United States of America v. Texas Television, Inc., Gulf Coast Broadcasting Company, and K-Six Television Inc., Proposed Final Judgment and Competitive Impact Statement

DEPARTMENT OF JUSTICE

Antitrust Division

United States of America v. Texas Television, Inc., Gulf Coast

Broadcasting Company, and K-Six Television Inc., Proposed Final

Judgment and Competitive Impact Statement

Notice is hereby given pursuant to the Antitrust Procedures and

Penalties Act, 15 U.S.C. section 16(b) through (h), that a proposed

Final Judgment, Stipulations, and a Competitive Impact Statement have

been filed with the United States District Court for the Southern

District of Texas, Corpus Christi Division in United States of America

v. Texas Television, Inc., Gulf Coast Broadcasting Company, and K-Six

Television Inc., Civil Action No. C-96-64.

The complaint in the case alleges that the three defendants, which

respectively operate the ABC, NBC and CBS affiliates in Corpus Christi,

engaged in a combination and conspiracy to increase the price of

retransmission consent rights being sold to local cable operators, in

violation of Section 1 of the Sherman Act, 15 U.S.C. Sec. 1.

Retransmission consent rights, granted by a television broadcast

station, permit a cable operator to carry that station on its cable

system.

The proposed Final Judgment agreed to by the defendants prohibits

them for a period of ten years from engaging in the type of combination

of conspiracy alleged in the Complaint. Specifically, each defendant is

enjoined from entering into any agreement with any broadcaster not

affiliated with it that relates to retransmission consent or

retransmission consent negotiations. The defendants are also prohibited

from communicating to any non-affiliated broadcaster any information

relating to retransmission consent or retransmission consent

negotiations, or from communicating certain types of information that

relate to any actual or proposed transaction with any cable operator or

other multichannel video programming distributor.

Public comment on the proposed Final Judgment is invited within the

statutory 60-day comment period. Such comments and responses thereto

will be published in the Federal Register and filed with the Court.

Comments should be directed to Donald J. Russell, Chief;

Telecommunications Task Force; United States Department of Justice;

Antitrust Division, 555 4th Street N.W., Room

[[Page 6033]]

8100; Washington, D.C. 20001 (telephone: (202) 514-5621).

Rebecca P. Dick,

Deputy Director of Operations, Antitrust Division.

United States District Court, Southern District of Texas, Corpus

Christi Division

In the matter of: United States of America, Plaintiff, v. Texas

Television, Inc., Gulf Coast Broadcasting Company, and K-Six

Television, Inc., Defendants. Civil Action No. C-96-64.

Stipulation

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

respective attorneys, that:

1. The parties to this Stipulation consent that a Final Judgment in

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

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

the requirements of the Antitrust Procedures and Penalties Act (15

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

proceedings, provided that Plaintiff has not withdrawn its consent,

which it may do at any time before entry of the proposed Final Judgment

by serving notice on the Defendant and by filing that notice with the

Court.

2. If Plaintiff withdraws its consent or the proposed Final

Judgment is not entered pursuant to this Stipulation, this Stipulation

shall be of no effect whatever and its making shall be without

prejudice to any party in this or any other proceedings.

Dated:

For the Plaintiff:

Anne K. Bingaman,

Assistant Attorney General.

Rebecca P. Dick,

Deputy Director of Operations.

Donald J. Russell,

Chief, Telecommunications Task Force.

Frank G. LaMancusa,

Andrew S. Cowan,

Attorneys, U.S. Department of Justice, Antitrust Division, 555 4th

Street N.W., Suite 8100, Washington, D.C. 20001, (202) 514-5621

For the Defendant:

Jorge C. Rangel,

Federal I.D. No. 5698, State Bar No. 16543500, P.O. Box 880, 719 S.

Shoreline Blvd., Ste. 500, Corpus Christi, Texas 78403-0880, (515) 883-

8555, (512) 883-9187 (Facsimile)

Attorney in Charge for K-Six Television, Inc.

