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FCC Waiver Allows Tribune Deal to Proceed

Dec 2, 2007  •  Post A Comment

The Federal Communications Commission on Friday, on a 3-to-2 party-line vote, approved the Tribune Co.’s sale to investor Sam Zell and an employee stock ownership plan, allowing the $8.2 billion deal to go forward by year end.
The FCC gave a permanent waiver to the new company keeping WGN-TV and WGN-AM and the Chicago Tribune in Chicago, citing the long history of joint ownership in Chicago. It formally rejected similar waivers in five other markets where the Tribune has both newspaper and broadcast properties, but directed temporary waivers be granted while the company appeals the rejection.
In a press release, FCC officials said granting unlimited waivers was inappropriate while the agency considers changing a cross-ownership rule that has banned newspapers and broadcasters in a market from purchasing each other.
The temporary waivers would last two years or until litigation over the current ownership rule concludes—which could be years from now. The waiver allows Tribune to keep stations and newspapers in Los Angeles, New York, South Florida and Hartford, Conn., until then.
The cross-ownership problems had threatened Mr. Zell’s purchase of Tribune, raising the possibility that the company would have to sell some of its newspapers or TV stations. Tribune warned it needed resolution of the waiver issue by Friday to proceed with the deal.
Tribune in a statement said the deal would now move forward.
“We appreciate today’s action by the FCC, which allows our transaction to move forward,” said Dennis FitzSimons, Tribune chairman, president and chief executive officer. “We look forward to implementing the new ownership structure that will enable us to focus all of our energy and resources on Tribune’s future.”
FCC Chairman Kevin J. Martin is proposing commissioners vote on Dec. 18 to ease the cross-ownership rule in the top 20 media markets. That change would end Mr. Zell’s problems in all cities but Hartford.
Tribune owns the Los Angeles Times and KTLA-TV; Newsday and WPIX-TV in New York; the Sun-Sentinel in Fort Lauderdale and WSFL-TV in Miami; and the Hartford Courant and TV stations WTIC-TV and WTXX-TV.
Democratic commissioners Michael J. Copps and Jonathan Adelstein blasted the waiver approval. They said that denying an application but issuing waivers upon appeal of the denial subverts all FCC rules and precedents. They also said the move appears intended to let the Tribune take a challenge of cross-ownership to a court that is more friendly than others that overturned the FCC’s last bid to ease media ownership rules.
“The order employs certain novel, ill-advised and back-breaking legal gymnastics that will surely leave observers with their heads spinning,” said Mr. Adelstein, calling the procedure “regulatory contortionism.”
Mr. Copps said the banner headline on the order should read, “FCC Majority Uses Legal Subterfuge to Push for Total Elimination of Cross-Ownership Ban.”
”What does this order do? It denies the waiver request but offers an automatic (and unprecedented) waiver extension as soon as Tribune runs to the courthouse door. Presto! Tribune gets a waiver plus the ability to go to court immediately and see if they can get the entire rule thrown out. And most important, Tribune is not required to seek a hearing before the very court which expressly retained jurisdiction when it remanded the general newspaper-broadcast cross-ownership ban,” Mr. Copps said.
Two Republican commissioners, Deborah Taylor Tate and Robert M. McDowell, in a statement said the approval would allow consumers to get the benefits of cross-ownership.

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