Tribune will retain a stake of less than 5%. The deal has not been formalised, but key details such as price, structure and governance have been agreed.
Under the terms being discussed, Newsday would be part of a joint venture with News Corp's New York Post and various non-newspaper assets owned by the media company.
If the deal goes ahead, it would mark the second newspaper acquisition by News Corp in several months, following the company's $5.16bn acquisition of The Wall Street Journal's parent, Dow Jones, in December.
Murdoch and Mort Zuckerman, who owns the New York Daily News, have been vying to take control of Newsday for the past month.
Zuckerman was reportedly preparing a bid for the paper, which mainly serves the Long Island and Queens areas in New York, but is also available in Manhattan.
Tribune was also in discussions with Long Island cable operator Cablevision Systems Corp and Jared Kushner, the owner of The New York Observer, had also expressed an interest, but was never considered a serious bidder.
The prospective deal is likely to be scrutinised by regulators, given News Corp's existing media holdings in New York, which include the New York Post and local television station WNYW-TV, in addition to The Wall Street Journal and the Fox and Fox Business national TV networks.
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