TV inquiry could mean end of Fox, says News Corp

NEWS Corporation officials in the US yesterday warned of 'the likely demise' of its Fox Broadcasting network if US regulators force changes in its ownership of the six television stations at its core.

The US Federal Communications Commission unexpectedly announced yesterday that it was reviewing the original 1985 purchase of the stations from Metromedia. The move came a week after News Corp announced that it planned to spend dollars 500m to bring 12 more stations into its network.

The FCC said new information about the deal raised concerns about foreign control of the stations. Rupert Murdoch, News Corp's chief executive, personally bought the Metromedia stations after taking US citizenship to accommodate the foreign-ownership rules. But last week it emerged that 99 per cent of the purchase price was provided by Sydney- based News Corp.

A ruling interpreting this economic interest as equity ownership would not only require a restructuring of the stations' holding company but could also scupper the Fox network's latest move to extend its reach to 12 new TV markets.

News Corp hopes to circumvent the foreign-ownership rules by buying a 20 per cent non-voting stake in the company that owns the stations, New World Communications, which would then change their affiliation from the established US networks to Fox. This would give the fourth-ranked network almost 200 outlets.

Wall Street analysts and News Corp officials sought to play down the possibility the FCC will act on the complaint, which arose as a result of a protest by the National Association for the Advancement of Coloured People over a Fox bid for a Philadelphia TV station earlier this year.

The association, which argues the stations should be awarded to minority rather than foreign owners, unsuccessfully challenged Mr Murdoch's right to own the New York Post newspaper and the Fox affiliate in New York City.

News Corp said Mr Murdoch's original application for the stations 'clearly stated that the funds for the acquisition would be supplied by News Corporation through loans and capital contributions. There have been no material changes in the facts.'

A media analyst with Smith Barney Shearson said there was a feeling that Fox had had a run of good breaks from regulators. But the Clinton administration clearly supported the development of a fourth network, he added.