On Jan. 15, Sam Zell dropped by the bleak house that is the Melville, N.Y., headquarters of Newsday, Long Island’s newspaper.

It was to be a pep talk: The last decade, characterized by its nearly annual tradition of soul-wrenching job cuts, was over. “We’ve got to get off our ass,” he said to the assemblage of reporters and salesmen; it went over well, less like a scolding than a slap on the butt from Coach.

Two months later, a somber group showed up at the Newsday auditorium for cannoli, pecan pie and coffee to say goodbye to the 36 newsroom buyouts Tribune had exacted from the paper, including three national reporters, several business reporters, its features editor, its movie editor and two critics. (Some reporters were taken off other desks and transferred to the Long Island desk.)

There was a speech, but no toasts, no booze, and very little of that Zell zetz you hear so much about. With recent sales, and further attrition, younger reporters in the newsroom have begun to adopt a pet nickname for the newspaper’s Melville headquarters: Hellville.

Mr. Zell recently said that the Tribune Company—which owns Newsday, the Los Angeles Times, The Baltimore Sun and the Chicago Tribune—was doing so poorly that “we may have to reevaluate a lot of our decisions,” which included selling some Tribune properties.

Newsday was put on the block, and the three usual suspects have shown up: the owners of the region’s two other tabloids, Rupert Murdoch and Mort Zuckerman, and the perennial also-ran of Long Island media efforts, Charles Dolan. (Last time they sold Newsday, he was mad nobody told him.)

The price quoted for the paper keeps changing, but it’s pretty fair to call it a fire sale.

So what does Sam Zell know that these New York media veterans don’t?

For one thing, Sam Zell was never cut out to be a player in a single regional media market. What can the Tribune Company do with a Melville bureau? And is it worth it to sustain one so that their Pentagon coverage can reach Long Islanders?

But for Messrs. Murdoch, Zuckerman and Dolan, Newsday instantly gains them the wealthy, suburban readership their other properties—the New York Post and New York Daily News—haven’t quite been able to crack.

Since the Long Island Press folded in 1977, Newsday has gone without any daily competition in covering the island; the paper tells advertisers it reaches 71 percent of all Long Island residents, themselves a significantly more acquisitive lot than most random samples you could take somewhere else.

“If you asked me five years ago, I would have said it would fetch $1 billion,” said John Morton, a newspaper analyst. “Now it’ll get somewhere closer to $600 million.”

But even at that, the paper is still making money, something Mr. Murdoch can’t say for the Post. Last year, Newsday had an operating revenue of $498 million, according to an S.E.C. filing, and an overall cash flow of $88 million, according to an internal memo.

“Newsday is a great property,” said Jason Klein, the president of the Newspaper National Network, a company that sells ads to newspapers. “It’s one of the largest circulation papers that penetrate deeply into an affluent and suburban area.”

And it is rarer still that its entire circulation—which ranked 12th nationally in 2007—is almost entirely suburban (read: deep wallets).

But that’s also precisely the reason that Newsday doesn’t serve much of a purpose for Mr. Zell.

“If he’s going to sell a paper, I figured it would be this one,” said Edward Atorino, a newspaper analyst at the Benchmark Company. “It’s a little too local, especially compared to the Chicago Tribune or the L.A. Times. It doesn’t have the national presence that those papers do—they are national brands.”

In his two-month tour of newsrooms, Mr. Zell has hinted that he’s looking for more consolidation among his news outfits—for his papers to work almost as a wire service for another.

In a late February meeting in the Tribune’s Washington bureau, his comments seemed to indicate that he was interested in creating something like a mini Knight Ridder. He reportedly complained about the papers’ overlaps (competing “fiefdoms” he said); why, then, one could imagine him thinking, would the L.A. Times have a Pentagon reporter when the Chicago Tribune already had one? Ideally, there would be centralized news coming out of the bureau used for various papers, and bodies could be saved. Calling the bureau “bloated,” he reportedly pointed to the L.A. Times Washington bureau chief, Doyle McManus, and said, “Your revenue is down 20 percent. How many of the 47 [newsroom staffers] did you get rid of?”

With that logic, a religiously local paper like Newsday would serve no purpose.

And in recent weeks the message has been sent loud and clear to newsroom members that the paper has given up entirely on producing a national product.

