NEWS Corp has withdrawn a US$580 million offer for Long Island newspaper Newsday, three days after its chairman, Rupert Murdoch, said talks with owner Tribune Co were in a "pretty advanced stage."

News Corp spokeswoman Teri Everett said in an e-mail that the bid had become "uneconomical," while declining to elaborate. Cablevision Systems Corp has offered US$650 million for Newsday, a person familiar with the bid has said. Cablevision spokesman Charlie Schueler has declined to comment.

"Of course, they're overpaying," said John Morton, an independent newspaper industry analyst in Silver Spring, Maryland, in a telephone interview commenting on Cablevision. "Murdoch was overpaying. If somebody didn't have a hometown interest, this paper would've sold for US$400 million to US$450 million, possibly US$500 million."

Murdoch, who completed News Corp's US$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 US$100 million a year, Murdoch said on a conference call last Wednesday, according to Bloomberg News.

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 United States 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 4.7 percent drop from a year earlier.

Sam Zell, who took control of Chicago-based Tribune last year, is cutting jobs and selling assets to repay debt as print advertising and circulation fall. Tribune is the second-largest US newspaper publisher after Gannett Co. The owner of the Los Angeles Times and Chicago Tribune has US$1.85 billion in debt maturing by the end of 2009. The firm plans to sell its Chicago Cubs baseball team and home stadium.

Mortimer Zuckerman, owner of the New York Daily News, also has offered US$580 million for Newsday.