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The deal saw Zell beat two other Los Angeles billionaires to buy the Tribune Co, which also owns a number of other newspapers and TV stations. The media firm owns the Chicago Cubs baseball team as well, which it also plans to sell and could fetch as much as $700m.

The deal will take Tribune private and will burden it with $8.4bn worth of debt. It involves Zell paying $315m and eventually getting an option to buy 40% of the company. The rest will be owned by employees, financed by company contributions to an employee stock option plan and debt.

The deal will bring to an end months of uncertainty about the future of the company, which was put up for sale in September, and has excited interest from a number of different buyers, among them News Corporation.

The media giant had at one point planned a joint $7.6bn bid with the Chandler family, which owns a 15% slice of the US media group.

David Geffen had earlier separately made a bid for the LA Times alone and has said he is still interested.

Zell's bid is reported to have been at the same $34 a share price as one by Los Angeles billionaires Eli Broad and Ron Burkle. In the final event the bids were lower than what some analysts thought Tribune could be sold for, but the weak newspaper advertising market and the rise of the internet has put the price under pressure.

It is not a done deal and the board can consider other proposals until shareholders vote is taken. However, the deal is supported by the Chandler family and Ariel Capital Management, Tribune's fourth-largest shareholder.

There is little indication as to why Zell wants into the newspaper business at such a crucial hour in its history. He made property billions by buying up property in the US when commercial lending on property was hard to come by and foreclosures were running high. This earned him nickname the "grave dancer".

He is now the largest mobile-home landlord in the US and has a record of fighting local rent-control laws and raising rents in across the country.

He has given no interviews, but is on record as saying it is Tribune's economics he is interested in and not its journalism, which will likely send a chill through the group's 21,000 employees.

LA Times media critic Tim Rutten told Reuters, said: "I think there's a great deal of uncertainty ... because it's a very ambiguous kind of agreement, whose implications for the journalism of the Tribune papers are pretty uncertain."

Chief Executive Dennis Fitzsimons will remain in place and Zell will become chairman of the board.

The LA Times is the US's fourth largest newspaper and is seen as the crown jewel of Tribune's newspaper business. However, it has had a shaky time of late and lost its editor Dean Baquet in November after he stood up to demands for job cuts.