Tribune Cross Ownership to Be Cleared in FCC Proposal

The Federal Communications Commission is set to vote on relaxing media-ownership rules and ratifying Tribune Co.’s common control of television stations and newspapers in cities including New York and Chicago, a final step the company needs to emerge from bankruptcy.

FCC Chairman Julius Genachowski today asked for a vote to “streamline and modernize” media ownership rules, Tammy Sun, an agency spokeswoman, said in an e-mail.

The proposals include allowing common ownership of a daily newspaper and a TV station in the 20 biggest U.S. cities, according to two officials briefed on the plan. In a separate proposal, Genachowski asked the agency to let Tribune keep its five TV-newspaper combinations, two officials said.

Tribune holds its television stations and newspapers under exceptions to a 1975 rule, and is asking the FCC to approve license transfers from the old company to the new entity as it emerges from bankruptcy proceedings. The combinations are in Chicago -- where Tribune publishes its namesake newspaper and opened TV station WGN in 1948 -- as well as New York, Los Angeles, South Florida and Hartford, Connecticut.

Genachowski’s proposed revisions to the broader rule would partially grant relief that newspapers have sought as they lose readers to the Web and advertising revenue declines. The agency officials spoke on condition they not be identified because the matter hasn’t been made public.

Commission Vote

The five-member commission, with three Democrats including Genachowski and two Republicans, could vote on the chairman’s proposal for broad cross-ownership relief in coming days without meeting in public. The Tribune waivers would take effect Nov. 16 as long as no commissioner objects, and no vote is needed, Sun said.

Gary Weitman, a Tribune spokesman, in an e-mail declined to comment. Jeremy Gaines, a spokesman for Gannett Co., which publishes 82 daily U.S. newspapers and operates 23 TV stations, in an e-mail said “an updated view” of the market “would result in the relaxation of many of these rules.”

Media companies have said allowing cross-ownership will help them provide more local news at lower cost by combining broadcast and newspaper staffs, and that restrictions intended to preserve a diversity of voices don’t make sense in an era when the Internet ensures wide-ranging debate.

Opponents have said metropolitan newspapers and TV stations remain important sources of information, and consolidation will reduce the information reaching residents.

Genachowski advanced his proposal in preliminary form last year.

Media Ownership

The rules package is the FCC’s third effort in a decade to rewrite media ownership rules in response to a directive from Congress to periodically assess restrictions.

Last year, a federal appeals court rejected the FCC’s 2007 attempt, saying the agency didn’t provide adequate notice it intended to change the rules. A revision adopted in 2003 was blocked by a U.S. court that said the FCC didn’t justify its method for determining which markets could be eligible for cross-ownership.

The cross-ownership rule undermines the FCC’s goal of preserving strong journalism by keeping newspapers from luring investment by broadcasters, the Newspaper Association of America said in an FCC filing. The trade group, with members including the New York Times Co. (NYT), Gannett and the Washington Post Co. (WPO), favors repealing the rule.

Business Model

The Internet has brought a diversity of voices to communities as it has upended the traditional news industry business model, the newspaper association said.

Local reporting has lagged as paid daily newspaper circulation has diminished to World War II-era levels, and newspaper advertising revenue dropped 47 percent from 2005 to 2009, said the Arlington, Virginia-based newspaper association.

The FCC should lift restrictions on cost-sharing among local TV stations, and ease its prohibition on common ownership of two TV stations in markets outside the 50 largest cities, the National Association of Broadcasters said in a filing.

CBS Corp. (CBS), Clear Channel Communications Inc., Gannett, Media General Inc. (MEG) and Cox Enterprises Inc. joined the court challenge to the 2007 FCC order and argued the agency should have further relaxed the cross-ownership rule.

Chicago-based Tribune filed for bankruptcy in December 2008, one year after a buyout led by real-estate billionaire Sam Zell. It owes creditors about $13 billion. The company is valued at more than $7 billion, Tribune said in court papers.

Tribune officials have said the company will be able to leave bankruptcy this year if the FCC approves the reorganization plan and the license transfers.

The case is Tribune Co., 08-bk-13141, U.S. Bankruptcy Court, District of Delaware (Wilmington).

To contact the reporters on this story: Todd Shields in Washington at tshields3@bloomberg.net; Steven Church in Wilmington, Delaware at schurch3@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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