April 25, 2008 / 10:44 PM / 11 years ago

Zuckerman submits $580 mln Newsday bid: source

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 Chief Executive Rupert Murdoch, according to a source familiar with the matter.

The Tribune Tower in Chicago, April 2, 2007. REUTERS/John Gress

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.

For Murdoch, a Newsday-Post deal could be a decisive move to triumph over the Daily News, which over the years has mostly enjoyed higher circulation.

Rather than banking on raising the bidding price as a sure-fire way to eclipse Murdoch’s offer, Zuckerman is using regulation as a key point in trying to win the paper, the source said.

U.S. media ownership rules generally restrict companies from owning a local newspaper and a television station in a single market. News Corp, however, has waivers from the Federal Communications Commission that let it own the Post, WNYW-TV in New York and WWOR-TV, which is based in northern New Jersey and serves the New York market.

He also owns The Wall Street Journal, which he bought along with Dow Jones & Co Inc for $5.6 billion last December.

Zuckerman’s lack of television stations means that he would be able to seal a deal without regulatory delay, whereas Murdoch’s bid likely would come under lengthy FCC scrutiny, the source said.

There is no regulatory risk, a News Corp spokesman said on Friday. The company declined further comment.

Editing by Carol Bishopric

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