Gannett, Media General win sweethearrt cross-ownership waivers after execs lobby FCC

by Todd Shields, Bloomberg

The chief executives of Gannett Co. and Media General Inc. personally lobbied top U.S. regulators before winning exceptions to rules that limit newspaper and broadcast ownership in the same markets.

Waivers approved by the Federal Communications Commission on Dec. 18 let Media General continue to run both newspapers and television stations in four southeastern U.S. markets. Gannett, the largest U.S. newspaper publisher, can keep assets in Phoenix, according to three people familiar with the ruling. Without the waivers, the companies may have had to sell properties because their TV-newspaper combinations weren't permitted, even after the FCC relaxed rules this week for some top markets.

Media General CEO Marshall N. Morton telephoned Kevin Martin, chairman of the Federal Communications Commission, on Dec. 14, four days before the agency relaxed the cross-ownership rules. Gannett's Craig Dubow met with Martin on Dec. 7. The talks were disclosed in filings at the FCC Web site.

``It's just part of working with the FCC,'' said Ray Kozakewicz, a spokesman for Richmond, Virginia-based Media General, publisher of 25 daily newspapers and 23 network- affiliated TV stations. He confirmed in an e-mail that the company won the four waivers.

FCC spokeswoman Mary Diamond declined to comment on which companies got waivers, saying details will be published later.

Media General advanced $1.06, or 5.1 percent, to $22.04 at 4:02 p.m. in New York Stock Exchange composite trading. The stock has fallen 41 percent this year. Gannett, based in McLean, Virginia, rose $1.07 to $38.62 and has declined 36 percent.

Media General said in a statement on Dec. 18 the FCC's decision recognized benefits of cross-ownership, such as increased local news where a TV and newspaper combine forces.


Opponents such as the Media Access Project, a Washington- based public interest law firm, criticized the waivers.

``This involves some of the smallest markets in the country where Media General's dominance is overwhelming,'' Andrew Schwartzman, the group's president, said an interview. He said Media General had been among the most active lobbyists at the FCC in recent weeks, ``with obvious success.''

The contacts with regulators capped campaigns by the companies to protect same-city newspaper-TV holdings they have amassed even though rules generally forbid such combinations.

Acquisitions in 1997 and 2000 brought Media General the TV stations in the communities where it won waivers: Johnson City, Tennessee; Panama City, Florida; Columbus, Georgia; and Florence, South Carolina.

In 2000, Gannett bought the Arizona Republic in Phoenix, where it already owned KPNX, one of the 23 U.S. television stations it operates.

Winning Exceptions

On the same 3-to-2 vote that granted the waivers, the FCC freed publishers to own both newspapers and a TV station in the 20 largest U.S. markets. The FCC also renewed 36 waivers in effect since the cross-ownership ban was established in 1975.

``The waivers are a plus,'' said Barry Lucas, an analyst at Gabelli & Co. in Rye, New York. ``It would alleviate concerns about potential forced divestitures.'' Lucas recommends investors buy Media General shares and doesn't own any himself.

According to the filings, Gannett's Dubow brought with him Richard E. Wiley, a former FCC chairman and a partner with Wiley Rein LLP, a Washington law firm that employed Martin before he was appointed to the commission in 2001.

Gannett wasn't alone in enlisting a former Martin employer. On Dec. 7, according to a filing, those meeting with Commissioner Deborah Taylor Tate on behalf of Media General included Harold Furchtgott-Roth, a former FCC member who employed Martin as an aide from 1997 to 1999.


Under FCC rules, Dec. 14 was the last date executives could lobby FCC officials before yesterday's vote. The agency's three Republicans, Martin, Tate and Robert McDowell, voted to loosen the rules and grant the waivers. Both Democrats, Jonathan Adelstein and Michael Copps, voted against.

Adelstein said in an interview yesterday that he received notice of the waivers the evening before the vote and that the markets receiving exceptions should have been studied more.

Martin on Dec. 18 said the waiver applications had been pending for several years. The companies presented ``significant evidence'' they had increased local news coverage, he said.

Tara Connell, a spokeswoman for Gannett, said the company has yet to receive official notice of a waiver. Gannett publishes 85 daily newspapers including USA Today.

``Ending the ban is important to us to be able to compete in this new media world,'' Connell said. ``Any communication with anyone at the FCC would be restating that idea.''

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