Proposed Final Judgment and Competitive Impact Statement; United States of America v. American Radio Systems Corporation, The Lincoln Group, L.P. and Great Lakes Wireless Talking Machine LLC

DEPARTMENT OF JUSTICE

Antitrust Division

Proposed Final Judgment and Competitive Impact Statement; United

States of America v. American Radio Systems Corporation, The Lincoln

Group, L.P. and Great Lakes Wireless Talking Machine LLC

Notice is hereby given pursuant to the Antitrust Procedures and

Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment,

Stipulation, and Competitive Impact Statement have

[[Page 57702]]

been filed with the United States District Court for the District of

Columbia in United States v. American Radio Systems Corporation, The

Lincoln Group, L.P. and Great Lakes Wireless Talking Machine LLC, Civ.

Action No. 96-2459. The proposed Final Judgment is subject to approval

by the Court after the expiration of the statutory 60-day public

comment period and compliance with the Antitrust Procedures and

Penalties Act. 15 U.S.C. 16(b)-(h).

The United States filed a civil antitrust Complaint on October 24,

1996, alleging that the proposed acquisition of assets of The Lincoln

Group, L.P. (``Lincoln'') by American Radio Systems Corporation

(``ARS'') would violate Section 7 of the Clayton Act, 15 U.S.C. 18, and

that the Joint Sales Agreement (``JSA'') between ARS and Great Lakes

Wireless Talking Machine LLC (``Great Lakes'') violates Section 1 of

the Sherman Act, 15 U.S.C. 1. The Complaint alleges that ARS and

Lincoln own and operate three and four radio stations respectively in

the Rochester, New York area. In addition, ARS has a JSA with a radio

station owned by Great Lakes (WNVE-FM), allowing ARS post-merger to

control the sale of advertising time on an eighth station as well. This

acquisition would allow ARS to control advertising time on six of the

top eight radio stations in the Rochester area. As a result, the

combination of these companies would substantially lessen competition

in the sale of radio advertising time in Rochester, New York and the

surrounding area.

Moreover, the Complaint alleges that, beginning at least as early

as October 1, 1995 and continuing to this day, ARS and Great Lakes

entered into a contract, the purpose of which is the elimination of all

pricing competition between two rival radio stations, to the detriment

of purchasers of radio advertising time in the Rochester area. As such,

it constitutes an illegal contract in restraint of interstate trade and

commerce.

The proposed Final Judgment orders ARS to divest WHAM-AM and WVOR-

FM, both currently owned by Lincoln, and WCMF-AM, currently owned by

ARS. Unless the United States grants a time extension, ARS must divest

these radio stations either within six months after the filing of the

Final Judgment, or within five (5) business days after notice of entry

of the Final Judgment, whichever is later. If ARS does not divest WHAM-

AM, WVOR-FM and WCMF-AM within the divestiture period, the Court may

appoint a trustee to sell the assets. The proposed Final Judgment also

requires ARS to ensure that, until the divestiture mandated by the

Final Judgment has been accomplished, all of Lincoln's present stations

(including WHAM-AM and WVOR-FM) will be operated independently as

viable, ongoing businesses, and kept separate and apart from ARS' other

Rochester radio stations. Further, the proposed Final Judgment requires

ARS to give the United States prior notice as to certain future radio

station acquisitions in Rochester.

In addition, the Final Judgment requires ARS and Great Lakes to

terminate the JSA that allows ARS to sell radio advertising time for

WNVE within five (5) business days after receiving notice of entry of

the Final Judgment, and to cease and desist from entering into any

future joint sales agreements between them in the Rochester, New York

Metro Survey Area. ARS and Great Lakes also must terminate their

``Option Agreement'' dated September 28, 1995, between them, within

five (5) business days after receiving notice of the entry of the Final

Judgment, unless ARS has first assigned this agreement to any entity or

entities acquiring WHAM-AM, WVOR-FM or WCMF-AM. Furthermore, the

proposed Final Judgment requires ARS and Great Lakes to give the United

States prior notice before entering any future agreements that would

grant ARS or Great Lakes the right to sell advertising time or to

establish advertising prices for non-ARS radio stations in Rochester.

A Competitive Impact Statement filed by the United States describes

the Complaint, the proposed Final Judgment, and remedies available to

private litigants.

Public comment is invited within the statutory 60-day comment

period. Such comments, and the responses thereto, will be published in

the Federal Register and filed with the Court. Written comments should

be directed to Craig W. Conrath, Chief, Merger Task Force, Antitrust

Division, 1401 H Street, NW, Suite 4000, Washington, D.C. 20530

(telephone: 202-307-0001). Copies of the Complaint, Stipulation,

proposed Final Judgment and Competitive Impact Statement are available

for inspection in Room 215 of the Antitrust Division, Department of

Justice, 325 7th St., NW, Washington, D.C. 20530 (telephone: 202-514-

2481), and at the office of the Clerk of the United States District

Court for the District of Columbia, Third Street and Constitution

Avenue, NW, Washington, D.C. 20001.

Copies of any of these materials may be obtained upon request and

payment of a copying fee.

Constance K. Robinson,

Director of Operations, Antitrust Division.

Stipulation

It is stipulated by and between the undersigned parties, by their

respective attorneys, as follows:

(1) The Court has jurisdiction over the subject matter of this

action and over each of the parties hereto, and venue of this action is

proper in the United States District Court for the District of

Columbia.

(2) The parties stipulate that a Final Judgment in the form hereto

attached may be filed and entered by the Court, upon the motion of any

party or upon the Court's own motion, at any time after compliance with

the requirements of the Antitrust Procedures and Penalties Act (15

U.S.C. 16), and without further notice to any party or other

proceedings, provided that the United States of America (hereinafter

``United States'') has not withdrawn its consent, which it may do at

any time before the entry of the proposed Final Judgment by serving

notice thereof on the parties and by filing that notice with the Court.

(3) The defendants shall abide by and comply with the provisions of

the proposed Final Judgment pending entry of the Final Judgment, and

shall, from the date of the signing of this Stipulation, comply with

all the terms and provisions of the proposed Final Judgment as though

the same were in full force and effect as an order of the Court.

[[Page 57703]]

(4) The parties recognize that there could be a delay in obtaining

approval by or a ruling of a government agency related to the

divestitures required by Section IV of the Final Judgment,

notwithstanding the good faith efforts of American Radio Systems

Corporation (``ARS'') and any prospective Acquirer. In this

circumstance, the United States will, in the exercise of its sole

discretion, acting in good faith, give special consideration to

forebearing from applying for the appointment of a trustee pursuant to

Section V of the Final Judgment, or from pursuing legal remedies

available to it as a result of such delay, provided that: (i) ARS has

entered into one or more definitive agreements to divest the Lincoln

Assets and WCMF-AM Assets, and such agreements and the Acquirer or

Acquirers have been approved by the United States; (ii) All papers

necessary to secure any governmental approvals and/or rulings to

effectuate such divestitures (including but not limited to FCC, SEC and

IRS approvals or rulings) have been filed with the appropriate agency;

(iii) Receipt of such approvals are the only closing conditions that

have not been satisfied or waived; and (iv) ARS has demonstrated that

neither it nor the prospective Acquirer or Acquirers are responsible

for any such delay.

(5) In the event the United States withdraws its consent, as

provided in paragraph 2 above, or if the proposed Final Judgment is not

entered pursuant to this Stipulation, this Stipulation shall be of no

effect whatever, and the making of this Stipulation shall be without

prejudice to any party in this or any other proceeding.

(6) The defendants represent that the divestitures and contract

terminations ordered in the proposed Final Judgment can and will be

made, and that the defendants will later raise no claims of hardship or

difficulty as grounds for asking the Court to modify any of the

divestiture or termination provisions contained therein.

Dated: October 24, 1996.

For Plaintiff United States of America:

Craig W. Conrath,

U.S. Department of Justice, Antitrust Division, Merger Task Force, 1401

H Street, N.W., Suite 4000, Washington, D.C. 20005, (202) 307-5779.

