U.S. federal media ownership rules are making it difficult for lenders on Wall Street that have suddenly found themselves owners of newspaper, TV and radio companies after media firms go broke, the Wall Street Journal reported today. Restructuring talks have hit speed bumps, as lenders on Wall Street, never having anticipated such dire economic circumstances to have hit all media, are caught off guard by the rules.

The Federal Communications Commission's rules, created to cap concentrated ownership of media companies by regulating media sales, state that foreign ownership of a U.S. broadcaster is limited to 20 percent, or 25 percent if that ownership is through a holding company. Media cross-ownership is also limited, but it is allowed "under certain circumstances," according to the WSJ.

For example, the WSJ notes, J.P. Morgan may find itself a shareholder in both newspaper publisher Tribune Co. and an owner in media group Freedom Communications Inc., after it has already become the owner of Journal Register Co. due to Chapter 11 bankruptcy by its former owner. All three companies exist in markets that Citadel also has a presence in, including Los Angeles and Chicago.

Citadel Broadcasting Corp. recently offered to swap a large portion of its debt for equity to top lenders, including J.P. Morgan, GE Capital and ING Groep NV, with Citadel on Wednesday facing a deadline to pay US$2 million in interest, Reuters reported in a related article.