By Alina Selyukh
WASHINGTON (Reuters) - The U.S. Federal Communications Commission has withdrawn a proposal to relax the ban on owning several media outlets in the same media market, an FCC official said on Tuesday.
For decades, U.S. media markets have operated under rules that prohibit one owner from controlling both a newspaper and a television or radio station in a single market.
More than a year ago, the previous FCC chairman, Julius Genachowski, circulated a proposal that would have relaxed the ban, eliminating the restrictions on one owner controlling a radio station and a newspaper in the same market.
The current chairman, Tom Wheeler, took Genachowski's proposal off circulation on December 6, an FCC official said, adding that the agency would soon follow up with further actions on the matter.
Congress requires the FCC to reassess its media ownership rules every four years to make sure they are in the public interest. The ongoing 2010 quadrennial review is now butting into the new 2014 one. Wheeler's proposals are expected to be part of the new quadrennial review.
Many FCC staff and industry insiders have long said they had given up on any major change coming from the 2010 review. Wheeler had been expected to close the current proceeding or merge it with the new one on his own terms.
The details of Genachowski's proposal were never made fully public and, according to sources familiar with the proceeding, Genachowski left the FCC without even casting his own vote on the proposal after failing to corral the unanimous support of the other two Democratic commissioners.
The matter has become a hot and sensitive topic.
Those who favor relaxed rules argue they are necessary to let big media companies with TV-driven profits invest in and revitalize the struggling newspaper industry. Those who support current or tighter rules say that without restrictions, corporations might marginalize women and minorities.
Both the broadcasting and the newspaper industries have urged more flexible rules in hopes of spurring investment.
Several previous chairmen had made such proposals, but courts told the FCC it did not properly study the impact of the rules on diversity of viewpoints and diversity of media owners.
The U.S. media marketplace, in the meantime, has seen continued consolidation among newspaper and broadcast companies in part thanks to the waivers the FCC has issued in some of the biggest markets.
This year, Los Angeles Times and Chicago Tribune publisher Tribune Co announced plans to buy 19 TV stations, and the largest newspaper chain, Gannett Co Inc, announced a deal to buy Belo Corp and its 20 local TV stations.
The FCC in February delayed its vote on the Genachowski proposal to wait for an outside study that looked at how female and minority broadcasters were affected by cross-ownership.
Released in May, the study from the Minority Media and Telecommunications Council found female and minority broadcasters did not appear concerned about one owner controlling newspapers, radio and TV stations in the same market.
But the study faced an outcry from public interest groups, and the review of FCC's rules was paused as Genachowski left.
The FCC has since also launched a study of Americans' information needs and another on the Hispanic TV market.
The agency is also considering relaxing the limits on foreign investment in U.S. broadcast companies.
(Reporting by Alina Selyukh; Additional reporting by Sakthi Prasad and Rohit T.K. in Bangalore; Editing by David Gregorio)