For Defendant American Radio Systems Corporation:

James R. Loftis, III, Collier Shannon Rill & Scott, PLLC, 3050 K

Street, N.W., Suite 400, Washington, DC 20007, (202) 342-8480.

For Plaintiff State of New York:

Dennis C. Vacco,

Attorney General of the State of New York.

John H. Carley,

Deputy Attorney General, Public Advocacy.

Stephen D. Houck,

Assistant Attorney General, Chief, Antitrust Bureau.

By:

Stephen D. Houck.

Richard L. Schwartz,

Deputy Chief, Antitrust Bureau.

George R. Mesires,

Assistant Attorney General, 120 Broadway, Suite 2601, New York, New

York 10271, (202) 416-8275.

For Defendant the Lincoln Group, L.P.:

Jason L. Shrinsky,

Kaye Scholer Fierman Hays & Handler, LLP, 901 15th Street, N.W., Suite

1100, Washington, DC 20005.

For Defendant, Great Lakes Wireless Talking Machine LLC:

Stephen P. Morris,

Morris & Morris, 30 Corporate Woods, Suite 120, Rochester, NY 14623,

(716) 292-5750.

Certificate of Service

I, Dando B. Cellini, hereby certify that on October 24, 1996, I

caused a copy of the foregoing Complaint, Motion for Entry of

Stipulation and Order, Stipulation, form of Order, United States'

Explanation of Consent Decree Procedures and Competitive Impact

Statement filed this day in United States and State of New York v.

American Radio Systems, et. al to be served on all parties by having a

copy mailed, first class, postage prepaid, to:

Plaintiff State of New York:

George R. Mesires,

Assistant Attorney General, State of New York, 120 Broadway, Suite

2601, New York, New York 10271.

Defendant the Lincoln Group, L.P.:

Jason L. Shrinsky,

Kaye Scholer Fierman Hays & Handler, LLP, 901 15th Street, NW., Suite

1100, Washington, DC 20005.

Defendant American Radio Systems Corporation:

James R. Loftis, III,

Collier Shannon Rill & Scott, PLLC, 3050 K Street, N.W., Suite 400,

Washington, DC 20007, (202) 342-8480.

Defendant Great Lakes Wireless Talking Machine LLC:

Stephen P. Morris,

Morris & Morris, 30 Corporate Woods, Suite 120, Rochester, NY 14623,

(716) 292-5750.

Dando B. Cellini

Dated: October 24, 1996.

Final Judgment

Case Number: 1:96CV02459

Judge: Norma Holloway Johnson

Deck Type: Antitrust

Date Stamp: 10/24/96

No. ______.

Whereas, plaintiffs, the United States of America (hereinafter

``United States'') and the State of New York (hereinafter ``New

York''), having filed their Complaint herein on October 24, 1996, and

defendants, by their respective attorneys, having consented to the

entry of this Final Judgment without trial or adjudication of any issue

of fact or law herein, and without this Final Judgment constituting any

evidence against or an admission by any party with respect to any issue

of law or fact herein;

And whereas, defendants have agreed to be bound by the provisions

of this Final Judgment pending its approval by the Court;

And whereas, the purpose of this Final Judgment is prompt and

certain divestiture of certain assets to assure that competition is not

substantially lessened;

And whereas, plaintiffs require defendants to make certain

divestitures and contract terminations for the purpose of remedying the

loss of competition alleged in the Complaint;

And whereas, defendants have represented to plaintiffs that the

divestitures and contract terminations ordered herein can and will be

made and that defendants will later raise no claims of hardship or

difficulty as grounds for asking the Court to modify any of the

divestiture or termination provisions contained below;

Now, therefore, before the taking of any testimony, and without

trial or

[[Page 57704]]

adjudication of any issue of fact or law herein, and upon consent of

the parties hereto, it is hereby ordered, adjudged, and decreed as

follows:

I. Jurisdiction

This Court has jurisdiction over each of the parties hereto and

over the subject matter of this action. The Complaint states a claim

upon which relief may be granted against defendants ARS and Lincoln, as

hereinafter defined, under Section 7 of the Clayton Act, as amended (15

U.S.C. 18), and against defendants ARS and Great Lakes, as hereinafter

defined, under Section 1 of the Sherman Act, as amended (15 U.S.C. 1).

II. Definitions

As used in this Final Judgment:

A. ``ARS'' means defendant American Radio Systems Corporation, a

Delaware corporation with its headquarters in Boston, MA, and includes

its successors and assigns, its subsidiaries, and directors, officers,

managers, agents, and employees acting for or on behalf of ARS.

B. ``Lincoln'' means defendant The Lincoln Group, L.P., a New York

limited partnership with its headquarters in Syracuse, NY, and includes

its successors and assigns, its subsidiaries, and directors, officers,

managers, agents, and employees acting for or on behalf of Lincoln.

C. ``Great Lakes'' means defendant Great Lakes Wireless Talking

Machine LLC, a New York limited liability company with its headquarters

in East Rochester, New York, and includes its successors and assigns,

its subsidiaries, and directors, officers, managers, agents and

employees acting for or on behalf of Great Lakes.

D. ``Lincoln Assets'' means all of the assets, tangible or

intangible, used in the operation of the WHAM-AM and WVOR-FM radio

stations in Rochester, New York, including but not limited to: All real

property (owned and leased) used in the operation of these two

stations; all broadcast equipment, personal property, inventory, office

furniture, fixed assets and fixtures, materials, supplies and other

tangible property used in the operation of these two stations; all

licenses, permits and authorizations and applications therefor issued

by the Federal Communications Commission (``FCC'') and other

governmental agencies relating to these two stations; all contracts,

agreements, leases, and commitments of Lincoln pertaining to these two

stations and their operations; all trademarks, service marks, trade

names, copyrights, patents, slogans, programming materials and

promotional materials relating to these two stations; and all logs and

other records maintained by Lincoln or these two stations in connection

with each station's business.

E. ``WCMF-AM Assets'' means all of the following assets: all real

property (owned and leased) used solely in the operation of radio

station WCMF-AM; all broadcast equipment used solely in the operation

of radio station WCMF-AM; and all licenses, permits, and authorizations

and applications therefor issued by the Federal Communications

Commission (``FCC'') and other governmental agencies relating to radio

station WCMF-AM.

F. ``ARS Rochester Radio Stations'' means the following radio

stations: WCMF-FM, WRMM-FM, WPXY-FM, and WHTK-AM.

G. ``Non-ARS Radio Station'' means any radio station licensed to a

community in the Rochester Area that is not an ARS Rochester Radio

Station.

H. ``Rochester Area'' means the Rochester, New York Metro Survey

Area as identified by The Arbitron Radio Market Report for Rochester

(Summer 1996), and includes the following six counties: Monroe, Wayne,

Ontario, Livingston, Genesee and Orleans.

I. The ``WNVE Joint Sales Agreement'' means the agreement between

ARS and Great Lakes dated September 28, 1995, entitled ``Joint Sales

Agreement.

J. The ``WNVE Option Agreement'' means the agreement between ARS

and Great Lakes dated September 28, 1995, entitled ``Option

Agreement.''

K. ``WNVE'' means WNVE-FM, a radio station owned by Great Lakes and

located in South Bristol, New York.

L. The ``Asset Purchase Agreement'' means the agreement between ARS

and Lincoln dated February 23, 1996, entitled ``Asset Purchase

Agreement.''

M. ``Acquirer'' means the entity or entities to whom ARS divests

the Lincoln Assets and/or the WCMF-AM Assets under this Final Judgment.

III. Applicability

A. The provisions of this Final Judgment apply to each of the

defendants, their successors and assigns, their subsidiaries,

affiliates, directors, officers, managers, agents and employees, and

all other persons in active concert or participation with any of them

who shall have received actual notice of this Final Judgment by

personal service or otherwise.