“In 2004, there was a question if we should be a national newspaper that also covers Long Island,” said one reporter, after attending a meeting with the paper’s editor, John Mancini, last month. “Now that’s not even a thought anymore. It’s a paper that doesn’t have any national aspirations.”

“Local, local, local,” said another.

“It’s incredibly influential!” said Richard Kessel, the former chairman of the Long Island Power Authority and one of the leading public faces on the island for the past two decades. (Utility companies are the heavyweights out there!) “It’s the only major game in town. Yeah, some people read The Times and the Post and the News, but for the people in public life, including myself, all that matters in the end is Newsday.”

Competition is light. The Post and News only come out for made-for-tabloid stories like Joey Buttafuoco, or more recently, the trial of a middle-aged black man who shot and killed a white Long Island teenager two years ago.

The Times largely gave up its coverage of Long Island in 2006, when Bill Keller said that its Sunday regional sections would “combine reporting on the themes that unite our region”—which meant fewer unique stories, more trend pieces for the region overall.

Meanwhile, the paper says 48 percent of Long Island residents read it every day, and 57 percent on Sunday.

But even with that: “Its influence might have diminished slightly over the last 10 years with the advent of the Internet and News12, but it’s still has an impact,” said Mr. Kessel.

There was a time when business was better for the paper, of course. The paper once had foreign bureaus—which shuttered last year—and as late as 1997, the paper still flew in potential job candidates for one-week stays, paid them a one-week salary and covered their airfare and lodging, a luxury they afforded long after The Times had dispensed with a similar program.

In the mid-1980’s, it started its own stately tabloid for the city, New York Newsday. That paper was wildly successful in one respect; in a profile for The Village Voice, investigative reporter Wayne Barrett wrote that it covered “city and state government more thoroughly and substantively than any local competitor, including The Times.” But in every other way it was a bad business. In 1995, Newsday had the largest drop in daily circulation in the country, thanks largely to the city edition. New York Newsday shuttered later that year, at a time when the company closed down 800 jobs and spilled journalistic talent (familiar names like Jim Dwyer, Eliot Spitzer scoopster William Rashbaum) all over the city.

It was a preview of things to come. After the Tribune Company bought the paper, more layoffs followed. In 2004, the paper was caught in a circulation scandal in which they had been hyping fake numbers to potential advertisers; they had to pay out $80 million to advertisers.

Then this past year, things got worse. Their performance in 2007 was “well under plan,” said their publisher in an internal memo. The paper’s cash flow in 2007 was at $88 million, which was “well below” the paper’s goal of $95 million, according to another memo written by the paper’s publisher, Tim Knight.

After Mr. Knight announced the news, he fired his advertising director and announced a wide search—with the help of an outside firm—to find a new senior vice president for advertising. But two months later, no replacement had been named, leading some in the newsroom to speculate recently that the paper was being stripped to the bone in preparation for an impending sale (according to one source, the paper has discontinued the search altogether).

So enter the three men interested in buying the paper.

All three have their constraints: Mr. Murdoch paid $5 billion last year on Dow Jones and recently shut down Pagesix.com because of the current economic downturn; Mr. Zuckerman, a real estate mogul, is in the process of developing two Eighth Avenue skyscrapers and has reportedly bid on the GM Building on Fifth Avenue, which is expected to sell for more than $3 billion; and Mr. Dolan recently tried to take Cablevision private at a price of more than $10 billion but was rebuffed by investors because they felt his bid was too low.

Other strategies may exist as well: Perhaps a partnership; perhaps combining a printing press. Newsday itself reported that Mr. Murdoch has been in conversations with the paper’s union since late February or early March.

If they do buy it, the advantages include consolidating editorial material, and perhaps even advertising. Of course, at a time when advertising has been doing very poorly, any advertising synergy is a trickier proposition.

In the newsroom, Newsday employees are walking around with their shoulders slumped, said one. They’re speculating on rumors and wondering what will happen next.

“If I had my choice, I would take Rupert Murdoch,” said one. “That may sound strange, but if you pair him up and compare him to the others, he comes out well above. Dolan isn’t anything—nothing! He’s brainless, clueless, stupid, arrogant. Murdoch is a newspaperman.

“Most people here would prefer Murdoch,” the reporter continued. “A couple years ago it would have been a horrible thought, but now we’re left with no other choice.”