WASHINGTON -- The $8.2 billion deal to take the Tribune Co. private has become entangled in a newly inflamed debate over media ownership rules at the Federal Communications Commission.
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 also is owner of The Sun.
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 is refusing to grant any further 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 Martin is expected to propose is eliminating the ban on owning a newspaper and TV station in the same market.
A vote Dec. 18 could come too late for Tribune, which has long pushed for lifting the rule.
To go private by the end of the year in a deal with real estate mogul Sam Zell, the company needs the FCC by mid-November either to grant temporary waivers or to lift the so-called cross-ownership ban, said Shaun Sheehan, Tribune's Washington lobbyist.
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 percent annualized "ticking fee" until the deal closed.
"I have enormous concern," Sheehan said. The deal likely would die if it were not approved by May 31, when financing commitments expire.
Martin, a Republican, hasn't publicly ruled out granting Tribune waivers, which have been pending since May 2. But privately he's saying the only way to approve the Tribune request is by eliminating the cross-ownership rule.
Copps is unlikely to approve the waivers, but it's unclear how the FCC's other Democrat, Jonathan S. Adelstein, might vote. Both oppose greater media concentration. But the Republican majority is expected to approve Tribune's request. Adelstein and Copps said yesterday they were prepared to vote on the waivers.
"It's entirely inappropriate to exploit the urgency of a business transaction to leverage another agenda," Adelstein said. "It's just not fair to hold it hostage."
Martin declined comment. But his spokeswoman, Tamara Lipper, said the Tribune deal was not a factor in his proposed date for the media ownership vote, which Martin would consider changing.
Martin's move to link Tribune to the broader media ownership issue could limit backlash from key congressional Democrats, such as Sen. Richard J. Durbin, an Illinois Democrat, who has urged prompt action on the waivers.
But Martin's move could backfire. Durbin will oppose any broader loosening of media ownership rules, said spokesman Jose Shoemaker.
Jim Puzzanghera writes for the Los Angeles Times.