Newsday next, Murdoch lives up to old fears

His first love, however, remains newspapers. The purchase of Newsday from the Tribune Company would put Murdoch in control of 3 of the nation’s 10 largest-circulation papers (the others being The Journal and The New York Post). Owning Newsday, which is based on Long Island, would also open an eastern front in the long-running battle for New York tabloid supremacy and, by combining some operations, could allow News Corporation to end decades of heavy losses by The Post.

But the agreement is far from final as competing bidders consider their positions. Mortimer B Zuckerman, owner of The Daily News, the archrival of The Post, will make a counteroffer next week, according to people involved in the bidding who would not be identified because of the confidentiality of the talks. Representatives of another bidder, the Observer Media Group, publisher of The New York Observer, plan to meet in a few days with Cablevision— which had dropped out of the bidding—to discuss a joint offer.

People in both the News and Observer camps say they were shocked to learn of the handshake deal with Murdoch, first reported by The Chicago Tribune and The Journal, because they had been assured by Tribune’s bankers that they had until next week to submit offers. In addition, a takeover of Newsday by News Corporation, which also owns two New York City television stations, could face trouble with regulators.

Like other newspaper companies, Tribune has suffered heavy losses in advertising revenue and faces nearly $1 billion a year in debt service costs, forcing it to make plans to sell the Chicago Cubs and assets like Newsday. The company took on most of its debt load last year when it went private in a deal that put Samuel Zell, who made billions in real estate, in control.

News Corporation and Tribune Company declined to comment on any of the moves.

The resignation of Marcus W Brauchli from The Journal was less shocking, if only because Brauchli was appointed by the previous owners of the paper. Since he bought Dow Jones in December for $5.2 billion, Murdoch has moved swiftly to remake the stately paper, calling for shorter articles and more coverage of politics, culture and even sporsors and fewer business articles on the front page.

Brauchli’s colleagues and friends say he championed some of the changes and acted as a brake on others. But they say it was increasingly clear that much of the direction was being set by Murdoch and the publisher he installed, Robert J Thomson, who oversees news operations and has none of the usual business duties of a publisher. Editors and reporters say Brauchli’s authority was being undercut, a message reinforced by plans to give Thomson an office in The Journal’s main newsroom.

There was particular tension lately over calls by the News Corporation team to thin the ranks of The Journal’s editors, and to put short articles on the front page or the fronts of sections that would not continue on inside pages.