United States District Court, Southern District of Texas, Corpus

Christi Division

In the matter of: United States of America, Plaintiff, v. Texas

Television, Inc., Gulf Coast Broadcasting Company, and K-Six

Television, Inc., Defendants. Civil Action No. C-96-64.

Stipulation

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

respective attorneys, that:

1. The parties to this Stipulation consent that a Final Judgment in

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

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

the requirements of the Antitrust Procedures and Penalties Act (15

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

proceedings, provided that Plaintiff has not withdrawn its consent,

which it may do at any time before entry of the proposed Final Judgment

by serving notice on the Defendant and by filing that notice with the

Court.

2. If Plaintiff withdraws its consent or the proposed Final

Judgment is not entered pursuant to this Stipulation, this Stipulation

shall be of no effect whatever and its making shall be without

prejudice to any party in this or any other proceedings.

Dated:

For the Plaintiff:

Anne K. Bingaman,

Assistant Attorney General.

Rebecca P. Dick,

Deputy Director of Operations.

Donald J. Russell,

Chief, Telecommunications Task Force.

Frank G. LaMancusa,

Andrew S. Cowan,

Attorneys, U.S. Department of Justice, Antitrust Division, 555 4th

Street N.W., Ste. 8100, Washington, D.C. 20001, (202) 514-5621

For the Defendant:

Bruce L. James,

State Bar No. 10538000, Federal ID No. 1378, Kleberg & Head, P.C., 112

E. Pecan, Ste. 220, San Antonio, TX 78205, (210) 225-3247, (210) 212-

8952 (Facsimile)

Attorney in Charge for Texas Television

United States District Court Southern District of Texas Corpus Christi

Division

In the matter of: United States of America, Plaintiff vs. Texas

Television, Inc., Gulf Coast Broadcasting Company, and K-Six

Television, Inc., Defendants. C.A. No. C-96-64.

Stipulation

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

respective attorneys, that:

1. The parties to this Stipulation consent that a Final Judgment in

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

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

the requirements of the Antitrust Procedures and Penalties Act (15

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

proceedings, provided that Plaintiff has not withdrawn its consent,

which it may do at any time before entry of the proposed Final Judgment

by serving notice on the Defendant and by filing that notice with the

Court.

2. If Plaintiff withdraws its consent or the proposed Final

Judgment is not entered pursuant to this Stipulation, this Stipulation

shall be of no effect whatever and its making shall be without

prejudice to any party in this or any other proceedings.

Dated:

For the Plaintiff:

Anne K. Bingaman,

Assistant Attorney General.

Rebecca P. Dick,

Deputy Director of Operations.

Donald J. Russell,

Chief, Telecommunications Task Force.

Frank G. Lamancusa,

Andrew S. Cowan,

Attorneys, U.S. Department of Justice, Antitrust Division, 555 4th

Street N.W., Suite 8100, Washington, D.C. 2001, (202) 514-5621

For the Defendant:

Matthews & Branscomb,

A Professional Corporation, 802 N. Caranacahua, Suite 1900, Corpus

Christi, Texas 78470-0700, (512) 888-9261, (512) 888-8504 (FAX)

Douglas Mann,

TSB #12921500, Federal I.D. No. 1154

Attorney in Charge for Gulf Coast Broadcasting Company.

