, invest heavily in it and make a solid profit. Or the paper could build out a five-day-a-week New York section, which all projections indicated would lose money. 

At that point, Les Hinton, a Murdoch confidante for decades and the publisher of The Journal, leaned back and asked, unfazed, ‘How much would it cost to run it six days a week?” according to the source.

It wasn’t long after that meeting that the wheels were set in motion. Once again, Mr. Murdoch would spare no cost. According to Sarah Ellison’s book War at The Wall Street Journal, this is the man who lost $80 million on The Journal last year and spent $60 million moving the paper from its longtime home downtown to the News Corp. building on Sixth Avenue. The New York Post has reportedly lost tens of millions of dollars a year. A Dow Jones spokeswoman said that The Journal, in the fiscal year 2010, would be profitable, as would the Journal franchise.

Mr. Thomson said that the plan that was temporarily shelved, the Weekend section relaunch, will start this fall. “It will be quite grand and rather profitable,” he said.

Though the war will begin over New York stories in a few days, the skirmishes with The Times began long ago.

Mr. Thomson has gone on the record to attack time and again, complaining about The Times’ pretentiousness or about how the whole institution could go under because Arthur Sulzberger is in charge. Last year, he accused Mr. Keller of tampering with an awards process. He’s accused media reporter David Carr of being biased.

The Times, uncharacteristically, has responded with a few jabs of its own. It poached arts reporter Kate Taylor, who had been working at The Journal for mere weeks on its New York section and who infuriated her old bosses at the News Corp. “People here are fucking furious,” said a Journal source at the time. “She knows all the plans.” Bob Christie, the PR chief at The Journal, left a few weeks ago to join up at Mr. Sulzberger’s shop.

In addition, The Times last month kicked off an ad campaign that argued The Times had a greater market share of local women readers than The Journal. For months, The Times’ public posture has been that it’s not worried about the upcoming section. 

Mr. Thompson responds. “I have absolutely no doubt that whatever magical metrics they’re looking [at] at The Times that The Journal, as it’s evolving, is developing a closer relationship with ever-larger number of women.”

Once the New York changes take effect, the business and finance paper of yore that will include a section that covers nightlife and gossip and local political and sports news. It will have stringers stationed throughout the tristate area covering suburban news.

“We’ve got five sports beat reporters, which is a big departure for The Journal,” said John Seeley, a former editor at The New York Sun who is the lead editor on the New York section.

Much of the Journal staff has no knowledge of the paper’s planned new section. It’s been so top secret that many staffers have told us that they’ll learn just as much about it as everyone else when it debuts on April 26.

The majority of people assigned to the section have been hired from outside the paper. Jacob Gershman, a familiar player in local political coverage, has been hired, but most of the three dozen other new reporters are not boldface names. The sports reporters come from the likes of the Memphis Commercial Appeal and the Calkins newspaper chain. (Compare that to ESPN’s New York portal, which recently hired big names like Leon Carter and Adam Rubin, a longtime Mets reporter, or Wallace Matthews, a longtime writer for Newsday.)

“You want someone who brings energy and drive,” said Mr. Thomson. “It’s a good thing you haven’t heard of most of them.”

“We have a body of expertise,” said Mr. Thomson. “We brought in the best journalists in the region to write about the region. Readers are smart. They will make informed decisions about the value of this section. I have absolutely no doubt they will see the value. We will present them a choice, and they’ll decide accordingly. If we’re inadequate, they won’t buy the paper.”

jkoblin@observer.com