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The Crossownership Cloud

After years of working to get rid of a ban prohibiting companies from owning television stations and newspapers in the same market, Tribune is taking the fight to the Supreme Court. So vows Shaun Sheehan, Tribune vice president and long-time Washington lobbyist, who has fought the crossownership battle for years.

The company thought it finally had a victory in its grasp when the FCC eliminated the rule in its June 2003 rulemaking. But the Third Circuit Court of Appeals in Philadelphia threw out the FCC decision, sending it back to the agency for a rewrite.

Getting rid of the rule would give Tribune clear ownership of its TV-station and newspaper properties in four markets, while also giving it the opportunity to buy stations and newspapers in markets currently closed to it.

And that's what concerns activists, who hope to take advantage of the opportunity the Philadelphia court has given them.

"The newspaper/broadcast combination is too much power for any one company to have," says Andrew Jay Schwartzman, president and CEO of nonprofit law firm Media Access Project. He notes that, although newspapers may not seem to have the power they had in the days when every city had several competing dailies, and broadcast television has plenty of cable competition, "newspapers and over-the-air TV stations are by far the most powerful forces shaping public opinion."

In No. 1 market New York, Tribune owns powerhouse WB affiliate WPIX along with Newsday,
which it acquired as a part of its 2000 acquisition of Times-Mirror Co., publisher of the Los Angeles Times
and other papers. It also owns Newsday
and Spanish-language Hoy, the two New York papers that have been recently facing scandals over inflated circulation numbers.

In Los Angeles, the nation's second-largest market, Tribune already owned another top WB affiliate, KTLA, when it aquired the Times. The broadcast licenses for WPIX and KTLA come up for renewal in 2006, and Tribune may have to seek an FCC ownership waiver to keep those stations if the rule has not yet been settled.

In hometown Chicago, the company owns WGN and the Chicago Tribune, two of the company's flagship properties, as well as WGN(AM). All three properties are grandfathered because Tribune owned them before the FCC implemented the crossownership rule in 1975.

In Hartford, Conn., Tribune owns a duopoly through Fox affiliate WTIC and WB affiliate WTXX—along with The Hartford Courant,
another Times-Mirror pickup. Tribune may need a waiver to continue that combination.

And separate from the Times-Mirror deal, Tribune owns WBZL and the South Florida Sun-Sentinel
in Miami/Fort Lauderdale. The company has a waiver until the rule's status is sorted out.

And that should be interesting. Because even though the court didn't rule in Tribune's favor, it has indicated sympathy towards Tribune's position.

"Reasoned analysis supports the commission's determination that the blanket ban on newspaper/broadcast crossownership is no longer in the public interest," wrote the court, basing its arguments on the fact that advertisers don't see newspaper and TV stations as competitors.

Evidence also indicates that stations' news coverage tends to improve if the station is connected to a newspaper, according to the court.

Still, the panel considered the FCC rules as a package deal and said it didn't make sense just to pluck one rule out of the bunch. Earlier this month, the court rejected Tribune's narrow appeal of its June decision, sticking with its original opinion that the FCC needed a broader rewrite of the ownership rules .

That's when Tribune decided to take its grievance to the Supreme Court. The company has until Dec. 3 to file its case.

"The FCC is not lifting a finger on ownership rules until after the election. They don't want to make a political issue out of it," Sheehan says. "And the chances of the Supreme Court taking our case increase demonstrably after the election."

The chance that the FCC will retain crossownership rules is much better if Sen. John Kerry defeats President Bush in November. That's because, if the Democrat wins, FCC commissioner Michael Copps, who has been on an anti-consolidation rant for the last year, would likely become the new chairman.

The Supreme Court is not Tribune's last hope, however. The FCC still must rewrite the rules, according to the Third Circuit's decision. But that could take a few years.

The FCC's reluctance to make new rules prior to the election makes political sense. Still, financial types would like to sese the whole thing decided once and for all.

"The entire industry and Wall Street were disappointed with the Philadelphia decision," says Tribune Television President Pat Mullen. "Wall Street would like there to be clarity to the rules today."

But it looks like Wall Street and the Tribune are going to have to wait awhile.