Rupert Murdoch is facing off against the Federal Communications Commission (FCC) as he seeks to take control of two TV stations and three newspapers in New York -- including Newsday -- The New York Times reports. A December 2007 FCC rule allows a company to own just one paper and one television station in the same city in the top 20 markets so long as there are at least eight other independent sources of news and the station is not in the top four. (The stations that News Corp. (NYSE: NWS) controls are the fourth- and sixth-largest in the New York market).

Meanwhile, I am fascinated by the Wall Street Journal's [subscription required] coverage of the departure of its own managing editor, Marcus Brauchli, yesterday. The punch line was that everything is fine because Brauchli was simply doing what the boss wanted. Brauchli's new role? Providing "guidance to senior management in a wide range of areas," including whether Murdoch's Star-TV service in Asia should launch a business-news channel. Sounds like a good fit.

In contrast to the Journal's corporate press release on its page one, The New York Times reported that Brauchli was fired. It noted that a few weeks prior to his departure, Murdoch's henchmen indicated they were unhappy with the pace of change at the Journal. The Times wrote: "At some point, They told him, 'We don't think this is working,' and Brauchli replied that in that case, he should consider leaving."

On April 12th, I wrote about a Wall Street Journal piece that raised some interesting questions about American Apparel (AMEX: APP): CEO Dov Charney had taken the ambitious step of referring to the company's CFO as a "complete loser", and the company was also dealing with accounting issues, a substantial debt load, and more. The stock took a hit following the Journal piece.

American Apparel didn't issue any public rebuttal but, yesterday afternoon, DealBreaker published a letter sent by to the Wall Street Journal by director Adrian Kowalewski. Kowalewski wrote that "Our lawyers are currently pursuing this matter with News Corporation, so we have not yet issued a public statement." He went on to make the case that the company is in strong financial health and that, furthermore, Mr. Charney doesn't walk around the offices in his underwear, except for that one time, but that was part of a promotional video.

The financial issues and Charney's unconventional personality aside, American Apparel has put up some pretty spectacular growth numbers.

In a related story, Judge Judy is not a fan of American Apparel's racy ads.

It appears that News Corp (NYSE: NWS) will buy the largest newspaper on Long Island, Newsday, from The Tribune Co., increasing pressure on The New York Times Co. (NYSE: NYT) in its home market. News Corp already owns The New York Post. Recent press reports indicate that News Corp is adding more political and international content to The Wall Street Journal to better compete with the Times.

According to The Wall Street Journal, the price for Newsday could be about $580 million, and final details of the purchase or lack of government approval could still kill the deal.

Tribune needs to make the sale to cover debt it took on in its LBO.

The news is especially bad for The New York Times Co. While the Post does not take much advertising from the Times, it does have a circulation of over 600,000 in New York City. Newsday has a daily circulation of about 400,000 in the well-to-do area of Long Island, just east of New York.

The New York Times is already in enough trouble. It posted a loss last quarter, and in March advertising revenue fell about 11%. The firm's stock trades at $20, but many observers believe that it it were not the target of investors who hope to break it up or sell it that the shares price would be much lower.

The value of the company just got undermined again.

Douglas A. McIntyre is an editor at 247wallst.com.

MAJOR PAPERS:

• If the financial crisis hasn't crippled banks enough, the cost to build bank loan reserves may be just as painful, according to the Wall Street Journal's "Heard on the Street". The need for larger reserves is eating away at earnings and is showing up in first quarter reports for banks such as Bank of America Corporation (NYSE: BAC), whose results took an additional hit because of a $6B addition to its loan loss reserve.
• Just four months after Journal parent Dow Jones & Co. was bought by Rupert Murdoch's News Corporation (NYSE: NWS), Wall Street Journal managing editor Marcus Brauchli is expected to resign, according to the Wall Street Journal. Journal publisher Robert Thomson may temporarily take over until a new managing editor is hired.
• The Financial Times reported that Citigroup Incorporated (NYSE: C) is seeking advice from IT group Hewlett-Packard Company (NYSE: HPQ) on how to overcome a crisis without breaking up the company.

WEB SITES:

• According to Reuters, activist shareholders in ASM International (NASDAQ: ASMI) believe, by giving more equity to top managers, that they can boost its value by $1.6B.

