Los Angeles Times, April 2, 2007
By Jim Puzzanghera

Plans by the new owner of the Tribune Co. to keep the company intact present regulatory hurdles because of federal rules that prevent ownership of a television station and newspaper in the same market.

The problem has loomed over Tribune since it purchased Times Mirror Co. in 2000, acquiring the Los Angeles Times and newspapers in two other markets where it already owned TV stations. But because federal licenses for those stations are only now expiring, the issue is coming to a head just as Tribune is being sold.

The sale faces another regulatory challenge. The company's ownership of the Chicago Tribune and television station WGN in Chicago had been grandfathered since the Federal Communications Commissions enacted the cross-ownership restrictions in 1975, but that protection doesn't extend to new owners.

For the sale to be completed, the FCC must approve the transfer of Tribune's TV stations to any new owner, who must get waivers or sell some properties to comply with the rules. Real estate mogul Sam Zell, who won the bidding for the company, would consider selling the stations rather than the newspapers, according to a person familiar with his plan.

"It would at the least be a short delay and at the worst a long delay. I don't see it blocking anything," said Edward Atorino, an analyst with Benchmark Co.

FCC approval was not required for the Times Mirror sale because no station licenses were transferred.

Tribune already has applied for a waiver for its cross-ownership in Los Angeles, where its license for KTLA Channel 5 expired on Dec. 1, as well as in New York and Connecticut, where licenses expire this spring. Tribune has a temporary waiver allowing it to own the South Florida Sun-Sentinel and a television station, WSFL in Fort Lauderdale, in the same market, but that waiver it would not automatically transfer to a new owner.

The waivers should be granted, Tribune has argued, because the FCC is reviewing the cross-ownership restriction as part of a broader assessment of media ownership rules. With FCC Chairman Kevin J. Martin indicating he supports eliminating the cross-ownership restriction, Tribune and other media companies are hopeful the FCC will abolish the rule.

Because of a possible change, the FCC has been expected to grant temporary waivers pending completion of its media ownership review sometime next year.

"Generally if there is a policy that is going to address a specific question, the commission tends to keep the status quo in effect pending that policy review," said Blair Levin, an analyst at brokerage Stifel, Nicolaus & Co. and a former FCC chief of staff.

But the FCC sent a different signal last month with its approval of the sale of Univision Communications Inc. to a group of private investors.

The new owners were given only six-month waivers to resolve cross-ownership issues in seven markets. One of Univision's new owners, Providence Equity Partners, holds a 16% stake in Freedom Newspapers, publisher of the Orange County Register, which conflicts with Univision's ownership of KMEX Channel 34 in Los Angeles.

Levin said the decision shows that some commissioners at the FCC want to be selective about granting waivers.

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