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.

Good news for real estate mogul Sam Zell: His bid to buy struggling newspaper chain Tribune (TRB) got a shot in the arm Wednesday on word that FCC chief Kevin Martin wants to waive media ownership rules that might otherwise impede the takeover plan. The announcement puts Zell a step closer to taking control of the publisher of two of the biggest papers in the nation, the Los Angeles Times and Chicago Tribune.

For Zell, the beauty of the deal — struck at the height of this past spring’s leveraged buyout frenzy — can’t be overstated. He’ll put down just $315 million to take over an outfit whose market capitalization was $3.55 billion at Wednesday’s close, after the stock posted a 10% rally on the news. Most of the risk of the heavily leveraged deal is being borne by Tribune’s employees, who will be contributing to an employee stock ownership plan that will end up saddled initially with billions of dollars in debt — while giving billionaire Zell some much-needed tax breaks.

So if Zell’s Tribune turnaround works out, then everyone shares (if not equally) in the winnings. And if not? Then more workers face the firing line, while Zell has to write off a modest (by his standards) investment.  He wouldn’t be happy about losing those tax breaks, though.

The New York Times (NYT) is laying off newsroom employees for “the first time in recent memory,” according to a memo from editor Bill Keller. The memo, which comes on the same day Times stock was downgraded by Bank of America on worries of weakening retail spending, indicates no journalists will be laid off. Instead, the Times will cut support, clerical and administrative jobs. Keller also indicates a hiring freeze remains in effect at the paper, though he stresses that “does not make this news any easier to share.”