WASHINGTON — The $8.2-billion deal to take Tribune Co. private has become entangled in a newly inflamed debate over media ownership rules at the Federal Communications Commission that could pose problems for the transaction.
Tribune needs FCC waivers to complete the deal because it owns newspapers and TV stations in Los Angeles and four other markets in violation of rules that prevent such cross-ownership. Tribune owns the Los Angeles Times and KTLA-TV Channel 5 as well as other newspapers, TV stations and the Chicago Cubs baseball team.
Now, trying to capitalize on Tribune's push to complete the deal by year's end and its support from some key lawmakers, FCC Chairman Kevin J. Martin has indicated that he won't grant any waivers pending a vote on major revisions to the commission's media ownership rules, agency officials said.
"He's tying the fate of the Tribune deal that he wants to a large proceeding on media ownership," said FCC Commissioner Michael J. Copps, a Democrat who opposes loosening the rule. "To say we have to change the media ownership rules so we can get the Tribune deal done does not strike me as . . . a good way to make public policy."
Martin has proposed an ambitious timetable for the FCC to vote on a package of media ownership rule changes by Dec. 18. Among the changes he is expected to propose is the elimination of the ban on owning a newspaper and a TV station in the same market. But some FCC commissioners, lawmakers and public interest advocates criticize the vote as coming too soon.
A Dec. 18 vote could come too late for Tribune, which has long pushed for lifting the cross-ownership ban. The company needs 20 days to complete the transaction after FCC approval.
To go private by the end of the year in a deal led by real estate mogul Sam Zell, the company needs the FCC by mid-November either to grant temporary waivers or to lift the cross-ownership ban, said Shaun Sheehan, Tribune's Washington vice president. Failure to do so would mean significant financial penalties. The new private company would not be eligible for tax-exempt status for 2008 and the $34-a-share offer would go up, based on an 8% annualized "ticking fee," until the deal closed.
"I have enormous concern," Sheehan said. The deal probably would die if it was not approved by May 31, when financing commitments expire.
