FCC's Martin Threatens Tribune Sale For Political Ends

The much-publicized sale of the Tribune Company to Chicago real estate mogul Sam Zell for $8.2 billion is in jeopardy because Kevin J. Martin, chairman of the Federal Communications Commission, is refusing to grant the necessary waivers that would allow the deal to circumvent FCC rules against cross-ownership of media properties.

Tribune Co. owns TV stations and newspapers in five markets around the country. The company was originally allowed to acquire these properties despite the FCC rule against cross-ownership through waivers granted by the agency when the company was publicly traded. However, the waivers must essentially be renewed if the company is to be taken private.

According to the Los Angeles Times, which reported the news on Friday, it isn't Martin's goal to actually block the sale. Rather, he hopes that by threatening such action on cross-ownership grounds, he can spur two Democratic commissioners who are sympathetic to the Tribune Co. and Zell to revise the cross-ownership rules.

Martin has made the revision of these rules a top priority for his second term as FCC chairman, which began November 2006. He's pushing for an FCC vote on the revisions, which include repealing the ban on ownership of TV stations and newspaper properties in the same market, by December 18.

With two fellow Republican commissioners on board, Martin already has a majority on the five-person commission, but is said to prefer a consensus vote on this controversial issue.

However, Martin's tactics may end up torpedoing the Tribune deal altogether, according to Tribune executives, who noted that the transaction must close by the end of the year. Since the company needs an additional 20 days after FCC approval to complete the deal, the Dec. 18 vote may be too late, regardless of the outcome. Martin may be willing to grant temporary waivers before then, in exchange for a promise of favorable votes from the two Democratic commissioners.

The same cross-ownership rules could prove to be a stumbling block for Rupert Murdoch's acquisition of Dow Jones. Murdoch's News Corp. already owns WNYW-TV in the New York City area--and his 1993 purchase of the New York Post required an FCC waiver, on the grounds that it was a "failing" newspaper.

Thus, his planned acquisition of Dow Jones' Wall Street Journal could still meet FCC opposition--unless the cross-media ownership rules are waived before the deal closes in December. Michael Copps, one of the FCC's Democratic commissioners, said in late September that the Murdoch-Dow Jones deal merits further investigation because of ownership issues.

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