Add Comment

Paperweights


Rupert Murdoch, Mortimer Zuckerman, James Dolan. Casual newspaper readers might not recognize the names, but they should, because a major source of information is soon to be filtered by the winner of a heated bidding war.

One of these media moguls will beat out the other two by ending up with the winning bid that buys Newsday. The story has been noisily playing out on the business pages since news of the discussions was made public on April 17 by Sam Zell, owner of Newsday parent company, Tribune Company. The idea of either the New York Post’s Murdoch, New York Daily News’ Zuckerman or Cablevision Systems Corporation’s Dolan controlling what is arguably the Island’s largest local news outlet—the paid circulation of Long Island’s only daily paper is around 380,000—is frightening to many. One bidder has already dropped out: Jared Kushner, a New York City real estate mogul and owner of the New York Observer. No matter who takes over, media experts are predicting that the result on the quality of news coverage will be detrimental.


advertisement

“The big question is what the reporters at Newsday and what the readers should expect,” says Peter Hart, activism director with New York City-based media watchdog Fairness and Accuracy in Reporting (FAIR). “It doesn’t really matter which one of those three prevails: The public interest and media diversity in New York will be the loser.”

Hart makes a pragmatic prediction that is also daunting. “We often forget that there are people’s lives at stake—from people inside the newsroom to people who drive the delivery trucks to the people who subscribe to that paper and don’t have a local alternative for a daily paper,” he says, alluding to what everyone already suspects will be one result of any buyout: more job cuts at Melville-based Newsday.

And while most coverage of the pending deal has centered on the Big Three, the effects any sale will have on Long Island readers has been largely left out of the discussion. Newsday’s supporters have opinions across the spectrum, ranging from ambivalence to rooting against bidders. Most, though, say that they simply don’t want to see any more changes take place at a paper that has already been thinned significantly in recent years.

James Dolan

“I don’t think it will matter to me who buys it, I’ll probably still end up reading it,” says Joseph Fresiello, 48, a carpenter from Seaford who subscribes to Newsday. But for some, it does get personal.

“I just hope that Cablevision doesn’t buy it because I’ve seen what they’ve done to the Knicks, and I don’t want them to do that to Newsday,” says Mike Lenaway, 31, a bartender in Syosset.

Courting The Cash Cow

Ultimately, the Island’s losses will translate as the new owner’s gain: The paper is still profitable, despite its 2004 $90 million circulation scandal, because it functions as a monopoly in a captured market. It reportedly has a profit of more than 15 percent, earning its owners an estimated $50 million annually through advertising sales, subscriptions and newsstand sales.

It is on the market because Tribune needs to sell Newsday in order to get out of debt incurred after Zell took Tribune private in December. However, Tribune plans to hold on to a small percentage of Newsday to avoid corporate taxes, because Zell has owned the company for less than one year. Zell would stand to pay several million dollars in taxes, as buying and selling a company in such a short time incurs a large tax.

The winner of the multimillion-dollar bidding frenzy stands to gain significantly from the buyout by combining its workforce and synergizing its marketing tactics. LI’s casualties will come from what is now the latest front to open up in the tabloid war between the Post and the News (both papers are currently neck and neck with circulations of more than 700,000 each).

“We may well see some staff combinations, but it’s probably safe to say that we’re going to expect some staff cuts,” says Prof. Bob Papper, chair of the department of journalism, media studies and public relations at Hofstra. “That I think is pretty much inevitable.”

The Daily News’ Zuckerman would seem to presume that his offer is the best of the lot, because he says his deal faces fewer regulatory issues. Although he is also editor-in-chief of U.S. News & World Report, Zuckerman made his fortune at the company he co-founded, Boston Properties Inc. Still, the News owner and real estate mogul isn’t as dominant a figure in the media world as Murdoch.

The Post’s Murdoch has some rivers to cross before he is granted permission to take over Newsday, in that he has a temporary TV station license waiver pending with the Federal Communications Commission (FCC) because his company, News Corp., owns two New York City-area television stations, Channels 5 and 9, in addition to two New York-based newspapers. FCC regulations prohibit one company from owning more than one television station and one newspaper in top markets like New York City and its suburbs. Murdoch recently received a permanent waiver allowing him to own Channel 5.

The web of Cablevision Systems Corp.

That’s in addition to the company’s book publisher HarperCollins; Internet company MySpace.com; movie venture 20th Century Fox; and international media holdings. News Corp. also owns a chain of community weekly newspapers in Queens and another in the Bronx. Murdoch was able to dodge the feds with his recent takeover of Wall Street Journal publisher Dow Jones, after the FCC ruled that the publication is a national newspaper.

“I’d bet on Murdoch,” says Pulitzer-prize winning columnist Jimmy Breslin, a former Newsday writer. Recalling a dinner he had with Murdoch, Breslin says Murdoch told him the theory behind his aggressive business style: “‘If you say you’re going for something, you must get it. You cannot show weakness and fail.’” Breslin says Murdoch told him this just after coming back from a cross-country courtship to buy another publication.

Dolan’s telecommunications, media and entertainment company, Cablevision, which in recent years has put the big push on expanding its digital television and Internet services, has upped the ante to $650 million, compared to Murdoch’s and Zuckerman’s dueling $580 million bids. Murdoch reportedly isn’t budging while Zuckerman is said to be contemplating his next move.

Of the three media titans battling for Long Island’s sole daily, Cablevision is the most LI-centric, having started in 1973 as strictly an LI cable provider, but this homegrown mogul has expanded into New York City as well. Dolan is best known by sports fans as the owner of the Knicks, the Rangers, and women’s basketball team the New York Liberty. He also owns Madison Square Garden and Radio City Music Hall.

Leave a Comment

Please use the comment box below for general comments, but if you feel we have made a mistake, typo, or egregious error, let us know about it. Click here to "call us out." We're happy to listen to your concerns.