Antitrust Law Daily U.S. information exchange investigation nets another TV station operator
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Friday, December 14, 2018

U.S. information exchange investigation nets another TV station operator

By Jeffrey May, J.D.

Nexstar Media Group, Inc. is the seventh television broadcaster to agree to settle Department of Justice Antitrust Division allegations that it engaged in unlawful agreements to share non-public competitively sensitive advertising market information with competitors. The other six companies—Sinclair Broadcast Group Inc., Raycom Media Inc., Tribune Media Company, Meredith Corporation, Griffin Communications, and Dreamcatcher Broadcasting LLC—were named in a November 13 complaint. An amended complaint adding Nexstar and a proposed consent decree were filed yesterday in the federal district court in Washington, D.C. (U.S. v. Sinclair Broadcast Group, Inc., Case No. 1:18-cv-02609).

According to the Justice Department’s announcement, Nexstar agreed with other entities in many metropolitan areas across the United States to exchange revenue pacing information and also engaged in the exchange of other forms of non-public sales information in certain metropolitan areas. Pacing information compares how each station is performing versus the rest of the market over a certain time period and provides insight into each station’s remaining spot advertising for the period. By exchanging pacing information, 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 government contends.

The proposed final judgment, if approved by the court, would prohibit Nexstar from directly or indirectly sharing such competitively sensitive information. The Justice Department has determined that prohibiting this conduct would resolve the antitrust concerns raised as a result of Nexstar’s conduct. The proposed settlement would further require Nexstar to cooperate in the Justice Department’s ongoing investigation. It also includes compliance and reporting obligations. The settlement has a seven-year term and it will continue to apply to stations currently owned by Nexstar, even if those stations are acquired by another company.

Proposed acquisition. The settlement comes as Nexstar, which owns or operates 105 television stations around the country, looks to acquire Tribune Media, another defendant in the case. On December 3, Nexstar announced that it had entered into a definitive merger agreement to acquire Tribune Media, which owns 41 stations. In the statement, Nexstar said that it would divest certain television stations necessary to comply with regulatory ownership limits and might also divest other assets which it deemed to be non-core. The combined firm would reportedly own or control more U.S. local television stations than any other.

Attorneys: Lee F. Berger, U.S. Department of Justice, for the United States. Tabitha Bartholomew (Hughes Hubbard & Reed LLP) for Sinclair Broadcast Group, Inc. John Benedict Wyss (Wiley Rein LLP) for Raycom Media, Inc. Michael C. Baker (Covington & Burling LLP) for Tribune Media Co.

Companies: Dreamcatcher Broadcasting LLC; Griffin Communications; Meredith Corp.; Raycom Media Inc.; Sinclair Broadcast Group Inc.; Tribune Media Co.; Nexstar Media Group, Inc.

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