FCC Expected to Overturn 32-Year-Old Ban on Broadcaster Ownership of Newspapers; Tribune Deal in Spotlight

The Federal Communications Commission is expected to approve Tuesday a proposal by Chairman Kevin Martin that will allow broadcasters in the nation's 20 largest media markets to also own a newspaper — overturning a 32-year-old rule.

Martin calls his plan a "relatively minor loosening" of the rule. He probably also has enough support on the five-member commission to do away with the ban entirely.

In the long run, that's what could happen thanks to the exceedingly complex FCC order released a few weeks ago that approved the $8.2 billion buyout of Chicago-based media conglomerate Tribune Co. The FCC in essence invited Tribune to file suit against the agency and challenge the rule.

Michael Copps, the senior Democrat on the five-member commission, has accused Martin of enlisting Tribune as "an accomplice" to do away with the long-standing ban altogether.

A spokeswoman for Martin denies the accusation.

Regardless, the public dustup over Tribune Co. and the larger issue of media ownership provides a glimpse into how the important and some say occasionally dysfunctional federal agency operates.

The cross-ownership ban was approved by the FCC in 1975 to serve "the twin goals of diversity of viewpoints and economic competition." The FCC at the time noted that "it is unrealistic to expect true diversity from a commonly owned station-newspaper combination."

Opponents of the ban say in the past decade there has been an explosion of news outlets thanks to cable television and the Internet and that such restrictions are no longer necessary. Ban supporters say there may be new outlets, but there has been no corresponding increase in news gatherers and producers, especially at the local level.

Political pressure on Martin to delay the vote has been intense. On Monday, 25 senators sent him a letter threatening that if he goes ahead with the vote, they will move legislation to revoke the rule and nullify the ruling.

Tribune Co., publisher of the Chicago Tribune, began broadcasting in the city on WGN-AM radio in 1924 and WGN-TV in 1948. The company was exempt from the cross-ownership rule.

In 1997 it bought WSFL-TV in the Miami/Fort Lauderdale market, an area where it already owned a newspaper. In 2000, it bought Times-Mirror Inc., and with it the Los Angeles Times, Newsday in New York and the Hartford Courant. Tribune owned television stations in all three of those markets.

Tribune was gambling the FCC would eliminate the cross-ownership ban before the company would have to renew its station licenses. In July 2003, the FCC approved a broad "cross-media" ownership rule that would allow a single company to own a broadcast station and a newspaper in 170 markets, from New York City down to much smaller locales.

But that rule was rejected and sent back to the FCC in 2004 by a federal appeals court in Philadelphia.

The court agreed with the FCC's determination that a blanket ban on newspaper-broadcast cross-ownership was "no longer in the public interest." But it added that this did not mean that "no regulation is necessary."

Since then, the commission has been working on crafting a new set of ownership rules that will satisfy the court.

Last April, a revenue-losing Tribune agreed to be taken private in a transaction led by real estate entrepreneur Sam Zell.

Tribune needed the FCC to approve the transfer of the company's broadcast licenses to the new owners. It also asked the agency to allow the new owners to keep the stations in the cross-owned cities — including Chicago — until the FCC passed a new rule on media ownership.

Martin scheduled a vote for Dec. 18 on a new rule that would allow newspaper-broadcast combinations in the 20 largest markets in certain circumstances.

While that appeared to be good news for Tribune, the company said the vote would actually come too late for the transaction to close by year-end, which was necessary for tax purposes and to get the required financing.

On Nov. 30, the FCC approved the license transfer in an order Democratic Commissioner Jonathan Adelstein described as "a feat of rare regulatory contortionism."

The order approved the license transfers and granted a permanent exemption from the cross-ownership rule in Chicago. But it denied waivers in Tribune's four other cross-owned markets. It went on to say that if Tribune were to sue over the denial of the waivers, it would not have to comply with ownership rules for two years or until six months after the litigation ends, whichever was longer.

Had the agency simply granted Tribune's request for waivers, the company could have closed on its deal and stayed out of court.

On Dec. 3, the company filed suit in a federal appeals court in Washington, D.C., challenging the denial of its waivers and arguing that the FCC's cross-ownership rule was unconstitutional.

Copps contends that the lawsuit gives the D.C. court an opportunity to eliminate any cross-ownership restriction, including the rule commissioners are expected to approve Tuesday.

If the FCC approves Martin's rule and the appeals court in Philadelphia gives it the OK, the Tribune suit "would likely go away," said a senior FCC official who spoke on condition of anonymity because of the pending litigation.

But that outcome is uncertain.

"If the commission goes forward on Dec. 18 and votes relief, do we stay in court or not?" asked Shaun Sheehan, Tribune's Washington lobbyist, during a C-SPAN appearance. "That's a question perhaps we decide for a later date." If Tribune continues to press the suit, a favorable ruling "very well could" invalidate all restrictions on broadcast-newspaper ownership, he said.