Time on Murdoch’s side in Newsday buy

BY MELANIE LEFKOWITZ | melanie.lefkowitz@newsday.com

April 30, 2008

There is little the federal government can do to stop Rupert Murdoch from buying Newsday, despite some congressional opposition, objections from public-interest groups and a proposed deal that would violate even relaxed federal rules, media experts say.

Such a purchase could, how-ever, endanger Murdoch's licenses for his two area television stations, WNYW and WWOR. But even if the Federal Communications Commission decides not to renew his licenses for those stations, legal challenges could delay any action for years.

"He can go ahead and do the transaction, but the problems will come somewhere later on," said Andrew Jay Schwartzman, president of the Media Access Project, a Washington D.C.- based advocacy group for open media. "He is free to go buy Newsday tomorrow; how-ever, he is further jeopardizing his licenses for his two television stations by so doing."

Murdoch, who also owns the New York Post and The Wall Street Journal, among other properties, has indicated he expects to arrive at a deal with Tribune Co. to purchase Newsday. Sources have said that Daily News publisher Mortimer Zuckerman also has put in a bid to buy the paper - at $580 million, the same offer as Murdoch - and the owners of the New York Observer and Cablevision also have expressed interest.

If Murdoch and Tribune reach a deal for Newsday, the only immediate hurdle Murdoch would face is the Justice Department's 30-day waiting period to evaluate whether the deal violates antitrust laws. Most experts agree that is not likely to pose a problem.

In December, the FCC announced it would loosen regulatory requirements, allowing media companies to own both a newspaper and a television station in any of the nation's 20 largest markets. Even so, Murdoch - with two television stations and two newspapers in the New York market - would violate the regulations. He has a permanent waiver for WNYW and a temporary waiver for WWOR. His licenses to operate both stations expired last June.

"This faces a real regulatory uphill battle in a difficult and somewhat awkward political moment, and I think it is a surprisingly aggressive move in light of the regulatory obstacles, to consider this acquisition," said Schwartzman, whose group is among those that have challenged Murdoch's licenses. "But Rupert Murdoch has been extraordinarily successful at navigating the regulatory system to his advantage."

If Murdoch succeeds in buying Newsday and is denied a license renewal for his television stations, he can appeal the decision, effectively buying time.

Blair Levin, an analyst at St. Louis-based brokerage Stifel Nicolaus and former chief of staff at the FCC, said that if newspapers continue their current decline, the climate regarding media ownership could be very different a few years from now.

"If what Murdoch is really doing is saying, I've got five years to litigate this, the facts on the ground are probably going to be better for his litigation strategy, not worse," Levin said.

A Senate committee voted last week in favor of a bill - whose sponsors include both Democratic presidential candidates, Sens. Hillary Rodham Clinton and Barack Obama - to reverse the FCC's easing of ownership rules. President George W. Bush has vowed to veto any such legislation.

Although the legislative efforts may not have any immediate impact on Murdoch's bid, the fight over his licenses could well extend into a new presidency and a new FCC. New FCC commissioners could be more readily swayed by arguments on media consolidation, Levin said.