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Rupert Murdoch says Los Angeles Times purchase not a sure thing

January 14, 2013|By Meg James and Nicole Sperling
  • Rupert Murdoch and Jim Gianopulos attend the 70th Annual Golden Globe Awards cocktail party held at the Beverly Hilton Hotel in Beverly Hills.
Rupert Murdoch and Jim Gianopulos attend the 70th Annual Golden Globe Awards… (Kevin Winter / Getty Images…)

Now that Rupert Murdoch is spinning off News Corp.’s publishing properties into a separate company, media observers have identified the Los Angeles Times as a likely target for acquisition.

Murdoch isn’t one of them.

"It won’t get through with the Democratic administration in place," Murdoch said during a break in the Golden Globes ceremony Sunday night in Beverly Hills.

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Murdoch was alluding to federal regulations that seek to limit media consolidation. A Federal Communications Commission rule adopted in 1975 bars the same company from owning newspapers and television stations in the same market. News Corp. owns two television stations in Los Angeles: KTTV-TV Channel 11 and KCOP-TV Channel 13. Adding the L.A. Times to the portfolio would put Murdoch in violation of the cross-ownership rules.

News Corp. is expected to split into two publicly traded companies this summer.  The more profitable Fox television and movie studio properties will become one company called the Fox Group. Newspapers, including the Wall Street Journal, New York Post, Times of London and the Australian, along with HarperCollins book publishing, will make up another stand-alone company called News Corp.

Murdoch will be chairman of both entities.

Jack Goodman, a communications lawyer and former attorney with the National Assn. of Broadcasters, said Monday that separating the newspapers from the TV stations will not get Murdoch out of the cross hairs of FCC cross-ownership rules. Murdoch and his family are expected to retain their voting control in both the Fox Group and News Corp.

Under the FCC’s current rules, because Murdoch would be a common officer of both corporations, the assets of one would be considered owned by the other.

Murdoch could apply for a waiver to those rules. Tribune currently holds such a waiver because the company also owns KTLA-TV Channel 5 and The Times. Murdoch holds one because News Corp. owns the New York Post and two TV stations in the New York metropolitan region.

Murdoch received the FCC waiver for the New York Post in 1993, after a hard-fought, months-long battle with the FCC. The waiver -- to help rescue the tabloid from bankruptcy court -- came five years after Murdoch was forced to sell the Post to comply with the cross-ownership rules.

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The FCC rules would not be an immediate roadblock. The Fox Group will not need to seek renewals of its licenses for its two Los Angeles stations until mid-2014. That's when the issue would become a problem (although Murdoch would not want to spend hundreds of millions of dollars buying an asset, only to be forced to divest the same asset within a year).

Two other media companies, Belo Corp. and Cox Communications, also have waivers. Although Belo's TV stations and newspapers – among them the Dallas Morning News and the Riverside Press-Enterprise -- operate as two separate companies, Robert W. Decherd serves as chairman of both.

FCC Chairman Julius Genachowski has recommended an effort to "streamline and modernize" media concentration rules as the Internet has made concerns about media monopolies less of a factor.

Some reports indicate that Genachowski has proposed new rules to allow common ownership of a daily newspaper and a TV station in the 20 biggest U.S. cities, which should allow Murdoch sufficient wiggle room.

Times staff writer Joe Flint contributed to this report

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