FCC chief proposes to relax media ownership ban

By Peter Kaplan

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.