B. Each defendant shall require, as a condition of the sale or

other disposition of all or substantially all of the assets used in its

business of owning and operating its portfolio of radio stations in the

Rochester Area, that the acquiring party or parties agree to be bound

by the provisions of this Final Judgment; provided, however, defendants

need not obtain such an agreement from an Acquirer, as defined herein,

or from any future purchaser of WNVE.

IV. Divestiture of Lincoln Assets and WCMF-AM

A. ARS is hereby ordered and directed, in accordance with the terms

of this Final Judgment, within six (6) months after the filing of this

Final Judgment, or within five (5) business days after notice of entry

of this final judgment, whichever is later, to divest the Lincoln

Assets and WCMF-AM Assets to an Acquirer acceptable to the United

States, in its sole discretion, after consulting with New York. Unless

the United States otherwise consents in writing, the divestitures

pursuant to Section IV of this Final Judgment or by the trustee

appointed pursuant to Section V, shall be accomplished in such a way as

to satisfy the United States, in its sole discretion after consulting

with New York, that the Lincoln Assets and WCMF-AM Assets can and will

be used by an Acquirer as viable, ongoing commercial radio businesses.

The divestitures, whether pursuant to Section IV or V of this Final

Judgment, shall be made (i) to an Acquirer that, in the sole judgment

of the United States after consulting with New York, has the capability

and intent of competing effectively, and has the managerial,

operational and financial capability to compete effectively as a radio

station operator in the Rochester Area; and (ii) pursuant to an

agreement the terms of which shall not, in the sole judgment of the

United States after consulting with New York interfere with the ability

of the purchaser to compete effectively.

B. ARS agrees to use its best efforts to divest the Lincoln Assets

and WCMF-AM Assets, and to obtain all regulatory approvals necessary

for such divestitures, as expeditiously as possible. The United States,

in its sole discretion, may extend the time period for the divestitures

for two (2) additional thirty (30)-day periods of time, not to exceed

sixty (60) calendar days in total.

C. In accomplishing the divestitures ordered by this Final

Judgment, ARS promptly shall make known, by usual and customary means,

the availability of the Lincoln Assets and, unless relieved of this

obligation by compliance with paragraph E of this Section, the WCMF-AM

Assets. ARS shall inform any person making a bona fide inquiry

regarding a possible purchase that the

[[Page 57705]]

sale is being made pursuant to this Final Judgment and provide such

person with a copy of the Final Judgment. ARS shall make known to any

person making an inquiry regarding a possible purchase of the Lincoln

Assets or WCMF-AM Assets that the assets described in Section II (D)

and (E) are being offered for sale. ARS and Lincoln shall also offer to

furnish to all bona fide prospective purchasers, subject to customary

confidentiality assurances, all information regarding the Lincoln

Assets and, unless relieved of this obligation by compliance with

paragraph E of this Section, WCMF-AM Assets customarily provided in a

due diligence process, except such information that is subject to

attorney-client privilege or attorney work-product privilege. ARS shall

make available such information to plaintiffs at the same time that

such information is made available to any other person.

D. ARS and Lincoln shall permit bona fide prospective purchasers of

the Lincoln Assets and, unless relieved of this obligation by

compliance with paragraph E of this Section, WCMF-AM Assets, to have

access to personnel and to make such inspection of the assets, and any

and all financial, operational or other documents and information

customarily provided as part of a due diligence process.

E. ARS may fully comply with those portions of Section IV and V

that pertain to the divestiture of the WCMF-AM Assets by entering,

within forty (40) days of the filing of this Final Judgment, into a

binding agreement to divest the WCMF-AM Assets to an Acquirer approved

by the United States, in its sole judgment after consulting with New

York.

V. Appointment of Trustee

A. In the event that ARS has not divested the Lincoln Assets and

WCMF-AM Assets within the time periods specified in Section IV above,

the Court shall appoint, on application of the United States, a trustee

selected by the United States to effect the divestiture of the assets.

B. After the trustee's appointment has become effective, only the

trustee shall have the right to sell the Lincoln Assets and WCMF-AM

Assets. The trustee shall have the power and authority to accomplish

the divestiture at the best price then obtainable upon a reasonable

effort by the trustee, subject to the provisions of Section V and VIII

of this Final Judgment and consistent with FCC regulations, and shall

have other powers as the Court shall deem appropriate. Subject to

Section V(C) of this Final Judgment, the trustee shall have the power

and authority to hire at the cost and expense of ARS any investment

bankers, attorneys or other agents reasonably necessary in the judgment

of the trustee to assist in the divestiture, and such professionals or

agents shall be solely accountable to the trustee. The trustee shall

have the power and authority to accomplish the divestiture at the

earliest possible time to a purchaser acceptable to the United States,

in its sole judgment after consulting with New York, and shall have

such other powers as this Court shall deem appropriate. ARS shall not

object to the sale of the Lincoln Assets and WCMF-AM Assets by the

trustee on any grounds other than the trustee's malfeasance. Any such

objection by ARS must be conveyed in writing to plaintiffs and the

trustee no later than fifteen (15) calendar days after the trustee has

provided the notice required under Section VIII of this Final Judgment.

C. The trustee shall serve at the cost and expense of ARS, on such

terms and conditions as the Court may prescribe, and shall account for

all monies derived from the sale of the assets sold by the trustee and

all costs and expenses so incurred. After approval by the Court of the

trustee's accounting, including fees for its services and those of any

professionals and agents retained by the trustee, all remaining monies

shall be paid to ARS and the trustee's services shall then be

terminated. The compensation of such trustee and of any professionals

and agents retained by the trustee shall be reasonable in light of the

value of the divestiture and based on a fee arrangement providing the

trustee with an incentive based on the price and terms of the

divestiture and the speed with which it is accomplished.

D. ARS shall take no action to interfere with or impede the

trustee's accomplishment of the divestiture of the Lincoln Assets and

WCMF-AM Assets, and shall use its best efforts to assist the trustee in

accomplishing the required divestiture, including best efforts to

effect all necessary regulatory approvals. Subject to a customary

confidentiality agreement, the trustee shall have full and complete

access to the personnel, books, records, and facilities related to the

Lincoln Assets and WCMF-AM Assets, and ARS shall develop such financial

or other information as may be necessary to the divestiture of the

Lincoln Assets and WCMF-AM Assets. ARS shall permit prospective

purchasers of the Lincoln Assets and WCMF-AM Assets to have access to

personnel and to make such inspection of physical facilities and any

and all financial, operational or other documents and information as

may be relevant to the divestiture required by this Final Judgment.

E. After its appointment becomes effective, the trustee shall file

monthly reports with ARS, the plaintiffs and the Court, setting forth

the trustee's efforts to accomplish divestiture of the Lincoln Assets

and WCMF-AM Assets as contemplated under this Final Judgment; provided,

however, that to the extent such reports contain information that the

trustee deems confidential, such reports shall not be filed in the

public docket of the Court. Such reports shall include the name,

address and telephone number of each person who, during the preceding

month, made an offer to acquire, expressed an interest in acquiring,

entered into negotiations to acquire, or was contacted or made an

inquiry about acquiring, any interest in the Lincoln Assets and WCMF-AM

Assets, and shall describe in detail each contact with any such person

during that period. The trustee shall maintain full records of all

efforts made to divest these operations.

F. Within six (6) months after its appointment has become

effective, if the trustee has not accomplished the divestiture required

by Section IV of this Final Judgment, the trustee shall promptly file

with the Court a report setting forth (1) the trustee's efforts to

accomplish the required divestiture, (2) the reasons, in the trustee's

judgment, why the required divestiture has not been accomplished, and

(3) the trustee's recommendations; provided, however, that to the

extent such reports contain information that the trustee deems

confidential, such reports shall not be filed in the public docket of

the Court. The trustee shall at the same time furnish such reports to

ARS, the United States and New York, who shall each have the right to

be heard and to make additional recommendations. The Court shall

thereafter enter such orders as it shall deem appropriate to accomplish

the purpose of this Final Judgment, which shall, if necessary, include

extending the term of the trustee's appointment.

