News Limited chief executive Kim Williams has attacked the federal government's changes to media ownership and press standards laws as a politically motivated attempt to "gag the media".

Mr Williams lashed out at the reforms announced by federal Communications Minister Stephen Conroy on Tuesday, which include the creation of a Public Interest Media Advocate to monitor activity in the sector.

"This government will go down in history as the first Australian government outside of wartime to attack freedom of speech by seeking to introduce a regime which effectively institutes government-sanctioned journalism," Mr Williams said in a statement.

Senator Conroy said the advocate would rule on media industry mergers and acquisitions, subject to a "public interest test".

The advocate will also "authorise" self-regulatory media industry bodies, such as the Press Council, to ensure that media companies "live up to their own standards".

Companies that did not meet self-regulatory criteria would not be "declared" by the advocate and would not be protected under current privacy laws.

Mr Williams said threatening to remove privacy law exemptions was "a not too sophisticated endeavour to gag the media" and called the public interest test a "political interest test which governments will use to punish outlets they don't like".

Fairfax Media chief executive Greg Hywood said in a statement he could not see the purpose of further regulation of news publications.

"Exactly what's going to happen is unclear based on today's press release," Mr Hywood said.

The reforms, which form the federal government's response to the Convergence Review and the Finkelstein Inquiry into media independence, also leave open the possibility of a tie-up between Southern Cross Media and Nine Entertainment.

The "75 per cent reach rule", which restricts media organisations to broadcasting to no more than three-quarters of Australia's population, is to be reviewed by a parliamentary committee next week.

While free-to-air TV broadcasters welcomed a move to make permanent a 50 per cent reduction in commercial licence fees, Ten Network boss Hamish McLennan blasted the review of the 75 per cent rule via a proposed one-day inquiry as "ill-conceived".

"The fate of the reach rule is critically important in terms of media diversity and local news services in regional Australia," Mr McLennan said.

"It cannot and should not be dismissed with a quick and dirty one-day inquiry."

Mr McLennan also criticised the government plan to introduce a public interest test for major media mergers and acquisitions as "unworkable and unnecessary".

Shares in media companies mostly ended lower on Tuesday however Southern Cross Media shares added 2.7 per cent.

Southern Cross's programming supply agreement with Ten Network ends in mid-2013 and there has been speculation that it could strike a new agreement with Nine Entertainment.

Removal of the 75 per cent rule would open the way for a merger between Southern Cross and Nine.

It would also potentially allow Seven West Media to move on regional affiliate Prime.

BBY media analyst Mark McDonnell said the new requirement for commercial TV operators to broadcast an additional 1,490 hours of Australian content by 2015, in return for the permanent halving of licence fees, was a hidden sting for running costs.

"If you are talking notionally about, say, $100,000 an hour to make an Australian program, for 1,490 hours that's not exactly trivial," Mr McDonnell said.

Mr McDonnell also warned that there was no guarantee the 75 per cent rule would be removed.

"There's going to be a bit of horse-trading ... around content," he said.

Local news and current affairs programming in regional areas is an area of particular sensitivity.