Newsday, May 9, 2008
By Mark Harrington

A day after News Corp. chief Rupert Murdoch spoke confidently that he would end up buying Newsday, sources familiar with the negotiations in Chicago said last week's higher bid from Cablevision Systems Corp. is being seriously considered.

The sources said the talks between attorneys for Cablevision and Newsday parent company Tribune Co. were "working intently to move this forward." Much energy was being spent on the Cablevision bid, in part because it doesn't appear to face the regulatory hurdles presented by a competing offer from News Corp., said the sources, who have knowledge of Tribune-News Corp. negotiations. But that doesn't mean "Cablevision has won the prize," one of the sources added.

Another source said Tribune chief executive Sam Zell, despite his preference to expand his relationship with Murdoch, cannot ignore Cablevision's $650-million offer -- a $70-million premium over $580-million bids from Murdoch, who owns the New York Post and The Wall Street Journal, and Daily News owner Mortimer Zuckerman. However, the full details of the three bids have not been reported.

A source familiar with the Daily News bid said Thursday Zuckerman's team was working on a revised offer despite the "daunting" Cablevision offer.

"Interest in working with Cablevision has increased with the passage of time," said one source close to the talks, who stressed the talks were not over.

The source also said attorneys were deliberating over how a joint venture between Tribune and Cablevision would be structured, particularly how savings could be achieved without the cable operator's owning a paper.

Tribune spokesman Gary Weitman declined to comment Thursday.

Meanwhile, people who view Murdoch and Zuckerman's dueling bids as logical extensions of their tabloid empires have been forced to grapple with just how Cablevision would integrate a newspaper. Many experts are wondering how a stalwart from the world of pole-strung cables, set-top boxes, television programming and local TV news assimilates a newspaper.

In a conference call with analysts Thursday, Cablevision Chief Executive James Dolan declined to comment on bids for Newsday. "We have nothing to announce regarding Newsday," he said. "We continue to look at all of these options as well as strategic investments that help retain what is a very healthy business right now."

Cablevision's large customer base for video, telephone and Internet service likely would find many uses for Newsday content, said one observer, particularly as it moves to create a wireless Internet network throughout the region.

"Murdoch has the money, but Cablevision has the technology of the future," said Paul Levinson, chairman of the department of Communications and Media Studies at Fordham University. "In the long run, Cablevision might be a better fit."

Bob Papper, a professor of journalism at Hofstra University, said that while he believes the News and the Post would create efficiencies by eliminating overlapping newsroom and back-office operations and staffs, he said he suspects Cablevision believes it can justify the purchase through higher revenue.

"What they're looking to do is protect and consolidate an advertising market," Papper said, adding that packaged selling of cable-TV and Newsday subscriptions, and advertising for both properties are inevitable. "The fact that they're a cable company doesn't mean they can't become a newspaper company."

But media analyst John Morton disagreed. "One of the problems is the Dolans don't come out of the newspaper culture," he said. "One wonders just how attracted they are to the viability of newspapers," particularly in light of newspapers' slimmer profit margins compared to cable. "I would be nervous," Morton said.

Wall Street, too, has been laboring to imagine Newsday affixed to Cablevision.

Joseph Bonner, who tracks Cablevision for Argus Research Co. in Manhattan, remains perplexed by the cable operator's bid. "I don't see how it fits."

But he suggested the Dolans "get a news guy to run it and let him run it."

The story was reported by Mark Harrington, Thomas Maier and James T. Madore. It was written by Harrington.

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