Hold The Press: FCC To Investigate Dow Jones Deal

Michael Copps, one of two Democratic commissioners on the five-person Federal Communications Commission, sent a letter last week to FCC Chairman Kevin J. Martin urging him to investigate Rupert Murdoch's proposed $5.6 billion purchase of Dow Jones.

In the letter, Copps cited concern that the deal will lead to undue concentration of media ownership in the New York market, by violating the FCC's regulations against cross-ownership of different media. His letter represents a new stumbling block for Murdoch, who earlier dismissed suggestions that the deal may run afoul of federal regulators.

Copps warned that the purchase of Dow Jones--which publishes The Wall Street Journal--would have a negative impact on "localism, diversity and competition," which the FCC is mandated to protect for the benefit of consumers. He doesn't explicitly call for the deal to be blocked, writing: "I believe that the FCC's obligation to consider the public interest... requires us to consider the implications of a merger between these two media giants."

However, an investigation could be the preamble to regulatory action.

Murdoch is facing an uphill battle because, as Copps notes in the letter, News Corp. was already operating with a waiver from the FCC which allowed the mogul to buy the New York Post in 1993. The waiver was required because Murdoch also owns WNYW-TV in the same market. The waiver was granted on the grounds that the Post was a "failing newspaper."

The letter from Copps, a Democrat, seems to hint at a power struggle within the FCC. It comes just two months before the commission is scheduled to vote on a proposal by Martin to repeal the rule against cross-ownership of media in specific markets. It may also be a tit-for-tat move by the Democratic commissioners, in response to Martin's recent threat to block the sale of the Tribune Company to Sam Zell.

Tribune Co. owns TV stations and newspapers in five markets around the country. The company was originally allowed to acquire these properties, despite the FCC rule against cross-ownership, through waivers granted by the agency when the company was publicly traded. The waivers must essentially be renewed if the company is to be taken private, and Martin has threatened not to grant them.

News reports say it is not Martin's goal to actually block the sale. Rather, he hopes that by threatening such action on cross-ownership grounds, he can spur the two Democratic commissioners to revise the cross-ownership rules.

The Tribune deal is favored by Dick Durbin, the Democratic Senator from Illinois. Meanwhile, Murdoch--owner of the conservative New York Post and Fox News--is said to hold favor with Senate Republicans.

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