(originally published in Crain's Chicago Business)
FCC ownership solution long way off
Tribune rival sees no quick fix to regulatory 'morass'
By Jeremy Mullman
Resolution of a regulatory issue critical to Tribune Co.’s future will take up to two years, the CEO of Tribune’s chief newspaper-publishing rival said Wednesday.
Speaking on a conference call, Gannett Co. CEO Douglas McCorkindale said he saw no way to accelerate the “morass we’re in” regarding the newspaper industry’s attempted repeal of a provision banning the cross-ownership of newspapers and television stations in the same markets.
Gannett, the nation’s largest newspaper publisher, owns a newspaper-television combo in Phoenix, and has said it would like to add more.
Tribune has combos in New York, Los Angeles, Miami and Connecticut that are all impacted by the rule.
Tribune’s ownership of the Chicago Tribune and WGN-TV in Chicago isn’t affected by the Federal Communications Commission’s rule, because it predates it. However, Tribune will not be able to renew its broadcast licenses in New York, Los Angeles or Connecticut – where it acquired newspapers in 2000 — after they begin expiring next year.
If the cross-ownership rule stays in place, Tribune would eventually have to divest properties in those markets. That probably won’t happen soon. Tribune CEO Dennis J. FitzSimons has predicted that, even in a worst-case scenario, appeals and legal maneuvers could hold off divestitures until at least 2010.
Media companies are currently waiting to see whether the Supreme Court will review a lower court ruling that blocked the FCC's move in 2003 to loosen rules on owning a newspaper and television station in the same city.
McCorkindale said the current view is that there’s a 50% chance the high court would hear the case. Otherwise it goes back to the FCC for further consideration.
In the meantime, McCorkindale said the uncertainty over the rule changes has had a "dampening" effect on discussions about potential acquisition deals. He said he expects a resolution to take another 18 months to two years, although he added that "I hope I'm wrong."
Separately, J. Stewart Bryan III, Media General Inc.'s CEO, told analysts on that company's conference call that he was "hopeful" the Supreme Court would take the case.
Gannett and Media General own both television stations and newspapers, and would benefit from the ownership rules being loosened, as would Tribune Co., which owns television stations as well as a portfolio of major newspapers including the Los Angeles Times, the Chicago Tribune, and Newsday of New York's Long Island.
Consumer advocates have opposed the FCC's drive to loosen media-ownership rules, saying it would give a handful of large companies greater power over print media and the airwaves. In mid-afternoon trading: Tribune shares were trading at $39.25, down 0.3%, and Gannett shares were at $79.43, down 0.7%. But Media General shares rose 5%, to $64.49, after a Deutsche Bank analyst raised his outlook on the company’s shares to “buy” from “neutral.”
(With files from the Associated Press)
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