This a story about a group of old friends who tried to buy and sell two magazines and a weekly newspaper. One member of the group cared more about buying than about his friendships. He won.

This doesn't mean that the winner - an Anglo-Australian New Yorker named Rupert Murdoch - is unique in this crowd, which includes a lot of fancy New York lawyers and bankers, one of American's most successful magazine editors, a rich, pedigreed New York City councilman and the proprietor of The Washington Post. A lot of these people know how to put business before pleasure.

Murdoch won, according to a participant in the adventure, because "he kept his eye on the ball."

The story of this sale of journalistic properties has received extraordinary attention from other jounrnalistic properties. Rupert Murdoch will be on the cover of next week's issues of Time and Newsweek. Friday's Wall Street Journal contained a detailed dispatch. Today, The Post takes a long look.

Another case of the press finding its own affairs irresistibly fascinating? Perhaps, but there is more - duplicity, intrigue, a cast of rich and glamorous characters.

These boardroom battles are probably not so unusual in the stratosphere of American capitalism, but when they involve journalists they can become public spectacles. This time everyone kibitz.

The yarn goes something like this:

Prologue

Several years ago, Katharine Graham, publlisher of The Washington Post, met Rupert Murdoch, the owner of numerous newspapers, on a visit to Australia.

Murdoch entertained Graham, and she invited him to visit her in American. Eventually he came, and she invited him for a weekend at her farm in Virginia. She also invited an old friend from New York, Clay S. Felker, the founder and editor of New York magazine.

These three persons have a good deal in common. All run newpapers and/or magazines; all like to talk shop; all like to acquire new properties.

The similarities could be overstated, however Graham entered the world of publishing relatively late in life, after the death of her husband in 1963 left The Washington Post Co. without a head. She is a pillar of Washington political and social establishment.

Magazine writers often call her the most powerful woman in America, but her manner belies that characterization.

Felker has been a prominent figure in New York Herald Tribune hired him from Esquire to be an editor with special responsibilities for its new Sunday magazine - "New York."

When The Herald Tribune and its successor, The World Journal Tribune, folded, Felker had his chance to fulfill a well-nourished dream to become his own boss. With the help of writers like Tom Wolfe, and Jimmy Breslin and the backing of group of New York financiers he launched New York as an independent magazine in 1968.

It soon prospered. In 1974 New York acquired The Village Voice, a weekly tabloid of leftish inclination. In 1976 Felker launched New West, a magazine patterned after New York, for the California market.

Felker is a man of great ambition, attracted to the bright lights and beautiful people. He has provoked strong emotions throughout his career - fierce loyalty and affection from his friends, bitter enmity from many others.

Murdoch, 45, is also a man of great ambition. He has an intense competitive nature that has led him into newspaper circulation wars in three countries - all of which he has won.

The son of a giant in Australian newspaper history, the late Sir Keith Murdoch, Rupert at 22 years of age saw his father's newspaper chain slip from family control, leaving only the small Adelaide Daily News.

Oxford-educated and trained in the fundamentals of aggressive fleet street editing on Lord Beaverbrook's Daily Express, Murdoch returned to the Adelaide Daily News in 1952 and began feverishy rebuilding the empire.

As recently as 1968, Murdoch was virtually unknown outside of Australia, but today he is the owner of the London Sun and News of the World - both flashy papers with heavy emphasis on sex and sensationalism - and a string of provincial paper reaching an etimated 27 million readers.

In the United State, Murdoch founded the 1.4 million-circulation National Star, and in 1973 purchased the financially ailing San Antonio News and Express.

Much of the criticism aimed at Murdoch stems from The San Antonio News, which features splashy red headlines over crime stories of questionable significance, and The London Sun, which carries a daily nude pinup picture.

Murdoch, whose deceptively relaxed manner and sad-looking eyes belie his aggressiveness, defends the tone of both papers saying "they're what the people want."

He often is openly contemptuous of traditional American newspapers, criticizing them for being dull and saying that England's sub-editors and Australian reporter sare the most aggressive an imaginative in the world.

Felker remembers that weekend at Graham's farm as a pleasant event. He flew back to New York with Murdoch, and the two became friends. Murdoch took up residence in New York to launch the Star. Felker urged him to rent a house in the Hamptons on Long Island, where Felker summered. Murdoch did so.

The two men discussed possible projects they might undertake together - a magazine like New York in London, a Sunday newspaper in New York modeled on the London Sunday papers. But they decided they couldn't work together because, as Felker recalls it, "I am not only an editor, I'm a publisher too, as he is."

(Murdoch's recollections cannot be reported here. He refused to talk to The Washington Post.) Trouble

Though New York magazine was born and propered almost entirely because of Felker's energies, he didn't own it. He was not wealthy, and depended on outside backers.

In 1974 his control was diluted further to 10 per cent of the shares when new York took over The Village Voice. The takeover was based on an exchange of stock.As a result of the exchange, a handsome young millionaire named Carter Burden, principal owner of the Voice, held 24 per cent of the stock in New York. Burden's friend and associate, Bardle Bull, held another 10 per cent.

