WASHINGTON, D.C. — The U.S. Department of Justice has reached settlements with five broadcast TV station ownership groups to resolve a Department lawsuit brought as part of its ongoing investigation into exchanges of competitively sensitive information in the broadcast television industry.
The settlements, which came late Monday (6/17), were agreed upon by CBS Corp., Cox Enterprises, The E.W. Scripps Co., Fox Corporation and TEGNA.
The five broadcast TV companies were alleged to have engaged in unlawful information sharing among their owned broadcast television stations.
Included in the settlement is Cox Reps, one of two large rep firms in the industry that assist broadcast stations in sales to national advertisers. DOJ alleges that the rep firms also participated in the unlawful information sharing conduct.
“The Antitrust Division’s efforts to protect competition in the television broadcast industry continue with today’s settlements that will stop the unlawful exchange of competitively sensitive information among rival broadcasters and their sales rep firms,” said Assistant Attorney General Makan Delrahim of the Department of Justice’s Antitrust Division. “Vigorous competition among broadcast stations allows American businesses across the country to obtain competitive advertising rates. The unlawful sharing of information reduced that competition and thereby harmed businesses that rely on competitive rates to best serve their customers.”
The settlement also sees the five companies added to a complaint against Sinclair Broadcast Group filed by the U.S. government — a technicality designed to move forward with a full settlement of the DOJ’s charges against all involved.
According to the amended complaint, CBS, Cox, Scripps, Fox, and TEGNA agreed with other entities in many metropolitan areas across the U.S. to exchange revenue pacing information. They also engaged in the exchange of other forms of non-public sales information in certain metropolitan areas.
The complaint further alleges that Cox Reps also facilitated and participated in this exchange of pacing information by its broadcast-station clients that operated in the same metropolitan areas.
Pacing compares a broadcast station’s revenues booked for a certain time period to the revenues booked in the same point in the previous year. Pacing indicates how each station is performing versus the rest of the market and provides insight into each station’s remaining spot advertising for the period.
By exchanging pacing information, the five new defendants and other broadcasters were better able to anticipate whether their competitors were likely to raise, maintain, or lower spot advertising prices, which in turn helped inform their stations’ own pricing strategies and negotiations with advertisers. As a result, the information exchanges harmed the competitive price-setting process in markets for the sale of spot advertisements.
DOJ commended each of the new defendants for their cooperation with the Antitrust Division in bringing these issues to settlement.
In particular, Fox assisted in the expeditious resolution of the Division’s investigation, even though Fox’s relevant conduct of which the Division is currently aware appears to have occurred before Fox’s spin-off from the recently merged Walt Disney Company and 21st Century Fox.
The proposed settlements with CBS, Cox, Scripps, Fox and TEGNA prohibit the direct or indirect sharing of such competitively sensitive information. Additionally, the Department’s proposed settlement with Cox requires that Cox Reps implements firewalls in markets where it represents more than one broadcast station. The Department has determined that these provisions would resolve the antitrust concerns raised as a result of the defendants’ alleged conduct.
The proposed settlements further require these five defendants to adopt rigorous antitrust compliance and reporting measures to prevent similar anticompetitive conduct in the future.
The settlements have a seven-year term, and they will continue to apply to stations currently owned by CBS, Cox, Scripps, Fox, and TEGNA even if those stations are acquired by another company.
CBS owns or operates 28 television stations across 18 markets and had revenue in excess of $14.5 billion in 2018. Cox’s CMG arm owns or operates 14 TV stations across 10 markets and had an estimated $20 billion in revenues in 2018, including Cox Reps.
Scripps owns or operates 60 television stations across 42 markets and had over $917 million in revenues in 2018.
Fox owns or operates 17 television stations across 17 markets.
TEGNA owns or operates 49 television stations in 41 markets and had $2.2 billion in revenues in 2018.
As required by the Tunney Act, the proposed settlements, along with the Department’s competitive impact statement, will be published in the Federal Register.