Rupert Murdoch's plan to add Long Island's Newsday newspaper to his News Corp empire likely would become the next lightning rod in a debate over how U.S. regulators decide on the number of media properties one company can own.

Tribune Co is close to a deal to sell Newsday to News Corp for about $580 million and put Newsday into a joint venture with News Corp's New York Post, sources familiar with the matter have said.

If News Corp did try to buy Newsday, the company might ultimately have to convince U.S. regulators to expand waivers that exempt it from some media ownership restrictions in the New York area, potentially sparking a backlash from media watchdog groups and some members of Congress.

"Adding Newsday clearly expands Murdoch's influence over local news coverage, and local news is the heart of the media consolidation debate," said Paul Gallant, an analyst with Stanford Washington Research Group.

U.S. media ownership rules generally restrict cross-ownership of a local newspaper and TV station in a single market. But News Corp has waivers from the Federal Communications Commission that let it own the New York Post, WNYW-TV in New York and WWOR-TV, which is based in northern New Jersey but also serves the New York market.

The Wall Street Journal, which News Corp bought along with Dow Jones & Co last December, is not subject to the ownership restrictions because it is a national newspaper.

News Corp needs no up-front permission from the FCC to buy Newsday, but the issue will come up when the company seeks FCC renewal of the licenses of its two TV stations in the New York market. News Corp filed renewal applications with the agency in June 2007.

"This could be a long process involving not just the Department of Justice and the FCC, but the courts, and indirect congressional intervention in the media ownership rules," said Stifel Nicolaus analyst Blair Levin.

The media consolidation issue flared up four months ago, when the FCC voted to loosen cross-ownership restrictions in the biggest 20 markets, including the New York area. In those markets, companies now can own a newspaper and a TV station.

But any further consolidation would face a "high hurdle," FCC Chairman Kevin Martin said at that time. Under the new rule, a company could get a waiver by, among other things, showing that a newspaper-broadcast combination would increase the amount of local news.

Martin called the move a "relatively minimal loosening of the ban" that could help ailing newspapers in big cities by spreading local news gathering costs across multiple media platforms.

Andrew Jay Schwartzman, president of the non-profit watchdog group Media Access Project, said a News Corp acquisition of Newsday would serve as "a test of whether FCC chairman Martin is going to hold firm or not.

"Our view has been the new FCC rules are riddled with loopholes. Chairman Martin has insisted that they will work and he will hold the line," Schwartzman said. "We will see."

News Corp likely would echo Martin's concerns in seeking to renew the TV station licenses after buying Newsday and argue "that you need to allow these combinations to allow newspapers to survive," Gallant said.

The FCC's two Democratic commissioners objected to the December 2007 vote to loosen restrictions, saying it would lead to more consolidation in the industry, eliminate independent voices and degrade local news coverage.

The two Democrats also said it created a loophole that would let media owners combine newspapers and broadcast outlets in many smaller markets around the United States, not just the top 20 cities. Existing FCC rules ban ownership of a newspaper and a television or radio station in the same market, unless the FCC grants a waiver.

Loosening of the media ownership rule has provoked a backlash among some lawmakers in Congress, who also oppose further consolidation of the U.S. media. They are trying to win approval of a resolution that would roll back the changes.

"Philosophically, Martin is inclined to approve this transaction. But he recognizes the volatile politics of media consolidation," Gallant said.