Burden also must be introduced. He is a New York City councilman representing a district on the East Side of Manhattan. Not so many years ago Burden appeared to be a bright star in the political firmament - an ally of Bobby Kennedy, the great grandson of Cornelius Vanderbilt married to the beautiful Amanda, stepdaughter of William Paley, the founder of CBS. Big things were predicted.

But they didn't happen. The marriage broke up. Burden won a seat on the City Council after a lavish campaign, but he did not emerge as a significant force in city politics. Felker's New York ran a devastating profile of Carter and Amanda before they divorced which seemed to open the hunting season as far as Burden was concerned. The gossips have not been charitable.

Felker did not like or admire Burden, but the board of directors of New York installed him as chairman of the board's executive committee. This was but one sign of the strained relations between Felker and his board. The Drama Unfolds

In November, 1976, Murdoch made a deal with Dorothy Schiff to buy The New York Post for close to $30 million. The day the deal was signed Felker telephoned Schiff in her office to congratulate both her and Murdoch.

Felker invited Murdoch out to dinner to celebrate the purchase. With a party of friends they went to Elaine's a hangout for writers on the upper East Side whose clientele consists of celebrities and gawkers. One member of the party was Felix Rohatyn, a partner in the investment banking firm of Lazard Freres, about whom more presently.

At dinner, Felker recalls, he talked to Murdoch about the problems he was having with his board. The issue, as he saw it, was one of priorities: the board wanted dividends and profits, Felker wanted to reinvest to build up his magazines.

The board apparently saw it differently. Some of its members thought Felker was profligate with company money. They did not like the enormous start-up costs of New West, and they resented Felker's persistent demands for more money and benefits. His salary was $120,000, but in 1975 he asked for a lot more, plus fringes including company provided housing.

The full story of what happened next would fill today's edition of The Post, and must be summarized here. Murdoch offered to buy New York and Felker turned him down. (Murdoch proposed letting Felker buy back New West, leaving Murdoch with the New York properties). Just before Christmas Felker learned that Murdoch had raised his bid, which he says came as a complete surprise. He called Murdoch to ask what he was up to. Murdoch said he hadn't decided yet whether he wanted New York with or without Felker, Felker recalls.

Felker then got in touch with his old friend, Katharine Graham. They had talked more than once about teh idea of The Post Co.'s perhaps buying New York or hiring Felker. Now Felker asked if she would like to back him in a bid to retain the company.

(Burden and Felker had formal agreement: if either wanted to sell his shares, he first had to offer them to the other before going to an outsider. So if Burden was tempted by Murdoch's new offer, Felker reckoned, he would try to get Graham to match it. The agreement expired Dec. 31.)

What followed was something of a comedy. Business executives of The Post Co. tried desperately to deal with three questions at once: was the New York Magazine Co. worth buying? At what price? And could a contract be negotiated with Felker that was not outrageously expensive, but which would keep him working happily at the head of the three publications.

Despite the turmoil, Felker decided to go to Nassau for Christmas - a decision which still astounds even his friends who were aware of what was going on. When aware of what was going on. When he got back there were only a few days left to make the deal. Graham had informally reteined Felix Rohatyn, The Post Co.'s investment banker, to try to make it.

Rohatyn is a competitive man, having eagerly accepted the ultimate challenge of saving New York City from financial ruin with one hand while helping run one of Wall Street's most active investment banking houses with the other.

As chairman of the Municipal Assistance Corp. (Big Mac) and closest principal adviser to Gov. Hugh L. Carey, Rothayn was architect of the various schemes that held New York from default.

That crisis left him with the nickname "Felix the Fixer" because of his arm-grabbing style of diplomacy and legendary powers of persuasion, particularly over such seemingly immovable adversaries as the city's big union leaders. Rahatyn relished the image.

The crunch came early on the morning of Dec. 31. Rohatyn, Graham and her associates thought they might have a deal, but they had no hard word from Burden, whose stock they were trying first of all to buy. (Burden's stock was "the linchpin," Rohatyn said.) Burden was skiing in Sun Valley, Idaho. Rohatyn was bargaining with him through his lawyer, New York socialite Peter Tufo.

Rohatyn thought Burden would come to him and accept. Others involved were not so sure. Some thought The Post Co, should have gone to Burden directly to cajole his stock out of him.

In the early hours of Dec. 31 Burden called Felker at home. A heated conversation ensued. Burden's lawyer, Tufo says Felker threatened to ruin Burden's career during their talk. Felker denies it:

"I never threatened Carter's career. I don't think he has a political career. He's just out of it. He's going nohere."

Nevertheless, according to Post Co. sources, Tufo the next day told Rohatyn be would recommend to Burden that he accept the Post offer. Instead Burden rejected it.

The next day, Rupert Murdoch hired a jet and flew personally to Sun Valley - the sort of gesture some people allied with the Post bid thought they should have made a day or two earlier. Murdoch apparently clinched the purchase of New York with Burden in Idaho. The Denouement

If Murdoch clinched the deal in Idaho, it was a symbolic clinch. Felker didn't give up easily.

