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 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.

News Corp would own most of the company, with Tribune keeping a very small stake. Additionally, Tribune could receive anywhere between $500 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.

Selling the paper based on Long Island, adjacent to New York City, would be key to Tribune Chief Executive and Chicago real estate magnate Sam Zell's plans to help slash debt at the company.

Zell took Tribune private in an $8.2 billion leveraged buyout that restructured the publisher as an employee-owned company, saddling it with more than $10 billion in debt.