Murdoch too powerful for government regulators

By Brooks Boliek

WASHINGTON (Hollywood Reporter) - The dirty little secret about Rupert Murdoch's plan to add Newsday to his stable of New York media properties is that there's little anybody can do to stop him.

In the topsy-turvy world of media regulation, Murdoch or any other media baron can own a TV station and then buy a newspaper in the same market, and there's not much federal regulators can do about it directly.

Debt-laded media firm Tribune Co. is close to a deal to sell Newsday to Murdoch's News Corp. for about $580 million and put Newsday into a joint venture with his New York Post, sources familiar with the matter said this week.

The Federal Communications Commission doesn't have the power to review Murdoch's bid to purchase the Long Island-based newspaper in advance. But when Murdoch's TV stations in the area come up for license renewal, the panel will be able to consider whether his purchase of Newsday is in the public interest.

The forces that oppose Murdoch -- because he's Murdoch or because they fear an increasingly consolidated media market -- are in luck. News Corp. last year asked the FCC to renew its licenses to operate TV outlets WNEW and WWOR.

Murdoch already has managed a number of waivers in the area.

Ownership of WNEW and the New York Post is allowed under a permanent waiver. His waiver to own WWOR and the New York Post and, in effect, WNEW, expires at the end of the year. (Murdoch is allowed to own the Wall Street Journal because it's a "national" newspaper and the broadcast ownership rules deal with local markets.)

That waiver may have to be renewed. Or, it may not, depending on the legal status of the new ownership rules the FCC approved last year, which allow one person or company to own both a newspaper and a TV station in the top 20 markets.

News Corp. likely would need a waiver or may have to sell something to purchase Newsday since the new rule specifically said it allows the ownership of one station and one newspaper, not two stations.

Then again, maybe not. The way the rule is written, a broadcast baron can buy a newspaper. There's also a question about just what market is served by the different media properties.

There are a number of legal challenges to the new rule, including ones from Tribune Co. and News Corp.

As for the case at hand: Say News Corp. and Tribune cut a deal for Murdoch to get Newsday.

The purchase would get challenged during the license renewal. Let's just say the FCC determines that it's bad for the public. Murdoch can then ask for a hearing before an administrative law judge.

If News Corp. asks for an administrative hearing -- which it would -- and loses, the deal then would get a review by the full commission. If News Corp. loses at the commission and the FCC says it has to sell some property, then the company would go straight to the D.C. Circuit Court of Appeals, which has been hankering for a media-ownership case.

Whoever loses there would take the case to the Supreme Court.