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Apr 29 2008 3:51PM EDT

Handicapping the 'Newsday' Sale

And now for an update on the Newsday sale.

Newsday, which has had the best coverage of the negotiations -- go figure! -- says the price is likely to spiral up past $600 million, despite Mort Zuckerman's belief that he can beat Rupert Murdoch without topping his $580 million bid. Whether or not Zuckerman's right that his offer is more attractive from a regulatory standpoint, a likely play by Cablevision, possibly in conjunction with Observer Media, will make it hard to stand pat.

Meanwhile, Fortune's Devin Leonard predicts that Murdoch will end up with Newsday, in part because an acquisition by News Corp., though it would require fresh waivers from the F.C.C., might have an easier time getting by the Justice Department. "By all accounts, Zuckerman's Daily News turns a profit," writes Leonard, while "[t]he Post loses an estimated $50 million a year."

Well, not quite all accounts. Remember that Zuckerman himself said last fall that the News was on the verge of unprofitability.

Still, I think Leonard is probably right that Murdoch will come out on top, if only because, in contrast to Murdoch, who hates to lose bidding wars, Zuckerman is something of a tire-kicker. "He's a value buyer," as one media banker puts it. And when the value's not there, he's content to be outbid, as he was for New York magazine. Of course, if Murdoch wins Newsday, the cost to Zuckerman of not buying it could be very high indeed.

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