VI. Termination of Joint Sales Agreement and Option to Purchase

ARS and Great Lakes are hereby ordered and directed, within five

(5) business days after notice of entry of this Final Judgment, to

terminate the WNVE Joint Sales Agreement, and to cease and desist from

entering into any joint sales agreements between them in the Rochester

Area. ARS and Great Lakes are further ordered and directed, within five

(5) business days after notice

[[Page 57706]]

of entry of this Final Judgment, to terminate the WNVE Option

Agreement, unless said Option Agreement has theretofore been assigned

by ARS to an Acquirer approved in advance by the United States, in its

sole judgment after consulting with New York.

VII. Preservation of Assets/Hold Separate

Until the divestiture of the Lincoln Assets required by Section IV

of the Final Judgment has been accomplished.

A. ARS and Lincoln shall continue to take all steps necessary to

ensure that WHAM-AM, WPXY-FM, WVOR-FM and WHTK-AM, until divested

pursuant to Section IV, are maintained as separate, independent,

ongoing, economically viable and active competitors to ARS and that,

except as necessary to comply with Section IV and paragraphs B and C of

this Section of the Final Judgment, the management of said stations,

including the performance of decision-making functions regarding

marketing and pricing, will be kept separate and apart from, and not

influenced by, ARS.

B. ARS and Lincoln shall use all reasonable efforts to maintain and

increase sales of advertising time by WHAM-AM, WPXY-FM, WVOR-FM and

WKTK-AM, until divested pursuant to Section IV, and shall maintain at

1995 or previously approved levels for 1996, whichever are higher,

promotional advertising, sales, marketing and merchandising support for

such radio stations.

C. ARS and Lincoln shall take all steps necessary to ensure that

the assets used by Lincoln in the operation of WHAM-AM, WPXY-FM, WVOR-

FM and WHTK-AM are fully maintained until divested pursuant to Section

IV. Lincoln's sales and marketing employees shall not be transferred or

reassigned to any non-Lincoln ARS station, except for transfer bids

initiated by employees pursuant to ARS' regular, established job

posting policy, provided that ARS gives plaintiffs and Acquirer ten

(10) days' notice of such transfer.

D. Neither ARS not Lincoln shall, except as part of a divestiture

approved by the United States after consulting with New York or in

connection with the consummation of the Asset Purchase Agreement, sell

any Lincoln Assets.

E. ARS and Lincoln shall take no action that would jeopardize the

sale of the Lincoln Assets.

F. ARS and Lincoln shall appoint a person or persons to oversee the

assets to be held separate and who will be responsible for ARS' and

Lincoln's compliance with Section VII of this Final Judgment.

VIII. Notification

Within two (2) business days following execution of a binding

agreement to divest, including all contemplated ancillary agreements

(e.g., financing), to effect, in whole or in part, any proposed

divestiture pursuant to Section IV or V of this Final Judgment, ARS or

the trustee, whichever is then responsible for effecting the

divestiture, shall notify plaintiffs of the proposed divestiture. If

the trustee is responsible, it shall similarly notify ARS. The notice

shall set forth the details of the proposed transaction and list the

name, address and telephone number of each person not previously

identified who offered to, or expressed an interest in or a desire to,

acquire any ownership interest in the Lincoln Assets or the WCMF-AM

Assets, together with full details of same. Within fifteen (15)

calendar days of receipt by plaintiffs of such notice, plaintiffs may

request from ARS, the proposed purchaser or purchasers, any other third

party, or the trustee, if applicable, additional information concerning

the proposed divestiture, the proposed purchaser, and any other

potential purchaser. ARS and the trustee shall furnish any additional

information requested within fifteen (15) calendar days of the receipt

of the request. Within thirty (30) calendar days after receipt of the

notice or within twenty (20) calendar days after plaintiffs have been

provided the additional information, whichever is later, the United

States after consulting with New York shall provide written notice to

ARS and the trustee, if there is one, stating whether or not it objects

to the proposed divestiture. If the United States fails to object

within the period specified, or if the United States provides written

notice to ARS and the trustee, if there is one, that it does not

object, then the divestiture may be consummated, subject only to ARS'

limited right to object to the sale under Section V (B) of this Final

Judgment. A divestiture proposed under Section IV shall not be

consummated if the United States objects to the identity of the

proposed purchaser or purchasers. Upon objection by the United States,

or by ARS under the proviso in Section V (B), a divestiture proposed

under Section V shall not be consummated unless approved by the Court.

IX. Financing

ARS is ordered and directed not to finance all or any part of any

purchase by an Acquirer made pursuant to Sections IV or V of this Final

Judgment without the prior written consent of the United States.

X. Affidavits

A. Within twenty (20) calendar days of the filing of this Final

Judgment and every thirty (30) calendar days thereafter until the

divestiture has been completed, whether pursuant to Section IV or

Section V of this Final Judgment, ARS shall deliver to plaintiffs an

affidavit as to the fact and manner of ARS' compliance with Section IV

or V of this Final Judgment. Each such affidavit shall include, inter

alia, the name, address and telephone number of each person who, at any

time after the period covered by the last such report, was contacted by

ARS, or their representatives, made an offer to acquire, expressed an

interest in acquiring, entered into negotiations to acquire, or made an

inquiry about acquiring, any interest in the Lincoln Assets or the

WCMF-AM Assets, and shall describe in detail each contact with any such

person during that period. Each such affidavit shall also include a

description of the efforts that ARS has taken to solicit a buyer for

the Lincoln Assets and the WCMF-AM Assets.

B. Within twenty (20) calendar days following the entry of this

Final Judgment, ARS and Great Lakes shall deliver to plaintiffs an

affidavit as to the fact and manner of their compliance with Section VI

of this Final Judgment.

C. Within twenty (20) calendar days of the filing of this Final

Judgment, ARS shall deliver to plaintiffs an affidavit which describes

in reasonable detail all actions ARS has taken and all steps ARS has

implemented on an on-going basis to preserve WHAM-AM, WPXY-FM, WVOR-FM

and WHTK-AM pursuant to Section VII of this Final Judgment. ARS shall

deliver to plaintiffs an affidavit describing any changes to the

efforts and actions outlined in its earlier affidavit(s) filed pursuant

to this Section within fifteen (15) calendar days after such change is

implemented.

D. ARS shall preserve all records of all efforts made to preserve

WHAM-AM, WPXY-FM, WVOR-FM and WHTK-AM and to divest the Lincoln Assets

and the WCMF-AM Assets.

XI. Notice

A. Unless such transaction is otherwise subject to the reporting

and waiting period requirements of the Hart-Scott-Rodino Antitrust

Improvements Act of 1976, as amended, 15 U.S.C. 18a (the ``HSR Act''),

ARS, without providing advance notification to the plaintiffs, shall

not directly or indirectly acquire any assets of or any interest,

including any financial, security, loan, equity or management interest,

in any

[[Page 57707]]

Non-ARS Radio Station; provided, however, that, where not inconsistent

with the HSR Act, ARS need not provide notice under this provision for

an acquisition of any one, but not more than one, of any Class A

Licensed FM radio station in the Rochester Area other than WDKX, 103.9

FM, and WMAX, 106.7 FM, or their successors.

B. ARS and Great Lakes, without providing advance notification to

the plaintiffs, shall not directly or indirectly enter into any

agreement or understanding that would allow ARS or Great Lakes to

market or sell advertising time or to establish advertising prices for

any Non-ARS Radio Station.

