The power vacuum in New York City that will be left by Michael Bloomberg's departure from public office will likely be compounded by another unfillable hole: the loss of the New York Post.

The Post has been in business since 1801, and owned since 1976 by Rupert Murdoch (other than for a five-year hiatus when regulatory requirements forced him to sell the paper – that is, until he arranged to be exempted from those rules and buy it back). It's been Murdoch's money-losing personal instrument for all manner of trouble-making, political power-brokering, and punishment and reward. When it was not being bent to his personal will, it was to that of his editors, picking the paper's enemies and friends for both personal and institutional benefit.

To say the Post is self-serving would be beside the point. It is the last of the great bully-boy newspapers.

This joie de guerre has cost Murdoch as much as $80m a year in unstoppable losses – perhaps more than $1bn over 35 years.

Murdoch's attachment to the paper has long been more sentimental than strategic. Once, it was the seat of his power in the US, electing Ed Koch mayor and making Murdoch the most feared publisher in the nation. But that was decades ago.

Its truer recent purpose has been as a model for what he thinks newspapers ought to be: a semi-lawless, unrepentant, sometimes quite joyful agent of the carrot-and-stick of publicity. The Post newsroom has been his retreat in New York – a half-fantasy world where, when the burdens of running a big corporation and a fractious family became too much, he could repair.

I urged my daughter to try to work there after she finished college. There would not be an opportunity, I advised, to experience something like the Post much longer. Now, as Murdoch gets ready to separate his newspapers from his richer entertainment holdings in a move that will force the papers to pay their own way, the Post's day of reckoning nears.

The new newspaper company will be backed by a several billion-dollar dowry from the entertainment company, but that dough will be needed for cash flow-positive investments. The present assets, including the Wall Street Journal, more than 70 papers in Australia, and the Sun, the Times, and Sunday Times in London, will all need to become productive and ever-more-profitable members of the company. Many will struggle to get there.

There is, however, no scenario in which the Post will reach that point; there is no scenario in which, even with cuts, it doesn't keep losing more.

Murdoch himself, since has acquisition of the Wall Street Journal, in 2008, has reluctantly distanced himself from the Post, letting it become an increasingly sclerotic and gothic enterprise, full of aging figures. Its editor, Col Allan – an Australian of the Murdoch old school – has alternatively been trying to retire, or fighting efforts to make him retire, for half a decade. Its once-feared gossip columnist, Richard Johnson, long having forsaken a diligent day, is working out his rich contract in Los Angeles. Keith Kelly's column about print media, which, in its heyday held the city's media power brokers in its thrall (always a particular Murdoch goal), now reads more like the shipping news – with Kelly still one of Murdoch's highest paid reporters.

The hacking scandal in London has made the Post's characteristic behavior – its bar-tab relationship with the New York City police; the payoffs the paper has admitted taking (not least of all by Johnson for favorable Page Six coverage); and its standard operating procedure of pressuring its opponents with attacks in the paper – a red flag to the company's lawyers in New York. Indeed, Robert Thomson, the Wall Street Journal editor, who will be the CEO of the new newspaper company, is openly contemptuous of Col Allan and the paper's low-rent, cowboy atmosphere.

The paper's publisher is now Jesse Angelo, a high school friend of Murdoch's son James – and James' personal proxy on the Murdoch family trust. Angelo,whose own father is a significant investor in the Tribune Company, which owns the LA Times that Murdoch would like to buy – was the No 2 editor at the Post and long promised the No 1 job on Allan's retirement. Instead, reportedly eager to get out of the Post, he was moved to run Murdoch's tablet news project, the Daily.

When that failed, Angelo was moved back to the Post, over Allan, where, by all accounts, he is being warehoused for a top job at the new news company. (Angelo was a guest at Murdoch's 82nd birthday party last month – Allan was not.)

"If you have any juice inside of News Corp, you are negotiating yourself out of the Post," said a senior News Corp source last week.

The competition has not been kind, either. Where once the Post had only the less aggressive Daily News to consider in the tabloid world, now it is up against a free-form internet world of gossip, crime, and political coverage, as well as a local start-up, DNAinfo, comprising many former Post reporters, which regularly beats the Post on crime and political stories. And, as well, there is Wall Street Journal itself, with its metro section now competing with the Post for advertising.

Everything about the paper – advertising, circulation, staff, and even its once-outsized influence – has been shrinking. Inside News Corp, the strategy has long been described as "closing the Post without the old man having to admit that it's closed".

Still, it can yet rouse itself. It would be hard to imagine an Anthony Weiner running for mayor without the Post. And, reflecting Murdoch's views, the Post has recently become a loud, if peculiar, proponent of gun control laws.

But the end is surely here. It is just one more jarring adjustment for the 82-year-old Murdoch. The Post will not outlive him.

• Editor's note: the spelling of Col Allan's name was amended at 1.30pm ET on 15 April; and the spelling of Robert Thomson's name was amended at 7.30am ET on 16 April