Zell's Tribune May Get Pass From FCC

Proposal to Waive Cross-Owner Restrictions So Deal Can Close

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WASHINGTON (AdAge.com) -- Federal Communications Commission Chairman Kevin Martin has proposed the agency temporarily waive its media cross-ownership rules so a deal for the Tribune Co. can go through.
Sam Zell
Sam Zell Credit: Bloomberg News

In a press conference today, Mr. Martin cited the "unique circumstances" of the Tribune deal in proposing the FCC waive the rule for two years or until litigation over cross-ownership is resolved, which could be years. The FCC could grant the waiver by Friday.

An $8.2B acquisition
Investor Sam Zell and an employee stock-ownership plan are trying to close their $8.2 billion acquisition of Tribune Co., by year end, but have been on hold awaiting needed FCC action. Once complete, the deal would put the new company in violation of the existing cross-ownership rule in Los Angeles, where the company owns the Los Angeles Times and KTLA-TV; in New York, where it owns Newsday and WPIX-TV; in Southern Florida where it owns the Sun-Sentinel in Fort Lauderdale and WSFL-TV in Miami; in Chicago where it owns the Chicago Tribune and WGN-TV and WGN-AM; and in Hartford where it owns the Hartford Courant and TV stations WTIC-TV and WTXX-TV. The cross-ownership rule prevents the owner of a newspaper from buying a broadcaster in the same market.

Mr. Martin today noted he has proposed a change in the FCC's cross-ownership rule that would allow cross-ownership in the top 20 markets and that the rule is currently slated for a FCC vote Dec. 18. Noting that the Tribune needs a waiver approved by Friday for its deal to close this year, he said he proposed the waiver late last night to other FCC commissioners.

He suggested the waiver would be applicable in the unusual circumstances of the Tribune, but would not necessarily apply to any other forthcoming deals.

'Unique' situation
"This is unique circumstances, in that they have a transaction in front of us implicated by a rule that the [appellate] court has already indicated and has already supported the commission in removing," he said. "I have proposed at the same time a change to that rule that would actually accommodate almost all the properties involved in the transaction. I would have to evaluate any other transaction that comes along."

Andy Schwartzman, director of the Media Access Project, said he was worried the waiver would open the door to more deals including some in smaller markets.

"My initial reaction is not positive. Count me troubled," he said. "It's hard to justify giving this to the Tribune and not everyone else."
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