U.K. media regulator Ofcom has proposed loosening the rules governing media ownership to allow local news providers to own different types of media.

In a document published Friday, Ofcom has recommended to the Secretary of State for Culture, Media and Sport, Ben Bradshaw, changes to the media ownership rules that reflect the economic issues the industry now faces as the Internet cannibalizes an already shrinking advertising revenue pool.

Local newspaper publishers like Trinity Mirror Gourp PLC (TNI.LN), Johnston Press PLC (JPR.LN) and the U.K. publishing arm of U.S.-listed Gannett Co. Inc (GCI) have faced plunging revenue as advertising sales migrate online or dissapear entirely because of the recession.

The regulator is proposing that all restrictions on cross media ownership are lifted except where a company owns a local newspaper with more than 50% market share, a local radio station and a regional ITV PLC (ITV.LN) licence.

Ofcom also proposed removing the rules that govern local and national radio multiplex ownership.

The recommendations take into account the fact that consumers still use television, radio and newspapers as their main source of local news even though there has been a change in the distribution channels that people can get their news from, specifically the Internet.

Ofcom recommended not to change the rules governing national newspapers and other restrictions designed to safeguard one broadcaster having undue influence, as well as the media public interest test, which allows the Secretary of State to step in to protect plurality of news.

Company Web site: www.ofcom.org.uk

-By Kathy Sandler, Dow Jones Newswires; 44-207-842-9293; kathy.sandler@dowjones.com