Rupert Murdoch's News Corp., once the front-runner in bidding for Tribune Co.'s Newsday, has withdrawn its $580-million offer for the Long Island, N.Y., daily newspaper, a News Corp. spokeswoman said Saturday.
Cablevision Systems Corp., a Long Island-based cable TV operator, had topped Murdoch's offer last month with a $650-million bid that News Corp. was unwilling to match or exceed.
"It became uneconomical to continue," News Corp. spokeswoman Teri Everett said.
A third bidder, Mortimer Zuckerman, owner of the New York Daily News, also has a $580-million bid on the table.
This leaves Cablevision as the clear favorite, according to sources familiar with the bidding, who spoke on condition of anonymity because the discussions are confidential. One source said an agreement was imminent, perhaps coming as soon as today but more likely in the next few days.
Murdoch's withdrawal did not appear to be a negotiating ploy. "I don't think he would have made a public statement unless he realized that he wasn't going to win," the source said.
All of the bids were structured to allow Tribune to receive most of the price in cash yet avoid the tens of millions of dollars in capital-gains taxes that would be triggered by a conventional sale. Tribune, which also owns the Los Angeles Times, KTLA-TV Channel 5 and other media properties, needs cash to reduce the nearly $13-billion mountain of debt that remains after the December buyout led by Chicago real estate investor Sam Zell.
For Cablevision, Newsday might provide a way to become a dominant advertising player across three platforms on Long Island: print, the Internet and cable TV. There might also be an opportunity for shared editorial content between the reporting staffs of Newsday and Cablevision's News 12 regional news channel.
Zuckerman's Daily News battles Murdoch's New York Post -- both tabloids -- for dominance among New York's straphangers. Buying Newsday, with its contiguous readership in the Long Island suburbs, has been seen as a way for either paper to gain an advantage in the money-losing war by being able to spread printing, distribution and back-office costs across a larger base.
In a conference call Wednesday with reporters and Wall Street analysts to discuss corporate earnings, Murdoch said a Newsday acquisition would "improve our cash flow by $100 million a year."
He also projected the air of someone on the brink of victory. "I don't think Cablevision will prevail," Murdoch said. "Just be patient for a couple of days, will you? We're certainly not in the business of getting into an auction here."
Murdoch, 77, controls a news and entertainment empire, including Wall Street Journal publisher Dow Jones & Co., which he bought last year.