FCC Cross-Ownership Decision Could Boost Newspapers

by Erik Sass, Dec 20, 2007, 8:46 AM

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The effects of Tuesday's vote by the Federal Communications Commission to loosen restrictions on cross-ownership of media will not be felt for at least a year or two, according to Ken Doctor, a newspaper analyst with Outsell Inc., a consultancy serving the information industry. But once the kinks are worked out, the decision could be a boon to newspaper owners.

And there are plenty of kinks to work out. The FCC decision still faces broad bipartisan opposition in both houses of Congress, led in the Senate by Republican Trent Lott and Democrat Byron Dorgan. Congress has vowed to take up the FCC decision in the New Year, and could effectively reverse it, depending on the extent of real opposition among lawmakers--still an unknown quantity.

If the rule changes survive congressional mauling, there will also be a number of lengthy court cases, with jurisdiction tracing back to the 3rd U.S. Circuit Court of Appeals in Philadelphia, which issued a stay in September 2003 blocking the FCC's previous, more ambitious attempt to deregulate ownership.

Such legal realities will probably deter media owners from making any big moves until the court cases are settled, Doctor said, delaying the effects even further.

However, if the rule changes do happen, they may be a lifeline for struggling newspaper publishers. It may not benefit readers, however, Doctor warns.

By making it easier for newspapers to merge their operations with TV stations, the rule changes will "allow them to produce both story content, video content and audio content, out of a single enterprise with a single management, single newsrooms and a single sales staff," he says. If they can pull that off, Doctor says newspapers can reduce overhead and produce a substantial cost savings. Publishers could further benefit from combining their Internet presence with broadcasters.

In the best-case scenario, this will in turn "give a boost to papers like The Washington Post, which has a long tradition of public service and real commitment to producing good journalism." Doctor added that a number of big newspaper publishers could also benefit from capital infusions if purchased by another media company.

But Doctor questioned whether this generation of media leaders "has the vision and the drive to pull off such a transition." The alternative would not benefit the consumer. He predicts the industry would endure if "outsiders with no real interest in journalism come in, buy up, and roll up newspaper publishers with TV broadcasters, with no concern except maximizing profits."

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