Dissident shareholders from the Chandler family, who currently own about 20% of Tribune stock, want to buy the company and spin off some business, including its broadcast division.
There are three bids standing for Tribune Co.: the $7.7 billion offer from the Chandlers, another bid from two Los Angeles billionaire execs, Eli Broad and Ronald W. Burkle, and a third from the Carlyle Group seeking to acquire the TV broadcast division.
The auction was undertaken at the behest of the Chandlers and other shareholders who are dissatisfied with the company's low stock value. They thought it might shore up the stock's price, but a lukewarm response from the media industry has produced the opposite result.
Because Murdoch already commands a vast media empire, he's unlikely to make a bid for the entire company for fear of running afoul of cross-media ownership rules. Instead, according to the London newspaper, Murdoch would likely settle for a minority stake in a slimmed-down newspaper holding company, which would still give him control of Newsday. Combining back-office operations, like printing and subscription processing, could help cut costs and put the New York Post in the black.
"Murdoch's interest in Newsday makes sense, especially as it follows the clustering initiative of the newspaper industry," notes Ken Doctor, an analyst with Outsell, Inc., who points to cost-cutting through consolidation at other major papers. In terms of the auction, Doctor believes "it's a strengthening of the Chandler's hand," which may jump-start the process. But he also predicts cross-ownership issues if Murdoch gets the OK.
Still, Newsday comes with baggage.
Newsday endured a nasty circulation scandal. According to the U.S. Department of Justice, from 2002-2004, Newsday employees conspired with newspaper distributors to inflate the paid circulations of the paper and its sister Spanish-language publication Hoy by up to 100,000 copies a week. The Tribune Co. fired a number of Newsday executives and managers.