Trouble Brewing for Tribune Co.

Jul 10, 2006  •  Post A Comment

Consumer groups are aiming to do what the Chandler Trusts haven’t so far accomplished: force the Tribune Co. to sell off some of its newspapers or TV stations.

A new front in the ownership war — what to do about the 6-year-old Tribune purchase of Times Mirror and the cross-ownership violations it created in Los Angeles and Hartford, Conn. — is about to open as Congress considers revamping some cable franchising rules and the Federal Communications Commission launches a re-examination of media ownership rules.

When Tribune bought Times Mirror, it did a bit of gambling. Though FCC rules banned newspaper and broadcasters from licensing new cross-ownerships, Tribune bet the rules would change by the time the license of KTLA-TV in Los Angeles, WPIX-TV in New York and its Hartford station, WTIC-TV, came up for renewal. (Tribune later acquired a second Hartford station, then-struggling WTXX-TV, which it operated under a management agreement via an FCC waiver.) The Times Mirror purchase gave Tribune the Los Angeles Times, the Hartford Courant and Newsday, among other papers.

As it turns out, the cross-ownership issue isn’t yet decided, and the Tribune’s licenses for TV stations are now starting to come due. The first, for KTLA, must be filed by early next month — and current FCC rules say that license can’t be granted while the Tribune holds the L.A. Times.

Tribune will seek a waiver of the cross-ownership rules to allow it to keep both the Los Angeles newspaper and TV station. The waiver is expected to have the backing of FCC Chairman Kevin Martin, who has been outspoken in his criticism of the cross-ownership rules.

Consumer groups, however, contending that the rules haven’t been changed, are disputing the need for a waiver and gearing up for a fight.

“The basis for which waivers are granted is financial hardship and difficulty of effectuating a sale,” said Andy Schwartzman, director of the Media Access Project, a public interest law firm that successfully sought to overturn the FCC’s last attempt to rewrite media rules. “They’ve had five or six years to do something with the Los Angeles Times. It doesn’t make any sense.

“No one is going to say that any of their properties are distressed, with the possible exception of one Hartford television station, and no one is going to say they don’t have ready buyers. People are lining up to buy these properties.”

Mr. Schwartzman said consumer groups would likely sue to try to overturn any FCC wavier grant.

Mark Cooper, research director for the Consumer Federation of America, also predicted a suit: “I am certain that many in the public interest community will oppose the waiver. No doubt someone will sue.”

While the FCC has granted waivers before, consumer groups say that in general, past waivers permitted conflicts to exist until a license came due or until a property could be sold. They suggest a KTLA waiver could have broader implications.

Shaun Sheehan, Tribune’s VP of Washington affairs, in confirming the company’s plans to seek the waivers, said that while the FCC is re-examining its media ownership rules as a result of an appellate court decision, the court, while generally rejecting the FCC’s first ownership rules, indicated some support for removing the cross-ownership rule.

He also said that the rule hangs “by the thinnest of threads” in that it was adopted in 1975, well before the growth of competing media platforms changed the media landscape.

He also said the cross-ownership ban “never had a factual predicate,” or evidence that cross-owned properties offer any less news or public affairs programming than other stations.