C. Notification described in (A) and (B) above shall be provided to

the plaintiffs in the same format as, and per the instructions relating

to, the Notification and Report Form set forth in the Appendix to Part

803 of Title 16 of the Code of Federal Regulations as amended, except

that, in the case of ARS, the information requested in Items 5-9 of the

instructions must be provided only with respect to ARS Rochester Radio

Stations. Notification shall be provided at least thirty (30) days

prior to acquiring any such interest or entering any such agreement

covered in (A) or (B) above, and shall include, beyond what may be

required by the applicable instructions, the names of the principal

representatives of the parties to the agreement who negotiated the

agreement, and any management or strategic plans discussing the

proposed transaction. If within the 30-day period after notification,

representatives of the plaintiffs make a written request for additional

information, ARS or Great Lakes shall not consummate the proposed

transaction or agreement until twenty (20) days after submitting all

such additional information, Early termination of the waiting periods

in this paragraph may be requested and, where appropriate, granted in

the same manner as is applicable under the requirements and provisions

of the HSR Act and rules promulgated thereunder.

D. This Section shall be broadly construed and any ambiguity or

uncertainty regarding the filing of notice under this Section shall be

resolved in favor of filing notice.

XII. Compliance Inspection

For the purpose of determining or securing compliance with the

Final Judgment and subject to any legally recognized privilege, from

time to time:

A. Duly authorized representatives of the plaintiffs, including

consultants and other persons retained by the plaintiffs, shall, upon

written request of the United States Attorney General, or of the

Assistant Attorney General in charge of the Antitrust Division, or of

the New York Attorney General, and on reasonable notice to defendants

made to their principal offices, permitted:

(1) Access during office hours of defendants to inspect and copy

all books, ledgers, accounts, correspondence, memoranda and other

records and documents in the possession or under the control of

defendants, who may have counsel present, relating to any matters

contained in this Final Judgment; and

(2) Subject to the reasonable convenience of defendants and

without restraint or interference from them, to interview directors,

officers, employees and agents of defendants, who may have counsel

present, regarding any such matters.

B. Upon the written request of the United States Attorney General,

or of the Assistant Attorney General in charge of the Antitrust

Division, or of the New York Attorney General, made to defendants'

principal offices, defendants shall submit such written reports, under

oath if requested, with respect to any of the matters contained in this

Final Judgment as may be requested.

C. No information or documents obtained by the means provided in

this Section XII shall be divulged by any representative of the United

States or New York to any person other than a duly authorized

representative of the Executive Branch of the United States or the

State of New York, except in the course of legal proceedings to which

either plaintiff is a party (including grand jury proceedings), or for

the purpose of securing compliance with this Final Judgment, or as

otherwise required by law.

D. If at the time information or documents are furnished by any

defendant to plaintiffs, and such defendant represents and identifies

in writing the material in any such information or documents to which a

claim of protection may be asserted under Rule 26(c)(7) of the Federal

Rules of Civil Procedure, and such defendant marks each pertinent page

of such material, ``Subject to claim of protection under Rule 26(c)(7)

of the Federal Rules of Civil Procedure,'' then ten (10) calendar days'

notice shall be given by plaintiffs to such defendant prior to

divulging such material in any legal proceeding (other than a grand

jury proceeding) to which such defendant is not a party.

XIII. Retention of Jurisdiction

Jurisdiction is retained by this Court at any time for such further

orders and directions as may be necessary or appropriate for the

construction, implementation or modification of any provisions of this

Final Judgment, for the enforcement of compliance herewith, and for the

punishment of any violation hereof.

XIV. Termination

Unless this Court grants an extension, this Final Judgment will

expire upon the tenth anniversary of the date of its entry.

XV. Public Interest

Entry of this Final Judgment is in the public interest.

Dated:-----------------------------------------------------------------

----------------------------------------------------------------------

United States District Judge

Competitive Impact Statement

The United States, pursuant to Section 2(b) of the Antitrust

Procedures and Penalties Act (``APPA''), 15 U.S.C. 16(b)-(h), files

this Competitive Impact Statement relating to the proposed Final

Judgment submitted for entry in this civil antitrust proceeding.

I. Nature and Purpose of the Proceeding

The plaintiffs filed a civil antitrust Complaint on October 24,

1996, alleging that the proposed acquisition of The Lincoln Group, L.P.

(``Lincoln'') by American Radio Systems Corporation (``ARS'') would

violate Section 7 of the Clayton Act, 15 U.S.C. 18, and that the Joint

Sales Agreement (``JSA'') between ARS and Great Lakes Wireless Talking

Machine LLC (``Great Lakes'') violates Section 1 of the Sherman Act, 15

U.S.C. 1. The Compliant alleges that ARS and Lincoln own and operate

three and four radio stations respectively in the Rochester, New York

area. In addition, ARS has a JSA with a radio station owned by Great

Lakes (WNVE-FM), allowing ARS post-merger to control the sale of

advertising time on an eighth station as well. This acquisition would

allow ARS to control advertising time on six of the top eight radio

stations in the Rochester area. As a result, the combination of these

companies would substantially lessen competition in the sale of radio

advertising time in Rochester, New York and the surrounding area.

Moreover, the Complaint alleges that, beginning at least as early

as October 1, 1995 and continuing to this day, ARS and Great Lakes

entered into a contract, the purpose of which is the elimination of all

pricing competition between two rival radio stations, to the detriment

of purchasers of radio advertising time in the Rochester area. As such,

it constitutes an illegal contract in restraint of interstate trade and

commerce.

[[Page 57708]]

The prayer for relief seeks: (a) Adjudication that ARS's proposed

acquisition of Lincoln would violate Section 7 of the Clayton Act; (b)

adjudication that ARS' JSA with Great Lakes is a violation of Section 1

of the Sherman Act; (c) preliminary and permanent injunctive relief

preventing the consummation of the proposed acquisition and enjoining

the continuation of the JSA; (d) an award to the United States of the

costs of this action; and (e) such other relief as is proper.

Shortly before this suit was filed, a proposed settlement was

reached that permits ARS to complete its acquisition of Lincoln, yet

preserves competition in the market for which the transaction would

raise significant competitive concerns. A Stipulation and proposed

Final Judgment embodying the settlement were filed at the same time the

Complaint was filed.

The proposed Final Judgment orders ARS to divest WHAM-AM and WVOR-

FM, both currently owned by Lincoln, and WCMF-AM, currently owned by

ARS. Unless the United States grants a time extension, ARS must divest

these radio stations either within six months after the filing of the

Final Judgment, or within five (5) business days after notice of entry

of the Final Judgment, whichever is later. If ARS does not divest WCMF-

AM and the Lincoln Assets within the divestiture period, the Court may

appoint a trustee to sell the assets. The proposed Final Judgment also

requires ARS to ensure that, until the divestiture mandated by the

Final Judgment has been accomplished, all of Lincoln's present stations

(including WHAM-AM and WVOR-FM) will be operated independently as

viable, ongoing businesses, and kept separate and apart from ARS' other

Rochester radio stations. Further, the proposed Final Judgment requires

ARS to give the United States prior notice as to certain future radio

station acquisitions in Rochester.

In addition, the Final Judgment requires ARS and Great Lakes to

terminate the JSA that allows ARS to sell radio advertising time for

WNVE within five (5) business days after receiving notice of entry of

the Final Judgment, and to cease and desist from entering into any

future joint sales agreements between them in the Rochester, New York

Metro Survey Area. ARS and Great Lakes also must terminate their

``Option Agreement'' dated September 28, 1995, between them, within

five (5) business days after receiving notice of the entry of the Final

Judgment, unless ARS has first assigned this agreement to any entity or

entities acquiring either the Lincoln Assets or WCMF-AM. Furthermore,

the proposed Final Judgment requires ARS and Great Lakes to give the

United States prior notice before entering any future agreements that

would grant ARS or Great Lakes the right to sell advertising time or to

establish advertising prices for non-ARS radio stations in Rochester.

The plaintiffs and the defendants have stipulated that the proposed

Final Judgment may be entered after compliance with the APPA. Entry of

the proposed Final Judgment would terminate this action, except that

the Court would retain jurisdiction to construe, modify, or enforce the

provisions of the proposed Final Judgment and to punish violations

thereof.

