BODY: Federal regulators yesterday
approved the News Corporation's acquisition of Chris-Craft Industries, paving
the way for the company to gain unprecedented control over two of the main
broadcast television stations in the New York market.
In a 3-to-2 vote, the Federal Communications Commission ruled that Fox
Television Holdings, a subsidary of the News Corporation, could complete its
$4.4 billion acquisition of Chris-Craft, which owns 10 television stations. The
vote, which waived government rules against a single company's ownership of too
many news media properties, means that the News Corporation will control The New
York Post, WNYW-TV (Channel 5) and WWOR-TV (Channel 9).
The decision is expected to have far-reaching implications for the
media business in New York. The work forces at the two stations are likely to be
significantly reduced as their operations are combined, executives said. And
industry officials say the acquisition will give Fox a tighter grip on a $1.5
billion advertising market.
"They don't have a lock on
the market, they have a pretty strong knot," said Allen Kay, the chairman of
Korey Kay & Partners, an advertising firm whose best-known clients include
Virgin Records, Comedy Central and the Metropolitan Transportation Authority.
"It makes it pretty hard for us to ignore News Corp."
The acquisition could also heighten the political clout of the
company's chairman, Rupert Murdoch, who has not been afraid of using his control
of The New York Post to push his agenda.
"From a
political point of view, Rupert already had immense power, starting off when he
made the candidacy of Ed Koch, and he has a hundredfold more power today," said
George Arzt, a political consultant who has worked for Mr. Murdoch at The Post
and WNYW. "I think that he can't be ignored by any local politician, or for that
matter, a national politician coming into New York."
The ruling by the F.C.C. could lead to further consolidation in the
television broadcast industry, as it signals that the commission and its new
chairman, Michael K. Powell, may be more ready to approve such deals than the
commissioners were under the Clinton administration, media analysts said.
The F.C.C.'s approval of the deal overrides several of its
rules on antitrust issues in the broadcast industry, including its long-standing
national ownership cap, under which one entity cannot own stations that reach
more than 35 percent of the nation's television audience.
Although Fox is not exempt from the cap, it has 12 months to comply
with it. The commission voted not to enforce the cap until a federal court in
Washington decides on a challenge to it.
The waiver
granted yesterday involves a long-standing F.C.C. policy, a cross-ownership rule that prohibits the ownership of a television
station and newspaper in the same media market. Mr. Murdoch had already
been granted a permanent waiver for ownership of The New York Post and
WNYW-TV.
In yesterday's ruling, the commission granted
the News Corporation a two-year waiver, but many regulators think that the
F.C.C., under Mr. Powell's leadership, will change the rule before the waiver
expires.
Christopher R. Day, a lawyer for the Institute
for Public Representation, which opposed the merger, said that his group hoped
that Congress would "quickly take action to ensure that this commission does not
let media diversity wither on the vine."
In a
statement, Mr. Powell, a Republican appointed by President Bush, defended the
commission's decision, saying that the positive aspects of the temporary waivers
would "outweigh any temporary impact on diversity and competition and is in the
public interest."
He added, "The New York market would
still have 19 independent TV voices, over 120 commerical and noncommercial radio
stations, 25 daily newspapers and hundreds of weekly papers."
The commission voted along party lines, with Republicans voting in the
majority to approve the acquisition. The decision came 10 months after Fox
submitted its application to the F.C.C., and after Susan Ness, a commissioner
who was an opponent of consolidation, stepped down.
In
a dissenting statement, Gloria Tristani, a commissioner and a Democrat, said the
decision showed "the lengths the commission will go to avoid standing in the way
of media mergers."
In New York, executives the News
Corporation said that the newsrooms of WWOR and WNYW were not likely to be
affected beyond the possible sharing of talent. But on the business side,
officials are considering proposals to combine promotion, engineering and sales
efforts.
In one of the first moves, a general manager
is expected to be appointed to oversee both stations when the deal is completed,
perhaps within weeks. "I don't think there is any big mystery here about what is
going to happen," said Thomas Burnett, the president of Merger Insight, a
financial research firm. "Having a duopoly gives them a lot of clout with
advertisers," particularly when it comes to setting rates.
Andrew Butcher, a spokesman for the News Corporation, declined to
comment on specific changes other than to say that "the newsrooms will remain
separate," adding that he was "sure there will be consolidation of some parts of
the two stations, but I am not sure what they will be yet."
The two stations would have a combined 11 percent share of viewers in
the market, about the same audience share as the market leaders, WABC-TV and
WNBC-TV, have.
Ted Faraone, a television consultant,
cautioned that WWOR's broadcast license would virtually require the station to
keep its newsroom in New Jersey, and that the stations' audiences were quite
different.
"In Channel 5 you have the whitest audience
in New York and in Channel 9 you have the blackest," he said. "And having them
both controlled by a right-wing immigrant Australian who owns The New York Post
could make for some interesting merger pains."
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