The New York Times reports that Marcus Brauchli, managing editor of News Corp'.s (NYSE: NWS) Wall Street Journal is leaving his post. It does not appear to know whether he resigned or was fired. But a quick look at this morning's Journal tells me that Murdoch is determined to take business news out of the Journal and cover politics.

This morning's Journal doesn't have a single business story on the front page of its first section. The one business-like story, about Saudi Arabian oil supplies, is a thinly veiled defense of record high oil prices.

Increasingly since Murdoch took over, the Journal has featured stories on domestic and international politics on its first section. And it seems to have cut back on the kind of in-depth analysis of business stories or identification of new business trends that made the Journal a must-read for me.

In a move that's both sad and expected, The New York Times Company (NYSE: NYT) is planning to eliminate as many as 100 newsroom positions from its flagship paper.

The move follows cutbacks at the other major papers including the company's Boston Globe as well as The Los Angeles Times and Washington Post. Even though newspaper executives will babble on and on about the Internet, the industry is still a print business and that's the problem. Advertisers continue to find it more cost effective to shift their spending from traditional media onto the Internet. That trend will become even more prevalent as marketing budgets get squeezed in an economic downturn.

It's amazing that the New York-based publisher avoided these cuts until now. If the Sulzberger family didn't have a iron grip over the company through a dual-class ownership structure that minority shareholders have complained for years is unfair, the layoffs would have been much worse. Shareholders may pressure for even deeper cuts if there isn't an improvement in the company's stock which is down 27% over the past year.

TheStreet.com's Jim Cramer says to ignore the inflation worrywarts; the Fed needs to keep easing to keep things in check.

"Mounting Inflation Concerns Weigh on Fed's Next Move."

Here's where we need Rupert Murdoch to exert control over the Journal. Here's where we need some real intervention from someone with business sense.

That's right, because we have seen a "mounting inflation concerns" headline about the Fed pretty much every week since the easing began. It's become something like "DA Probes Rackets," when there's nothing else to write about.

Do you realize that we have had gigantic easings right after Fed frets of inflation or when some Fed head says nothing's wrong and the fundamentals are sound? Do you realize that even under Murdoch, there is no accountability for this stuff for anyone -- neither Fed nor the WSJ?

News Corporation (NYSE: NWS), Rupert Murdoch's media empire, today reported second-quarter profit that fell short of Wall Street expectation.

Net income was $832 million, or 27 cents per share, compared with $822 million, or 26 cents, a year earlier. Gains by MySpace along with higher fees by cable networks, including Fox News Channel, pushed up revenue by about 10% to $8.59 billion. Analysts expected earnings of 28 cents on revenue of $8.25 billion.

¿"We are obviously proud of the results we delivered during the second quarter, the highest operating income quarter in our history, but most important is the balanced nature of our earnings momentum with double-digit growth at nearly every operating segment," Murdoch said in the earnings press release.

After saying publicly that he planned to make The Wall Street Journal's website free and rely on advertising revenue to make up for lost subscriptions, Rupert Murdoch has changed his mind.

Speaking at the World Economic Forum in Davos, Switzerland, Murdoch said that the articles and sections "giving the greatest insights, that will still be a subscription service."

I guess we can assume that the paper's editorial page will be free now. Perhaps we will even be paid to read it.

News Corp. (NYSE: NWS) appears to have gone back and forth on this matter, and I doubt we've heard the last of it. Long-term, I still think that the WSJ website will end up being free. The increasing quality of online business coverage will make a WSJ subscription less of a necessity for many readers. But a free WSJ-website would instantly become the top business news site in America.

As the newspaper industry is assaulted by bloggers on one side and readers' decreasing willingness to pay for content on the other, the industry in searching for the right model.

Current trends show companies like the New York Times (NYSE: NYT) lowering or removing the "pay wall" between users and content. The NYT recently discontinued its Times Select section, which required subscription fees, and since then, traffic to parts of the site that previously required payment has increased greatly.

So, it's not surprising to read an article today in PaidContent.org that claims similar success with a change in the model at the Financial Times' website. PaidContent.org reports claims by staff at FT.com that admit to traffic and registration increases due to a recent change in the subscription structure.

"FT.com now allows readers coming in from blogs and other aggregators to read five stories a month for free and another 30 for free upon registering with the site," says PaidContent.org. After that, users would have to pay up.

The result?

