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By the Project for Excellence in Journalism

The debate over which model of ownership best suits news media continued in 2007.

As smaller new-media businesses appeared, media deals closed in on a record $100 billion in value, but Wall Street was hardly bullish, and while it looked for long-term strategy, it also put a high value on short-term profits.

In newspapers, the roster of public newspaper companies that have disappeared since 2000 now has risen to four, with Tribune and Dow Jones joining Pulitzer (acquired by Lee in 2005) and Knight Ridder (acquired by McClatchy in 2006). Two more public companies – Belo and Scripps – plan to split in two in 2008, particularly separating print from television to add value to the more profitable and/or faster-growing parts of their holdings.

Things looked healthier for one public company. Rupert Murdoch’s News Corp bucked the pessimism about newspapers and set off familiar alarms over quality and editorial independence with its takeover of Dow Jones, publisher of the Wall Street Journal. Murdoch also launched his long-awaited business channel on cable, with limited fanfare, trying to keep expectations low and patience high.

But other owners who made acquisitions, such as Sam Zell of Tribune Company, borrowed heavily to finance the deals and face substantial debt and credit issues.

In magazines, Time Warner, owner of long-dominant newsmagazine Time, now shares the No. 1 spot in terms of revenue with Advance, owner of Condé Nast magazines. Both bring in more than $3 billion in annual magazine revenue. Hearst is third at $2 billion. Aside from Time Warner, with its legacy ties to magazines, the sector is not dominated by the largest media companies in America. Smaller companies are bigger players here.

In network television news, owners all made acquisitions, joint ventures or cutbacks in response to sagging stock prices. The situation was better in local television, where stations were vigorously bought and sold. On the regulatory side, Federal Communications Chairman Kevin Martin, perhaps sensing a possible Democratic victory in the presidential election, forced a late-year – and successful, along strict party lines —vote in his drive to relax ownership rules.

In radio, Clear Channel Communications may have started a trend when it went private and began divesting its stations in 2006; its closest competitor, Cumulus, is moving in the same direction. The sole satellite radio providers, Sirius and XM, fight on for a merger that they hope will provide success and profits.

Which companies dominate the online industry? It depends on which criteria you use to measure.

By revenues, three players in particular dominate: Google, Yahoo and Time Warner (which owns both AOL and CNN).  All three companies continued to increase revenue in 2007, but Google’s rate of growth (56%) for the year was far greater than what it was at either Yahoo (8%) or Time Warner (6%).

In terms of audience for news, four sites continued to generate the most unique visitors: Yahoo News, MSNBC, CNN and AOL News. Yahoo News, according to Nielsen Online data, averaged 32.6 million unique visitors a month in 2007, up 15% from its 2006 average. At No. 2, averaged 29.2 million unique visitors a month in 2007 (up 14%). averaged 29.1 million a month in 2007 (up 20%). Next came AOL News, which depending on the rating company, averaged between 20 million and 23 million a month, also growing.

But even in the infinite digital world, the model of a limitless marketplace for competition does not appear to be holding up. While Google continued to dazzle Wall Street through most of 2007, Yahoo and AOL fell farther behind their rival and failed to calm investors’ anxieties. As 2008 began, the prospect of a Yahoo-Microsoft merger began to dominate the business pages, a sign of just how rapidly things in that industry can change. In less than a generation, Microsoft has become the slow-moving giant, much like the one it once helped bring humble — the IBM of its age. And, at only 13 years old, Yahoo is now trumped by a younger Google.

All of this activity has raised the question of whether overseas buyers might be interested in American media companies, a prospect that could boost stock prices but raises cultural questions. With a weak dollar, American newspapers appear ripe for picking by foreign investors in 2008. Thrillers have been written with plots of intrigue about shadowy foreign owners trying to influence American hearts and minds through U.S. media properties. To date, though, except for a few Canadian ownership groups, it hasn’t happened. Perhaps investors sense that distant ownership would not go over well with hometown audiences.