Tribune Accused of 'Gaming' Sale to Avoid Cross-Ownership Rules

Consumer Groups Argue FCC Should Block Transfer of TV Stations to Zell

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WASHINGTON (AdAge.com) -- A consumer's group and a religious group active in Federal Communications Commission media-ownership issues are petitioning the FCC to deny Tribune Co.'s bid to sell itself to an employee group but hold on to its TV stations in Chicago, Hartford, Los Angeles, Miami and New York.
Sam Zell
Sam Zell Credit: Bloomberg News

License transfers
Calling the proposed $8.2 billion sale of the media company to an employee stock-option plan and venture capitalist Sam Zell "entirely voluntarily," the United Church of Christ and the Media Alliance said the Tribune has "gamed" the FCC regulatory process. The groups questioned the legality of the Tribune's request for waivers to keep its TV stations while the FCC reviews its media-ownership rules. They urged the commission to either entirely reject the license transfers to the new owners, or condition them on the stations' sale.

"The proposed transaction is entirely voluntary. Tribune decided to put itself up for sale and chose the matter in which it did so," said the groups' filing.

Calling the sale's structure "mind-boggling and complex" and describing it as a tax-efficient restructuring aimed at maximizing shareholder value, the groups contend the Tribune offers no "serious argument" that a waiver of the rule benefits the public or does anything other than minimize the company's burden.

"Simply put, Tribune may not advance its private interests at the expense of the public," the filing said. "The commission is charged with taking action in the public interest, not with protecting the private interests of those who volunteer to be commission licensees."

Long-running fight with FCC
The petition represents the biggest battle yet in a long-running Tribune fight over the cross-ownership rule that began with the company's purchase of Times Mirror in 2000.

That purchase and another left the Tribune in violation of the FCC's ban of a newspaper and broadcast company buying each other in the same market. Those markets include New York (Newsday and WPIX-TV); Los Angeles (Los Angeles Times and KTLA-TV); Hartford (Hartford Courant and now two TV stations, WTIC-TV and WTXX-TV), and South Florida (South Florida Sun-Sentinel in Fort Lauderdale and WSFL-TV in Miami).

Chicago now joins that list as the potential ownership change eliminates a grandfather provision the company enjoyed that allowed it to hold onto the Chicago Tribune and WGN-TV, which pre-dated the FCC's cross-ownership rule.

Tribune did not immediately return a request for comment. In the past the company has contended the cross-ownership rule is outdated, failing to reflect the number of news sources now available to the public and that joint ownership like that in Chicago benefits local residents.

Shaun Sheehan, VP-Washington affairs for the Tribune, called the cross-ownership rule outmoded. "In 2004, the Federal 3rd Circuit wrote that on major-market cross-ownership, the commission got it right. Anyone alive today if concerned about free broadcasting would vote for relief and the jettisoning this Nixon Administration anti-Washington Post affront to the First Amendment," he said.
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