United States District Court, Southern District of Texas, Corpus

Christi Division

In the matter of United States of America, Plaintiff, v. Texas

Television, Inc., Gulf Coast Broadcasting Company, and K-Six

Television, Inc., Defendants. Civil Action No.: C-96-64; Judge Janis

G. Jack.

Final Judgment

Whereas Plaintiff, United States of America, filed it complaint on

February 6, 1996 and Plaintiff and Defendants, Texas Television, Inc.,

Gulf Coast Broadcasting Company, and K-Six Television, Inc., have

consented to the entry of this Final Judgment without

[[Page 6034]]

trial or adjudication of any issue of fact or law, and without this

Final Judgment constituting any evidence against or an admission by any

party with respect to any such issue;

And whereas Defendants have agreed to be bound by the provisions of

this Final Judgment pending its approval by the Court;

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

trail or 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 and Venue

The Court has jurisdiction of the subject matter of this action and

of each of the parties consenting to this Final Judgment. The complaint

states a claim upon which relief may be granted against Defendants

under Section 1 of the Sherman Act, 15 U.S.C. Sec. 1.

II. Definitions

As used in this Final Judgment:

A. ``Affiliated'' means under common ownership or control.

B. ``Multichannel video programming distributor'' means a cable

operator, a multichannel multipoint distribution service or any other

person that sells multiple channels of video programming to subscribers

or customers.

C. ``Retransmission consent'' means any authorization given by a

television broadcast station to a multichannel video programming

distributor to distribute that station's signal.

D. ``Retransmission consent negotiation'' means any communication

between a television broadcast station and a multichannel video

programming distributor relating to the compensation or consideration

to be given by the distributor in exchange for retransmission consent.

E. ``Television broadcaster'' means:

1. each Defendant and each of its officers, directors, agents,

employees, subsidiaries, successors and assigns;

2. each person that operates any television broadcast station; and

3. each person that possess an equity interest of at least five

percent (5%) in any television broadcast station.

F. ``Television broadcast station'' means any broadcast station, as

defined in 47 U.S.C. Sec. 153(dd), that broadcasts television signals.

III. Applicability

This Final Judgment applies to each Defendant and to each of their

officers, directors, agents, employees, subsidiaries, successors and

assigns, and to all other persons in active concert or participation

with any of them which shall have received actual notice of this Final

Judgment by personal service or otherwise.

IV Prohibited Conduct

A. Each Defendant is hereby enjoined and restrained from directly

or indirectly entering into, adhering to, maintaining, soliciting or

knowingly performing any act in furtherance of any contract, agreement,

understanding or plan with any television broadcaster not affiliated

with that Defendant relating to retransmission consent or

retransmission consent negotiations.

B. Each Defendant is further enjoined and restrained from directly

or indirectly communicating to any television broadcaster not

affiliated with that Defendant:

1. Any information relating to retransmission consent or

retransmission consent negotiations, including, but not limited to, the

negotiating strategy of any television broadcaster, or the type or

value of any consideration sought by any television broadcaster; or

2. Any information relating to the negotiating strategy of any

television broadcaster, or to the type or value of any consideration

sought by any television broadcaster relating to any actual or proposed

transaction with any multichannel video programming distributor.

C. Nothing contained in Section IV.B of this Final Judgment shall

prohibit any Defendant, in response to any question to it from any news

organization related to retransmission consent or to any actual or

proposed transaction with any multichannel video programming

distributor, from providing to that news organization a response that

does not disclose that Defendant's negotiating strategy, the content or

progress of negotiations, any plan related to retransmission consent,

or the type of value of any consideration being sought.

V. Notification Provisions

Each Defendant is ordered and directed:

A. To send a written notice, in the form attached as Appendix A to

this Final Judgment, and a copy of this Final Judgment, within sixty

(60) days of the entry of this Final Judgment, to each multichannel

video programming distributor that distributes the television signal of

any of Defendant's television broadcast stations transmitting in Corpus

Christi;

B. To send a written notice, in the form attached as Appendix A to

this Final Judgment, and a copy of this Final Judgment, to each

multichannel video programming distributor, that contacts the Defendant

within ten (10) years of entry of this Final Judgment to request

retransmission consent for the television signal of any of Defendant's

television broadcast stations transmitting in Corpus Christi, and which

was not given such notice pursuant to Section V.A. Such notice shall be

sent within seven (7) days after such multichannel video programming

distributor first contacts the Defendant about carrying the Defendant's

signal.

