Tribune Co. sealed a deal to sell its Long Island newspaper Newsday to Cablevision Systems Corp. for $650 million, the companies said on Monday.

Cablevision, controlled by the Dolan family, boasts 3.1 million subscribers in the metro area as well as ownership of Madison Square Garden, the NBA's New York Knicks, and the NHL's New York Rangers.

Under the contract, Tribune will get $612 million for a 97 percent stake in Newsday, plus an additional $18 million in prepaid rent for some facilities, the companies said in a statement today.

Tribune will retain a 3 percent stake in a tax-friendly joint venture it will form with Cablevision that will include Newsday, its Web site, some regional magazines and the free daily newspapers in the city, amNewYork. Cablevision will own 97 percent of the venture.

Cablevision shares were recently down 71 cents, or 2.9 percent to $24.26 in New York.

Cablevision won a bidding war for Newsday against Murdoch's global media empire, News Corp., which owns the New York Post, and Mort Zuckerman, owner of the New York Daily News.

Murdoch's News Corp. dropped a $580 million bid on May 10, saying a purchase was no longer economical.

We admire Newsday's strong editorial voice and reputation for quality as well as its leadership in print and online journalism, Cablevision Chairman Charles Dolan said in a statement. We are committed to maintaining Newsday's journalistic integrity and important position in the marketplace.

By selling Newsday, Tribune will give up its position as the second-largest newspaper publisher in the U.S. behind Gannett GCI to McClatchy MNI, a company which is facing pressure from shareholders after its value dropped following the acquisition of several newspapers from the dissolved Knight-Ridder chain.