Australian Publisher Rupert Murdoch asked the Federal Communications Commission yesterday to approve his $2 billion acquisition of six independent television stations, including Washington's WTTG-TV, Channel 5, from Metromedia Inc.
Murdoch said in his FCC application that he has applied to the Immigration and Naturalization Service to become a U.S. citizen and expects to become a citizen within the next several months and "in any event, prior to the closing of the deal ." Murdoch must become a citizen to take control of the television stations to meet FCC restrictions on foreign ownership.
Murdoch needs the approval of both the FCC and the antitrust division of the Justice Department to complete the acquisition, and approval is expected. "I am confident that we are in compliance with all FCC requirements," Murdoch said.
Murdoch said in the filing yesterday that he has sufficient financial resources to make the purchase, with necessary funds provided through open credit lines with American, European and Australian banks. However, Murdoch said the provision of the open lines of credit will not allow the lenders to exercise any influence or control over the day-to-day operations of the television stations.
Last week, Denver oilman Marvin Davis, who was expected to be Murdoch's partner in the purchase of the stations, announced that he was not going to exercise an option to purchase 50 percent of News American Television Inc., the newly formed company that will own the stations.
Sources said Davis, who earlier this year sold Murdoch half of Twentieth Century Fox-Film Corp., was not comfortable with the financial structure of the deal. Murdoch has indicated that the Metromedia stations will be used as outlets for Fox productions, possibly creating a cost-effective broadcasting network. Davis reportedly has considered selling Murdoch the 50 percent stake he still holds in Fox, a move that would give Murdoch complete control of the entire operation.
Murdoch will need about $250 million to $300 million in cash to complete the $2 billion deal. The remainder consists of about $1.3 billion in Metromedia debt that he has agreed to assume and $450 million that he will receive from the sale of Metromedia's Boston televison station to Hearst Corp.
The Metromedia stations that Murdoch has agreed to acquire are in Washington, New York, Los Angeles, Chicago, Dallas and Houston. They will give Murdoch access to about 21 percent of the nation's television audience in his quest to build a global broadcasting and publishing empire.
Murdoch will be forced to divest the New York Post and the Chicago Sun-Times newspapers to comply with FCC cross-ownership rules that prohibit ownership of a daily newspaper and television station in the same city. He asked the FCC yesterday to give him two years to sell those properties.
"The requested two-year waiver is well within prior commission precedent in this area and is entirely consistent with the commission's diversity policies and with the public interest," Murdoch said. " . . . The waiver sought will promote the underlying pro-diversity of the rules by reducing the prospects for a 'distress sale' atmosphere that could severely and adversely affect the continued competitive viabilty of the New York Post and the Chicago Sun Times.
" . . . The Chicago Sun Times and the New York Post represent two of the few remaining competitive challenges to dominant newspapers in major metropolitan markets. . . . In the absence of a reasonable period of time in which to dispose of the newspapers, we would be under tremendous and unwarranted pressure to sell the assets, potentially on terms and conditions unfavorable to prospects for sustaining the newspapers as strong, healthy competitors. . . . In other cases, the commission has granted waivers of two and three years to cure violations of its cross-ownership rules."
In addition to the tens of millions of dollars of profit Metromedia Chairman John W. Kluge will realize from the sale of the stations to Murdoch, the FCC application said he also will receive $200,000 for agreeing not to own more than 5 percent of any independent television station within a radius of 35 miles from the transmitters for the New York, Washington and Los Angeles television stations and for agreeing not to dissuade any employes from working for Murdoch