Feb. 5 (Bloomberg) -- A move to make it easier for companies to own U.S. daily newspapers and nearby broadcast stations has stalled amid partisan tension that could prevent deals between companies such as Tribune Co. and News Corp.
Federal Communications Commission Chairman Julius Genachowski, a Democrat, hasn’t won approval of his proposal to ease a ban on cross-media ownership almost three months after asking fellow commissioners to vote for it.
The FCC proposal’s fate may determine whether News Corp. Chairman Rupert Murdoch has a chance to buy Tribune Co. newspapers in U.S. markets where his company owns Fox television stations. Tribune emerged from bankruptcy Dec. 31 with a plan to focus on its broadcast properties, and Murdoch plans to take a close look at the newspapers if they become available, according to a person with knowledge of his thinking.
“They’d be changing rules for Rupert Murdoch to potentially make a run at the Chicago Tribune and the Los Angeles Times,” Craig Aaron, president of the Florence, Massachusetts-based policy group Free Press, said in an interview.
The cross-ownership changes proposed by Genachowski are similar to those passed by the agency on a Republican-led vote in 2007 and struck down by an appeals court in 2011. Like the earlier effort, Genachowski’s would allow newspaper-broadcast common ownership in the 20 largest U.S. media markets so long as a television station isn’t among the top four in audience size, as measured by Nielsen Holdings NV.
News Corp.’s Fox stations in Los Angeles and Chicago, the nation’s second- and third-largest markets, don’t always rank among the top four by audience, opening the door to potential bids, Aaron said.
To prevent that, the FCC would include language in the plan to extend the cross-ownership restriction on stations that move in the rankings between fourth and fifth, Neil Grace, an FCC spokesman, said in an e-mail.
“The assertion that the FCC’s order would make it easier for a top four TV station -- or for a TV station that moves between fourth and fifth in the rankings -- to acquire a newspaper is simply false,” Grace said. “In fact, it would make it harder.”
Dan Berger, a spokesman for News Corp., declined to comment. News Corp. supports eliminating the cross-ownership rule, the company said in a July filing.
Genachowski’s proposal would relax prohibitions enacted in 1975 to protect a community’s media outlets from domination by a single media owner.
Opponents say weakening the rule would damage the diversity of viewpoints needed in a democratic society, while newspaper owners and broadcasters say outdated restrictions prevent the cost-sharing media companies need as readers, viewers and advertisers move to the Internet.
“Media ownership has become a matter of religion for both parties,” Gigi Sohn, president of the Washington-based policy group Public Knowledge said in an interview. “Democrats don’t want to lift anything, and Republicans want to lift everything.”
That’s left Genachowski’s plan caught between Democrats who say it goes too far and Republicans who say it doesn’t go far enough.
The five-member FCC has been trying to rewrite its media-ownership regulations for a decade. Twice it has had had new rules rejected by courts.
In the current negotiations, two Democratic commissioners are withholding “yes” votes, saying the agency should study how the new rules would change minority ownership of broadcast stations, said two agency officials who asked not to be identified because deliberations haven’t been made public. The FCC’s two Republicans reject a Genachowski proposal that would tighten remaining ownership limits on broadcast stations that share advertising sales, the officials said.
“The two Democrats seem to share our view, that the commission cannot proceed” before analyzing minority ownership, Andrew Jay Schwartzman, a Washington lawyer who advises the policy group Free Press, said in an interview. “The two Republicans think that what Julius wants to do doesn’t go far enough, and Julius is sort of in the middle -- and he can’t get three votes either way.”
Genachowski said commissioners continue to deliberate. “We’re in active discussions,” he told reporters at a Jan. 31 news conference. In July, the chairman said the agency was “on a track” to vote on the rules by the end of 2012.
Newspapers aren’t expecting purchases by major broadcasters, given the top-four rule, and they would welcome investments to help replace lost advertising revenue, Paul Boyle, senior vice president of the Newspaper Association of America, said in an interview. The Arlington, Virginia-based trade group, with members including the New York Times Co., Gannett Co. and the Washington Post Co., favors repealing the rule.
“We think this provides some relief to hopefully get some investments, in newspapers and vice versa,” Boyle said. For instance, he said, a newspaper may be able to buy a local radio station and begin broadcasting news.
Tribune emerged from bankruptcy at the end of December and has considered selling newspapers. It owns the Los Angeles Times, the Chicago Tribune and six other daily newspapers, along with 23 television stations. Tribune, which in January appointed former Fox television executive Peter Liguori as its chief executive officer, plans to focus on its more profitable broadcast business going forward.
Murdoch has a government waiver that lets him own the New York Post, which targets readers in the New York metropolitan area, where he also owns two broadcast stations. His ownership of the Wall Street Journal doesn’t require special approval as it’s considered a national newspaper.
Murdoch plans to split his company into publishing and entertainment groups by the middle of this year. Cross-ownership restrictions still would apply since the businesses will have the same owner.
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