FCC’s Copps Calls for News Corp.-Wall Street Journal Inquiry

FCC Commissioner Cites Cross-Ownership Rule

By John Eggerton -- Broadcasting & Cable, 10/25/2007 5:10:00 PM

Democratic Federal Communications Commission member Michael Copps asked FCC chairman Kevin Martin to open an inquiry into News Corp.'s purchase of The Wall Street Journal.

In a letter to Martin Thursday (although they are only a few hallways from each other at the FCC), Copps said he is concerned that the $5.6 billion combination, which is not currently before the FCC for consideration, would result in control of a network and two of the nation's five largest newspapers by a single company and would result in the ownership of two newspapers and two TV stations in New York, the nation's top market.

Saying this was unprecedented in the history of the FCC, Copps proposed opening a proceeding to determine "whether approval of this transaction accords without public-interest responsibilities" and, taking the opportunity to make a subtle pitch for regulation, posed the question of whether "our existing media-ownership rules and precedents are adequate to deal with this proposed transaction."

Martin is even now considering scrapping the cross-ownership rule, so Copps' letter attempts to swing the pendulum the other way.

The FCC is not reviewing the News Corp.-WSJ transaction because as a "national newspaper," the Journal does not run afoul of the newspaper-broadcast cross-ownership ban, which applies to local papers and stations in the same market. But Copps said that precedent should not preclude the FCC from analyzing the merger in the broader context of its responsibility to consider the public-interest implications for localism, diversity and competition."

Anti-consolidation groups weren't happy at the prospect of Murdoch owning the Dow Jones jewel, but they haven't seen much they can do on the regulatory front.

FCC rules disallow ownership of a local daily paper and TV stations in the same market, except for waivers, such as the one News Corp. got to own both the New York Post and its New York TV stations, and grandfathered combinations like Tribune’s arrangement in Los Angeles, which itself has come under fire with the planned sale of the company. The rule, however, does not apply to national daily newspapers thanks to a mid-1980s FCC decision.

In that ruling, the FCC permitted Gannett to buy WDVM Washington, D.C. (eventually renamed WUSA), although the company owned USA Today, which is published a silver dollar's throw across the Potomac. The FCC ultimately agreed with Gannett that USA Today was a national newspaper and its location in the WUSA market was “a completely neutral factor in terms of the local-diversity concerns.”

In the same decision, the FCC also cited the WSJ’s national-paper status, which seemed to leave clear a path for News Corp.