Will Rupert Murdoch Buy The Los Angeles Times? Even He Doesn’t Know

Speaking backstage during a break at Sunday’s Golden Globe Awards, Murdoch told the Times that the Obama administration would never approve a deal for his News Corp. (Nasdaq:NWSA) to purchase the paper from the Tribune Company. “It won’t get through with the Democratic administration in place,” Murdoch said, according to Times reporters Meg James and Nicole Sperling.

Murdoch was referring to federal regulations that prevent unchecked media consolidation by limiting the amount of media properties that a single company can own in any given market. News Corp. already owns two television stations in Los Angeles: KTTV-TV Channel 11 and KCOP-TV Channel 13. Adding a newspaper into the mix would be illegal under Federal Communications Commission rules against cross-ownership.  

Nevertheless, Murdoch has been on the prowl for new media properties to bolster the publishing end of News Corp. as it splits into two separate publicly traded businesses later this year. The publishing end will keep the name News Corp., while the entertainment side -- which includes the far more profitable Fox News and 20th Century Fox -- will be known as the Fox Group. Because Murdoch will serve as chairman of both companies, his entertainment and publishing businesses will be seen by the FCC as existing under a single owner.

All hope for News Corp.’s L.A. expansion is not lost, however. Murdoch could apply to have the FCC regulations waived, as he did in 1993 when he purchased the struggling New York Post, despite already owning two television stations in the New York area. It was a hard-fought deal but one that was largely seen as having rescued the Post from financial ruin -- although the tabloid still remains unprofitable to this day.

The Los Angeles Times, similarly, has been plagued by frequent staff cuts and page-count reductions for the better part of the last six years, most recently in last March, when the paper reportedly laid off more than a dozen editorial staffers. Although its owner, the long-suffering Tribune Company, emerged from bankruptcy on Dec. 31, its resuscitation was not without conditions. According to Reuters, Tribune’s controlling owners -- Oaktree Capital and Angelo, Gordon & Co. and JPMorgan Chase -- plan to sell off most if not all of its newspapers, which also include the Chicago Tribune, the Baltimore Sun and the Orlando Sentinel.

Whether or not Murdoch has a shot at taking the Los Angeles Times off of Tribune’s hands will ultimately lie in the hands of federal regulators. However, it’s worth pointing out that the FCC chairman, Julius Genachowski, has indicated that he would be open to loosening the cross-ownership regulations that have been in place since 1975. Granted, not everyone would welcome such a change, particularly not media advocacy groups like Free Press, which has launched a petition calling on voters to tell the FCC they oppose further media consolidation. But let’s just say that if Murdoch gets his way, it wouldn’t be the first time.