Media mogul Rupert Murdoch has agreed in principle to pay $580 million for Newsday in a deal with the Chicago-based Tribune Co. that would reshape the New York City tabloid world.
Newsday, based in Melville, Long Island, is part of the Tribune Company, which is now controlled by real estate magnate Sam Zell. The sale of the tabloid had been rumored for months. with the top contenders being Murdoch, owner of the New York Post, and Mortimer Zuckerman, owner of the New York Daily News.
Newsday is still profitable despite declining circulation, whereas both the Post and the Daily News lose money.
By buying Newsday, Murdoch gains huge cost advantages over longstanding rival Zuckerman, who also owns U.S. News & World Report. He would save on the costs of distributing the tabloids, while balancing off operating losses at the Post with the still-profitable Newsday. He would also be able to charge advertisers for the opportunity to reach readers extending from New York City to eastern Long Island.
The tentative deal, which was reported today in Newsday, would make the Long Island paper part of a joint venture with the Post, as well as various non-newspaper assets of Murdoch’s News Corp. Tribune would reportedly retain a stake of less than 5 percent. Details were still being hammered out.
The sale would be the first of Tribune properties since the company was taken over by Zell in December. Zell may be seeking to sell off other flagship properties, including the Los Angeles Times, industry watchers speculate, despite a promise last year not to sell off pieces of the company as he struggles to make payments on Tribune’s $12.8 billion debt, including $1 billion due this year.
One potential obstacle to the Newsday deal could come from concerned about antitrust issues. Besides the Post and the Wall Street Journal, Murdoch also owns two television stations in the New York market. However, industry analysts are betting that the current downturn in the newspaper business will make such concerns a non-issue.
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1 Comments
#1. Martin 04.22.2008
This deal will advance Murdoch’s challenge of the primacy of The New York Times as a general-interest newspaper. Readers have traditionally turned to Newsday as a single source that combined suburban coverage plus state and international coverage. If Murdoch protects and grows this Newsday brand, he could attract New York Times readers who have been upset by that newspaper’s growing neglect of local coverage. The Times might be forced to devote to local coverage reporatorial resources it now has the luxury to expend on national and international coverage, giving The Journal an opening. And the synergistic capacity the Journal would have for providing Newsday with national and international news content could quell the growing dissatisfaction among Newsday readers who feel their newspaper is failing to keep them informed about events beyond the Cross Island Parkway.
This gets interesting.
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