Murdoch kills Newsday bid

May 10, 2008

murdoch-frowns.jpgWhen Rupert Murdoch said the other day that he wasn’t investing in newspapers anymore, we assumed that he was being ironic, especially as it came in the same telephone conference call with News Corp analysts and reporters in which he said that he thought his agreement to buy Newsday from Tribune Co was all but sewn up .

That goes to show you what they say about assuming things.

The Wall Street Journal reported on Saturday , and we subsequently confirmed , that News Corp isn’t going to chase Newsday after all. Instead, it’s pulling its $580 million bid, paving the way for Cablevision to likely take over its fellow Long Island media outlet. New York Daily News owner Mortimer Zuckerman is in the race still as far as we know, but it’s hard to see how Tribune will take his $580 million bid when Cablevision has a $70 million sweetener on top of that.

Why? Apparently the economics were unjustifiable. What could that mean? The short list: Tribune’s quarterly financial results, which came out late Friday, show the company continuing to lose advertising revenue at its newspapers; media ownership laws might make it tough for Murdoch to take the paper yet keep his New York-area television broadcast licenses; and finally, a bid higher than $650 million is already a higher valuation for a newspaper than most sensible financial folks see as feasible.

That didn’t seem to bother Murdoch before. Here’s what he said on the News Corp earnings call (reproduced from our earlier blog entry ):

No, I don’t think Cablevision will prevail. Just be patient for a couple of days (inaudible). We’re certainly not in the business of getting into an auction here …

We’re hoping to wrap it up within the next week. And I don’t mean the end of next week, I mean within the next seven days … It takes two to agree. But we’re at a pretty advanced stage. I’ll just leave it at that at the moment.

Here’s what he subsequently said at the Time 100 dinner later that week, according to the New York Observer (whose owner Jared Kushner also was interested in bidding, though a source close to Kushner Properties told us recently that he has no idea what he wants to do about a bid right now — we’re guessing nothing):

“Yeah, I might have gone a little too far saying it was a certainty,” he told The Observer. “I was telling the truth, but you don’t know until …”

Until Saturday.

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[...] a higher valuation for a newspaper than most sensible financial folks see as feasible,” writes Robert [...]