Tribune near plan to sell Newsday to News Corp

By Robert MacMillan and Jui Chakravorty Das

NEW YORK (Reuters) - Tribune Co has reached agreement in principle to sell Newsday to Rupert Murdoch's News Corp for about $580 million in what would be a joint venture, according to a source familiar with the matter.

Another person briefed on the matter said the two parties are "very close" to a deal.

Under the terms of the alliance, Tribune's Newsday would be part of a joint venture with News Corp's money-losing New York Post, allowing the two publications to combine back office operations, the person said.

Still, Post tabloid newspaper rival the New York Daily News remains interested in Newsday. The paper's owner, Mortimer Zuckerman, plans to submit a new, formal bid by the end of the week for Newsday, the daily newspaper on Long Island, New York, a source close to the discussions said Tuesday.

The source declined to say if Zuckerman's bid is higher than News Corp's or how it differs from a previous bid.

Under News Corp's plan, it would own most of the company, with Tribune keeping a very small stake. Additionally, Tribune could receive anywhere between $500 million and $600 million in cash, the source said.

Details of ownership are still being ironed out and there is still a small chance the deal could fall through, the person said.

Both sources spoke on condition of anonymity because the talks are confidential.