WASHINGTON, D.C. — A deal has been reached between the Department of Justice and no less than 6 owners of broadcast TV stations — including an Oklahoma company that just bought a group of radio stations from The E.W. Scripps Co.
The other companies involve a company that won’t be completing what was to be the biggest merger of the year, and the company set to complete its own merger with a respected owner that is swiftly growing in size.
The settlement resolves a DOJ lawsuit alleging that the six companies — Sinclair Broadcast Group; Raycom Media; Tribune Media; Meredith Corporation; Dreamcatcher Broadcasting LLC and Oklahoma-based Griffin Communications —engaged in “unlawful agreements to share non-public competitively sensitive information with their broadcast television competitors.”
In an act that puts the settlement in motion, the Justice Department’s Antitrust Division on Tuesday filed a civil antitrust lawsuit in the U.S. District Court for the District of Columbia to challenge the unlawful exchange of competitively sensitive information among these six broadcast television companies, their sales representatives, and other broadcast television groups. At the same time, the Department filed proposed settlements that, if approved by the court, would resolve the lawsuit’s alleged competitive harm alleged in the complaint.
“The unlawful exchange of competitively sensitive information allowed these television broadcast companies to disrupt the normal competitive process of spot advertising in markets across the United States,” Makan Delrahim, Assistant Attorney General of the Justice Department’s Antitrust Division, said. “Advertisers rely on competition among owners of broadcast television stations to obtain reasonable advertising rates, but this unlawful sharing of information lessened that competition and thereby harmed the local businesses and the consumers they serve.”
According to the complaint, the six broadcast television companies agreed “in many metropolitan areas across the United States” to exchange revenue pacing information, and certain defendants also engaged in the exchange of other forms of non-public sales information in certain metropolitan areas.
By exchanging pacing information, DOJ claims the broadcasters were better able to anticipate whether their competitors were likely to raise, maintain, or lower spot advertising prices, which in turn helped inform the stations’ own pricing strategies and negotiations with advertisers. “As a result, the information exchanges harmed the competitive price–setting process,” the Justice Department believes.
The settlement prohibits the direct or indirect sharing of such competitively sensitive information.
The Department has determined that prohibiting this conduct would resolve the antitrust concerns raised as a result of the conduct of these defendants.
The settlement further requires defendants to cooperate in the department’s ongoing investigation, and to adopt rigorous antitrust compliance and reporting measures to prevent similar anticompetitive conduct in the future.
The settlement has a seven year term, and it will continue to apply to stations currently owned by defendants, even if those stations are acquired by another company.
Raycom Media is on track to merge with Gray Television, while Sinclair and Tribune Media are not merging.
Meanwhile, Oklahoma City-based Griffin Communications, which owns or operates four television stations in two markets and exceeded $60 million in revenue in 2017, in June 2018 agreed to purchase The E.W. Scripps’ five radio stations in Tulsa for $12.5 million. The deal gave Griffin News/Talk KFAQ-AM 1170, CHR/Pop KHTT-FM 106.9 “KHits,” Country siblings KVOO-FM 98.5 and KXBL-FM 99.5 and Adult Hits KBEZ-FM 92.9 “Bob FM.”
Dreamcatcher Broadcasting, headquartered in Santa Monica, Calif., owns or operates three television stations in two markets and had over $50 million in revenue in 2017. It is closely aligned with Tribune, which maintains Shared Services Agreements with Dreamcatcher’s stations, located in the Norfolk and Scranton-Wilkes Barre, markets, respectively.
As required by the Tunney Act, the proposed settlement, along with the department’s competitive impact statement, will be published in the Federal Register.
Any person may submit written comments concerning the proposed settlement within 60 days of its publication to Owen Kendler, Chief, Media, Entertainment, and Professional Services Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 8700, Washington, DC 20530.
At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.