VI. Compliance Program

Each Defendant is ordered to establish and maintain an antitrust

compliance program which shall include designating, within 30 days of

entry of this Final Judgment, an Antitrust Compliance Officer with

responsibility for implementing the antitrust compliance program and

achieving full compliance with this Final Judgment. The Antitrust

Compliance with this Final Judgment. The Antitrust Compliance Officer

shall, on a continuing basis, be responsible for the following:

A. Furnishing a copy of this Final Judgment within thirty (30) days

of entry of the Final Judgment to each of that Defendant's officers and

directors and each of its employees, salespersons, sales

representatives, or agents whose duties relate to retransmission

consent for any of Defendant's television broadcast stations

transmitting in Corpus Christi;

B. Distributing in a timely manner a copy of this Final Judgment to

each person who succeeds to a position described in Section VI.A.; and

C. Obtaining from each person designated in Sections VI.A. or B. a

signed certification that he or she has read, understands and agrees to

abide by the terms of this Final Judgment and is not aware of any

violation of the Final Judgment that has not already been reported to

the Antitrust Compliance Officer and understands that failure to comply

with this Final Judgment may result in conviction for criminal contempt

of court.

VII. Certification

A. Within 75 days of the entry of this Final Judgment, Defendant

shall certify to Plaintiff whether the Defendant has designated an

Antitrust Compliance Officer and has distributed the Final Judgment in

accordance with Section VI.A. above.

B. For ten years after the entry of this Final Judgment, on or

before its anniversary date, the Defendant shall file with the

Plaintiff an annual

[[Page 6035]]

statement as to the fact and manner of its compliance with the

provisions of Sections V and VI.

C. If Defendant's Antitrust Compliance Officer learns of any

possible violation of any of the terms and conditions contained in this

Final Judgment, Defendant shall forthwith take appropriate action to

terminate or modify the activity so as to comply with this Final

Judgment. Any such action shall be reported by Defendant in the

respective annual statement required by paragraph VII.B. above.

VIII. Plaintiff Access

A. For the purpose of determining or securing compliance with this

Final Judgment, and for no other purpose, duly authorized

representatives of Plaintiff shall, upon written request of the

Attorney General or the Assistant Attorney General in charge of the

Antitrust Division, and on reasonable notice to a Defendant, be

permitted, subject to any legally recognized privilege:

1. Access during that Defendant's office hours to inspect and copy

all records and documents in the possession or under the control of

that Defendant, which may have counsel present, relating to any matters

contained in this Final Judgment; and

2. To interview that Defendant's officers, employees and agents,

who may have counsel present, regarding any such matters. The

interviews shall be subject to the Defendant's reasonable convenience.

B. Upon the written request of the Attorney General or the

Assistant Attorney General in charge of the Antitrust Division to any

Defendant at its principal office, that Defendant 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, subject

to legally recognized privilege.

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

this Section VIII shall be divulged by any representative of the

Department of Justice to any person other than a duly authorized

representative of the Executive Branch of the United States, except in

the course of legal proceedings to which the United States is a party,

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 a

Defendant to Plaintiff, that 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 that 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) days' notice

shall be given by Plaintiff to that Defendant prior to divulging such

material in any legal proceeding (other than a grand jury proceeding),

so that Defendant shall have an opportunity to apply to this Court for

protection pursuant to Rule 26(c)(7) of the Federal Rules of Civil

Procedure.

IX. Duration of Final Judgment

This final judgment will expire on the tenth anniversary of its

date of entry.

X. Construction, Enforcement, Modification and Compliance

Jurisdiction is retained by the Court for the purpose of enabling

any of the parties to this Final Judgment to apply to this Court at any

time for such further orders or directions as may be necessary or

appropriate for the construction or carrying out of this Final

Judgment, for the modification of any of its provisions, for its

enforcement or compliance, and for the punishment of any violation of

its provisions.

