Tribune Waiver Transfer Supported by Some Major Creditors

Tribune’s planned transfer of waivers from FCC cross-ownership rules on common ownership of radio or TV stations and daily newspapers in the same market as the bankrupt company restructures was supported by a bank that will own more than 5 percent of the new company’s stock and by some unsecured creditors. The company, the official committee of its unsecured creditors and debtholder J.P. Morgan, the administrative agent under a 2007 credit deal that will own a large chunk of stock, opposed petitions to deny the transfers. Wilmington Trust Co., which holds about $1.2 billion in subordinated debt in the owner of TV and radio stations and papers, opposed the deal, along with two unions and four non-profit groups while another union sought a delay (CD June 16 p13).

The plan to exit bankruptcy ensures all shareholders with stakes in the company deemed attributable by the FCC will follow multiple-ownership rules and Tribune will adhere to foreign ownership limits, said J.P. Morgan. Those attempting to block cross-ownership waivers and a continued permanent exemption from local TV ownership rules “have a narrow range of interests that are unrelated to this proceeding and/or reflexively opposed the requested waivers without taking into account the circumstances of the combinations in question,” the bank continued. Wilmington Trust, contending it’s due stock in the new company, filed the petition to oppose the waiver transfers “to gain leverage in its efforts to obtain a settlement from Tribune and its other creditors,” J.P. Morgan said. The National Association of Broadcast Employees and Technicians, Communications Workers of America, Free Press, Media Alliance, National Hispanic Media Coalition and United Church of Christ are “self-described opponents of virtually all forms of broadcast group ownership,” it said.

Opponents are wrong to ask that Tribune’s finances be ignored because citing such conditions undermines newspaper-broadcast cross-ownership (NBCO) rules, that company said. “Indeed, as the Commission is well aware, several indicia included in its NBCO and duopoly waiver calculus involve consideration of the financial health of the media,” Tribune said. “Among the four factors at issue in rebutting a negative presumption” against waivers is financial condition, it continued. “Not only is Tribune’s bankruptcy status relevant on these issues, but consideration of the severe downturn in the financial condition of the newspaper and broadcast industries since these criteria were adopted is necessary to any reasoned evaluation of the factors."

The regulator should quickly approve Tribune’s requests for NBCO waivers for WGN(AM) and TV and The Chicago Tribune, all in that city, and from cross-ownership and TV duopoly rules for WTIC Hartford, Conn., nearby WTXX-TV Waterbury and The Hartford Courant, the creditor committee said. “It is simply beyond any reasonable dispute that Tribune is entitled to a continuation of its permanent, grandfathered NBCO waiver” in Chicago, the committee said. When the NBCO rule was adopted in 1975, the Tribune’s combination in Chicago had existed for nearly 30 years, it said. Denying the Hartford waiver is more likely to lead Tribune’s paper there to cut back its production schedule than be sold, the creditors said. “Mere speculation that ownership of the properties by some other entity would better serve the public interest does not provide any reasoned basis for the Commission to reverse course after granting its approval in a series of cases over the past thirteen years since 1997.”