New Calls for Newspaper-Station Joint Ventures

Buckling economy leads to talk of loosening ownership restrictions

Newspaper and broadcast lobbyists have been trying to make a point about media ownership for years. Now it seems the buckling economy has helped make the point in ways words could not.

Newspapers and TV stations may in fact need to combine to remain viable in a fragmenting media market. At least one investment adviser has outlined that case in an SOS to Washington, and some of the Democrats who control the levers of power in Washington appear to be listening.

Asked by B&C whether continued declines—layoffs, closings, Web-only strategies—in the print business suggest some top Democrats in the last Congress were wrong to have opposed loosening the ban on newspaper/TV station combos, Rep. Rick Boucher (D-Va.) said he supported allowing those joint ventures in certain circumstances. “I favor allowing newspapers and television stations to have common ownership in markets large enough that there are diverse voices remaining after a combination takes place,” he said.

Boucher has advocated loosening station ownership restrictions before, but he now has a larger bully pulpit as chairman of the House subcommittee that oversees communications. He is also not alone in suggesting that media outlets may need to combine, at least in major markets.

Boucher has a surprising ally in Larry Irving, co-chair of the Internet Innovation Alliance and former top telecom advisor to the Clinton administration. Irving, who counseled the Obama transition team on communications policy, stated six months ago in a policy paper that he supported reversing the FCC's loosening of the cross-ownership ban. But he told B&C his view has changed with the shifting economic times: “Where we are seeing newspapers go away, it wouldn't be the end of the First Amendment if you were actually able to get some synergies out of newspaper-broadcasting.”

At about the same time Boucher weighed in two weeks ago, House Speaker Nancy Pelosi (D-Calif.) wrote to the Justice Department, asking it to “allow free-market forces to preserve as many news sources as possible.”

Pelosi was responding to reports that the San Francisco Chronicle might have to shut down. Sounding a little like a broadcast lobbyist, Pelosi said market realities required Justice to take into account as relevant competition “not only the number of daily and weekly newspapers in the Bay Area, but also the other sources of news and advertising outlets available in the electronic and digital age.”

Said a spokesman for the National Association of Broadcasters: “While the [NAB] has never sought wholesale deregulation of broadcast ownership rules, we are encouraged by recent statements from lawmakers who are recognizing the realities of today's communications marketplace.”

Toward that end, a staffer on the Senate Commerce Committee said last week that the health of newspapers and broadcast properties had been put on the agenda of items to discuss.

Acting FCC Chairman Michael Copps also said last week that the commission may have to revisit the broadcast/newspaper cross-ownership issue, though it was unclear just what form that revisit might take. A Copps aide said he was not reversing his support of the ban. Copps will soon be giving up his seat to chairman-nominee Julius Genachowski, who isn't talking communications policy until after he is installed in his new post.

The FCC did loosen the cross-ownership ban to a degree, but congressional Democrats tried to overturn that decision during the last Congress, a decision currently tied up in a court battle.

But in the new market reality, TV stations are sending out an SOS to Washington that, according to investment advisory firm Gabelli & Co., needs to be heeded. The SOS was actually billed as SOL-TV, or “Save Our Local TV.”

According to one source, Gabelli pitched a local TV bailout plan in a report circulated to “elected and appointed government officials” as well as select institutional and investment management clients and corporate executives. The plan emphasizes that “the government is already helping banks, auto manufacturers and homeowners.”

Gabelli ticked off the prices of some of the station groups owned by its clients, including five—Belo, Gray Television, LIN TV, Nexstar and Sinclair—whose stock prices had fallen below $1 per share (in some cases, well below). The firm called for lifting cross-ownership restrictions, saying the “threatened shutdowns of papers in San Francisco, Seattle and Tucson underscore the plight of traditional media companies.”

John Sturm, who heads the Newspaper Association of America, says that to the extent newspapers are looking for assistance along the lines of Pelosi's suggestion, it is for the preservation of journalism. “What I hear is that some of the TV companies are going to go through the same kind of difficult process of debt refinancing that has happened in the newspaper industry,” he says. “All of that suggests that if journalism is going to be preserved at the local level, the government is going to have to make some changes.”

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