XI. Public Interest

Entry of this Final Judgment is in the public interest.

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

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

United States District Judge

Appendix A

Dear Distributor: In February 1996, the Antitrust Division of

the United States Department of Justice filed a civil suit that

alleged that KIII, KRIS and KZTV violated the antitrust laws of the

United States by conspiring with the intent and effect of raising

the price of retransmission consent rights in the Corpus Christi

region. Our station denies these allegations. Without admitting any

violation of the law and without being subject to any monetary

penalties, our station has agreed to the entry of civil Final

Judgment that prohibits us from engaging in certain practices for a

period of ten (10) years.

I have enclosed a copy of the Final Judgment for your

information. Retransmission consent was authorized by Congress in

the Cable Television Consumer Protection and Competition Act of

1992. Under the terms of the enclosed Final Judgment, our station

may not enter into any agreement or understanding with any other

television broadcast station relating to retransmission consent or

retransmission consent negotiations. The Final Judgment also forbids

our station from communicating certain related information to any

other station.

If you learn that our station or its agents have violated the

terms of the Final Judgment at any time after the its effective

date, you should provide this information to our station in writing.

Should you have any questions concerning this letter, please

feel free to contact me.

Sincerely,

[General Manager of Station]

United States District Court, Southern District of Texas, Corpus

Christi Division

In the matter of: United States of America, Plaintiff, v. Texas

Television, Inc., Gulf Coast Broadcasting Company, and K-Six

Television, Inc., Defendants. Civil Action No.: C-96-64, Judge Janis

G. Jack.

Competitive Impact Statement

The United States of America, pursuant to section 2 of the

Antitrust Procedures and Penalties Act (``APPA''), 15 U.S.C.

Sec. 16(b), submits this Competitive Impact Statement in connection

with the proposed Final Judgment submitted for entry in this civil

antitrust proceeding.

I. Nature and Purpose of the Proceeding

On February 6, 1996, the United States filed a civil antitrust

complaint under Section 4 of the Sherman Act, as amended, 15 U.S.C.

Sec. 4, alleging that the Defendants, Texas Television, Inc., Gulf

Coast Broadcasting Company, and K-Six Television, Inc., engaged in a

combination and conspiracy, in violation of Section 1 of the Sherman

Act, 15 U.S.C. Sec. 1, to increase the price of retransmission rights

to cable operators in Corpus Christi, Texas and surrounding areas. The

complaint alleges that, in furtherance of this conspiracy, each

Defendant from at least June of 1993 through December 1993:

a. agreed not to enter into a retransmission consent agreement with

any cable company until that company had reached agreements with all

three Defendants;

b. agreed not to accept a retransmission consent agreement with any

cable company if that agreement gave that Defendant a competitive

advantage over the other two Defendants; and

c. in order to carry out these agreements, exchanged information

with each other on the progress being made and the terms being

considered in each Defendant's retransmission consent negotiations.

The effect of this combination and conspiracy was to increase the

price of retransmission consent and to restrain competition among the

defendants in the sale of retransmission rights. The complaint alleges

that the combination and conspiracy is illegal, and accordingly

requests that this Court

[[Page 6036]]

prohibit Defendants from continuing or renewing such activity.

The United States and Defendants have stipulated that the proposed

Final Judgment may be entered after compliance with the APPA, unless

the United States withdraws its consent. The Court's entry of the

proposed Final Judgment will terminate the action, except that the

Court will retain jurisdiction over the matter for possible further

proceedings to construe, modify or enforce the Judgment, or to punish

violations of any of its provisions.