When my grandfather of blessed memory, Jack Miller, started teaching me about investing over 30 years ago, he explained to me that investors invest in stocks for a couple of reasons:

1. Potential for stock appreciation
2. Corporate payouts in the form of dividends

When he died earlier this year at the ripe old age of 95, he left behind an investing legacy that witnessed numerous bulls and bears, the Great Depression and many fads that came and went. He was a purist: investing in good companies at good prices. To his last days, he was still managing his portfolio and even learned to use the Internet to conduct primary research.

My own investment style tends to skew towards technology investing. Tech companies have traditionally chosen not to return money to investors in the form of dividends but rather invest corporate profits back into the company to bull-up on growth opportunities.

The Wall Street Journal's [subscription required] David Wessel gets it. His analysis of the problems with the banking system and how to fix them are spot on. He thinks there are three steps to fix the system and I agree.

His three steps:

• Link banker's pay to the quality of the loans they originate
• Improve the quality of bank monitoring to increase transparency
• Stop letting the ratings agencies' clients pay for their ratings

I posted about these ideas last year. In this October 2007 post, for example, I commented on the importance of putting banker's compensation at risk when they originate loans. I thought that if bankers' bonuses were at stake, they would be more careful about the loans they originated. I also discussed the importance of transparency in reporting. And in this August 2007 post, I talked about how the ratings agencies were compromised by the fact that they were being paid by the people they were supposed to rate.

I like Wessel's ideas and I hope his powerful editorial pulpit helps to get them implemented.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

Sirius Satellite Radio (NASDAQ: SIRI) ended the year with 8.3 million subscribers, up 38%. The company would probably prefer to have had its merger with XM Satellite (NASDAQ: XMSR) approved, but the subscriber growth is a consolation prize.

Chief Executive Mel Karmazin told The Wall Street Journal, "Our gross subscriber additions in 2007 were the highest in the history of satellite radio."

That still leaves open the question of whether Sirius is a viable company without the merger. It lost $121 million last quarter and it has long-term debt of almost $1.3 billion.

Some analysts believe that the merger will bring savings. But, the talent on the two satellite networks is not likely to want to take pay cuts. The new company would also have to run two networks for some period because the systems are not comparable.

The subscriber additions are nice news, but the company is still a long way from being viable.

Douglas A. McIntyre is an editor at 247wallst.com.

MAJOR PAPERS:

• Netflix Inc (NASDAQ: NFLX), the DVD rental firm, and LG Electronics, have formed a partnership to have movies delivered over the Internet by Netflix to also be shown on TV screens via a new device, reported the Wall Street Journal. Efforts by Apple Inc (NASDAQ: AAPL) have not worked.
• According to people familiar with the situation, Ford Motor Company (NYSE: F) is expected to indicate as early as today it will focus attention on Tata Motors as a bidder for its Land Rover and Jaguar units, the Wall Street Journal reported.

WEBSITES:

• After Intel Capital's (NASDAQ: INTC) president, Arvind Sodhani, resigned from the board of Clearwire Corporation (NASDAQ: CLWR), speculation began that Intel has some new plans in the Wimax arena that don't involve Clearwire, according to TheInquirer.net.
• Tech Crunch reported that Plaxo, an early social networking site with per-visit numbers comparable to that of Facebook, is for sale, and has hired Revolution Partners to handle the effort.

MAJOR PAPERS:

• The Wall Street Journal's "Deal Journal" reported that Sam Zell's planned buyout of Tribune Company (NYSE: TRB) is contingent on the receipt of a solvency opinion, and that this is the first time they have ever seen a deal dependant on this.
• The WSJ's "Heard on the Street" reported that Countrywide Financial Corporation (NYSE: CFC) may not be out of the woods yet. Despite executives promising a return to profitability, there is still a risk the company may eventually seek bankruptcy protection or "resort to huge sales" of new stock.
• U.S. private equity group JC Flowers "is understood" to have walked away from the auction for troubled bank Northern Rock, the Financial Times reported.
• Rupert Murdoch is shaking up the management of News Corp (NYSE: NWS.A), the Financial Times reported, giving his son, James Murdoch, control over the company's European and Asian operations, and appointing two trusted executives to lead Dow Jones & Company Inc (NYSE: DJ) and the Wall Street Journal.

WEB SITES:

• Barron's Online's "Weekly Trader" said AutoNation Inc (NYSE: AN) looks attractive now, despite hovering near a multi-year low. The company has also been on a slow but steady quest to diversify away from unpopular domestic brands by snapping up luxury and import dealerships.