Think of FCC Chairman Kevin Martin's blazing-guns Tribune (TRB) waiver in two ways. In one way, it's a celebration of feudalism, as the new Sam Zell-led Tribune gets an unexpected prize, principality status in Chicagoland. In another, it's Martin's own way to propel the local newspaper and broadcast industries fully into the 21st Century, opening the door to singular, city-based companies producing multi-platform journalism and selling multi-platform ads.
By itself, today's ruling just gives the Tribune the ability to go private, keeping its portfolio intact for awhile, pending other FCC actions and court appeals. In FCC Commissioner Jonathan Adelstein's words opposing the waiver, "The Order employs certain novel, ill-advised and back-breaking legal gymnastics that will surely leave observers with their heads spinning." That's certainly true, but I'll leave those gymnastics to other observers, focusing instead on the media and journalism implications of what we're seeing.
The ruling -- allowing the company to keep its broadcast stations and newspapers in key markets for now -- should be enough to finally allow the Tribune deal to go through and for Sam Zell to begin his restructuring of company. The work of his teams of analysts roaming the Tribune building will take effect, and 2008 won't be much like 2007. The share price has been snaking up towards the $34 offer price expected, today closing at $31.04. A little more confidence-building as CEO Dennis Fitzsimons re-re-re-affirms that the bank financing will hold and Sam Zell affirms he's ready to roll, and the price, like it did in the News Corp/Dow Jones buyout, will move toward its target.
On the decision, the feudal part is the easiest to understand. The language:
64. IT IS FURTHER ORDERED, that a permanent waiver of the newspaper/broadcast cross-ownership rule, 47 CF.R. Sec. 73.3555, to permit the common ownership of WGN, WGN-TV and the Chicago Tribune by Sam Zell, The Tribune Employee Stock Ownership Plan, as implemented through the Tribune Employee Stock Ownership Trust, and EGI-TRB, LLC IS GRANTED.
The "permanent" is the shocker, putting into good Tribune Tower granite, the long-time domination of the Chicago media landscape.
Why? According to the ruling:
"Here, we find that the nature of the market involved combined with the uniquely long-term symbiotic relationship between the broadcast stations and the newspaper warrants a permanent waiver. In this regard, our examination of the record confirms “the myriad public interest benefits that have resulted over the almost 60 years of Tribune’s common ownership of WGN-TV, WGN(AM), and the Chicago Tribune in the Chicago DMA.”
It's hard to know whether the FCC is enshrining the near-monopoly or just re-enforcing another longtime Chicago tradition -- of course, a Daley will be mayor, and Tribune will run the media.
For Zell, though, this is probably the best prize he can get. He's now becoming the new Media Mayor of Chicago, a role he'll savor -- and can afford to subsidize.
It's the 21st Century part of the ruling that's really quite ironic.
I take you back to the year 2000. Newspaper valuations were good, and the Tribune company pulled off its blockbuster deal, buying Times Mirror for $8 billion, gaining properties in L.A., New York, Baltimore, Hartford (all subject to today's waiver granting) and a couple of others. On the foundation of that deal, Tribune, uniquely in the newspaper industry, set off on a strategy of grabbing more ad share and higher ad pricing by its ownership of newspaper, broadcast and, then, quickly, Internet sites in each site. It was a big strategy, at odds with many of its newspaper brethren. Long story short, it didn't work.