If cross-ownership rules ease, the media mogul may swoop, writes Amy Chozick.
In weighing a bid for the Los Angeles Times, Rupert Murdoch finds himself in a familiar role: waiting for rule changes from the government. With the resignation last week of Julius Genachowski, the chairman of the US Federal Communications Commission, he may have to wait a little longer.
Mr Murdoch, who has never shied away from a regulatory battle, has been beefing up News Corporation's lobbying efforts in Washington in the last few months to urge regulators to revise a media ownership rule that would prevent the company from acquiring the Los Angeles Times and other newspapers in markets in which it already owns television stations.
"He wants it," one person close to Mr Murdoch said of the Los Angeles Times.
"They're working on getting a waiver now," added this person, who spoke on the condition of anonymity to discuss internal talks. But another person close to Mr Murdoch said he currently considered a potential deal more trouble than it is worth given the regulatory hurdles in Washington.
The resignation of Mr Genachowski, a Democrat, could further stall a plan favoured by the departing chairman that would relax a longtime ban on consolidation between television stations and newspapers in local markets. The FCC signalled on Friday that a vote on easing media ownership rules would move forward despite Mr Genachowski's departure.
Initially expected to be presented for a vote early this year, the measure has already faced several setbacks. Last month, Mr Genachowski said there would be no vote until the Minority Media and Telecommunications Council, a Washington-based non-profit, completed a study of the impact of cross-ownership on news gathering. That process could take several weeks, potentially pushing a vote to the summer.
In a series of letters sent to the FCC late last year, Maureen A. O'Connell, News Corporation's senior vice president for regulatory and government affairs, and Jared S. Sher, a vice president and associate general counsel at the company, argued that regulators should dissolve the cross-ownership rule. "There can be little debate today that the newspaper industry faces existential threats," Ms O'Connell wrote in a letter documenting a meeting with agency officials. "We urged the FCC to eliminate the cross-ownership rule as a relic from a bygone era."
Any easing of the media ownership rule would face fierce opposition from groups that say too much consolidation threatens a free press. If Mr Murdoch owned a major Hollywood studio and a newspaper known as the paper of record for the entertainment industry, it could spark additional scepticism.
Mr Murdoch has given mixed signals about his interest in the Los Angeles Times, which is being put on the market by the Tribune Company, along with its other seven newspapers. A longtime reader of the paper, Mr Murdoch is weighing whether a bid would be worth the headache and regulatory battles, said several people close to him who spoke on the condition of anonymity. (The Tribune Company has indicated that it may prefer to sell its newspapers as a bundle.)
Under the Obama administration, Mr Murdoch has lost some of his muscle in Washington.
"It won't get through with the Democratic administration in place," Mr Murdoch told a Los Angeles Times reporter when asked at the Golden Globes in January whether he wanted to buy the paper.
Later this year, News Corporation will separate its newspapers into a smaller, mostly publishing-based company. Even if regulators were to grant a waiver of the cross-ownership rule, the Los Angeles Times would need significant investment that could strain the new company, said one of the people close to Mr Murdoch.
News Corporation spent US$6.3 million ($6 million) on lobbying last year, according to the Centre for Responsive Politics. A spokeswoman for News Corporation declined to comment.
Under Mr Genachowski's proposal to modify media ownership rules, a company or an individual could own both a television station and a newspaper in the same top-20 market as long as the station was not in the top four in audience size based on Nielsen ratings. News Corporation owns the Los Angeles stations KTTV and KCOP, and KCOP rates between fourth and fifth among local stations.
The FCC cannot rule specifically against Mr Murdoch or News Corporation; it must instead create broad regulations that apply to all media companies.