A sharply divided Federal Communications Commission voted yesterday to relax a 32-year-old rule that prevented a company from owning both a newspaper and broadcast station in the same market.

Public-interest advocates say the move will further consolidate power among a handful of media giants, while industry officials say it doesn't go nearly far enough.

FCC Chairman Kevin Martin said the move is aimed at slowing the bleeding in the newspaper industry, which has seen circulation and ad revenue steadily fall.

"Consumers have benefited from the explosion of new sources of news and information," Martin said, citing growth in cable TV and the Internet that he said make the old rules obsolete.

In a 3-2, party-line vote, the FCC's Republican majority agreed to allow linkups of a newspaper and TV or radio station in the nation's 20 largest markets as long as they don't involve any of the top-four TV stations.

Mergers in smaller markets or involving a top-four station could be approved if certain criteria are met. For instance, a newspaper or broadcast station would have to show that it's failing, or that a TV station with no local news would start airing seven hours a week.

Martin toughened those criteria Monday, but FCC Democrats were not mollified. Democrat Michael Copps said the exceptions have "the firmness of a bowl of Jell-O" and will prompt mergers in "towns big and small," leading to less local news and fewer voices. "The real losers are going to be all of us who depend on the news media."

Sen. Byron Dorgan, D-N.D., vowed to introduce legislation to overturn the changes.

But John Sturm, head of the Newspaper Association of America, called the move a "baby step," adding that "the record clearly points to full repeal of this rule."

Analyst Paul Gallant of Stanford Group says the FCC initiative could spark purchases of single newspapers or TV stations by giants such as Gannett (publisher of USA Today and owner of The Honolulu Advertiser), Media General and Belo. But he says uncertainty over whether waivers would be granted will prevent big deals involving multiple TV stations.

Democrats also criticized Republicans for granting waivers to six cross-ownership setups operating under exceptions that violate the FCC's new guidelines. The FCC said they produce more local news. Andrew Schwartzman of Media Access Project said the FCC "acceded to last-minute lobbying from media giants."

Separately, the FCC reinstated a rule preventing a cable company from serving more than 30 percent of U.S. pay-TV subscribers. An appeals court tossed out the rule in 2001, saying the FCC hadn't justified it. It largely affects Comcast, which serves 27 percent of U.S. subscribers. But Sanford C. Bernstein analyst Craig Moffett says the industry has no interest in consolidating anyway.

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