- The Washington Times - Wednesday, April 23, 2008

NEW YORK (AP) — Rupert Murdoch is edging closer to owning Newsday, a deal that could help stem losses at his New York Post tabloid by combining production operations, people familiar with the matter said yesterday.

The $580 million deal would also help Chicago-based Tribune Co., Newsday’s owner, reduce the $8.2 billion debt load it took on last year as part of a going-private transaction. The people familiar with the talks asked not to be named since the discussions were confidential.

News of the progress in the ongoing talks was reported late Monday by the Wall Street Journal, which Mr. Murdoch bought in December, and Newsday. The Chicago Tribune, Tribune’s flagship paper, also had a similar story yesterday.

The reports came as Mr. Murdoch faced turmoil at the Journal, where managing editor Marcus Brauchli stepped down yesterday after less than a year.

Mr. Brauchli, who will stay on with News Corp. as a consultant, said it is time for the new owners to pick their own managing editor.

The Journal said the Newsday deal would be structured as a joint venture with the New York Post and other News Corp. businesses, in which Tribune Co. would retain a stake of less than 5 percent.

Tribune’s new chief executive, Samuel Zell, confirmed on a conference call last week that he was considering selling Newsday, a reversal of his original plan to keep Tribune’s core businesses largely intact.

Mr. Zell said he was approached by several suitors for Newsday and was considering a sale of the paper, one of Tribune’s largest, amid a rapid decline in revenues in the past several months.

A sale of Newsday would help Tribune pare down its total debt burden of $13 billion. Mr. Zell also has sought to sell the Chicago Cubs baseball team and the stadium they play in, Wrigley Field.

For Mr. Murdoch, gaining Newsday would allow News Corp. to cut the persistent losses at the New York Post by combining back-office and production operations.

The Post circulates mainly in the New York City area and Newsday in neighboring Long Island, which could offer advertisers a broader reach in a single ad buy.

However, given their proximity and Mr. Murdoch’s other New York-area media holdings, which include two TV stations and the Journal, any deal for News Corp. to acquire Newsday would be sure to face close regulatory scrutiny.

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