Tribune Co. Chairman and CEO Dennis FitzSimons said Federal Communications (FCC) Chairman Kevin Martin's proposal to lift cross-ownership regulations in only America's biggest markets is “too little for the company - and may present 'challenges' as the Chicago media giant attempts to close its going-private deal led by real estate mogul Sam Zell,” according to a memo to Tribune employees Tuesday afternoon.

Tribune petitioned the FCC in May to transfer the licenses of the television and radio stations in four markets where it has newspaper operations.

"The Chairman previously said that he expected the commission to act on our application within 180 days -- we're now beyond that timeframe. The content of today's proposed rule change and Chairman Martin's aggressive timetable for voting on it are likely to face challenges in the weeks ahead and there will be a great deal of speculation in the media about its impact. In addition, the proposal as currently written is likely to need further clarification. Until that clarification, we are declining to comment publicly about the proposal," FitzSimons wrote in the memo.

According to Editor & Publisher, Tribune either needs the waivers soon, or risks higher financing costs, or the withdrawal of commitments by any of its four investment banks – so that it can swing the deal at the $34 per share offer in Zell's $8.2 billion employee stock ownership plan-based transaction.

FitzSimons said FCC's proposal, which allows daily newspapers in the largest 20 Nielsen Designated Market Areas to own either one TV station or one radio station is "less ambitious" than the one FCC passed in 2003. "Consequently, through the public comment process now underway, we will seek an expansion of cross-ownership relief beyond that contained in Chairman Martin's proposal," he added.

Gannett Co. Inc. released its statement Wednesday, stating that "Gannett agrees the newspaper/broadcast cross-ownership ban must be changed, but today's proposed rule is far too limited and does not reflect the realities of the marketplace."

Wall Street seems more confident that the Zell deal will get done - Tribune stock Tuesday closed at $28.53, up 62 cents, or 2.22 percent.