News Corp. drops $580 mln offer for Newsday
(RTTNews) - Media Conglomerate News Corp.
(NWS) on Saturday withdrew its bid for Long Island newspaper Newsday. The company, controlled by media mogul Rupert Murdoch, had expressed confidence earlier in the week that it would clinch the $580 million deal. The withdrawal leaves Cablevision Systems Corp.
(CVC) with a $650 million offer and Mortimer Zuckerman of Daily news, with an offer matching that of News Corp., in the fray for the Tribune Co.-owned newspaper.
Reports said News Corp. decided to drop out of the deal as it felt that raising the bid would be uneconomical. Newsday’s print advertising and circulation have been on a decline. For the six months ending March 31, the newspaper had a circulation of 379,613, which is down 4.7% from the same period last year.
Purchase of Newsday would have helped the company merge Newsday's printing and distribution operations with Murdoch’s New York Post., and increase cash flow by $100 million annually.
However, a News Corp-Newsday merger would have been difficult for regulatory reasons. The U.S. Federal Communications Commission enforces restrictions on common ownership of daily newspapers and broadcast stations in the same market. In December 2007, News Corp. purchased Dow Jones & Co., former publisher of New York-based The Wall Street Journal, for $5.2 billion.
Buying Newstoday would have meant that the company would have The Wall Street Journal, The New York Post, Newstoday, as well as two area television stations, under its fold. Nevertheless, the offer from Cablevision for Newstoday includes fewer regulatory hurdles.
Tribune, publisher of the second-largest U.S. newspaper after Gannett Co., decided to sell Newsday after real-estate magnate Sam Zell took control of the company in December 2007. In an effort to reduce Tribune's heavy debt burden, which climbed after the company was taken private in an $8.2 billion buyout, Sam Zell has announced job cuts and sale of assets. Tribune, which owns the Los Angeles Times and Chicago Tribune, has about $1.85 billion in debt maturing by the end of next year.
This is the second high-profile drop out from a bid in the past one week. On May 3, software giant Microsoft Inc.
(MSFT) withdrew its $47.5 billion takeover bid for internet search engine Yahoo Inc.
(YHOO). Microsoft offered Yahoo $31 per share and later sweetened it to $33 per share, but Yahoo refused to accept an offer less than $37 per share.
Stock Movement
NWS closed Friday’s regular trading session at $19.35, down $0.33 or 1.68%, from the previous close, on 1.60 million shares. For the past year, the stock has been trending in the range of $17.54-$24.95.
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