Antitrust issue may be moot in purchase of Newsday

BY ELLEN YAN | ellen.yan@newsday.com

8:31 PM EDT, April 10, 2008

When News Corp. chief Rupert Murdoch recently voiced concerns about not being able to nab Newsday, he was talking about federal regulators' raising possible antitrust and trade issues because he already owns the New York Post, The Wall Street Journal and two television stations in New York City.

But the financial plight of newspapers in the Internet age may make antitrust issues moot for media moguls who might want to invest in Newsday, legal and media experts said.

Business survival concerns are now paramount to federal regulators interpreting decades-old laws aimed at preventing monopolies and protecting choices for consumers. That could be good news for Murdoch, Daily News owner Mort Zuckerman and anyone else thinking of taking control of the Tribune Co.'s Long Island paper.

"The newspaper industry is in such economic shambles today that for the government to stand in the way of a newspaper's economic vitality and health would be unsound policy," said Jack Myers, publisher of jackmyers .com, a media industry Web site. "The government's role is to support and maintain multiple media voices in the community."

When the Federal Communications and Federal Trade commissions and the Justice Department review major media mergers, they look at the potential impact on diversity of news and advertising options for the public.

"They've been receptive to the argument that there's competition on the Internet, competition on the blogs and competition on alternative media, in different places and different ways," said Stephen Calkins, a Detroit-based antitrust lawyer and law professor at Wayne State University in Michigan.

Zuckerman recently put in a bid to obtain Newsday from Tribune Co. CEO Sam Zell, said a source familiar with the deal who did not want to be named. Zell is said to be interested in selling all or part of Tribune's interest in Newsday to help him pay down $12.8-billion-plus in debt derived largely from his deal taking the company private last year. Cablevision also has been reported to be interested but has declined to comment.

Zuckerman, who has fewer media properties in New York City than Murdoch, probably will have fewer obstacles than Murdoch in getting federal approval if he wants Newsday, analysts say. He can argue that a Murdoch investment will threaten the existence of the Daily News, while Murdoch can argue that the federal government has already set a precedent by giving him waivers on media ownership.

Murdoch has said obtaining Newsday, which is profitable, would give the money-losing Post a "much more secure future." And the Daily News is reportedly marginally profitable.

But though the New York City/Long Island metro market has four major dailies, enough to allay competition concerns, there's a broader issue at stake, said Andrew Schwartzman, president of Media Access Project, a nonprofit.

"Consumers here are more than consumers," he said. "We're talking about citizens. This adversely affects the marketplace of ideas as well as the consumer marketplace."

Federal regulators have been increasingly lenient over newspaper mergers and also cross-media ownership. Their focus instead has been on the new version of potential monopolies, such as Microsoft's attempt to buy Yahoo to compete with Google.

"Everyone knows that newspapers are in a crunch," said antitrust expert Reed Hundt, a lawyer and former FCC chairman. "It's important to let the new ownership basically try to keep the Fourth Estate alive ... The Google-Yahoo-Microsoft swirl -- in that context there are real and live antitrust issues."