Cablevision (NYSE: CVC) is considering buying Long Island newspaper Newsday. Jared Kushner, a rich young publisher who owns the small weekly The New York Observer may also be involved. As far any anyone knows, the Observer has never made any money.

According to Reuters, the bid would be above the $580 million already offered by New York Daily News owner Mort Zuckerman and Rupert Murdoch's News Corp (NYSE: NWS), which owns the New York Post.

Cablevision's board has already hurt its shareholders. The company's controlling shareholders, the Dolans, made a cash offer of $36.26 for the company in mid-2007. That was just before cable companies began to report weaker earnings due to increasing competition from phone operators like Verizon (NYSE:VZ). CVC now sells for $23,

There are no savings for Cablevision if it buys a newspaper. If it makes an offer in partnership with the Observer, the NY-based paper is so tiny that any cost cutting would be meaningless.

The reasons behind the Post and Daily News offers have some sense to them. By combining with another large daily paper which has overlapping geographic distribution, the chances of taking out tens of millions of dollars in costs per annum are excellent.

Putting a cable company with a daily newspaper does not make Cablevision shareholders a dime. With the newspaper industry faltering, it may actually cost them a great deal of money.

Douglas A. McIntyre is an editor at 247wallst.com and author of the Ten Stocks Under $10 letter.

Cablevision (CVC) and Newsday: a mistake from the beginning originally appeared on BloggingStocks on Thu, 01 May 2008 09:32:00 EST. Please see our terms for use of feeds.