Attorneys for Rupert Murdoch yesterday argued before a U.S. Appeals Court panel here that a surprise congressional action requiring the quick sale of the New York Post was unconstitutional because it was a "rifle-shot piece of legislation" aimed only at Murdoch.
Arguing that the rider attached to the omnibus spending bill in December by Sens. Edward M. Kennedy (D-Mass.) and Ernest Hollings (D-S.C.) was a "punitive measure," Murdoch attorney Howard M. Squadron told the court that since its enactment the Post's advertising and circulation had been slipping "making it almost entirely unviable."
An attorney for the Federal Communications Commission, Diane S. Killory, told the panel that the legislation was constitutional because Murdoch's efforts to retain the Post and a New York television station against FCC rules could be seen as only a "catalyst" for the legislation that put limits on how the FCC would enforce its "cross-ownership rule" that prohibits ownership of a television station and newspaper in the same market.
Besides prohibiting the FCC from revising the 13-year-old rule, the legislation also said the FCC could not extend temporary waivers. Murdoch's News America Publishing Inc. was the only company at the time with temporary FCC waivers of the cross-ownership rule for his properties in New York and Boston.
Killory said that because Congress did not rule out application for a permanent waiver, Murdoch could apply for such an exemption. He must prove that there were no buyers for the Post at "fair market value" and that the paper would close without sharing the profits from the television station, she said.
Murdoch has said that unless the unions agree to $24 million in cuts in pay, benefits and personnel over the next three years, he will close the Post next Friday.
New York real estate developer Peter Kalikow has agreed to pay $37 million for the paper, pending union concessions. He has signed a sales contract, but has not promised to keep the Post operating.
Union members and at least one other bidder have said they are still interested in buying the paper. Attorney Theodore Kheel, adviser to the unions at the New York Post, said this week that two investors had approached him with offers to buy the paper.
Kheel, who refused to identify the investors, said their offers would be more attractive than Kalikow's. Murdoch has indicated that Kalikow offered the best deal.
Two other bidders, including Village Voice owner Leonard Stern, would have tried for a joint operating arrangement with the New York Daily News, he said. Such an agreement would merge printing, advertising and circulation functions of the two papers and keep the editorial side separate.
Wilbert Tatum, majority owner of the New York Amsterdam News, also appeared at the hearing yesterday with his attorney, Kenneth Berlin, who argued that Tatum was among those who wanted to buy the paper and had difficulty even submitting his offer.
Squadron told the panel that Tatum's offer showed he did not intend to keep the staff, was not prepared to pay enough for the paper and had refused to pick up $40 million in severance liabilities in case the paper closed.
Tatum told reporters afterwardthat he had submitted a preliminary bid with questions and was preparing a firm offer when Murdoch announced he was selling to Kalikow.
In the meantime, the attention of New Yorkers has become riveted to Murdoch's latest bout with the unions and the possibility that, under Kalikow, the Post could be published by Peter Price. Price owns the successful upscale magazine Avenue.
Union leaders are wary of Price because he was chief executive of Carey Transportation, which operates buses from downtown New York to area airports. In 1985, when Carey filed for reorganization under Chapter 11, Price replaced union drivers with supervisors and new hires during a strike. The union drivers went back to work soon afterward under a new contract considered more favorable to the company.