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Reports: Murdoch among bidders for Newsday

By DANIEL WAGNER | daniel.wagner@newsday.com

8:04 PM EDT, March 20, 2008

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Chicago-based Tribune Co., struggling with declining revenues and crunching debt, may be getting ready to sell Newsday, according to media reports.

Billionaire media mogul Rupert Murdoch's News Corp. has submitted a bid to acquire Newsday, Crain's New York Business reported on its Web site, attributing the information to a "newspaper industry insider." A later post from The Wall Street Journal, which is owned by News Corp, listed Bethpage-based Cablevision Systems Corp. as a possible bidder. The Journal report was attributed to "people familiar with the situation."

The New York Times also reported on its Web site that New York Daily News owner Mortimer Zuckerman also has shown interest in the newspaper.

Representatives for Newsday and Chicago-based Tribune Co. would not comment on a possible sale of Newsday. A News Corp. official originally told Crain's he "knew nothing about any bid for Newsday," but later told Newsday he could not comment on a possible bid. A Cablevision spokesman did not return calls seeking comment.

Newsday already distributes News Corp.'s New York Post on Long Island under an existing agreement.

Reflecting on the possible acquisition, media analyst James Goss of the brokerage Barrington Research, said, "If you can structure it so you combine operations without combining brands, that could be very successful, [but] it would be up to the government to let it happen."

Tribune, which owns the Los Angeles Times, Chicago Tribune, Chicago Cubs and other media and entertainment properties, has "begun a strategic review of certain Tribune assets to determine whether capital can be more effectively redeployed into our core operations or toward reducing our outstanding leverage," chairman and chief executive Sam Zell said in a statement accompanying yesterday's financial disclosure.

Zell took Tribune private late last year under a complex transaction that burdened it with substantial debt and -- Zell said later -- was based on the expectation that revenues would decline more slowly than they have.

At the time, Zell said he would not sell "core assets" including Tribune's major newspapers. But he told Baltimore Sun employees last week that if rapid revenue declines continued, "we may have to re-evaluate a lot of our decisions," the Sun reported.

Also this week, Newsday completed a previously announced staff reduction program under which 46 newsroom positions were eliminated. Publisher Tim Knight announced last month that the company would be eliminating about 120 jobs. A Newsday spokeswoman would not comment on the total number of layoffs companywide.

Tribune Co. released figures yesterday showing it lost $78 million in the fourth quarter of 2007, down from a $233-million gain for the same period a year earlier.

According to yesterday's release, Tribune had $55 million in income for 2007, down from $661 million in 2006. The publishing group's operating profit decreased 99 percent, from $226 million in 2006 to $3 million in 2007.

Zell attributed the sharp decline to "lower revenues, higher interest expense and the net effect" of a series of one-time costs including bonuses paid to former Tribune executives, a new management incentive plan and a settlement between Newsday and advertisers who had sued over fraudulently inflated circulation figures.

"Despite the continued difficult operating environment and weakness in print revenue, we see significant opportunity within Tribune Company," Zell said in a statement. He pointed to leadership changes and "a fundamental shift in culture" as reasons for hope.