• by Erik Sass  @eriksass1, November 12, 2007

Congress is headed toward a confrontation with Federal Communications Commission Chairman Kevin Martin over his proposed revisions to media ownership regulations, with members of both parties saying he's moving too fast to scrap current rules regarding media ownership. But if they succeed in forcing him to delay the FCC vote by six months, they may also endanger the upcoming sale of Tribune Co. to Chicago real estate billionaire Sam Zell.

Martin has deployed the Tribune deal as a kind of political hostage in his confrontation with Congress, making for a situation that seems strange to outside observers: the FCC is threatening a deal it actually supports, to force through rule revisions that would limit its own power.

One of three Republicans on the five-member FCC, Martin wants to do away with regulations dating from the 1960s that prohibit the cross-ownership of media outlets in a single market--e.g., the same company owning a TV station and a newspaper in the same town. As chairman of the FCC, Martin wants to put the issue to a vote as soon as possible, and has mentioned December 18th as his target date for the vote.

Some members of Congress, however, are hesitant to move so quickly; on Friday Sen. Byron Dorgan, a Democrat from North Dakota, said Martin should hold off on the vote until the middle of 2008. In fact, Dorgan and others are threatening legislation that would force Martin to wait at least six months before holding the vote.

That's where the Tribune deal comes in. The sale of Tribune Co. to Sam Zell requires the renewal of waivers from the FCC allowing it to circumvent cross-ownership rules, because the company owns newspapers and TV stations in several major markets including Chicago and Los Angeles. Martin has threatened to withhold these waivers, effectively torpedoing the deal, if he fails to achieve a more comprehensive resolution of the cross-ownership issue.

According to the terms of the Tribune deal, it must close before the end of the year; otherwise the Tribune Co. will begin to take on onerous financial obligations, making the deal increasingly unlikely.

By this tactic Martin hopes to build Congressional support for his revisions; the Tribune deal has the support of Dick Durbin, Democratic Senator from Illinois, who sits on a number of powerful Congressional appropriations committees.

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. 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.