New York cable company Cablevision Systems Corp. (NYSE: CVC) beat an offer from Rupert Murdoch’s News Corp. (NYSE: NWS) to buy the newspaper Newsday from Tribune Co. – in a deal that has Cablevision almost certainly overpaying.

Tribune will get $612 million in exchange for Cablevision acquiring a 97% stake in Newsday plus an additional $18 million in prepaid rent. Tribune will keep a remaining 3% stake in Newsday worth $20 million. The deal values the newspaper at $632 million minus the value of the rent included in the deal.

Newsday had a circulation of 379,613 in the six months through March 31 – nearly 5% less than a year earlier, though the newspaper still had EBITDA of $80 million last year.

Cablevision hopes to use Newsday to increase its ability to advertise in the greater New York City area. Tribune is happy to sell because the company carries $13 billion in debt on the books.

The real question is if Murdoch walked away from the deal last week at $580 million because the economics no longer made sense, what makes Cablevision think they can make the deal work at a higher price tag - $50 million higher?

In the statement announcing the deal, Cablevision said it will generate substantial cash flow from the deal as they leverage Newsday for more local ads and subscriptions – Cablevision shareholders better hope such promises come true.

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