Cablevision Systems Corp is close to buying the Long Island newspaper Newsday from Tribune Co for US$650 million, a source with knowledge of the situation said on Sunday.
The deal, to be announced imminently, would net Cablevision, a cable TV company also based on Long Island, its first newspaper. It would also provide much-needed cash to Tribune Co, which is struggling under US$8.2 billion debt it took on when it went private in December.
The source familiar with the talks asked to remain anonymous since the discussions were confidential. Spokesmen for both Tribune and Cablevision declined to comment.
News that Cablevision was close to a deal came one day after Rupert Murdoch’s News Corp rescinded its own US$580 million bid, despite assurances from Murdoch himself just three days earlier that he would prevail over Cablevision within a week.
The Wall Street Journal and Newsday reported on their Web sites earlier on Sunday that a deal with Cablevision was close.
News Corp would have faced regulatory hurdles to owning Newsday since it already owns two New York-area television stations as well as the New York Post, a feisty Manhattan tabloid. Murdoch downplayed those concerns on Wednesday in a conference call with reporters following the company’s earnings announcement.
News Corp already has a waiver to rules barring one company from owning a newspaper and TV stations in the same city, but it’s not clear how the Federal Communications Commission would have acted on the renewal of the broadcasts licenses for those two stations had News Corp picked up another New York-area newspaper. News Corp, a major global media conglomerate, also owns the Wall Street Journal, Twentieth Century Fox and the Fox News Channel.
New York Daily News owner Mortimer Zuckerman had also bid US$580 million for Newsday, but there was no indication that he was ready to raise his price and a spokesman for Zuckerman declined to comment on Sunday.
Tribune, a major newspaper company that also owns the Los Angeles Times and the Chicago Tribune, became an employee-owned company last year in a transaction orchestrated by real estate mogul Sam Zell.
Zell had originally planned to keep the company’s newspapers and TV stations largely intact while selling some other assets such as the Chicago Cubs baseball team, but he changed his mind about Newsday following a rapid deterioration in the company’s newspaper business, which last week reported an 11 percent decline in first-quarter revenues. It’s not yet clear whether Zell intends to sell other Tribune media properties as well.
Cablevision has not commented about its interest in getting into the newspaper business and its investors are starting to get nervous about the company’s recent appetite for acquisitions.
Analysts peppered Cablevision chief executive James Dolan with questions on Thursday about its rationale for going after Newsday, but he declined to comment. The exchange came on a conference call to discuss the company’s latest earnings.
The day before its earnings release, Cablevision announced another acquisition: The purchase of Robert Redford’s Sundance Channel for about US$500 million.
Unlike newspapers, Cablevision does have a strong record in running cable networks and is on a roll with its AMC channel, which has garnered critical acclaim with original series including Mad Men. Cablevision also owns a local news cable channel, News 12.