Last updated: February 21, 2008 - 8:02am
TRIBUNE FACES KEY TESTS TO SEAL DEAL
[SOURCE: Los Angeles Times, AUTHOR: Jim Puzzanghera]
Tribune Co.'s shareholders are set to vote in late August on an $8.2-billion proposal to go private, but the Chicago-based media company has other hurdles to clear before the deal can be completed. Washington regulators must agree to transfer the licenses of Tribune's 23 TV stations and one radio station to the new company, led by real estate mogul Sam Zell, and to issue waivers allowing it to hold on to TV stations in Los Angeles and four other cities where Tribune also owns newspapers, including The Times. In addition, borrowing terms have grown more onerous since Zell made the proposal in April, making it costlier to finance the transaction. The company is expected to be saddled with about $10 billion in debt even after an expected sale of the Chicago Cubs baseball team. Wall Street has signaled its skittishness, sending Tribune shares down to $29.25 late last month after they had hit a high in late May of $33.20. The Zell deal is worth $34 a share if it is completed. Zell wants to close the deal by December and to keep the deal from collapsing needs FCC waivers to hold on to KTLA-TV Channel 5 and TV stations in New York, Chicago, Fort Lauderdale, Fla., and Hartford, Conn. Federal regulations prohibit the ownership of a newspaper and a TV station in the same city. The waivers normally would be routine because business-friendly Republicans control the FCC. But in a stroke of bad timing for Tribune, Democrats took control of Congress in January and immediately toughened oversight of the agency. Further complicating matters, the FCC is in the middle of hearings about relaxing its media ownership rules. Eliminating the ban on cross-ownership of newspapers and TV stations in the same market is one possible outcome. Many Democrats and liberal activist groups adamantly oppose changing the rule because they say media consolidation leads to less diversity of viewpoints. Several of those groups, including Consumer Reports publisher Consumers Union, Consumer Federation of America and the United Church of Christ, have formally opposed Tribune's waiver requests.