Move is perilous for independent media, public advocates say

When Clark Kent worked for the Daily Planet, he worked for the Daily Planet. Period. Not for the local Metropolis affiliate across town, too.

Were he a reporter at the Tampa Tribune today, he’d be parked in an experimental complex that houses the paper’s newsroom and the entire operation of WFLA, the local NBC affil. Both are owned by Media General.

“We put them in there and told them to work together,” says an exec at the Arlington, Va., media group, touting the benefits to news gathering and cross-promotion, after a year of collaboration.

For years, newspaper scribes have considered themselves more serious and hard-hitting than TV reporters (although maybe not as good-looking). So what happens when the newly Republican FCC axes a long-standing reg prohibiting ownership of a newspaper and TV station in the same market?

That’s likely to happen in coming months in a move that public advocates say is perilous for an independent media. Although most newspaper groups embrace the change, it seems likely that the print partner may get the short end of the stick.

“It’s all about investing in the medium that makes you the most money — and that’s going to be television and video-related technologies, not newspapers,” says Jeff Chester, director of the Center for Media Education in D.C. “There’s no question the newspapers suffer here.”

Adds Media Access Project CEO Andrew Schwartzman, “It accelerates the trend of letting business judgment prevail over journalistic judgment. That’s already an accomplished fact among broadcasters.”

Broadcast TV and daily newspapers, he says, “are by far the most influential media in any given market. When you want to know who to vote for in the mayoral or city council election, you still don’t get it from the Internet. Almost everything you know about local issues comes from these two places.”

Indeed, some politicians (apparently even Bill Clinton) have been happy to keep the ban in place, worried about coverage back home. “They’ve gotten hit on by the newspaper editorials and they’re afraid of giving out too much power by connecting newspapers and TV stations,” says one TV exec. That’s especially true in smaller markets with a dominant local paper and powerful station.

A handful of prominent lawmakers, including Sen. John McCain (R-Ariz.) and Rep. Michael Oxley (R-Ohio), however, have fought for years to lift the ban — joined by Wall Streeters, broadcast and newspaper groups, lobbyists, lawyers and regulators. They call the restriction, which dates to 1975, archaic given the proliferation of broadcast networks, cable, satellite and the Internet.

“The media world has exploded, but this rule has remained intact and hasn’t been reviewed in 26 years. It’s been the inviolable rule, the Holy Grail,” says telecom attorney and former FCC topper Dick Wiley.

Maybe there’s a reason. “It’s an important First Amendment pillar that protects the public right to a diversity of opinion,” Chester says. “TV folks have always engaged in copycat reporting, relying on newspapers. Now you will see even more homogeneous coverage.”

Industryites, however, see only a win-win situation, arguing that newspapers have been shut out of the consolidation revolution since they couldn’t buy TV or radio stations in their markets. Media barons like Rupert Murdoch stand to profit handily if the reg is lifted — in New York alone, News Corp. may wind up owning two TV stations plus the New York Post.

Tribune Co.’s purchase of Times Mirror last year gave it cross-ownership in three major markets. Trib, alongside Media General and others, is banking that the reg will expire before their broadcast licenses do.

(The reg flat-out forbids newspapers from buying stations in their market. Stations can buy newspapers, but face the music when their licenses must be renewed.)

Trib now owns the Los Angeles Times, Newsday and the Hartford Courant, all in markets where it has TV stations — respectively, KTLA, WPIX and WTIC. The broadcast licenses don’t come up for renewal for four or five years. In its hometown, Tribune has owned the Chicago Tribune and superstation WGN since 1948. That combo was grandfathered back in ’75 and can’t be touched.

“It’s only a matter of time — and not that much time — before all of our news personnel in a given market are located in the same newsroom … television, newspaper and interactive staffs working side-by-side. It’s good journalism, and it’s good business,” Tribune chairman-CEO John Madigan told investors at the Bear Stearns media conference last week in Florida.

Still, Tribune and others say their cross-owned stations and newspaper maintain total and separate editorial control.

WGN’s depth of coverage certainly benefits from the Chicago Tribune’s 600 reporters. With cross-promotion, the paper gets to extend its brand, hitting “the younger demos they want to reach,” says Tribune exec VP and broadcast president Dennis FitzSimons.

The Chicago Tribune, in fact, is one of the nation’s most profitable big-city papers, with margins north of 30%, although analysts disagree as to how much of that comes from cross-ownership. Tribune also owns a local radio station, a local cable network and the Chicago Cubs.

In L.A., FitzSimons says the Times and KTLA are starting to work together: “When the Concorde crashed, there was an L.A. Times reporter stationed in Paris on the air, reporting for us.”

News Corp. has had a nice cross-ownership deal since Rupert Murdoch got a waiver to own the New York Post and a TV station — by convincing regulators the Post would fail if he didn’t buy it. Now Murdoch plans to add a second Gotham station currently owned by Chris-Craft, a company News Corp. is buying. That deal is expected to close in June.

The idea is that frosh FCC chairman Michael Powell and his team, once it’s assembled, will grant Murdoch a waiver for the Chris-Craft purchase, after which the FCC will launch a formal review of the cross-ownership reg.

Powell is giving clear signals that the reg will die — and industry execs predict it will be within the next 18 months. For one thing, it’s much less controversial in industry circles than the 35% cap on broadcast ownership which has affiliates and networks on opposite sides of the fence.

A big round of media mergers is sure to follow. Sinclair Broadcast Group might get snapped up. Knight-Ridder, with big papers in Philadelphia, Miami, Detroit and San Jose, would be a toothsome acquisition for a big broadcaster. So would Pulitzer, with major city papers in St. Louis and Tucson, and newspaper group McClatchy Co. Gannet, Tribune and Hearst will be on the prowl, analysts say.

So will News Corp., the only big conglom with a passion for print and a thriving newspaper business. “I think we would take a close look. It’s one of our core competencies,” agrees one News Corp. insider.

Viacom chief operating officer Mel Karmazin, for one, has turned up his nose at newspapers, which are historically slower growing than Viacom’s other businesses. “That might change,” one Wall Streeter notes, “if Murdoch gets aggressive in newspapers and starts freezing him out of some markets.”

Follow @Variety on Twitter for breaking news, reviews and more