'Journal' Bid a Slam-Dunk?

Consolidation critics see little to block buy—except the Justice Department
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News Corp.'s bid for The Wall Street Journal launched a media-world shockwave. That it caused barely a ripple among anti-consolidation groups had some people shaking their heads.

The lack of protest comes in the wake of recent attacks on Rupert Murdoch's New York “media empire” from the United Church of Christ (UCC), Jesse Jackson's Rainbow/PUSH Coalition and the Media Access Project (MAP).

Those groups recently filed petitions to deny the license renewal of Fox's TV stations serving New York—WWOR and WNYW—over issues of news coverage and the ownership of TV stations and newspapers in the same market. The UCC and Rainbow/PUSH filed theirs the same day the News Corp. bid was reported. They noted that “the FCC's crossownership rule expressly prohibits newspapers and TV stations from being owned by the same entity.” Both groups called the timing a coincidence.

News Corp. has been operating the New York-market stations as well as the New York Post newspaper under a waiver of the FCC's crossownership rules. But its station licenses are up for renewal on June 1, and UCC and Rainbow/PUSH want the FCC to rescind the waiver and force Murdoch to divest either the stations or the paper.

So why didn't the bid for the Journal raise red flags? Anti-consolidation groups aren't happy at the prospect of Murdoch's owning the Dow Jones jewel but see little 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 grandfathered combinations like Tribune Co.'s arrangement in Los Angeles, which itself has come under fire with the planned Tribune sale. 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 (eventually renamed WUSA), although the company owned USA Today, published a silver dollar's throw across the Potomac. The FCC ultimately agreed with Gannett that USA Today was a national newspaper whose 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 Wall Street Journal's national-paper status, which seems to leave clear a path for News Corp. But a lack of legal challenge doesn't mean that veteran consolidation critics like what they see.

Jeff Chester, executive director of the Center for Digital Democracy, doesn't see any issues at the FCC. The Justice Department may be another matter, however. With News Corp. planning to launch a business-news channel, while also looking to buy Dow Jones, there could be some issues of reduction of sources in the financial-news market. That is likely a stretch, though.

Chester thinks Murdoch's potential purchase of the Journal should be a “wakeup call” for Congress to look at what media-ownership rules might apply in the digital age. He is concerned about News Corp.'s ownership of both MySpace and the Journal. “Instead of holding the umpteenth violence hearing,” he says, “it should get real and look at the violence being done to diversity and competition in the merged-media world.”

Congress is unlikely to legislate while the FCC reviews its rules, although Democrats could put the deal in the spotlight, even without a legislative counterpunch. A House Telecommunications Subcommittee source says that, although the deal was discussed among staffers, no hearing is planned, for now.

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