ITT Corp. and Dow Jones & Co. have announced the $207 million joint purchase of New York City-owned pubcaster WNYC, which the two companies plan to convert into a 24-hour business and sports news station.

Once the station purchase is wrapped, they hope to turn WNYC into a superstation to give their programming national distribution. But the partners would first have to persuade cable operators around the country to guarantee channel space, which might be tough given the limited channel capacity now available.

The deal confirms that ITT is emerging as a major player in the entertainment industry, following its $1 billion purchase of Madison Square Garden earlier this year in a joint venture with Cablevision Systems.

The Garden deal, which brings with it control of the MSG Network and ownership of three major sports teams, gave ITT access to sports programming. Dow Jones, publisher of the Wall Street Journal and Dow Jones Newswire, has already leveraged its business news expertise into news channels in Europe and Asia and was known to be developing a U.S. business news channel.

A source close to the winning bidders said Aug. 2 the deal gave “two companies that are steeped in content and lack a distribution system a distribution vehicle.”

The deal is “just the first step,” a source said. The companies may look at other opportunities, such as buying Walt Disney Co.’s Los Angeles station KCAL. If regulators won’t allow Disney to keep KCAL, the company would be forced to sell the station once it closes its purchase of Capital Cities/ABC. The latter owns L.A.’s KABC.

But sources noted that ITT would not be in the same position in L.A. as it is in New York, where it controls all the sports teams, as well as cable and over-the-air sports broadcast rights. Still, the purchase of WNYC lessens KCAL’s worth to station groups that had been looking at it, since they would also need to have a station in New York to have any leverage with programmers.

ITT and Dow Jones are paying $50 million to $80 million more than the $120 million to $150 million value assigned to WNYC when it was put on the market earlier this year. But sources said the pair, which will each hold a 50% stake, believed they could bid more for the station because they wouldn’t have to spend money on programming.

The sports programming will come mainly from ITT’s MSG Network, although some additional programming will be bought from Cablevision, which owns SportsChannel services around the country. Dow Jones will supply all the business programming.

To generate further synergies, ITT is expected to try and cross-promote its ITT Sheraton hotel chain with the station.

Neither Dow Jones nor ITT would comment on Aug. 2, and a spokeswoman for New York mayor Rudolph Giuliani said, “It’s too premature for me to comment on the sale of WNYC.”

Industry sources said the two companies had beaten out rival bidders, including the Tribune Co., for WNYC. But several other station groups that had been expected to bid, such as Paramount and Chris-Craft, remained out of the bidding. Disney, of course, pulled out to pursue the CapCities deal.

Smaller groups like Abry Partners and Clear Channel steered clear because the price, programming costs and potential losses were thought to be too steep. The owners would have been shut out of top-of-the-line off-net sitcoms because WNYC is a UHF outlet that does not reach the entire Gotham market.

Syndicators that have not struck distribution pacts with network station groups (like New World’s deals with NBC and Fox) will be disappointed by the purchase, since it could remove the only remaining outlet in New York on which to launch new firstrun programming.

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