Their defense was, if I recall correctly, that they weren't a "news station", but rather an "entertainment station."
Yeah, I think they got an entertainment licence for precisely that reason.
(They tried expanding to Canada. One reason they were rejected was because the CRTC wanted more homegrown content, so we got Sun News instead. The other reason was because they'd actually have to abide by our regulatory structure, the like of which doesn't exist in the US any more.)
We have the same thing in the UK. In order to receive funding from the government, TV channels have to uphold the 'public service' remit. Ie. they have to show a certain amount of factual, childrens, religious, science etc. programming each week. They also have to remain politically neutral.
That's the only thing the kept Murdoch from ruining the TV as well as print, hence why British TV and Radio news is a (debatable) paragon of integrity in the world and British print media is seen as a heap of derp and fail.
It's because the BBC were scared of what happened in the American radio market when that was set up. There was basically no regulation at all, there were several different stations per frequency, the bigger stations were able to crush the little ones through advertising funding which left the airwaves full of bullshit and snake oil. To avoid the same sort of chaos in the UK they decided there should be strict regulation of broadcast media to keep it civil.
The exact opposite was true of the UK newspaper industry. The Americans saw what happened in Britain when the newspaper tax was lifted and anybody with a press could churn out salacious nonsense and call it news, supported by the financial might of the 'press barons'. Thus, when American newspapers got going they stuck to a moral code of practice that keeps them comparatively noble to this day.