II. The Alleged Violations

A. The Defendants

Defendant ARS is a Delaware corporation with its headquarters in

Boston, Massachusetts. It currently owns and operates 62 radio stations

in 14 metropolitan areas in the United States. In 1995, ARS reported

total net revenues of approximately $97 million. ARS owns three radio

stations in Rochester, and sells advertising for one other radio

station (WNVE) under a JSA.

Lincoln is a New York limited partnership headquartered in

Syracuse, New York. Lincoln owns four radio stations in Rochester and

two in Salem, Ohio. Great Lakes is a New York limited partnership

headquartered in East Rochester, New York. It owns one radio station in

Rochester, WNVE-FM

B. Description of the Events Giving Rise to the Alleged Violations

On February 23, 1996, ARS agreed to purchase Lincoln for

approximately $30.5 million. As a result of the proposed transaction;

ARS would own or have the right to sell advertising for six of the top

eight radio stations in Rochester.

ARS and Great Lakes formerly competed for the business of local and

national companies seeking to advertise in the Rochester area. This

competition ended after ARS and Great Lakes entered into a JSA on

September 28, 1995, giving ARS exclusive control over the sale of

advertising on Great Lakes' radio station, WNVE-FM. The JSA eliminated

rivalry between direct competitors, to the detriment of radio

advertisers, without realizing any procompetitive benefits.

The proposed acquisition between ARS and Lincoln and the JSA

between ARS and Great Lakes precipitated the Government's suit.

C. Anticompetitive Consequences of the Proposed Merger

1. Sale of Radio Advertising Time in Rochester. The Complaint

alleges that the provision of advertising time on radio stations

serving the Rochester, New York Metro Survey Area (``MSA'') constitutes

a line of commerce and section of the country, or relevant market, for

antitrust purposes. The Rochester MSA is the geographical unit for

which Arbitron furnishes radio stations, advertisers, and advertising

agencies in Rochester with data to aid in evaluating radio audience

size and composition. The Rochester MSA includes six counties: Monroe;

Wayne; Ontario; Livingston; Genesee and Orleans. Local and national

advertising that is placed on radio stations within the Rochester MSA

is aimed at reaching listening audiences in the Rochester MSA, and

radio stations outside of the Rochester MSA do not provide effective

access to this audience. Thus, advertisers would not buy enough

advertising time from radio stations located outside of the Rochester

MSA to defeat a small but significant nontransitory increase in radio

advertising prices within the Rochester MSA.

Radio advertising time is sold by radio stations directly or

through their national representatives. Radio stations generate almost

all of their revenues from the sale of advertising time to local and

national advertisers.

Many local and national advertisers purchase radio advertising time

in Rochester because such advertising is preferable to advertising in

other media for their specific needs. For such advertisers, radio time:

may be less expensive and more cost-efficient than other media at

reaching the advertiser's target audience (individuals most likely to

purchase the advertiser's products or services); may reach certain

target audiences that cannot be reached as effectively through other

media; or may offer promotional opportunities to advertisers that they

cannot exploit as effectively using other media. For these reasons,

many local and national advertisers in Rochester who purchase radio

advertising time view radio either as a necessary advertising medium

for them, or as a necessary advertising complement to other media.

Although some local and national advertisers may switch some of

their advertising to other media rather than absorb a price increase in

radio advertising time in Rochester, the existence of such advertisers

would not prevent radio stations from profitably raising their prices a

small but

[[Page 57709]]

significant amount to those advertisers who have strong preferences for

using radio over other media for some or all of their advertising

campaigns. Radio stations, which negotiate prices individually with

advertisers, can identify those advertisers with strong radio

preferences. Consequently, radio stations can charge different

advertisers different rates. Because of this ability to price

discriminate between different customers, radio stations may charge

higher prices to advertisers that view radio as particularly effective

for their needs, while maintaining lower prices for other advertisers.

2. Harm to Competition. The Complaint alleges that ARS' proposed

acquisition of Lincoln would lessen competition substantially in the

provision of radio advertising time in the Rochester MSA. The proposed

acquisition would create further market concentration in an already

highly concentrated market, and ARS would control a substantial share

of the advertising revenues in the market. ARS presently controls

approximately 34% of all radio advertising revenues in Rochester

(including its JSA with Great Lakes), and its market share would rise

to approximately 64% after the proposed merger. According to the

Herfindahl-Hirschman Index (``HHI''), a widely-used measure of market

concentration defined and explained in Exhibit A hereto, the pre-merger

HHI in this market is 2704, which would rise to 4744 after the merger,

with a change of 2040. This substantial increase in concentration will

reduce competition and lead to higher prices and reduced services.

Advertisers select radio stations to reach a large percentage of

their target audience based upon a number of factors, including, inter

alia, the size of the station's audience and the characteristics of its

audience. Many advertisers seek to reach a large percentage of their

target audience by selecting those stations whose audience best

correlates to their target audience. If a number of stations

efficiently reach that target audience, advertisers benefit from the

competition among such stations to offer better prices or services.

Today, several ARS and Lincoln stations compete head-to-head to reach

the same audiences and, for many local and national advertisers buying

time in Rochester, they are close substitutes for each other based on

their specific audience characteristics.

During price negotiations between advertisers and radio stations,

advertisers will provide the stations with information about their

advertising needs, including their target audience and the desired

frequency and timing of ads. Radio stations thus have the ability to

charge advertisers differing prices after assessing the number and

attractiveness of alternative radio stations that can meet a particular

advertiser's specific target audience needs.

After the merger, advertisers attempting to reach certain audiences

who now mostly listen to ARS and Lincoln stations would face less

desirable choices if they buy time solely from firms other than the

merged entities in order to reach these audiences. Because advertisers

seeking to reach these audiences would have inferior alternatives to

the merged entity as a result of the merger, the acquisition would give

ARS the ability to raise its rates and reduce the quality of its

service.

The Department also considered how the proposed merger would

concentrate Rochester's strongest radio signals into the hands of a

single entity. After the merger, ARS would own four of the seven Class

B FM license radio stations in the Rochester area, and would have

controlled advertising on a fifth Class B FM license radio station

through its JSA with Great Lakes. ARS would also own the area's only

clear channel AM station. The merger would therefore have given ARS

control over advertising on six of Rochester's eight most powerful

radio signals.

If ARS raised prices or lowered services to those advertisers who

buy ARS and Lincoln stations because of their strength in delivering

access to certain specific audiences, non-ARS radio stations in

Rochester would not be induced to change their formats to attract a

greater share of the same listeners and to serve better those

advertisers seeking to reach such listeners. Successful radio stations

are unlikely to undertake a format change solely in response to small

but significant increases in price being charged to advertisers by a

multi-station firm such as ARS, because they would likely have to give

up their existing audiences. Less successful stations that change

format may still not attract enough listeners to provide a suitable

alternative to the merged entity.

New entry into the Rochester radio advertising market is highly

unlikely in response to a price increase by the merged parties. No

unallocated radio broadcast frequencies exist in Rochester. Also,

stations located in adjacent communities cannot boost their power so as

to enter the Rochester market without interfering with other stations

on the same or similar frequencies, a violation of Federal

Communications Commission (``FCC'') regulations.

For these reasons, the Department concludes that the merger as

proposed would substantially lessen competition in the sale of radio

advertising time in the Rochester MSA, eliminate actual competition

between ARS and Lincoln, and result in increased rates for radio

advertising time in the Rochester MSA, all in violation of Section 7 of

the Clayton Act.

D. The JSA is an Illegal Restraint of Trade

The complaint alleges that the JSA between ARS and Great Lakes

violates Section 1 of the Sherman Act. Before entering into the JSA,

Great Lakes station WNVE-FM competed with ARS Station WCMF-FM for

advertisers. Advertisers regularly played one of these stations off

against the other to obtain better rates and increased services. In the

fall of 1995, ARS and Great Lakes entered into a JSA pursuant to which

ARS exclusively prices and sells all radio advertising time on WNVE-FM.

In return, ARS pays Great Lakes a monthly lump sun.

