FCC chief proposes to relax media ownership ban

WASHINGTON (Reuters) - The head of the U.S. Federal Communications Commission on Tuesday proposed that the agency relax its ban on the cross-ownership of newspapers and broadcast stations in the 20 biggest U.S. cities.

The "relatively minor" rule change would help bolster the newspaper industry by allowing owners in the top markets to buy a TV or radio station, FCC Chairman Kevin Martin said.

The plan is less ambitious than a 2003 proposal to scale back the ownership rules, which were struck down by the federal courts the following year.

Martin said it was the only change he was seeking. "I think this is a balanced approach," he said.

Martin outlined the proposal in a column published Tuesday in The New York Times. The agency issued a formal announcement later on Tuesday morning.

"A company that owns a newspaper in one of the 20 largest cities in the country should be permitted to purchase a broadcast TV or radio station in the same market," Martin wrote in his newspaper column. "But a newspaper should be prohibited from buying one of the top four TV stations in its community."

Long-standing FCC rules restrict media cross-ownership and ban ownership of a newspaper and a TV or radio station in the same market, unless the FCC grants a waiver.

If cross-ownership limits were eased or lifted, it could help some investors, such as real estate tycoon Sam Zell, who is leading a proposed leveraged buy-out of media group Tribune Co TRB.N.

Zell wants the FCC to reaffirm waivers that allow Tribune to own daily newspapers and broadcast outlets in some markets.

Martin's proposal would ease the rules in four of five markets in which Tribune owns a daily newspaper and a TV station -- New York, Los Angeles, Chicago and Miami/Fort Lauderdale. It would not apply to the fifth, Hartford, Connecticut.

In a telephone briefing with reporters, Martin said he would "anticipate" that Tribune would be required to divest assets in Hartford under the proposed changes.

A Tribune spokesman declined to comment.

Martin's proposal could nullify any ownership concerns raised by News Corp's NWSa.N proposed buyout of Wall Street Journal owner Dow Jones & Co DJ.N. News Corp owns the New York Post newspaper and local stations in New York.

The proposal would strike a balance between protecting the quality of local news coverage while preventing too much concentration of ownership, Martin said.

In addition, the cross-ownership would be allowed only if the market would still have at least eight "independently owned and operating major media voices." Cross-owned TV stations could not be among the top-four ranked stations in the local market.

Martin's proposal also would require the cross-owned outlets to maintain their editorial independence.

Allowing cross-ownership would not be a problem in the 20 biggest markets, he said, because there is a large number of outlets for news and opinion in those markets.

Martin recently said he wants the agency to wrap up its examination of media ownership and reach a decision by December 18 -- whether to ease limits on how many media outlets a company may own in a single market.

However, the scaled-down proposal did not win over consumer groups or skeptics in Congress, who fear that more consolidation in the industry would eliminate independent voices and degrade local news coverage.

Some consumer advocates argued that the changes would make it easier for media companies to get FCC waivers for cross-ownership.

Sen. Byron Dorgan, a North Dakota Democrat, said Martin "has yet to make the case for why any further media consolidation is necessary."

Dorgan and Mississippi Republican Sen. Trent Lott have introduced legislation that would require further study of the issue and impose a 90-day delay on any FCC decision to ease media ownership rules.

"The proposal from Chairman Martin today only adds a greater sense of urgency to our effort to enact our legislation," Dorgan said in a statement.

Meanwhile, Newspaper Association of America Chief Executive John Sturm said in a statement on Tuesday that the plan "is extremely limited and does not go nearly far enough to deal with the issues that he himself raises in his statement and in The New York Times today, however well-intentioned."

"The fundamental issues he raises concerning the vitality of newspapers and assuring that local news remains available to the public in print and in broadcast are not confined to the top 20 markets," Sturm added.

(Additional reporting by Robert MacMillan in New York)

(Reporting by Peter Kaplan; Editing by Brian Moss and Maureen Bavdek)