II. Description of Practices Giving Rise to the Alleged Violation of

the Antitrust Laws

Defendants are three television broadcast stations conducting

business in Corpus Christi, Texas and the surrounding areas. Texas

Television, Inc. owns and operates KIII-TV (Channel 3), the ABC

affiliate. Gulf Coast Broadcasting Company owns and operates KRIS-TV

(Channel 6), the NBC affiliate. K-Six Television, Inc., a subsidiary of

Corpus Christi Broadcasting Company, Inc., owns and operates KZTV-TV

(Channel 10), the CBS affiliate. The complaint alleges that these three

local broadcasters colluded in order to raise the price of

retransmission rights being sold to local cable companies in the Corpus

Christi broadcast television market.

Retransmission rights allow a cable operator to carry a local

television station on its cable network. Before the enactment of the

1992 Cable Act, cable companies could carry a local broadcast station

on its cable system, without obtaining authorization from the station.

In contrast, under the Act, see 47 U.S.C. Sec. 325(b)(1), cable

companies are forbidden from carrying the signal of a local television

station without that broadcaster's express permission. If a station

elects to pursue ``retransmission consent'' under the Act, a cable

operator may carry the station's signal only after mutually agreeable

terms are negotiated. The Act established October 5, 1993, as the last

day that cable operators could carry a station's signal without its

retransmission consent, effectively setting that date as the deadline

for concluding retransmission consent agreements. As the Act requires

retransmission consent to be renegotiated every three years, such

negotiations will recur in the fall of 1996.

In the months leading up to October 1993, the cable and broadcast

companies in Corpus Christi announced their initial negotiating

positions. Each of the cable companies stated that they would not pay

cash for signals that their subscribers could receive for free over the

air, a position that had been taken by other cable companies

nationwide. Each of the three Corpus Christi broadcasters announced

that they expected to be paid cash for use of their signals, much as

cable operators pay for cable channels such as HBO or ESPN.

Negotiations between the broadcasters and the individual cable

companies were unproductive. At the time of the October 5 deadline, no

retransmission consent deals had been concluded between any of the

three Corpus Christi broadcast stations and any of the major local

cable operators: Tele-Communications, Inc. (``TCI'') (in the city of

Corpus Christi), Crown Media (in Kingsville, Texas), and Falcon Cable

Media and Post-Newsweek Cable, Inc. (each serving various small

outlying communities). As required by law, the cable companies dropped

the broadcasters' signals on October 5 just before midnight. The

signals were still available over the air from the broadcasters

themselves.

Intermittent negotiations with TCI continued through October and

November 1993, accompanied by an extensive public relations battle by

both sides, in part a reaction to a barrage of cable subscriber

complaints to the cable companies and the broadcasters. The stations

swapped commercials that advocated their side of the dispute, spots

that when aired on a given station featured the insignias of all three

stations, a clear message of broadcaster solidarity. Negotiations with

the other cable companies essentially ceased pending the resolution of

the TCI dispute. Except for Falcon Cable, which obtained several

extensions from the broadcasters, the stations' signals remained off

the cable systems until final deals were signed, starting with TCI in

mid-November.

In response to the position taken by each cable company, the three

Corpus Christi broadcasters restrained competition among themselves by

entering into an agreements that established a coordinated negotiating

strategy. Through these agreements, the broadcasters intended to

maximize the concessions they could each obtain from each cable

company, and to ensure that any concession obtained through this

strategy would not favor one broadcaster over the others. First, as the

broadcasters stated repeatedly to cable negotiators and to the public,

all three agreed not to return to a given cable system until all three

broadcasters had concluded retransmission agreements with that cable

operator. This allowed the broadcasters to eliminate any advantage a

cable company could gain by being able to play one broadcaster off

another. The broadcasters recognized that the first station to return

to a cable system placed the other two at a competitive disadvantage,

since these stations would lose advertising revenue through reaching

fewer viewers until their signals were restored to cable. The last

stations would therefore be forced to sign on less favorable terms with

the cable company than the first. By agreeing not to sign with a cable

company until the other broadcasters had reached agreements with the

same cable company, the broadcasters eliminated such competition among

themselves. The ``holdout agreement'' had no purpose other than to

guarantee that the three stations collectively obtained better

retransmission consent deals. As one of the broadcasters announced

publicly during the standoff, ``until we are all convinced that we can

get the best deal that we can get, then we're not going to be on

cable.''

