Murdoch, Newsday union reps have discussed deal

This story was reported by Daniel Wagner, Susan Harrigan, Mark Harrington and Thomas Maier. It was written by Wagner and Maier.

Representatives from Rupert Murdoch's New York Post discussed a possible acquisition of Newsday from the debt-laden Tribune Co. as early as late February or early March, sources said Friday.

Post executives met in Washington, D.C., with high-ranking officials of the Teamsters' Graphic Communications Conference about three weeks ago to discuss possible arrangements under which News Corp., the Post's parent company, would buy or partner with Newsday, according to two sources with knowledge of the meeting. That union represents employees of both Newsday and the Post, and would have to bless any arrangement that combined their operations.

This behind-the-scenes discussion came to light amidst widespread speculation about who might buy Newsday if Tribune Co. decides to shed Long Island's profitable major daily newspaper. Along with Murdoch's Post, another possible bidder is reportedly New York Daily News owner Mort Zuckerman and Cablevision's Charles Dolan.

A battle among these three motivated bidders for Newsday could raise to its ultimate price to between $500-$600 million, estimated media analyst John Morton, well above the going rate for newspapers in today's market. On Thursday, Tribune Co. chief Sam Zell accompanied a dismal fourth-quarter earnings disclosure with the statement that the Chicago-based media conglomerate has "begun a strategic review of certain Tribune assets to determine whether capital can be more effectively redeployed . . . toward reducing our outstanding leverage."

Zell had said he would not sell the company's major newspapers, which include the Los Angeles Times, Chicago Tribune, Newsday and the Hartford Courant. But last week, in a meeting at The Baltimore Sun, he indicated surprise at how rapidly revenues were declining and said he would have to re-evaluate earlier statements.

Later in the day, media reports began circulating -- first about a sale to Murdoch, then about possible bids from suitors including Bethpage-based Cablevision Systems Corp. and Zuckerman, the billionaire owner of the New York Daily News and U.S. News & World Report.

Representatives from Tribune, Cablevision, News Corp. have declined to comment on the reports. Zuckerman was unavailable for comment Friday, and a Daily News publicity firm could not be reached for comment.

Dennis Grabhorn, president of Local 406, which represents many Newsday employees, said members have been discussing several possible configurations under which the Post could partner with Newsday, which already distributes the Post on its trucks.

If News Corp. buys Newsday outright, it may inherit its labor agreements with Local 406. It might refurbish Newsday's existing presses or install new ones, such as those decommissioned by The New York Times at that paper's now-closed Edison, N.J., plant.

Another possible arrangement would involve News Corp. acquiring Newsday's printing operation and establishing a central facility that could produce Newsday, the Post and The Wall Street Journal, another News Corp. property.

Depending on its structure, this type of deal could help give Tribune a much-needed cash infusion while avoiding tax liability associated with any major-asset sales during the first 10 years of its new corporate structure created when Zell took the company private in late 2007.

Finally, News Corp. could establish some other form of joint venture under which the two would share operational functions like advertising sales and printing facilities.

"I'll take any of the three" bidders named in Friday's news reports," said Grabhorn, but "the only one that is a real newspaper person is Rupert Murdoch."

Grabhorn said he had first heard about a possible Newsday-Post deal from his counterparts at Local 2, which represents Post workers. Since then, he said, the pressrooms have been rampant with speculation and rumors about how an arrangement would be configured and how it would affect the jobs of his employees. He said officials from the Post's union had heard of the possible arrangement and encouraged the meeting between Post management and union leadership.

If consummated, the partnership would allow Murdoch a larger slice of the New York Metro area's newspaper market. Morton said Newsday's affluent suburban market, with a large home-delivered readership, would be a major "compulsion to buy" for both Zuckerman and Murdoch. He said the News has been "marginally profitable" in recent years, though its actual financial statements are not public, and that the Post had been a chronic money-loser subsidized by Murdoch's fortune. He predicted that U.S. anti-trust regulators will likely "be involved from the very beginning" if a serious offer is made by either the Post or News because they share the same New York metro market with Newsday.

The Daily News has been a direct competitor with Newsday for the past two decades, especially in Queens where they battle for readers and advertisers. Last year, Forbes reported Zuckerman had a net personal worth of $2.3 billion.

A person familiar with discussions about a possible Newsday sale said Dolan at one point had been among a group of well-heeled Long Island executives approached as part of a possible bid by businessman Frank Zarb. More recently, however, Zarb is believed to have cooled to a deal, primarily from a financial standpoint, the person said, adding that Zarb hadn't ruled it out and "has been examining the numbers." Zarb has declined comment.

Former Newsday officials said Charles Dolan has been the primary driving force behind Cablevision's interest. One said that when Tribune bought Newsday as part of a roster of newspapers from Times Mirror in 2000, Dolan called then-Newsday publisher Raymond Jansen to express disappointment he hadn't been called first. But this former executive said he suspected Dolan and Zuckerman's more recent involvement in a "soft auction" for Newsday may have stemmed from overtures by Tribune to draw them in, and drive up the price for Newsday, rather than their approaching Tribune first. "They got a phone call," the former executive speculated.

Of the three reported bidders, this person said, he views a deal with Zuckerman and the Daily News as the likely best fit. "They virtually don't exist on Long Island, and merging operations and printing all in one place, there's some logic there," he said. "He could spin this out and come out looking like St. Mort."

Another former Newsday executive said a sale to Cablevision could prove strategic, given that company's News12 operations, which have seen an increased effort in localization on its Web site. A new domain called News12MyTown seeks to burrow deeper into local town news than the TV news program, and content from Newsday could bolster that effort, he said. "They need content and they need advertising," he said.

But, this person said, News12 remains a relatively small portion of Cablevision operations, and it's unclear how Newsday would fit into the larger corporate structure, particularly at a price tag estimated at $500 million or more.

• MACHINIST

• RECEPTIONIST PART TIME

  LA-Z-BOY FURNITURE GALLERIES

• MECHANIC

• DRIVER

• ELECTRICAL ESTIMATOR

• View all Top Jobs

Search jobs

---

All Long Island jobs

Post resume