May 12 (Bloomberg) -- Cablevision Systems Corp., the New York-area cable provider, may be close to buying Long Island's Newsday newspaper for $650 million after Rupert Murdoch's News Corp. withdrew its offer.

Newsday owner Tribune Co. is near a deal to sell Newsday to Cablevision, the Wall Street Journal reported yesterday, citing an unidentified person familiar with the situation. Cablevision spokesman Charlie Schueler and Tribune spokesman Gary Weitman declined to comment when contacted by Bloomberg News.

The purchase price would top bids of $580 million each by News Corp. and Mortimer Zuckerman, owner of the New York Daily News. Cablevision Chairman Charles Dolan and his son, Chief Executive James Dolan, want Newsday to add another media outlet to their cable systems business, said Richard Dorfman, managing director of the New York-based investment firm Richard Alan Inc.

``The Dolans are willing to pay such a high price for Newsday because they have an immense desire to be the dominant media provider in their home area of Long Island,'' Dorfman said in an e-mail yesterday. ``Whether or not they'll gain the type of synergistic benefits they envision is far from certain. In my opinion, I believe it's unlikely that they will.''

Cablevision said last week that it wouldn't rule out more acquisitions beyond cable after announcing plans to build a high-speed wireless network and purchase the Sundance Channel for independent films. The Bethpage, New York-based company also owns Madison Square Garden and the New York Knicks basketball team.

Expansion Concern

The company's stock advanced 21 cents to $24.97 on May 9 in New York Stock Exchange composite trading and has risen 1.9 percent this year. Gains have been held back on concern over the Dolans' investments outside of their main business, according to Richard Greenfield, an analyst at Pali Capital LLC in New York.

``We find it incredibly hard to believe the Cablevision board can find an acquisition of a local newspaper in shareholders' best interests,'' said Greenfield, who raised his recommendation on Cablevision to ``neutral'' last week.

News Corp.'s May 10 announcement that it would drop its offer came three days after Chairman Murdoch said talks with Chicago-based Tribune were at a ``pretty advanced stage.'' News Corp. spokeswoman Teri Everett said in an e-mail that the bid was no longer economical.

Murdoch, who completed News Corp.'s $5.2 billion purchase of Dow Jones & Co. in December, had planned to combine Newsday's printing and distribution operations with his New York Post. The move would have helped News Corp. increase cash flow by $100 million a year, Murdoch said on a May 7 conference call.

Stable of Newspapers

The 77-year-old billionaire sought to add Newsday to a stable of more than 110 newspapers that stretches from Sydney to New York to London. He began building News Corp. in 1953 after inheriting a daily newspaper with a circulation of 75,000 in Adelaide, Australia. Today, News Corp. also includes satellite television, cable and broadcast TV stations and film studios.

A News Corp. purchase of Newsday would have triggered a review by the U.S. Federal Communications Commission, which enforces restrictions on common ownership of daily newspapers and broadcast stations in the same market.

Newsday had a circulation of 379,613 in the six months through March, according to the Audit Bureau of Circulations. That's a 4.7 percent drop from a year earlier. The newspaper had $80 million in earnings before interest, taxes, depreciation and amortization last year, a person familiar with the sale talks said last month.

Sam Zell, who took control of Tribune last year, is cutting jobs and selling assets to repay debt as print advertising and circulation decline. Tribune is the second-largest U.S. newspaper publisher after Gannett Co.

The owner of the Los Angeles Times and Chicago Tribune has $1.85 billion in debt maturing by the end of 2009. The company also plans to sell its Chicago Cubs baseball team and the Cubs' home stadium, Wrigley Field.

News Corp. Class A shares, down 9.8 percent this year, fell 35 cents to $18.49 on May 9 in NYSE composite trading.

To contact the reporters on this story: Gillian Wee in New York at gwee3@bloomberg.net; Dan Hart in Washington at dahart@bloomberg.net.

Last Updated: May 12, 2008 00:01 EDT