News Corp. is interested in buying the Los Angeles newspaper from Tribune Corp. However, a Federal Communication Commission rule prohibits one company from owning television and newspaper businesses in the same market. News Corp. owns two television stations in Los Angeles and is also the owner of Fox News, which reports on the entertainment industry based in Los Angeles, The New York Times reported Monday..
But the newspaper industry is struggling to keep up sales in the digital age as readers flock to the Internet for news. While combining newspaper and television outlets in the same market will eliminate diversity, allowing a newspaper to go bankrupt could eliminate diversity, as well.
"There can be little debate today that the newspaper industry faces existential threats. We urged the FCC to eliminate the cross-ownership rule as a relic from a bygone era," wrote News Corp. lobbyist Maureen O'Connell in one of a series of recent letters to the FCC.
"In an era of profound distress for the newspaper industry, the commission should embrace the ways in which television stations and newspapers can share resources and realize economic efficiencies," O'Connell wrote.
Murdoch, who is chairman of News Corp., is said to be a long-time reader of the Los Angeles Times. An unidentified person described by The New York Times as familiar with Murdoch's thinking simply said, "he wants it."
"They're working on getting a waiver now," to the cross-over rule, said this source, who spoke on the condition of anonymity.
The resignation of FCC Chairman Julius Genachowski last week threw another wrinkle into the possibility of News Corp.'s pursuit of a waiver.
Genachowski had proposed to change the rule to allow a company to own newspapers and television stations in the same market as long as the television stations ranked no higher than fourth in that market's Nielsen ratings.
Under Genachowski's proposal to modify media ownership rules, a company or an individual could own both a television station and a newspaper in the same Top-20 market as long as the station was not in the top four in audience size based on Nielsen ratings. Just as that would open the door for some companies, it would also make it harder for a company to obtain a waiver, an FCC spokesman said.
"The asset ration that the FCC's order would make it easier for a top-four TV station ... to acquire a newspaper is simply false," said the spokesman, Justin Cole.
Moreover, with Genachowski's departure, the remaining three FCC commissioners are likely to propose a study be done on the rule change and that could take months to complete, the New York newspaper said.
News Corp. spent $6.3 million on lobbying in 2012, but Murdoch is not convinced the effort to change the rules has a chance at this time. "It wouldn't get through with the Democratic administration in place," he said in January to a Los Angeles Times reporter.
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