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FCC Creates Dimmer Picture for TV Stocks

Insiders in the TV industry call Martin's proposal the "Tribune Preservation Act," since Tribune owns a number of CW affiliates that aren't in the top four, along with newspapers in markets like Chicago, Los Angeles, Miami and New York City. The rule change could therefore remove regulatory obstacles to the company's $8.2 billion buyout deal with real estate magnate Sam Zell.

Otherwise, media companies have largely disparaged the proposal as too limited and, in some cases, damaging to existing businesses. Tribune itself objected because while the proposal helps it in some markets, it could require the company to sell its newspaper or a TV station in Hartford, Conn. Moreover, it could delay the deal into 2008, triggering further payments to public shareholders.

Media General (MEG), publisher of the Richmond Times-Dispatch and Tampa Tribune, has criticized the plan for focusing on top 20 markets only, since it may have to sell a number of properties in smaller markets where it currently holds waivers to the restrictions.

The nation's largest newspaper publisher, Gannett (GCI - Get Report), has also voiced opposition, since it could have a conflict in Phoenix, where it owns the Arizona Republic and the local NBC affiliate, one of the top four TV stations in the market.

"We also want the rules changed because it's about the future of the industry," says Gannett spokeswoman Tara Connell.

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