News Corp. Can Buy Chris-Craft

Federal regulators approved News Corp.'s purchase of TV station owner Chris-Craft Industries Wednesday, after giving the companies extra time to comply with rules that limit the size and scope of media companies.

Federal Communications Commission approval is the final step for the $4.4 billion merger, announced a year ago.

The deal between News Corp., parent of the Fox network, and Chris-Craft technically triggered federal restrictions on the number of TV stations one company can own and a prohibition on common ownership of broadcast stations and newspapers in the same market.

But the commission granted the companies temporary waivers for coming into compliance. And before the waivers expire, the commission or the courts could ease or eliminate the regulations.

The approval came from a commission divided 3-2. Democrats blasted the decision, accusing the agency of abdicating its duty to protect the public interest on the nation's airwaves.

"Preserving and promoting a diverse media is essential to our democracy," said Commissioner Gloria Tristani. "Today's decision further diminishes the marketplace of ideas."

FCC Chairman Michael Powell defended the agency's review, saying it followed the guidelines laid out by the commission rules. "If the majority was on the crusade she suggests, then the commission would have granted permanent waivers of our rules, which it clearly did not," Powell wrote in response.

The merger boosts News Corp.'s presence in some of the nation's largest markets. Under the deal, the company gets nine of Chris-Craft's stations, giving it two TV stations each in New York, Los Angeles and Phoenix.

Once the deal is complete, News Corp. will own TV stations that reach nearly 41 percent of the national audience. Federal law prohibits companies from owning stations that reach more than 35 percent of the population. But the commission delayed enforcing the limit on News Corp. until a court hears and decides on a legal challenge to the cap.

Fox and other networks are asking the courts to eliminate the limit. The U.S. Circuit Court of Appeals for the District of Columbia will hear their arguments in the case in September and already has given one company relief while it evaluates the rule. Some believe that this signals the court may determine the cap intrudes too much on free speech.

The merger also gives Fox two television stations and one newspaper in New York, conflicting with rules for a single market. The commission said it would give the companies a two-year waiver to comply with this regulation.

News Corp. already had a special waiver to operate the New York Post and one TV station in that market. But the commission determined that this waiver did not cover the company adding another TV station in that market. Under the commission's order, the company now will have to shed some media property in the New York market in two years unless the agency changes its rules before then.

The commission dos plan to look in the months ahead at whether to modify the quarter-century-old restriction on one company owning a newspaper and TV station in the same market. If that rule is relaxed or thrown out, it could spare News Corp. from having to get rid of holdings in New York.

The commission also studied the structure of News Corp., which is a foreign company, to see if it violated agency rules of foreign ownership of U.S. communications companies. The FCC ultimately did not make such a finding.

To resolve antitrust concerns and address other FCC rules on market concentration, Chris-Craft must shed its ABC affiliate in Salt Lake City. Without that, the merger would have given News Corp. control of two of Salt Lake's top four television stations.

News Corp.'s television division owns the Fox network and 23 television stations. The company also owns Fox movie studios, the HarperCollins book publisher and the New York Post.

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