The broadcasters also told cable negotiators that they had agreed

to reject any deal that would grant any Corpus Christi station a

competitive advantage over the other two. This secondary agreement

supported the holdout agreement by eliminating the possibility that the

last station to sight might acquire especially favorable terms from the

cable company, since it could effectively withhold the signals of all

three stations until it had reached a deal.

Pursuant to their agreement, the broadcasters in fact refused to

return their signals to each individual cable system until all three

broadcasters had concluded deals with that cable operator. At the

insistence of the broadcasters, all three signals were restored to each

cable system at approximately the same time. In several instances, this

meant that broadcasters which had already reached an understanding with

a cable company waited days to sign the agreement, in order to give the

other stations time to finish their negotiations. The broadcasters'

desire to return to cable simultaneously required them to keep each

other informed as to the progress and content of their negotiations.

The broadcasters therefore made frequent telephone calls to each other.

At times, a broadcaster told cable negotiators that he would have to

check with the other stations before taking a certain action, for

example, approving a deal point or an extension. On at least one

occasion, representatives of two of the stations met in a Corpus

Christi restaurant to talk and exchange written information.

The broadcasters' collusion succeeded in extracting more favorable

terms from

[[Page 6037]]

the cable companies than they would have otherwise obtained, even

though the broadcasters failed to achieve their goal of direct cash

payments. Local cable operators also lost revenue from increased

subscriber cancellations during this period and from purchasing tens of

thousands of ``A/B'' switches so that their subscribers could more

conveniently obtain the stations' over the air signals. The amount of

commerce affected by the conduct is difficult to establish but appears

to be substantial in light of the lengthy disruption that resulted from

the concerted action of the broadcasters.

III. Explanation of the Proposed Final Judgment

The parties have stipulated that the Court may enter the proposed

Final Judgment at any time after compliance with the APPA. The proposed

Final Judgment states that it shall not constitute an admission by

either party with respect to any issue of fact or law.

The proposed Final Judgment enjoins any continuation or renewal,

directly or indirectly, of the type of combination or conspiracy

alleged in the Complaint. Specifically, Section IV.A. enjoins each

Defendant from entering into any agreement with any broadcaster not

affiliated with that Defendant that relates to retransmission consent

or retransmission consent negotiations. Section IV.B. prohibits each

Defendant from communicating to any non-affiliated broadcaster any

information relating to retransmission consent or retransmission

consent negotiations, or communicating certain types of information

that relate to any actual or proposed transaction with any cable

operator or other multichannel video programming distributor. Together,

these provisions guarantee that there will be no recurrence of illegal

activity by these broadcasters, whether with respect to retransmission

consent or to any other transactions with cable companies or other

multichannel video programming distributors that may occur in the

future. Section IV.C. preserves the right of each Defendant to respond

to news inquiries about retransmission consent negotiations, so long as

the response does not reveal information about that Defendant's

negotiating strategy, the content or progress of negotiations, its

plans related to retransmission consent, or the type or value of

consideration being sought for retransmission consent.

The Supreme Court has long recognized that certain types of

concerted refusals to deal or group boycotts are per se violations of

the Sherman Act, even when they fall short of outright price-fixing.

Northwest Wholesale Stationers, Inc. v. Pacific Stationery & Printing

Co., 472 U.S. 284, 290 (1985). The agreements between the broadcasters

fell into this category because they had the purpose and effect of

raising the price of retransmission rights in the Corpus Christi area.

