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FCC agrees to propose easing rules on media cross-ownership

The Federal Communications Commission agreed to propose easing limits on one owner holding a television station and newspaper in the same city.

Loosening the restrictions was among changes to media- ownership rules in a proposal Chairman Julius Genachowski sent to commissioners. The agency will take comments on any proposal, and no date has been set for a vote, according to an FCC official familiar with the situation. Neil Grace, an FCC spokesman, declined to comment.

"The consolidation of media assets in the same market would lower costs for these businesses and would make them more profitable," Laura Martin, an analyst with Needham & Co. in Pasadena, California, said in an interview. "Consolidation would give them a better ability to compete" with the Internet, she said.

A U.S. appeals court in Philadelphia vacated on July 7 an FCC rule adopted in 2007 to let one owner hold a daily newspaper and a broadcast station in the largest markets. The court sent the rule back to the FCC for more consideration.

CBS Corp., Clear Channel Communications Inc., Gannett, Media General Inc. and Cox Enterprises Inc. had challenged the 2007 FCC order for failing to relax the rule further.

Consumer groups said the proposal would concentrate too much power in the hands of large companies and limit the number of voices in a community.

Free Press, a nonprofit that promotes diverse and independent media, criticized the proposal as a mistake.

"The already dwindling number of smaller and independent media owners will be swallowed up by the same media giants that have crushed local journalism, killed local radio and left us with the same cookie-cutter content," Craig Aaron, the group's president and chief executive officer, said in a statement.

The Newspaper Association of America, an Arlington, Va.-based trade group, has argued that the media market has undergone "massive' changes because of the growth of the Internet, cable channels and satellite TV. The cross-ownership rule isn't needed to preserve a diversity of voices.

The July ruling marked the second time the appeals court intervened in the commission's attempts to relax media ownership rules. The same panel ruled in 2004 that the commission failed to provide reasoned analysis to support regulating cross-ownership with a new set of limits and sent the rules back to the FCC for review.

The agency's procedures leading up to the 2007 vote were "irregular," the appeals panel said. Between October 2006 and November 2007, the commission held six public hearings on media ownership in various cities with the final hearing announced just 10 days before the vote, the appeals court said in its ruling.

The commission's 2006 notice on the proposed rule failed to solicit comment on the overall framework under consideration and how the new approach might affect other ownership rules, the appeals court said.

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