Australian media giant Rupert Murdoch moved one step closer to the creation of a global broadcasting and publishing empire yesterday when Metromedia Inc. announced it has agreed to sell him its chain of major independent television stations, including WTTG-TV (Channel 5) in Washington, for more than $2 billion.
If Murdoch and his partner, Denver oilman Marvin Davis, receive government approval to complete the purchase, they will assume control of major independent television stations in New York, Los Angeles, Chicago, Dallas and Houston as well as Washington, with access to about 21 percent of the nation's television audience. As part of the complex transaction, Hearst Corp. would acquire Metromedia's Boston television station, an ABC affiliate, from Murdoch and Davis for about $450 million in cash.
While Murdoch would be forced to divest some of his media properties in the United States and possibly in Australia to comply with various restrictions on ownership, his vast remaining holdings would include well-known newspapers, magazines and television stations in Australia, Europe and the United States.
Murdoch and Davis became partners earlier this year when Murdoch bought half of Twentieth Century-Fox Film Corp. from Davis, who still owns the other 50 percent. The Metromedia television stations likely will be used as outlets for Twentieth Century-Fox productions, creating a cost-effective broadcasting network at a time when many independent television stations are searching for ways to hold down the spiraling cost of obtaining programing.
Murdoch's publishing holdings in this country include The Chicago Sun-Times, The New York Post, The Village Voice, The Boston Herald, The San Antonio Express and New York magazine. Federal Communications Commission regulations prohibiting ownership of daily newspapers and television stations in the same city probably would force Murdoch to sell The New York Post and The Chicago Sun-Times if he keeps two of the stations he's acquiring, WNEW-TV in New York and WFLD-TV in Chicago.
In Europe, Murdoch owns Sky Channel, Europe's first commercial cable television network, which already is carrying programing including "Dallas" to millions of viewers throughout the continent. In Britain, Murdoch publications include The Sun, the largest circulation daily in the country, and The Times of London.
To meet FCC restrictions on foreign ownership of television stations in this country, Murdoch plans to become a naturalized U.S. citizen. This probably would force him to sell some of his media properties in Australia, which also has rules restricting foreign ownership of radio and television stations, as well as newspapers.
In Australia, Murdoch owns The Australian, a national newspaper, in addition to The Daily and Sunday Telegraph, The Daily Sun and other newspapers, magazines and two television stations.
The FCC, which is the major regulatory hurdle to Murdoch's acquisition of the Metromedia television stations, yesterday said that as long as Murdoch followed the agency's rules, it would approve the $2 billion deal.
As long as Murdoch becomes an American citizen and fills out a broadcast license transfer application that leaves ample time for public comment, "I don't see any bar to his becoming an important American owner," said one commissioner. "We are going to have a new telecommunications tycoon that is a former Australian and the fourth largest U.S. broadcaster ," he said.
The completion of Murdoch's acquisition of Metromedia's television stations could take at least three months. Once an application is filed at the FCC, there will be a 50-day public comment period. Then the commission staff must look at how the deal is structured before transferring broadcast licenses to Murdoch.
FCC sources said Murdoch may request an 18-month interim period to divest newspapers that raise a conflict with the FCC's rules. Under those rules, no one entity or person may own daily newspapers, radio stations and television stations in the same market. Murdoch could retain a 5 percent or less interest in his newspapers without conflicting with those FCC cross-ownership rules.
"New York magazine would unlikely conflict; it is a national magazine and does not serve just the local area," one FCC commissioner said. Likewise, The Village Voice may not have to be divested because cross-ownership restrictions only apply to newspapers published at least four times a week and the Village Voice is published only once a week, FCC sources said.
Murdoch also may have to divest himself of Australian newspapers, according to the Australian Consulate in New York. Murdoch and his family own major Australian newspapers through a holding company called News Corp.
Under Australian law, an alien may not control more than 15 percent of a radio or television station, and two or more aliens together may not control more than 20 percent of a station, the consulate said.
A British Embassy press officer said Murdoch would be allowed to retain his British media holdings regardless of his citizenship.