Saying it would save the Washington Star, the Federal Communications Commission yesterday allowed Joe L. Allbritton to swap WJLA-TV for an Oklahoma television station and $55 million in non-voting stock in the company acquiring WJLA.
But the commission warned Allbritton that he could be forced to sell the stock by new rules on broadcasting ownership and control that will be proposed soon.
Valued at $100 million, the deal with Combined Communications Corp. is believed to be the biggest single-station television transaction ever.
Two of the seven FCC members voted to block the sale, arguing there was no specific promise from Allbritton that earnings from the sale would be used to keep the Star in business.They also argued that Allbritton had failed to keep promises to try to find a minority buyer for the station.
Allbritton had been ordered by the FCC to sell the station, Channel 7, as one condition of his purchase of Washington Star Communications Inc., in 1975. At that time, Star Communications owned the Star, Channel 7, WMAL-AM and WMAL-FM (now WRQX) and WLVA-AM-TV in Lynchburg, Va.
The FCC generally prohibits new cross-ownership of newspapers and television stations in the same city, to provide diversity of control and viewpoint in the media.
The arrangement Allbritton proposed for selling WJLA, however, raised new questions about concentration of media ownership.
The deal gives Combined Communications the Washington station in exchange for KOCO-TV in Oklahoma City and $55 million worth of non-voting, non-convertible, preferred stock in Combined Communications.
The 550,000 shares of stock pay guaranteed dividends of $7 a share, or $3.8 million a year Combined with the operating profits of KOCO-TV, that would provide the cash flow needed to assure continued publication of the Star. Allbritton had said.
Although they approved the sale, FCC members noted yesterday that Allbritton will still own both the newspaper and a major interest in the company that owns the television station.
FCC staff members, who recommended approval, said the non-voting stock arrangement kept Allbritton from exerting any influence of WJLA.
The FCC has never before permitted such a preferred-stock arrangement, staff members pointed out.
Assured by a staff attorney that the non-voting stock would give Allbritton no more control over WJLA than "a little old lady who owns 10 shares." Commissioner Abbott Washburn responded, "That ain't the way it works in the real world."
"His having $55 million in the company might have more influence," suggested Washburn, who eventually voted for the exchange.
Washburn complained that an FCC policy that was supposed to promote diversified ownership of broadcasting stations is instead leading to wholesale trafficing in stations by media conglomerates.
Said Commissioner Robert G. Lee, "the primary public interest is what ever assurance we can get that the Washington Star will remain on the scene."
But Commissioner Tyrone Brown, who voted against the sale, said, "I can't for the life of me figure out why the commission simply can't ask Mr. Allbritton what his present intention is" for continuing to publish the Star.
Joseph R. Fogarty, who also voted against the sale, complained Allbritton had reneged on a 1975 agreement to "facilitate" successful bids" for the station by minority interests.
That issue was raised in objections to the sale that were filed by the Adams Morgan Organization, the National Black Media Coalition and the District of Columbia chapter of the National Organization of Women.
Brown charged the FCC is "moving away from diversification of ownership" by allowing Allbritton to acquire his interest in WJLA's new parent company.
But chairman Charles Ferris said the critical issue was not ownership of stock, but control of the station. He said the arrangement "is valid from the standpoint of insulating the ownership of Washington Star Communication Inc. from that of Combined Communications."
Ferris noted that Allbritton owns other television and radion stations. "If he were to turn around an sell the Star, you could act on him."
Ferris said the Allbritton's ownership of a non-controlling interest in the broadcasting company is permitted by present FCC rules, but those rules may be changed. Next month, the agency is scheduled to propose new regulations that would limit non-controlling ownership.
Allbritton could not be reached for comment on the decision.