By: E&P Staff and The Associated Press Tribune Co. confirmed Monday that Cablevision Systems Corp. is acquiring Newsday, its reliable money-maker in Long Island, N.Y., for $650 million, including $18 million in prepaid rent on property leases.
The deal gives cable television operator Cablevision the abiliity to combine marketing forces with a daily that has a virtual monopoly in affluent Long Island -- and it gives Tribune a timely infusion of cash as it faces a big payment on the $8.2 billion in debt it took on to go private last December.
In winning Newsday, Cablevision beat out New York Daily News Publisher Mort Zuckerman and News Corp. Chairman Rupert Murdoch, who started off the bidding for the paper with a $580 million offer. News Corp. said over the weekend that it would be "uneconomical" to try to match or top the Cablevision bid.
In the deal, Tribune will retain 3% of Newsday Media Group, a structure that allows the Chicago media giant to defer big capital gains taxes.
Bank of America is providing the $650 million of senior debt financing, guaranteed by CSC Holdings, Inc., Tribune and Cablevision said.
Of that amount, Tribune will receive $612 million in cash, with its 3% equity stake in the partnership valued at $20 million.
Media mogul Rupert Murdoch, CEO of News Corp., withdrew his own $580 million bid on Saturday. New York Daily News owner Mortimer Zuckerman had also bid $580 million.
The deal brings Newsday back to local ownership on Long Island. Tribune under Sam Zell had been seeking to sell Newsday lighten an $8.2 billion debt load it took on last year when it went private.
Tribune will retain a 3 percent stake in a joint venture to be formed containing Newsday as well as several related assets, including Newsday.com, some regional magazines and the free daily newspaper in New York City amNewYork. Cablevision will hold the remaining 97 percent.
Cablevision said owning Newsday will allow the company to better market the newspaper to the many households on Long Island that don't yet subscribe to it, while tapping Newsday's expertise in ad sales to help Cablevision's own cable TV advertising business.
Cablevision, which is controlled by the Dolan family, runs one of the most advanced cable TV operations in the industry and has about 3.1 million subscribers in the New York metro area.
The company also owns Madison Square Garden, the NBA's New York Knicks, the NHL's New York Rangers, and a group of cable TV networks.
"We admire Newsday's strong editorial voice and reputation for quality as well as its leadership in print and online journalism," Cablevision Chairman Charles Dolan said in a statement.
"We are committed to maintaining Newsday's journalistic integrity and important position in the marketplace," Dolan said.
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