The JSA gives ARS complete control over the sale of the inventory

of its direct competitor. In so doing, the JSA eliminates one of the

most important forms of competition between two firms in an open

market: independent pricing. The agreement thus gives rise to the

inference that it will have anticompetitive effects.

This is the first JSA assessed by the Department. The FCC, though

not purporting to address antitrust issues, have suggested that, at

least in certain circumstances (without addressing the circumstances

present here), some JSAs may be beneficial. Accordingly, the Department

considered whether the JSA possessed any redeeming procompetitive

virtues. However, the creators of this JSA have not offered any

plausible procompetitive justifications for the JSA, and our

examination revealed none.

Based on our investigation, we found that this JSA did not improve

either the operations of the radio stations or the quality of their

products. The JSA did not integrate the management or operations of the

two stations. Nor did the JSA create any procompetitive benefits for

advertisers. Indeed, the Department uncovered evidence that the JSA was

created for the simple purpose of ending price competition between the

two stations. As one key participant explicitly acknowledged, the JSA

was entered into because the two stations ``were fighting needlessly

over the advertising dollar.''

[[Page 57710]]

Given the JSA's inherently suspect nature and conspicuous lack of

procompetitive virtues, the JSA is an unreasonable restraint that

violates Section 1 of the Sherman Act. See Federal Trade Comm'n v.

Indian Federation of Dentists, 476 U.S. 447, 459 (1986).\1\ Moreover,

though not necessary to the conclusion that this JSA is anticompetitve,

our investigation uncovered evidence that, following the creation of

the JSA, advertising prices increased despite a decline in

listenership.

---------------------------------------------------------------------------

\1\ The Department recognizes that JSAs may differ both in their

terms and in their potential for realizing procompetitive

efficiencies.

---------------------------------------------------------------------------

III. Explanation of the Proposed Final Judgment

The proposed Final Judgment would preserve competition in the sale

of radio advertising time in the Rochester MSA. It requires the

divestiture of WHAM-AM, WVOR-FM and WCMF-AM. It ends ARS' control of

WNVE advertising time. This relief will reduce the market share ARS

would have achieved through the merger from over 60 percent to about 40

percent of the Rochester radio market. The divestitures will preserve

choices for advertisers and help ensure that radio advertising rates in

Rochester do not increase, and that services do not decline.

Unless the United States grants an extension of time, ARS must

divest WHAM-AM, WVOR-FM and WCMF-AM either within six months after the

Final Judgment has been filed or within five (5) business days after

notice of entry of the Final Judgment, whichever is later. Until the

divestitures take place, all stations now owned by Lincoln will be

maintained as independent competitors to the other stations in the

Rochester MSA, including the ARS stations.

If ARS fails to divest WHAM-AM, WVOR-FM and WCMF-AM within the time

periods specified in the Final Judgment, the Court, upon application of

the United States, shall appoint a trustee nominated by the United

States to effect these divestitures. If a trustee is appointed, the

proposed Final Judgment provides that ARS will pay all costs and

expenses of the trustee and any professionals agent retained by the

trustee. The compensation paid to the trustee and any persons retained

by the trustee shall be both reasonable in light of the value of WHAM-

AM, WVOR-FM and WCMF-AM, and based on a fee arrangement providing the

trustee with an incentive based on the price and terms of the

divestiture and the speed with which it is accomplished. After

appointment, the trustee will file monthly reports with ARS, the

plaintiffs and the Court, setting forth the trustee's efforts to

accomplish the divestiture ordered under the proposed Final Judgment.

If the trustee has not accomplished the divestiture within six (6)

months after its appointment, the trustee shall promptly file with the

Court a report setting forth (1) the trustee's efforts to accomplish

the required divestiture, (2) the reasons, in the trustee's judgment,

why the required divestiture has not been accomplished, and (3) the

trustee's recommendations. At the same time, the trustee will furnish

such report to ARS and the plaintiffs, who will each have the right to

be heard and to make additional recommendations.

The proposed Final Judgment requires that ARS maintain all stations

now owned by Lincoln separate and apart from ARS, pending divestiture.

The Judgment also contains provisions to ensure that these Lincoln

stations will be preserved, so that the stations after divestiture will

remain viable, aggressive competitors.

In addition, the proposed Final Judgment requires ARS and Great

Lakes to terminate the WNVE Joint Sales Agreement within five (5)

business days after notice of entry of the Final Judgment, and to cease

and desist from entering into any future joint sales agreements between

them in the Rochester area. This prohibition prevents the parties from

re-entering what the Department has already determined would be an

illegal contract, and is designed to prevent a recurrence of a

violation of Section 1 of the Sherman Act, not merely as a way to guard

against another possible violation of Section 7 of the Clayton Act.

Moreover, ARS and Great Lakes must terminate the WNVE Option

Agreement (which gives ARS the right to purchase WNVE) within five (5)

business days after notice of entry of the Final Judgment, unless the

option has been assigned to one of the entities that is buying either

WHAM-FM, WVOR-FM or WCMF-AM. This prohibition prevents further

increases in concentration by ARS without providing the government with

adequate notice.

The proposed Final Judgment also prohibits ARS from entering into

certain agreements with other Rochester radio stations without

providing at least thirty (30) days' notice to the Department of

Justice. Specifically, ARS must notify the Department before acquiring

any significant interest in another Rochester radio station, except for

acquisition of one additional Class A-License FM radio station in the

Rochester MSA other than WDKX-FM or WMAX-FM. Acquisitions beyond this

would raise competitive concerns but might be too small to be otherwise

reportable under the Hart-Scott-Rodino (``HSR'') premerger notification

process.

Moreover, ARS and Great Lakes may not agree to sell radio

advertising time for any other Rochester radio station, or have any

other Rochester radio station sell advertising time for them, without

providing the United States with notice. This provision ensures that

the Department will receive advance notice of any acquisition, or

agreements, through which ARS or Great Lakes would increase the amount

of advertising time on radio stations that they can sell. In

particular, this provision requires ARS and Great Lakes to notify the

Department before they enter into any joint sales agreements

(``JSAs''), where one station takes over another station's advertising

time, or enter into any local marketing agreements (``LMAs''), where

one station takes over another station's broadcasting and advertising

time, in the Rochester area. Agreements whereby ARS sells advertising

for or manages other area radio station would effectively increase ARS'

market share in the Rochester MSA. In analyzing the Rochester radio

market, the Department treated ARS' present JSA station as if ARS owned

it outright. Despite their clear competitive significance, JSAs

probably would not be reportable to the Department under HSR. Thus,

this provision in the decree ensures that the Department will receive

notice of and be able to act, if appropriate, to stop any agreements

that might have anticompetitive effects in the Rochester market.

The relief in the proposed Final Judgment is intended to remedy the

competitive effects of the proposed acquisition of Lincoln by ARS, and

to eliminate a contract between ARS and Great Lakes that constitutes an

illegal restraint of trade. Nothing in this Final Judgment is intended

to limit the plaintiffs' ability to investigate or to bring actions,

where appropriate, challenging other past or future activities of ARS

or Great Lakes in the Rochester MSA, including their entry into other

JSAs, LMAs, or other agreements related to the sale of advertising

time.

IV. Remedies Available to Potential Private Litigants

Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any

person who has been injured as a result of conduct prohibited by the

antitrust laws may

[[Page 57711]]

bring suit in federal court to recover three times the damages the

person has suffered, as well as costs and reasonable attorneys' fees.

Entry of the proposed Final Judgment will neither impair nor assist the

bringing of any private antitrust damage action. Under the provisions

of Section 5(a) of the Clayton Act, 15 U.S.C. 16(a), the proposed Final

Judgment has no prima facie effect in any subsequent private lawsuit

that may be brought against defendants.

V. Procedures Available for Modification of the Proposed Final Judgment

The plaintiffs and the defendants have stipulated that the proposed

Final Judgment may be entered by the Court after compliance with the

provisions of the APPA, provided that the United States has not

withdrawn its consent. The APPA conditions entry upon the Court's

determination that the proposed Final Judgment is in the public

interest.

