Tribune's Newsday deal is one step in easing debt

Tribune Co.'s $650 million sale of Newsday is an important step toward alleviating its debt burden — for this year.

Now the Chicago company needs to move on its next big asset sales, including the Chicago Cubs baseball team and Wrigley Field, in order to meet its obligations to creditors looming in 2009.

The deal announced Monday puts one of Tribune's largest newspapers in the hands of cable operator Cablevision Systems Corp., which like Newsday is based on New York's Long Island.

Investors have been skeptical about the benefits to Cablevision from the deal, given that it hasn't operated a newspaper before and the newspaper industry is struggling as readers and advertisers move to the Internet.

"It's incredibly hard to fathom why they want to expand into the newspaper business," said Richard Greenfield, a media analyst with Pali Capital. "Why are they putting dollars towards newspapers rather than buying their own stock?"

For Tribune, there's no doubt why the deal make sense: The company needs cash. Last December, Tribune bought out its public shareholders in an $8.2 billion deal orchestrated by real estate mogul Sam Zell, and now it's struggling to service that debt.