Tensions between the two increased Monday, partly as result of the temporary restraining order Felker obtained over the weekend to block the sale of Burden's shares to Murdoch, and partly because of increasing vocal criticism of Murdoch's brand of journalism by staff members of New York magazine.

Felker's temporary restraining order was based on his claim of a right to buy Burden's shares before Murdoch got them. There was a touch of irony in the claim for those who recalled New York's 1974 takeover of the Village Voice. The same sort of accusation was made against Felker then by two of the Voice's officers. Felker finally settled their lawsuit with a $450,000 payment.

On Monday most of the New York editorial staff threatened a work stoppage unless the board of directors put off any transfers of stock. Felker added to the discontent with a memo to his staff promising to "fight as hard as I can to keep what we have built from being damaged in any way."

In fact, Felker's only alternatives were to press his lawsuit to try to block the sale or to negotiate a deal with Murdoch, acceding to his takeover. Apparently sensing this, U.S. District Court Judge Thomas P. Griesa ordered Felker and Murdoch to meet before he opened a hearing on the case last Friday morning.

The two met at Felker's lawyers' offices from 5 p.m. to 7 p.m. on Thursday. According to Robert Pieri, one of Felker's attorneys, "absolutely nothing was accomplished."

But it was during the waning hours of Thursday that Felker and his lawyers were coming to the conclusion that their lawsult was probably hopeless, and that the only real issues left were teh terms of Felker's surrender.

"As we prepared the testimony for the lawsuit, it became clear that the odds were 2 to 1 against us . . .," Felker said later. "We saw holes in our argument that scared us."

Even earlier - on Thursday morning - several of New York's editors and writers had concluded independently, after consulting a leading tender offer attorney, that Felker's court case was doomed.

"Therefore," said Ken Aulctta, a contributing editor, "We made the judgment that our audience wasn't going to be on Friday in court, but with Murdoch. We had to put pressure on him to get the hell out of this deal."

So on Thursday at noon, virtually the entire staff of the magazine walked off the job, saying they would never accept Murdoch's financial and editorial control. They timed the walkout to preclude - they hoped - the appearance of this week's edition of New York, for which the normal deadline came just an hour after the staff left the office in protest.

But the staff's unofficial strike did not block the ultimate agreement between Murdoch and Felker, which their lawyers finally worked out in the carly morning hours Friday.

The agreement's final drafting was done in Murdoch's East Side apartment. The players were Pieri: Murdoch's financial adviser, Stanley Shuman; his lawyer, Howard Squadron, and, for part of the time, Murdoch.

Shuman and Pieri worked in the living room, while Murdoch and his attorneys met in the library. As the principals smoked some of Murdoch's Havana cigars, rough outlines of settlement offers and counteroffers were passed back and forthe until after 2 a.m.

Did Felker make a last attempt to retain operating control over the three publications even if Murdoch owned them? Felker replied: "My lawyer went very much against my best -" and then he interrupted himself - "I didn't want to do it [that is, seek to remain]," but Pieri told him "you've got to try this. It would be best for the employees."

"I was very relieved that Murdoch, as he had to, turned this down," Felker said.

Pieri came to Felker in the predawn hours Friday to report what Murdoch had accepted:

Felker would receive his $120,000 salary for the remaining two years of his contract, and a clause preventing him from starting up a magazine that would compete with any of New York's publications was removed. Now the only restriction would be that Felker could not buy Cue magazine in New York or Los Angeles magazine. Murdoch would buy Felker's shares for about $1.4 million.

Also, Murdoch would guarantee editorial control to the existing top editors of the three publications and writers. Murdoch would become chief exectuive officer.

Pieri recalled that when he related the pact to Felker in the pre-dawn hours Friday, Felker showed little emotion.

"He had already crossed the bridge of understanding it was over. And it was all over, not the emotional part of it, but the intellectual acceptance of the fact," Pieri said.

Meanwhile, Murdoch and several other directors of New York went to the magazine's empty offices and began frantically putting and began frantically putting together layouts and page proofs for the Jan. 17 issue, which Felker and the senior editors had said could not be published because of the staff walkout. Subsequently, the issue was completed and sent to the printers for publication this week.

Late Friday Felker was led through a kitchen door of a restaurant on Second Avenue opposite New York's offices. The staff had assembled there without knowing details of the final settlement, but - according to Auletta - certain of Felker's ultimate fate.

Standing on a chair, Felker made an emotional speech. He ended it with these words:

"Rupert Murdoch and I disagree on the meaning of friendship, of human values and the meaning of journalism . . . Now I'm going to go out and start the best magazine I can."

He may have the help of a lot of old colleagues. Many New York staff members announced their resignations, including Auletta, political writer Richard Reeves and senior editor Aaron Latham.

Yesterday, New York's managing editor, Byron Dobell, quit in a telephone call to Murdoch. He was replaced by a new editor - James Brady, a key Murdoch associate at the Star and more recently, The New York Posts.

"It took me about six months to talk Rupert into hiring Brady." Felker said. Brady once worked for New York, an Felker thought of him as a friend and protege. Felker said he was stunned that "a guy I've helped so much" could "work so assiduoudly to set my job."