by FRANK ELTMAN

Associated Press writer

CENTRAL ISLIP, N.Y. -- A federal bankruptcy court on Thursday approved the $26 million sale of Ohio-based newspaper chain Brown Publishing Co. to a group of company insiders led by current president and chief executive Roy Brown.

U.S. Bankruptcy Court Judge Dorothy Eisenberg ruled that a newly formed Brown Media Corp. could purchase the majority of the chain for $22.4 million.

She also approved the purchase of two of Brown's Ohio dailies, the Van Wert Times and the Ada Herald, for $3.6 million to the Delphos Herald, Inc.

The sale involves company assets in Ohio, New York, Texas, South Carolina, Illinois, Iowa, Colorado, Utah, Arizona and Wyoming. Among the publications is Dan's Papers, a popular Hamptons-based weekly on Long Island.

The judge, who conducted hearings over two days before approving the sale, did reject one aspect of the proposed deal: the sale of three real estate parcels in Ohio. Brown Media was the lone bidder on the properties, offering $10,000 for parcels in Urbana, Xenia and Bellevue, Ohio.

Eisenberg said she found that the properties, which were valued at several hundred thousand dollars, had not been properly marketed for the highest possible sale price. Nevertheless, she said the remainder of the proposed sale could proceed.

Edward Fox, an attorney who represented Brown Publishing, said he was pleased with the judge's ruling, which he claimed would save 800 jobs. "We're very happy that business will continue," Fox said.

Thomas Clark Carlson, an investment banker appointed to oversee the sale, echoed the attorney's comments.

"I'm pleased the court gave its approval," he said moments after the judge made the ruling late Thursday afternoon. "We're happy to be going forward with the sale."

Brown Media Holdings Co. and Brown Publishing Co. filed for Chapter 11 bankruptcy relief in May. Newspapers, which get the bulk of their revenue from advertisements, have been struggling in the economic recession and from reliance by news consumers on websites and other nonprint resources. Brown is the latest of several publishers that filed for bankruptcy protection.

Among the companies' newspapers are the Amherst News-Times, Oberlin News-Tribune, and Wellington Enterprise in Lorain County, the Delaware Gazette in central Ohio and the Piqua Daily Call, the Troy Daily News and the Wilmington News Journal in western Ohio. Other subsidiaries named in the filings are Utah Business Publishers LLC, Texas Business News LLC, Texas Community Newspapers Inc., Upstate Business News LLC and Boulder Business Information LLC.