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Murdoch’s bid for Newsday draws opposition

With Rupert Murdoch closing in on owning his third N.Y.-area paper, opposition is emerging to potentially more concentration of ownership in the nation’s media capital.
/ Source: The Associated Press

With Rupert Murdoch closing in on owning his third New York-area newspaper, opposition is emerging from consumer groups to potentially more concentration of ownership in the nation’s media capital.

Murdoch’s News Corp. media conglomerate is close to acquiring Long Island-based Newsday for around $580 million from Tribune Co., which is seeking to sell assets just four months after being saddled with a debt load of $8.2 billion as part of a going-private transaction.

The fate of Newsday isn’t decided yet, however. According to a person familiar with the situation who asked not to be named, real estate developer Mortimer Zuckerman, who owns the New York Daily News — bitter rival to Murdoch’s New York Post — is planning to put in a formal proposal to buy Newsday on Friday.

Long Island-based cable TV provider Cablevision Systems Corp., which owns a local cable news channel, has also been reported to be considering a bid along with Jared Kushner, owner of the New York Observer, a highbrow weekly newspaper in Manhattan. Representatives of both Cablevision and Kushner declined to comment.

The acquisition is being watched particularly closely because — in addition to the feisty tabloid Post — News Corp. owns two New York-area TV stations and Dow Jones & Co., parent company of The Wall Street Journal.

For several consumer advocacy groups, the mere prospect of Murdoch getting another New York media outlet is unacceptable.

Susan Lerner, executive director of Common Cause in New York, called the potential acquisition “a step back that will hurt our democracy,” and Consumers Union, publisher of Consumer Reports, has also come out against it.

News Corp. spokeswoman Teri Everett declined to comment.

Chairman Kevin Martin of the Federal Communications Commission declined to comment directly on the deal Thursday, saying the commission doesn’t have any transaction before it.

“The commission will apply its rules on media ownership as they currently are, including the reforms we made in December, to any of those transactions,” Martin said. “I think we’ll follow those rules very closely.”

Martin said the FCC does not issue a “newspaper license.” Media ownership decisions take place at the time of license renewal, he said.

Both stations’ licenses apparently expired in June. Martin had no comment on when the agency will act on the applications for renewal.

News Corp. also owns a huge array of media assets around the globe, including the Fox network, Twentieth Century Fox, and newspapers in the United Kingdom and Australia.

From the regulatory point of view, the biggest hurdle would be likely to come from the Federal Communications Commission, which is still considering the renewal of the broadcast licenses of News Corp.’s two New York-area TV stations.

Andrew Jay Schwartzman, head of the Washington-based public interest law firm Media Access Project, already petitioned the FCC to deny the renewal of those licenses last year, and says there is sure to be even greater opposition if Murdoch buys Newsday.

The FCC wouldn’t have to sign off on News Corp.’s purchase of Newsday, Schwartzman said, but it could hold up or deny the renewal of the broadcast licenses.

An FCC rule passed last December expanded the conditions under which the same company can own a newspaper and TV station in the same market, but News Corp. would still need a waiver for its TV licenses since it would own both two TV stations and two newspapers all in New York.

Getting a waiver is still possible, although there are several conditions that would have to be met — conditions that FCC chairman Kevin Martin has said represent a “very high hurdle.”

The FCC’s new cross-ownership rule is currently being challenged in court, by News Corp. and other media companies on one side who say it didn’t go far enough, and by advocacy groups who say it went too far.

The rule is also facing a political challenge. On Thursday a Senate committee passed a bill from Sen. Byron Dorgan, D-N.D., that would overturn it altogether.

Even if the bill eventually gets blocked by a veto from President Bush, there is growing bipartisan support in Congress for measures to curb the further expansion of media ownership, Schwartzman said. That could present “greater political barriers to obtaining relief from the FCC,” he said.

On the antitrust front, Murdoch’s ownership of Newsday would be less likely to present significant regulatory hurdles, even though it operates in an adjacent area to the New York Post, said Eleanor Fox, a law professor at New York University and expert in antitrust law.

“Antitrust is generally not concerned with media concentration when there are a lot of players in the market,” Fox said. “Antitrust used to be concerned about diversity and point of view, but that hasn’t been true since the Reagan administration in 1980s.”

Of greater concern to antitrust regulators at the Department of Justice would be whether a business combination would be likely to result in higher prices, in this case for either advertisers or consumers who buy the papers, Fox said.