Tribune Co. non satisfied with limited ownership waivers from FCC

by Peter Kaplan, Reuters

U.S. media group Tribune Co has filed notice in federal court that it will challenge a recent decision by regulators to give the company only a temporary exemption from media ownership restrictions rather than a permanent one.

Tribune filed a notice of appeal with the U.S. Court of Appeals for the District of Columbia, contesting a Nov. 30 order by the Federal Communications Commission that granted a temporary waiver of FCC media ownership rules and allowed the company to proceed with its planned leveraged buyout.

Tribune had sought permanent waivers that would allow it to own both newspapers and TV stations in New York, Los Angeles, Chicago, Miami and Hartford, Connecticut.

The notice was filed on Monday, but obtained by Reuters on Thursday.

In its decision, the FCC granted Tribune a permanent waiver for Chicago. But the agency issued only temporary waivers for the other cities, as it considers a wider proposal by FCC Chairman Kevin Martin to relax the cross-ownership ban in the 20 biggest U.S. cities.

Under the FCC's decision, Tribune's temporary waivers will extend for a period of two years, or until six months after the end of litigation over the ownership rules.

The FCC's order required the company to appeal "to extend the cross ownership waivers to a period equivalent to the longer of two years or six months following the conclusion of the litigation," Tribune Chief Executive Dennis FitzSimons wrote in an e-mail to employees on Thursday.

"This appeal was, in essence, invited by the FCC's action on Friday," FitzSimons wrote.

Tribune is going private in an $8.2 billion deal led by Chicago real estate magnate Sam Zell and needs FCC approval to transfer the waivers.

In its legal filing, Tribune said the FCC's media ownership rules were unconstitutional and the denial of permanent waivers was "contrary to law, arbitrary and capricious, an abuse of discretion, and not supported by substantial evidence."

The dispute goes back to 2003, when a federal appeals court in Philadelphia halted an earlier FCC plan to relax media ownership rules after concluding the agency failed to adequately justify the new rules.

Martin's proposed changes are more modest, but he has said they would bolster the newspaper industry by allowing owners in top markets to buy a television or radio station.

Consumer groups and Democrats on the FCC have expressed reservations about easing ownership rules, fearing that more consolidation would eliminate independent voices and degrade local news coverage.

The commissioners are scheduled to vote on the overall media ownership changes at the FCC's next meeting on Dec. 18.

Tribune's legal challenge triggered renewed criticism from Democratic FCC commissioner Michael Copps, one of two Democratic commissioners on the FCC who both opposed the Tribune waiver decision.

Copps has said the waivers were designed to get Tribune to bypass the federal court in Philadelphia and challenge the entire media ownership rule in a different federal court. He issued a statement on Thursday predicting the three Republican commissioners would "mount a lukewarm defense of the rule in court and hope that the entire rule gets thrown out.

"In the final act, the majority will say they tried to do something more moderate, but the court simply wouldn't allow it. And the curtain will fall to thunderous applause from beltway insiders who appreciate a clever script that only they can follow," Copps said.

An FCC spokeswoman declined to comment on the Tribune filing and Copps' statement.

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