Thursday, May 1, 2008

$650M Cablevision bid for Newsday coming soon

10:43 PM EDT, April 30, 2008

In a bid that would leapfrog two competing offers from a pair of New York tabloid tycoons, Cablevision Systems Corp. is expected to make a $650-million offer for Newsday before week's end, possibly with a new Long Island partner, sources familiar with the cable operator's offer said yesterday.

A formal bid from the Bethpage company is expected in the next few days, according to sources familiar with talks between Sam Zell, chief executive of Newsday's parent, Tribune Co., and News Corp. chairman Rupert Murdoch.The bid, if tendered, and successful, would add a $70-million premium to separate $580-million offers made by Murdoch and Daily News owner Mortimer Zuckerman.

Cablevision is not working with The New York Observer in moving forward with its bid, though that may change in the future, a source familiar with the offer said.

Cablevision founder Charles Dolan spoke by phone yesterday with Observer officials, and the two companies decided mutually not to move forward together for now, the source said.

Spokesmen for Cablevision and Tribune declined to comment, as did Observer president Robert Sommer. News Corp. and Daily News spokesmen also have declined to comment.It is expected that Dolan would seek talks with a Long Island partner on the Newsday bid, a source familiar with the company's offer said. Dolan is reportedly looking for a partner that would share his television-centric view for a combined Cablevision-Newsday operation.

Cablevision's bid is expected to offer a joint-venture component that would allow Zell to structure the deal to avoid the heavy tax burden of an outright sale, the sources said. Murdoch and Zuckerman's bids were structured similarly, leaving Tribune with a roughly 5 percent stake in Newsday for over 10 years.

The size of Cablevision's offer got the attention of Zell, said the sources familiar with the Zell-Murdoch negotiations. "You cannot ignore a $70-million gain, but my guess is Rupert will top this," one of the sources said. "He has wanted Newsday for a while because some type of union would stop the hemorrhaging at the [New York] Post."After Murdoch's reported handshake agreement with Zell for Newsday and its subsidiaries about 10 days ago, sources said Zuckerman then matched the bid, adding that his was more attractive because it didn't face a high hurdle with the Federal Communications Commission.

But a source with knowledge of the Zell-Murdoch talks said Zell wasn't convinced that Murdoch couldn't persuade regulators that owning Newsday would keep more journalistic voices in the metro area by bolstering the New York Post.

"Sam has great confidence in Rupert. He thinks he can sway the FCC," the source said.One expert watching the negotiations said he expects Murdoch to top any Cablevision offer."Murdoch wants Newsday in the worst way, so I would not be surprised this escalates to a higher number," said Kevin Kamen, president of media appraisal firm Kamen & Co. Group Services in Baldwin.

Kamen had predicted a "low $600 million" offer from Cablevision in a Newsday story this week. Now, he said, bidding could top $675 million."This is a horse race now," said Kamen, adding, "I don't think we've heard the end of Zuckerman" as well.

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