The proposed $717 million purchase of the Evening News Association by Gannett Co. Inc. raises unusual media cross-ownership questions for the Federal Communications Commission because of the national distribution of USA Today, according to several leading media attorneys.
Longstanding Federal Communications Commission rules essentially prohibit the cross-ownership of a newspaper and either a radio or television station in the same market. A newspaper in this case is defined as a "generally circulated" English-language publication appearing more than four times a week in the community where it is printed.
Those "duopoly" rules are part of an FCC policy intended to help assure that there is a diversity of media ownership in a given market.
However, those rules were created before nationally distributed daily newspapers such as USA Today emerged. Though it still loses millions of dollars a month, USA Today has captured a circulation in excess of 1.33 million around the country and is now the third-largest daily newspaper in the United States behind The Wall Street Journal and the New York Daily News.
Since the ENA acquisition would give Gannett television properties in Austin, Texas; Oklahoma City; Mobile, Ala., Tucson, and Washington, D.C., there are questions whether USA Today -- which is distributed in all of those cities -- would violate the FCC cross-ownership rules.
"A national newspaper in the context of a duopoly is clearly an issue that the commission has not faced yet," said a top-ranking FCC staff official. "We will have to look at that issue when the Gannett/ENA papers are filed. We may intitiate our own review or we may have to respond to petitions to deny the transfer of broadcast licenses ."
Because USA Today is currently printed in Springfield, Va., which is in the Washington metropolitan area, and the newspaper is generally circulated throughout the community, it appears to conform to the FCC definition of a local newspaper. This could require Gannett to seek a waiver for its acquisition through ENA of WDVM-TV (Channel 9), the Washington CBS television affiliate.
Technically, under existing FCC rules, the conflict could exist anywhere Gannett has both a broadcast property and a USA Today printing plant.
While Gannett has stated that it "will comply with all government regulations on media ownership," the company does not believe that USA Today creates any problem for its acquisitions of broadcast properties.
"We have been advised by our FCC counsel that the rule does not effect the USA Today newspaper," said Douglas H. McCorkindale, Gannett vice chairman and chief financial officer. "The rule is designed to prevent dual ownership in local markets. The nature of the market we're talking about is national."
Similarly, a Gannett legal adviser argues that, "The FCC's concern in the past has been with local media concentration -- egregious cases of one person owning the only newspaper and television outlets in town -- USA Today is a national medium like a newsmagazine."
However, another leading media attorney, who asked not to be identified, insists, "I think it's a hell of a point. The rule was never structured in terms of a media monopoly -- it says any television station or any radio station. To suddenly say 'we didn't mean it' begs the question."
The attorney suggested that an FCC waiver might be necessary.
The New York Times Co., which is now distributing the New York Times nationally and owns broadcast properties in cities ranging from Scranton, Pa. to Moline, Ill., has not yet run afoul of the FCC's media cross-ownership provisions as it continues to expand the Times's distribution.
Dow Jones, the publisher of nationally distributed Wall Street Journal, does not own broadcast properties.