LOS ANGELES -- In a sign that Tribune Co. may be preparing to exit the broadcast TV business, the company's investment bankers have begun offering its premier TV stations - KTLA Channel 5 in Los Angeles, WPIX in New York and WGN in Chicago - to selected potential buyers.
One reason it is shopping the stations is the pending expiration of broadcast licenses. KTLA's eight-year license expires Dec. 1, at which time Tribune could be found in violation of Federal Communications Commission regulations banning ownership of a newspaper and a broadcast outlet in the same market, because it also owns the Los Angeles Times.
Tribune faces the same problem in New York, where it owns Newsday and WPIX, whose license expires June 1.
When Tribune bought the Times and Newsday in 2000, it hoped that cross-ownership rules would be lifted before the licenses expired. But experts believe that the sweep by Democrats in Tuesday's election will only solidify support for ownership restrictions.
Tribune has applied for a KTLA license renewal and a waiver until the FCC completes a pending review of the regulations - a process that may drag well into 2007. The agency in 2003 proposed relaxing the rule, but a federal appeals court sent the issue back to the FCC after a legal challenge by opponents.
"The chances of the cross-ownership rules being changed anytime soon just went away with Tuesday's election," said one executive who has expressed interest in some Tribune properties. The executive did not want to be identified because of the sensitivity of the subject.
Although Republicans hold a 3-2 majority on the commission, the agency will have to deal with Democratic-led committees in Congress, he said, and "they're not going to go looking for a fight."
Democrats generally are more supportive of the cross-ownership restrictions.
Shaun M. Sheehan, Tribune's vice president for Washington affairs, said Thursday that he remained confident that Tribune could obtain at least temporary waivers for KTLA and WPIX. If KTLA's renewal application is rejected, he said, Tribune would appeal the decision to federal court in Washington.
A sale of WGN in particular - the call letters stand for "World's Greatest Newspaper," long the slogan of the company's flagship Chicago Tribune - would mark a profound change in the company's makeup.
Tribune - which owns 11 newspapers, including The Sun, along with two dozen TV stations and the Chicago Cubs - has said that ownership of newspapers and TV stations in the nation's three largest markets is integral to its business strategy. But the company is under pressure from investors to raise its share price. Merrill Lynch analyst Lauren Rich Fine has estimated that the three stations could bring more than $2.5 billion before taxes.
Taxes could be a stumbling block. WGN and WPIX have been with Tribune since 1948, and KTLA has been part of the company since 1985. The low cost basis for the stations could mean that Tribune would have to pay hundreds of millions of dollars in taxes on any sale.
Major TV station owners that might find Tribune's properties attractive include CBS Inc., Gannett Co. and News Corp.'s Fox unit. It's unclear which, if any, of those companies had been approached by Tribune's bankers, Merrill Lynch and Citigroup Inc.
Pushed by its largest shareholder group, California's Chandler family, which holds nearly 20 percent of Tribune's stock, the company is exploring ways to boost its stock that include selling the company. Tribune has received nonbinding, preliminary bids from four groups of private-equity companies and, this week, from a group that includes Los Angeles billionaires Eli Broad and Ron Burkle.
Because the bids for the whole company have come in around where the stock is trading - too low to satisfy shareholders who think the shares are undervalued - Tribune has said it will consider bids for individual properties as well.
Tribune's FCC problems could complicate a sale of the entire company because a buyer would inherit the same cross-ownership worries, plus an additional one in Chicago. Tribune's ownership of the Chicago Tribune and WGN is allowed because it existed before the law was enacted in 1975. But the grandfather status would not transfer to a new owner.
Selling the stations separately from the newspapers could solve the FCC problems but not the tax issues. In June, responding to the court order, the FCC began a new media ownership proceeding. FCC Chairman Kevin J. Martin has supported eliminating the cross-ownership strictures.
"Newspapers are the only media entities prohibited from owning a single broadcast station in the markets they serve," Martin told the Newspaper Association of America last spring. "We should correct any imbalance in our rules, create a level playing field and give newspapers the same opportunities other media entities enjoy."
But the chances that the FCC will change those rules soon are slim. Since June, the agency has held only one of seven promised public hearings, and dates for the others have not been announced, making action unlikely before the second half of 2007.
The Democratic takeover of Congress further complicates the issue. Many Democrats have opposed easing the rules.
Rep. John D. Dingell, the Michigan Democrat who will have oversight of the FCC as the incoming chairman of the House Energy and Commerce Committee, told reporters the day after the election that he wanted to take a "very careful look" at any media ownership rule changes.
Thomas S. Mulligan and Jim Puzzanghera write for the Los Angeles Times. Times reporter Meg James contributed to this article.