FCC Approves Tribune Co. Sale to Zell

Agency Grants Permanent Waiver for Chicago TV, Newspaper Ownership

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NEW YORK (AdAge.com) -- In a 3-2 party-line vote, the Federal Communications Commission has approved the Tribune Co.'s sale to investor Sam Zell and an employee stock-ownership plan, paving the way for the $8.2 billion deal to conclude by year-end.
Sam Zell
Sam Zell Credit: Bloomberg News

The FCC gave the company a permanent waiver in Chicago, allowing it to keep WGN-TV, WGN-AM and the Chicago Tribune, citing a long history of joint ownership in the city. It formally rejected similar waivers in five other markets where Tribune has newspaper and broadcast properties but directed temporary waivers be granted if 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 the same market from purchasing each other. The temporary waivers would last two years or until litigation concludes -- which could be years and years. They would let Tribune keep stations and newspapers in Los Angeles; New York; Southern Florida; and Hartford, Conn., until then.

Purchase threatened
The cross-ownership problems had threatened Mr. Zell's purchase of Tribune, raising the possibility that some newspapers or TV stations would have to be sold. Tribune had warned it needed to resolve the waiver issue by Nov. 30 to proceed with the deal.

FCC Chairman Kevin Martin is proposing that 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 everywhere except Hartford.

Tribune owns the Los Angeles Times and KTLA-TV in California; Newsday and WPIX-TV in New York; the Sun-Sentinel in Fort Lauderdale, Fla., and WSFL-TV in Miami; and the Hartford Courant and TV stations WTIC-TV and WTXX-TV in Hartford.

'Legal gymnastics'
Democratic commissioners Michael J. Copps and Jonathan Adelstein blasted the approval, saying that denying an application but then allowing waivers to be issued upon appeal of the denial subverts FCC rules and precedents. They said it appears mainly intended to let Tribune take a challenge of cross ownership to a friendlier court than the one 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," Mr. Adelstein said, calling the procedure "regulatory contortionism."

Mr. Copps said a banner headline about 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."

Benefits of cross ownership
Two Republican commissioners, Deborah Taylor Tate and Robert M. McDowell, said in their statement that the approval would allow consumers to get the benefits of cross ownership.

Dennis FitzSimons, Tribune chairman, president and CEO, in a statement: "We appreciate today's action by the FCC, which allows our transaction to move forward. 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."
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