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NEW YORK: Tribune Company said on Monday it will sell New York daily Newsday to cable operator Cablevision in a 650-million-dollar deal as it pares debt from last year's private equity buyout.
The deal capped a bidding war of the billionaire media barons in the United States for the Long Island-based Newsday, one of the nation's largest daily newspapers.
It comes in the context of consolidation of media empires amid declining print advertising revenues in an economic slowdown and consumers turn to the Internet and other media for news.
Charles Dolan, Cablevision's founder and chairman who has long had an interest in Newsday, was a latecomer to the bidding for Newsday.
But his 650-million-dollar offer trumped the 580-million-dollar rival bids by News Corp. chief Rupert Murdoch, one of the world's most influential media
moguls, and Mortimer Zuckerman, owner of the Daily News and US News & World Report.
Murdoch, owner of the New York Post and the Wall Street Journal, dropped out on Saturday, saying a deal had become "uneconomical."
According to the terms of the agreement, Cablevision Systems Corporation will acquire about 97 percent of Newsday Media Group for 632 million dollars.
Described as a "partnership," the deal will add Newsday's complementary print and online businesses to Cablevision, they said, creating "opportunities to grow Cablevision's advertising, subscription and content-based businesses."
The Tribune Company will have three percent equity in Newsday after the Cablevision purchase.
Tribune Company will also receive 18 million dollars at the completion of the deal as prepaid rent under certain leases of property used in the business, bringing the total transaction value to 650 million dollars, they said.
"This agreement enables us to maximise the value of Newsday and still retain an interest in this valuable asset," said Zell, Tribune chairman and chief executive.
Despite cutbacks, Newsday continues to be among the region's most profitable newspapers, earning about 80 million dollars last year on sales of approximately 500 million.
"Newsday is one of the great names in the history of American journalism and it is both an honor and privilege to return Newsday back to Long Island-based ownership after nearly 40 years," Dolan said.
"We are committed to maintaining Newsday's journalistic integrity and important position in the marketplace."
Cablevision also owns New York arena Madison Square Garden and its sports teams, the New York Knicks, Rangers and Liberty.
In addition to the newspaper and Newsday.com, Newsday Media Group includes amNY, a free daily in New York City; the Star Community Publishing Group of weekly shoppers; and Island Publications' portfolio of lifestyle magazines.
Zell, a Chicago real-estate titan, led the 2007 private equity buyout of the Tribune Company, estimated at the time to be worth 13 billion dollars including debt.
The Chicago-based company, which owns the Chicago Tribune and The Los Angeles Times among other assets, has been rocked by a sharp drop in advertising revenue and a shift away from traditional newspapers.
Tribune Company reported on Thursday a pre-tax loss from continuing operations of 30 million dollars in the first quarter, compared with income of 31 million a year ago.
In announcing the results, Zell said the company continues to be "challenged by the weak economy's impact on real estate and classified advertising."
Briefing.com analyst Jeffrey Ham highlighted the riskiness of Cablevision's investment.
"Given the deteriorating fundamentals surrounding newspapers, the company could have easily found a safer, and possibly better, investment elsewhere," Ham said.
Shares in Cablevision slid 1.80 percent to close at 24.52 dollars in New York trade. - AFP/de
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