Tribune plans to sell the Newsday daily newspaper on Long Island to News Corp for about $580 million, The Wall Street Journal reported online on Monday, citing sources familiar with the situation.
Under the terms of a deal, Newsday would be part of a joint venture with News Corp's New York Post and other News Corp assets, the Journal reported. News Corp would own most of the company and Tribune would keep a stake of less than 5 percent.
Selling the paper would be key to Tribune Chief Executive and Chicago real estate magnate Sam Zell's plans to help slash debt at the company, which he took private in an $8.2 billion buyout last year.
The Newsday deal is expected to wipe out as much as $50 million in annual losses that News Corp now incurs on the Post, with the combined Newsday-Post operation earning roughly $50 million, one person familiar with the situation said, according to the Journal.
Regulatory issues could slow the sale, particularly media ownership issues that could restrict the number of properties that News Corp and Chief Executive Rupert Murdoch could own in the New York Area.
An announcement of a deal could be some time away, one person said.
Other parties who have expressed interest in Newsday include Mortimer Zuckerman, who owns New York Post rival the New York daily News, as well as Cablevision Systems Corp, the Journal reported. Reuters previously reported that Zuckerman bid on Newsday, according to a source.
The pending agreement was fashioned largely by Murdoch, Zell and a senior banker, the Journal reported, adding Murdoch and Zell met directly several times during negotiations, according to people familiar with the situation.
The structure of the deal is in part designed to meet Tribune's demand that it be as tax efficient as possible, with Tribune getting cash from the deal by guaranteeing debt raised by the joint venture, the Journal reported.
In addition to its stake, Tribune will receive $540-$560 million in cash, people familiar with the situation said, according to the Journal.
As part of the agreement, News Corp wouldn't be able to unwind the joint venture for at least 11 years, the Journal said.
Several Tribune officials declined to comment. A News Corp spokesman could not immediately be reached.