Australian press baron Rupert Murdoch reached an agreement yesterday to buy seven Metromedia Inc. television stations, including WTTG-TV here, for $2 billion as part of a complex transaction that would include the immediate sale of Metromedia's station in Boston to the Hearst Corp.
The deal would give Murdoch, who has acquired an international media empire built primarily around newspapers and magazines, his first major foothold in the U.S. broadcasting industry.
But the transaction must clear a host of regulatory hurdles, including Federal Communications Commission rules that will require Murdoch to become a U.S. citizen.
An FCC "cross-ownership" rule prohibits a company or individual from owning a newspaper and broadcast station in the same city. It also could force Murdoch to sell two of his largest newspapers, the New York Post and the Chicago Sun-Times, and possibly the weekly Village Voice.
Murdoch told Cable News Network yesterday that he and oil man Marvin Davis, co-owners of Twentieth Century-Fox Film Corp., expect to complete negotiations this weekend to purchase the Metromedia stations.
But one source familiar with the talks said an agreement on the sale was reached yesterday morning at a meeting at the Waldorf Astoria Hotel in New York attended by Murdoch, Metromedia Chairman John W. Kluge, and Hearst executives.
After the meeting, Kluge and Frank A. Bennack Jr., president and chief executive officer of Hearst, announced that Hearst had acquired WCVB-TV, Metromedia's Boston TV station, for $450 million.
Kluge was quoted by the Associated Press as saying that the Hearst purchase is "part of an overall transaction which we will be able to announce Monday."
Murdoch also agreed to assume more than $1 billion in debt that Kluge acquired last year when he engineered a "leveraged buy-out" of Metromedia's public stock, turning the media conglomerate into a privately held company, Murdoch said.
Murdoch's interest in acquiring the Metromedia stations became clear Friday when the publisher told FCC officials in Washington that he plans to become a U.S. citizen. Yesterday, Murdoch said the necessary papers will be filed within a few days and that the citizenship process should take only a few weeks. FCC rules prohibit aliens from having more than 20 percent direct ownership or 25 percent indirect ownership in a broadcast license.
Murdoch, who has been a resident alien with a green immigration card for more than 10 years, owns 49 percent of News Corp. Ltd., an Australian company that earlier this year bought 50 percent of Twentieth Century Fox.
The six television stations that Murdoch and Davis would retain include outlets in Washington, New York, Chicago, Los Angeles, Houston, and Dallas.
It was not clear yesterday whether Murdoch plans to sell his prized New York Post, the tabloid he bought in 1977.
FCC officials say that sometimes the agency grants a waiver to give an owner time, after a purchase, to sell either the newspaper or broadcast station in the same city.
Murdoch told CNN yesterday that he is exploring "all our options" that might allow him to keep his New York and new Chicago television stations and his newspapers in both cities for a period. He added that "we'll be applying for a waiver as long as possible, but that would certainly be in excess of a year."
Asked whether he is considering selling the New York Post, he replied: "No, not at this stage . . . . "
Although the Metromedia stations would be Murdoch's first U.S. broadcast properties, he already owns a television network in Australia and a satellite "superstation" distributing programs to cable TV systems in Europe. Besides Twentieth Century-Fox, Murdoch also owns The Times of London, New York magazine, the Boston Herald and the San Antonio Express.