Zuckerman submits $580 mln Newsday bid: source

By Robert MacMillan and Kenneth Li

NEW YORK (Reuters) - New York Daily News owner Mortimer Zuckerman has submitted a $580 million bid for Tribune Co's Newsday daily newspaper on Long Island, New York, matching a bid by News Corp (NWSa.N: Quote, Profile, Research, Stock Buzz) Chief Executive Rupert Murdoch, according to a source familiar with the matter.

Murdoch's New York Post daily tabloid newspaper is the chief rival to Zuckerman's Daily News. Murdoch's bid would leave a small percentage of the paper in the hands of Tribune in order to defer the tax hit that Tribune would take if it sold the paper.

The source said Zuckerman's bid is similarly structured, but Zuckerman is betting that the deal would be more attractive to Tribune because it could get done more quickly without heavy U.S. regulatory scrutiny.

A representative for Zuckerman did not return telephone calls seeking comment.

Reuters previously reported that Tribune has reached an agreement in principle to sell Newsday to News Corp in a deal that would let Newsday and the Post combine their back-office operations, a source familiar with the matter told Reuters earlier this week.

The deal could help the Post mitigate its losses and perhaps turn a profit. Structuring the deal to leave a small stake in the paper in Tribune's hands would allow that company to defer capital gains taxes that it would otherwise incur in a straight sale, three sources familiar with the deal and Tribune have told Reuters.

Tribune's chief executive, the billionaire real estate mogul Sam Zell, is looking to sell Newsday as well as other properties in an attempt to pay down billions of dollars of debt that the company assumed when he took it private in an $8.2 billion buyout.

Though newspapers are viewed as an industry in a state of severe distress, Newsday enjoys an affluent readership on Long Island and the paper is profitable, several sources have told Reuters in recent weeks.