The APPA provides a period of at least sixty (60) days preceding

the effective date of the proposed Final Judgment within which any

person may submit to the United States written comments regarding the

proposed Final Judgment. Any person who wishes to comment should do so

within sixty (60) days of the date of publication of this Competitive

Impact Statement in the Federal Register. The United States will

evaluate and respond to the comments. All comments will be given due

consideration by the Department of Justice, which remains free to

withdraw its consent to the proposed Final Judgment at any time prior

to entry. The comments and the response of the United States will be

filed with the Court and published in the Federal Register.

Written comments should be submitted to: Craig W. Conrath, Chief,

Merger Task Force, Antitrust Division, United States Department of

Justice, 1401 H Street, N.W.; Suite 4000, Washington, D.C. 20530.

The proposed Final Judgment provides that the Court retains

jurisdiction over this action, and that the parties may apply to the

Court for any order necessary or appropriate for the modification,

interpretation, or enforcement of the Final Judgment.

VI. Alternatives to the Proposed Final Judgment

The plaintiffs considered, as an alternative to the proposed Final

Judgment, a full trial on the merits of their Complaint against

defendants. The plaintiffs are satisfied, however, that the divestiture

of the Lincoln Assets, the termination of the JSA between ARS and Great

Lakes, and other relief contained in the proposed Final Judgment will

preserve viable competition in the sale of radio advertising time in

the Rochester MSA. Thus, the proposed Final Judgment would achieve the

relief the Government would have obtained through litigation, but

avoids the time, expense and uncertainty of a full trial on the merits

of the Complaint.

VII. Standard of Review Under the APPA for Proposed Final Judgment

The APPA requires that proposed consent judgment in antitrust cases

brought by the United States be subject to a sixty (60) day comment

period, after which the court shall determine whether entry of the

proposed Final Judgment ``is in the public interest.'' In making that

determination, the court may consider--

(1) The competitive impact of such judgment, including

termination of alleged violations, provisions for enforcement and

modification, duration or relief sought, anticipated effects of

alternative remedies actually considered, and any other

considerations bearing upon the adequacy of such judgment;

(2) the impact of entry of such judgment upon the public

generally and individuals alleging specific injury from the

violations set forth in the complaint including consideration of the

public benefit, if any, to be derived from a determination of the

issues at trial.

15 U.S.C. 16(e). As the United States Court of Appeals for the D.C.

Circuit recently held, this statute permits a court to consider, among

other things, the relationship between the remedy secured and the

specific allegations set forth in the government's complaint, whether

the decree is sufficiently clear, whether enforcement mechanisms are

sufficient, and whether the decree may positively harm third parties.

See United States v. Microsoft, 56 F.3d 1448, 1461-62 (D.C. Cir. 1995).

In conducting this inquiry, ``[t]he Court is nowhere compelled to

go to trial or to engage in extended proceedings which might have the

effect of vitiating the benefits of prompt and less costly settlement

through the consent decree process.'' \2\ Rather,

\2\ 119 Cong. Rec. 24598 (1973). See United States v. Gillette

Co., 406 F. Supp. 713, 715 (D. Mass. 1975). A ``public interest''

determination can be made properly on the basis of the Competitive

Impact Statement and Response to Comments filed pursuant to the

APPA. Although the APPA authorizes the use of additional procedures,

15 U.S.C. 16(f), those procedures are discretionary. A court need

not invoke any of them unless it believes that the comments have

raised significant issues and that further proceedings would aid the

court in resolving those issues. See H.R. Rep. 93-1463, 93rd Cong.

2d Sess. 8-9 (1974), reprinted in U.S.C.C.A.N. 6535, 6538.

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[a]bsent a showing of corrupt failure of the government to discharge

its duty, the Court, in making its public interest discharge its

duty, the Court, in making its public interest finding, should * * *

carefully consider the explanations of the government in the

competitive impact statement and its responses to comments in order

to determine whether those explanations are reasonable under the

circumstances.

United States v. Mid-America Dairymen, Inc., 1977-1 Trade Cas. para.

61,508, at 71,980 (W.D. Mo. 1977).

Accordingly, with respect to the adequacy of the relief secured by

the decree, a court may not ``engage in an unrestricted evaluation of

what relief would best serve the public.'' United States v. BNS, Inc.,

858 F.2d 456, 462 (9th Cir. 1988), citing United States v. Bechtel

Corp., 648 F.2d 660, 666 (9th Cir.), cert. denied, 454 U.S. 1083

(1981); see also Microsoft, 56 F.3d at 1460-62. Precedent requires that

the balancing of competing social and political interests affected

by a proposed antitrust consent decree must be left, in the first

instance, to the discretion of the Attorney General. The court's

role in protecting the public interest is one of insuring that the

government has not breached its duty to the public in consenting to

the decree. The court is required to determine not whether a

particular decree is the one that will best serve society, but

whether the settlement is ``within the reaches of the public

interest.'' More elaborate requirements might undermine the

effectiveness of antitrust enforcement by consent decree.\3\

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\3\ Bechtel, 648 F.2d 666 (citations omitted) (emphasis added);

see BNS, 858 F.2d at 463; United States v. National Broadcasting

Co., 449 F. Supp. 1127, 1143 (C.D. Cal. 1978); Gillette, 406 F.

Supp. at 716. See also Microsoft, 56 F.3d at 1461 (whether ``the

remedies [obtained in the decree are] so inconsonant with the

allegations charged as to fall outside of the `reaches of the public

interest' '') (citations omitted).

The proposed Final Judgment, therefore, should not be reviewed under a

standard of whether its it certain to eliminate every anticompetitive

effect of a particular practice or whether it mandates certainty of

free competition in the future. Court approval of a final judgment

requires a standard more flexible and less strict than the standard

required for a finding of liability. ``[A] proposed decree must be

approved even if it fall short of the remedy the court would impose on

its own, as long as it falls within the range of acceptability or is

`within the reaches of public inter-

est.' '' \4\

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\4\ United States v. American Tel. and Tel Co., 552 F. Supp.

131, 151 (D.D.C. 1982), aff'd. sub nom. Maryland v. United States,

460 U.S. 1001 (1983), quoting Gillette Co. 406 F. Supp. at 716

(citations omitted); United States v. Alcan Aluminum, Ltd., 605 F.

Supp. 619, 622 (W.D. Ky. 1985).

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[[Page 57712]]

This is strong and effective relief that should fully address the

competitive harm posed by the proposed merger and the JSA.

VIII. Determinative Documents

There are no determinative materials or documents within the

meaning of the APPA that were considered by the United States in

formulating the proposed Final Judgment.

Respectfully submitted,

Dando B. Cellini,

Merger Task Force, U.S. Department of Justice, Antitrust Division, 1401

H Street, N.W.; Suite 4000, Washington, D.C. 20530, (202) 307-0001.

Dated: October 24, 1996.

Exhibit A--Definition of HHI and Calculations for Market

``HHI'' means the Herfindahl-Hirschman Index, a commonly accepted

measure of market concentration. It is calculated by squaring the

market share of each firm competing in the market and then summing the

resulting numbers. For example, for a market consisting of four firms

with shares of thirty, thirty, twenty, and twenty percent, the HHI is

2600 (302 + 302 + 202 + 202 = 2600). The HHI takes

into account the relative size and distribution of the firms in a

market and approaches zero when a market consists of a large number of

firms of relatively equal size. The HHI increases both as the number of

firms in the market decreases and as the disparity in size between

those firms increases.

Markets in which the HHI is between 1000 and 1800 points are

considered to be moderately concentrated, and those in which the HHI is

in excess of 1800 points are considered to be concentrated.

Transactions that increase the HHI by more than 100 points in

concentrated markets presumptively raise antitrust concerns under the

Merger Guidelines. See Merger Guidelines Sec. 1.51.

[FR Doc. 96-28617 Filed 11-6-96; 8:45 am]

BILLING CODE 4410-01-M