Federal Communications Commission expected to approve new cross-ownership proposal that would allow newspapers and TV or radio stations in 20 largest markets to consolidate; move could benefit some big players in newspaper industry

WASHINGTON , November 6, 2012 () – Federal regulators are poised to ease ownership restrictions on major-market media outlets in what could be a boost to some big players in the struggling newspaper industry.

After two failed attempts to loosen its rules, the Federal Communications Commission is expected by the end of the year to approve a new proposal that would allow newspapers and television or radio stations in the 20 largest markets to consolidate.

And unlike previous battles, there is little opposition this time to easing the so-called cross-ownership rules.

A decade of Internet growth, fast-changing technologies and plunging newspaper revenues -- along with the nation's focus on recovering from the Great Recession -- have altered views. Few people seem to care much if newspapers and television stations hook up in the same metropolitan area.

That could be a boon for a handful of firms, including Los Angeles Times parent Tribune Co., as well as a relief for the FCC, which is trying for a third time in 10 years to loosen rules that limit media consolidation.

The less-contentious atmosphere stems partly from the decision of some key media companies to sever their broadcast businesses from their lower-valued newspaper units.

"It ought to be ... a huge issue. Big media wanted us to believe the age of media consolidation was over, but not so," said former FCC Commissioner Michael J. Copps, who had opposed loosening the rules in 2003 and 2007 and now heads a Common Cause effort to highlight the problems of media consolidation.

He pointed to Comcast Corp.'s takeover of NBCUniversal last year and Sinclair Broadcasting Group Inc.'s purchase this year of seven TV stations from Four Points Media.

Media companies said easing the cross-ownership ban would help newspapers and broadcast stations save money by sharing resources and open new avenues for potential sales.

"The ownership rules that govern broadcasting come to us from the 'I Love Lucy' era, and the realities of today's communications market simply cry out for a dramatic loosing of these rules," said Gordon Smith, head of the National Assn. of Broadcasters.

"If we want to end up with just the Internet being the source of news, that's the country we're heading for. I think that's a huge mistake," Smith said.

Paul Boyle, senior vice president for public policy at the Newspaper Assn. of America, said the rules make it difficult for investors who have as little as a 5% ownership in a broadcast company to buy a newspaper in the same market.

The long-standing cross-ownership limits have been a hindrance to sales of newspaper companies, and looser restrictions would make it easier for broadcasters to make such purchases, said Justin Nielson, an analyst at media consultant SNL Kagan.

But that might not be enough for some troubled newspapers, he said.

"There are synergies in terms of owning a newspaper and TV station in the same market, although it seems like in most cases, there isn't a huge advantage because newspaper advertising has been in decline," Nielson said.

Since peaking at $47.4 billion in 2005, newspaper print advertising revenue plunged 56% to $20.7 billion last year, according to the newspaper trade group. And ad revenue from newspaper websites hasn't made up much of the difference, totaling just $3.2 billion last year.

A coalition of 50 public interest groups called the Diversity and Competition Supporters cited "the diminished state of print journalism" in saying it would not oppose a relaxation of cross-ownership rules, as long as that would not impede minority ownership of broadcast stations.

As they stand, the rules generally prohibit major newspapers from merging with major television and radio stations in the same metropolitan market.

Attempts to loosen the rules previously stirred protests, angry public hearings and congressional backlash. In both cases, a federal court tossed out the revisions on technical grounds and sent the FCC back to the drawing board.

This time, the FCC staff has proposed easing the rules in the top 20 markets -- a proposal similar to the one approved in a bitter 3-2 vote by the FCC in 2007 under Republican Chairman Kevin Martin.

FCC Chairman Julius Genachowski, a Democrat, declined to comment, but a majority of the five FCC commissioners appears to support the rule change.

"There have been significant market changes, which everyone has to be recognizing at this point," said FCC Commissioner Robert M. McDowell, a Republican. He's the only current commissioner who was on the panel in 2007.

The cross-ownership rules have been in place since 1975. But the agency frequently has granted waivers, such as with Tribune's ownership of the Los Angeles Times and KTLA-TV Channel 5 in the L.A. market and the Chicago Tribune and WGN TV and WGN radio in Chicago.

Before Tribune can emerge from bankruptcy protection, the FCC must transfer the company's 24 broadcast TV and radio station licenses to the new owners. As part of the process, Tribune is seeking waivers for cross-ownership in Los Angeles, Chicago, South Florida and Hartford, Conn.

In December, the FCC solicited public comment on a proposal to issue automatic waivers for some cross-ownership of newspapers with either a television station or a radio station in the nation's top 20 media markets. The proposal provides other procedures as well, including the possibility of allowing combinations without review or waiver.

Despite the FCC's efforts, the industry already is moving away from consolidation. Companies with newspapers and broadcast stations are splitting in two and often selling the papers.

In June, for example, Media General Inc. sold nearly all its newspapers -- 63 daily and weekly publications -- to a subsidiary of billionaire investor Warren Buffett's Berkshire Hathaway Inc. This month, Media General sold its last and largest newspaper, the Tampa Tribune.

The company, which had FCC waivers for newspaper-broadcast combinations in several markets, said it wanted to focus on its more valuable broadcast stations and websites.

News Corp. said this summer it planned to split its entertainment and publishing operations into separate companies, although the proposed FCC rules may still apply because the new firms would have the same owners.



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