Analyst: Newsday Buy Should Clear D.C. Hurdles

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Washington—Cablevision’s $650 million purchase of the venerable Long Island newspaper Newsday shouldn't face high regulatory hurdles in Washington D.C., according to one media analyst.

“As best we can determine, the Federal Communications Commission would have no jurisdiction to directly review the transaction because there do not appear to be any communications licenses that would have to be transferred and require regulatory approval," Stifel Nicolaus analyst Blair Levin said in a client note hours after the deal was announced.

The FCC regulates common ownership of newspapers and television or radio stations in the same local market. The agency does not regulate the joint ownership of cable systems and newspapers in the same local market.

Cablevision, the dominant cable TV provider on Long Island (Nassau and Suffolk Counties), agreed Monday to pay $650 million to Tribune Co. for 97% of Newsday.

In his client note, Levin said that if the Justice Department reviews the deal, Cablevision probably would not face a tough ordeal.

“We do expect the deal to face some antitrust scrutiny, presumably from the Department of Justice, but because Cablevision does not own newspapers, we believe the DOJ is unlikely to give it a difficult review," Levin said.

Levin was one of the a few analysts to bet that the Justice Department would not attempt to block the satellite radio merger between XM and Sirius despite strong political opposition from incumbent radio stations.

Levin said that if Cablevision's control of Newsday were to ignite a new round in the media ownership debate, the cable operator would likely come out ahead because Newsday would not end up in the hands of Rupert Murdoch's News Corp., owner of the Wall Street Journal, the New York Post, and two TV stations in the New York market.

“There could also be some political blowback on the general issue of media concentration, but we believe that really awaits the election and will not affect the transaction. Moreover, given that the other potential bidders were News Corp. and the owner of another New York newspaper, even that blowback is likely to be limited, in our view,” Levin said.

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