Cablevision is preparing a $650 million offer for Newsday, $70 million more than bids by Rupert Murdoch and Mortimer B. Zuckerman, while the owners of The New York Observer have dropped out of the bidding, people briefed on the matter said on Wednesday.

Cablevision, controlled by the Dolan family, may be working with a partner, according to these people, who have knowledge of the negotiations but said they were not at liberty to discuss them publicly. The company declined to confirm or deny that it was interested in the Long Island-based newspaper from the troubled Tribune Company.

In the escalating bidding war for Newsday, the offer represented the surprise return of a suitor that had expressed interest in March, then signaled that it was out of the running.

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