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From Antitrust Law Daily, October 31, 2014

Combination of TV station operators requires divestitures in five markets

By Jeffrey May, J.D.

In order to resolve Department of Justice Antitrust Division concerns over their proposed merger, broadcast television station operators Media General Inc. and LIN Media LLC have agreed to divest TV stations in five markets where the companies compete head-to-head. The divestitures are required under the terms of a proposed consent decree filed along with a complaint in the federal district court in Washington, D.C. (U.S. v. Media General Inc., Civil Action No. 1:14-cv-01823).

Media General and LIN Media announced their proposed merger agreement in March. Yesterday, the Department of Justice filed a complaint, alleging that, without the divestitures, the proposed acquisition likely would substantially lessen competition in the sale of broadcast television "spot" advertising in the following markets: (1) Mobile, Alabama/Pensacola, Florida; (2) Birmingham, Alabama; (3) Savannah, Georgia; (4) Providence, Rhode Island/New Bedford, Massachusetts; and (5) Green Bay/Appleton, Wisconsin.

Broadcast television spot advertising was alleged to be the relevant product market. Broadcast television spot advertising is sold directly by the station itself or through its national representative on a localized basis and is purchased by advertisers who want to target potential customers in specific geographic areas. According to the government, this product is unique. Spot advertising is different from network and syndicated television advertising, and other media—such as radio, newspapers, or outdoor billboards—would not be desirable substitutes. Each of the five Designated Market Areas or DMAs is alleged to be a relevant geographic market.

Advertising rates would likely increase in these markets if the acquisition, valued at approximately $1.5 billion, were to proceed without the requested relief, the government alleged. For example, the Justice Department contends that the combination of the three stations operated by the defendants in the Providence/New Bedford DMA would give General Media approximately 83 percent of all television station gross advertising revenues in that DMA.

Under the proposed settlement, the defendants have agreed to divest: WVTM-TV (NBC) in Birmingham and WJCL-TV (ABC) in Savannah to Hearst Television; WALA-TV (FOX) in Mobile to Meredith Corporation; and WJAR-TV in Providence, WLUK-TV and WCWF-TV in Green Bay, and WTGS in Savannah to Sinclair Broadcast Group, Inc. The defendants are required to preserve these divestiture assets under a hold-separate agreement.

Another recent media merger challenge. The Justice Department's challenge to the combination of Media General and LIN Media follows a federal/state action to block Sinclair Broadcast Group’s $963 million acquisition of Perpetual Corp. A proposed consent decree to resolve that matter, which was announced in July, is awaiting approval in the federal district court in Washington, D.C. Last week, the government moved for entry of that final judgment.

Attorneys: Mark A. Merva for Department of Justice Antitrust Division. Richard C. Park (Fried, Frank, Harris, Shriver & Jacobson, LLP) for Media General Inc. Deborah A. Garza (Covington & Burling LLP) for LIN Media LLC.

Companies: LIN Media LLC; Media General Inc.; Sinclair Broadcast Group, Inc.

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