Bidding battle for Newsday


Long Island Newsday, which has reason to follow this story very closely, reports that New York Daily News owner Mort Zuckerman on Friday matched Rupert Murdoch’s bid to buy Newsday from Tribune Company, with another bid expected this week from a joint venture of Cablevision and the New York Observer, a weekly newspaper. Meanwhile, critics of media consolidation are screaming about the most likely scenario, the sale of Newsday to Murdoch’s News Corporation, which already owns the New York Post, Wall Street Journal and two NYC television stations.

Murdoch is believed to have a handshake deal to buy Newsday for $580 million. The offer, involving a complicated partnership, is designed to make the sale tax-free for Tribune, which is a big selling point to Tribune CEO Sam Zell. Zuckerman reportedly offered a similar tax-free deal structure and hopes to win because his deal would face fewer regulatory hurdles.

Media consolidation is clearly on the outs in Washington and Rupert Murdoch is the poster child for consolidation, so the biggest target. Congress is moving to rescind the FCC’s move to allow a single owner to own one broadcast outlet and one daily newspaper in the top 20 markets. News Corporation is already well beyond that in New York, with two TV stations and the New York Post, not to mention the recently acquired Wall Street Journal, a national daily based in New York.

RBR/TVBR observation: We wondered at first whether the crossownership rule even applied if News Corp. buys Newsday. So, we checked the BIAfn Media Access Pro maps and, yep, it does – just barely. The crossownership rule applies if the Grade A contour of the television station in question covers all of the city of publication of the newspaper in question. While Long Island Newsday is distributed throughout Nassau and Suffolk Counties, its actual hometown is Melville, NY. If News Corp. owned only WNYW-TV (Ch. 5, Fox) in the New York market, the crossownership rule wouldn’t even apply, since Melville is outside the Grade A contour. But WWOR-TV (Ch. 9, MyNetworkTV) has a Grade A contour that goes a bit further east and does appear to cover all of the 14,533 people who live in Melville.

Does Murdoch expect to win a waiver from the FCC? He’d like that, for sure. But we’re betting that he expects to see the crossownership rule struck down by the courts. And since the FCC can’t stop him from buying a newspaper, he can go ahead with this deal and then fight the FCC in court if no waiver is forthcoming.