By James Ledbetter 

It’s been widely reported on Friday that Newsday, one of the papers in the Tribune (TXA) stable, is being courted by three of New York’s oversized businessmen: James Dolan, the head of Cablevision (CVC); Rupert Murdoch, the chairman of News Corp (NWS), which owns the New York Post; and Mort Zuckerman, chairman of Boston Properties (BXP), who also owns the New York Daily News and U.S. News & World Report. Tribune, having recently been taken over by Sam Zell, may be in the mood to sell, given the miserable numbers they filed yesterday: a fourth-quarter loss just shy of $79 million, compared to a $239 million profit the previous year.

Newsday is big (10th largest paper in the U.S. in weekday circulation), profitable and actually has the distinction of being a pretty good newspaper, which you wouldn’t say of all the Tribune papers. Its Web site has grown rapidly in recent years. You can read the New York Times story linked above for more background, but here’s the important sentence:

Newsday illustrates the paradox Tribune faces: The best way to raise cash to meet short-term demands is to sell the very same properties the company would want to keep in the long run because they generate healthy profits.

There is a thick, dolorous irony here. For a little more than a decade - back before the Times Mirror chain merged with Tribune - Newsday published a New York City edition that competed directly with the News and Post. It struggled for years, as Murdoch and Zuckerman did everything they could to undercut it; the News used to air TV ads showing that the view from Melville, Long Island was a cow in a field, to underscore that the paper’s home was outside the five boroughs. (Never mind that the News’s owner for a good portion of that time was in Chicago, and then it was bought by a felonious Brit.)

New York Newsday finally began turning a profit in the mid-90s, even as the Post lost millions and the News “broke even” in its good years. But Times Mirror shut it down anyway, citing an insufficient rate of return.

Now the parent paper may end up in the hands of the guys who killed it. As Jimmy Breslin would say: Beautiful.

I asked Jim Dwyer, a Pulitzer-winning former Newsday columnist now at the Times, what he thought, and he said: “It’s hard to imagine anyone doing worse. Whoever ends up with it will make the current owners look like a combination of Joseph Pulitzer and Iphigene Sulzberger.”

Presumably the Justice Department would have to sign off on a purchase by either Murdoch or Zuckerman, but these are not men who let regulators stand in their way. I would almost say on principle Newsday should go to Dolan, except look what he’s done to the Knicks.

A clash of the corporate titans brews at IAC/InterActiveCorp (IACI), Barry Diller’s Internet conglomerate. The Wall Street Journal reports that media mogul John Malone is suing to wrest control of the operator of the Ask.com search engine from Diller. The dispute stems from Diller’s latest plan to change the structure of IAC with a spinoff of four operating units. Malone, whose Liberty Media (LINTA) owns a big stake in IAC, alleges Diller engaged in “misconduct” in structuring the deal to minimize Liberty’s control of the restructured company. Liberty seeks to have Diller and some other directors removed from the IAC board. Diller rejects the claims and says, “I am beginning to think these people are insane.”

Insane or not, Malone is no stranger to hard-ball tactics. Less than two years ago, he quietly took a big voting stake in Rupert Murdoch’s News Corp. (NWSA) and used that position to wrest control of DirecTV (DTV) from Murdoch. Meanwhile, Diller’s greatest claim to fame of late is his designation by The New York Times in late 2006 as the most overpaid CEO in America - and that was before IAC shares lost a third of their value of the past year. It’s easy to see why investors aren’t crazy about that arrangement.