November 29, 2007 / 12:13 AM / 12 years ago

UPDATE 3-US FCC chairman seeks ownership waiver for Tribune

(Adds response from FCC Commissioner McDowell)

By Peter Kaplan and Robert MacMillan

WASHINGTON/NEW YORK, Nov 28 (Reuters) - The chairman of the Federal Communications Commission said on Wednesday he wants to grant media group Tribune Co TRB.N a temporary exemption from U.S. media ownership rules, removing an obstacle to an $8.2 billion leveraged buyout of the company.

Tribune shares rose nearly 13 percent in afternoon trading in reaction to the news.

FCC Chairman Kevin Martin proposed the agency grant the waivers so the company can proceed with the deal at a time when the FCC is considering his broader plan to relax ownership rules in the largest U.S. cities.

The temporary Tribune waivers proposed by Martin would last for a period of two years, or six months after the end of all litigation connected to the ownership rules.

Martin expected the commissioners to vote on the Tribune proposal by the end of the day on Friday, giving the company the 20 business days it needs to close the deal by the end of the year.

“We are pleased with Chairman Martin’s proposal which, if approved, will enable Tribune’s going-private transaction to close by the end of the year,” Tribune Chief Executive Dennis FitzSimons said in a statement.

A spokeswoman for Zell declined to comment.

Tribune is going private in a deal led by Chicago real estate magnate Sam Zell and needs FCC approval to transfer waivers that allow the company to operate television stations and newspapers in the same markets.

In Wednesday’s comments, Martin declined to comment on any further details of the Tribune waiver proposal.

“I think that would give the commission an opportunity to consider new rules, and Tribune would be able to come into compliance with those new rules as I’ve proposed,” Martin said.

The Tribune proposal comes only weeks after Martin made a wider proposal to relax the FCC’s ban on the cross-ownership of newspapers and broadcast stations in the 20 biggest U.S. cities.

Long-standing FCC rules restrict media cross-ownership and ban ownership of a newspaper and a TV or radio station in the same market, unless the FCC grants a waiver.

The overall changes proposed would ease the rules in four of five markets in which Tribune owns a daily newspaper and a TV station — New York, Los Angeles, Chicago and Miami/Fort Lauderdale. It would not apply to the fifth, Hartford, Connecticut.

Martin has said the rule change would help bolster the newspaper industry by allowing owners in the top markets to buy a TV or radio station.

Tribune and other publishers, including Media General Inc MEG.N and Gannett Co Inc (GCI.N) opposed the plan, saying it does not go far enough to loosen the rules. The plan also could require Tribune to shed its TV stations in Hartford, Connecticut, or the Hartford Courant newspaper.

FCC Commissioner Robert McDowell, speaking to reporters at the Reuters Media Summit, said the two-year extension for Tribune is “in the right general direction,” and that Martin’s plan for the top 20 markets is “reasonable.”

He stressed that he had not read either proposal and had not made a final decision.

Tribune shares closed up $2.75, or 10.1 percent, at $30 on the New York Stock Exchange on Wednesday. (Editing by Gary Hill)

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