According to a Wall Street Journal report, Rupert Murdoch's News Corp. has withdrawn its $580 million bid for Newsday, enabling Cablevision to acquire the daily from Tribune Co.  Cablevision, a major provider of video, broadband, and phone service in Long Island and other parts of the New York area offered $650 million, including $18 million in prepaid rent on property leases. Of that amount, Tribune will receive $612 million in cash, and retain three percent of equity stake in the form of a partnership, which is valued at $20 million.

A spokesman for News Corp. said the company was unable to justify outbidding Cablevision's offer, calling the deal "uneconomical." The decision to withdraw comes as a surprise to most observers, as Murdoch adamantly told investors on a conference call last week, "I don't think Cablevision will prevail. Just be patient a couple of days." During the call, Murdoch characterized his bid as "competitively priced" when asked about why he has not raised his bid.

The confirmed deal brings Newsday back to local ownership on Long Island, though Tribune will retain three percent of Newsday. Included in the equity stake of Newsday Media Group are Newsday.com; amNewYork, the free daily newspaper in New York City; and several regional magazines.

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.

"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.

Cablevision also owns Madison Square Garden, the NBA's New York Knicks, the NHL's New York Rangers, and a group of cable TV networks.

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