Murdoch closing in on Newsday deal for $580 mn

NEW YORK: Rupert Murdoch is edging closer to owning Newsday, a deal that could help stem losses at his New York Post tabloid by combining production operations, people familiar with the matter said on Tuesday.

The $580 million (euro364.07 million) deal would also help Chicago-based Tribune Co, Newsday's owner, reduce the $8.2 billion (euro5.15 billion) debt load it took on last year as part of a going-private transaction. The people familiar with the talks asked not to be named since the discussions were confidential.

News of the progress in the ongoing talks was reported late Monday by The Wall Street Journal, which Murdoch bought last December, and Newsday. The Chicago Tribune, Tribune's flagship paper, also had a similar story on Tuesday.

The reports came as Murdoch faced turmoil at the Journal, where managing editor Marcus Brauchli stepped down Tuesday after less than a year on the job. Brauchli, who will stay on with News Corp. as a consultant, said it was time for the new owners to pick their own managing editor.

The Journal said the Newsday deal would be structured as a joint venture with the New York Post and other News Corp. businesses in which Tribune Co would retain a stake of less than 5 percent.

Tribune's new chief executive, Sam Zell, confirmed on a conference call last week that he was considering selling Newsday, a reversal of his original plan to keep Tribune's core businesses largely intact.

Zell said he had been approached by several suitors for Newsday and was considering a sale of the paper, one of Tribune's largest, amid a rapid decline in revenues in the past several months.

A sale of Newsday would help Tribune pare down its total debt burden of $13 billion (euro8.16 billion). Zell has also been working on selling the Chicago Cubs baseball team and the stadium they play in, Wrigley Field.

For Murdoch, gaining Newsday would allow News Corp. to cut the persistent losses at the New York Post by combining back-office and production operations.

The Post circulates mainly in the New York City area and Newsday in neighboring Long Island, which would also offer the potential of selling advertisers a broad reach of readers in a single ad buy.

However given their proximity and Murdoch's other New York-area media holdings, which include two TV stations and the Journal, any deal for News Corp to acquire Newsday would be sure to face close regulatory scrutiny.

Andrew Jay Schwartzman, president of the nonprofit advocacy group firm Media Access Project, said in a statement such a deal would face "vociferous opposition" from citizens' groups and others "concerned about preserving diversity in the marketplace of ideas."

The Post has been a longtime money-loser for News Corp, but it also enjoys major clout among New York's business and media circles.

News Corp. can easily afford the losses given its sprawling array of media assets, which include the Twentieth Century Fox movie and TV studio, Fox network, a large group of TV stations and a number of cable channels including Fox News Channel. News Corp acquired The Wall Street Journal's parent company Dow Jones & Co last December for $5 billion.

The Journal cautioned that many details and tax implications were still being worked out and that the deal could still fall apart. Newsday had also received interest from the real estate developer Mortimer Zuckerman, who owns the New York Daily News, the rival tabloid to Murdoch's New York Post.

A spokesman for Zuckerman didn't immediately return a call inquiring whether Zuckerman was still in the running for Newsday.