Moreover, the Supreme Court has held that an agreement between rival

companies that restrains competition between them is illegal when it

lacks, as did the agreements among these broadcasters, any pro-

competitive justification. See Federal Trade Commission v. Indiana

Federation of Dentists, 476 U.S. 447, 459 (1986). Although the 1992

Cable Act gave broadcasters the right to seek compensation for

retransmission of their television signals, the antitrust laws require

that such rights be exercised individually and independently by

broadcasters. When competitors in a market coordinate their

negotiations so as to strengthen their negotiating positions against

third parties and so obtain better deals, as did these Defendants,

their conduct violates the Sherman Act.

Section V. of the proposed final judgment is designed to ensure

that persons affected by Defendants' illegal conduct receive notice of

the restrictions placed on Defendant's future conduct by the Final

Judgment. Thus, paragraph V.A. and V.B. require each Defendant to send

a designated notice to each cable, wireless or satellite television

operator that currently distributes that Defendant's signal, and to all

other such operators that may in the future request retransmission

consent from that Defendant.

Sections VI. and VII. require each Defendant to set up an antitrust

compliance program and designate an antitrust compliance officer. Under

the program, each Defendant is required to furnish a copy of the Final

Judgment and a less formal written explanation of it to each of its

officers and directors and to each of its employees, sales

representatives, or agents whose duties relate to retransmission

consent for that Defendant's Corpus Christi television station.

The proposed Final Judgment also provides methods for determining

and securing each Defendant's compliance with its terms. Section VIII.

provides that, upon request of the Department of Justice, each

Defendant shall submit written reports, under oath, with respect to any

of the matters contained in the Final Judgment. Additionally, the

Department of Justice is permitted to inspect and copy all books and

records, and to interview the officers, directors, employees and agents

of each Defendant.

Section IX. makes the Final Judgment effective for ten years from

the date of its entry.

Section XI. of the proposed Final Judgment states that entry of the

Final Judgment is in the public interest. The APPA conditions entry of

the proposed Final Judgment upon a determination by the Court that the

proposed Final Judgment is in the public interest.

The Government believes that the proposed Final Judgment is fully

adequate to prevent the continuation of recurrence of the violation of

Section 1 of the Sherman Act alleged in the Complaint, and that

disposition of this proceeding without further litigation is

appropriate and in the public interest.

IV. Remedies Available to Potential Private Litigants

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

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

antitrust laws may bring suit in federal court to recover three times

the damages the person has suffered, as well as costs and reasonable

attorney 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.

Sec. 16(a), the proposed Final Judgment has no prima facie effect in

any subsequent private lawsuit that may be brought against the

defendant.

V. Procedures Available for Modification of the Proposed Final Judgment

The United States 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 provides a period of at least 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. Such comments should be made within 60 days of the date

of publication of this Competitive Impact Statement in the Federal

Register. The United States will evaluate the comments, determine

whether it should withdraw its consent, and respond to the comments.

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: Donald J. Russell, Chief,

[[Page 6038]]

Telecommunications Task Force, U.S. Department of Justice, Antitrust

Division, 555 4th Street N.W., Room 8100, Washington, D.C. 20001.

Under Section X. of the Proposed Final Judgment, the Court will

retain jurisdiction over this matter for the purpose of enabling any of

the parties to apply to the Court for such further orders or directions

as may be necessary or appropriate for the construction,

implementation, modification, or enforcement of the Final Judgment, or

for the punishment of any violations of the Final Judgment.

VI. Alternatives to the Proposed Final Judgment

The only alternative to the proposed Final Judgment considered by

the Government was a full trial on the merits and on relief. Such

litigation would involve substantial cost to the United States and is

not warranted, because the proposed Final Judgment provides appropriate

relief against the violations alleged in the Complaint.

VII. Determinative Materials and Documents

No particular materials or documents were determinative in

formulating the proposed Final Judgment. Consequently, the Government

has not attached any such materials or documents to the proposed Final

Judgment.

Dated:

Respectfully submitted,

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

Frank G. Lamancusa

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

Andrew S. Cowan

Attorneys, U.S. Department of Justice, Antitrust Division, 555 4th

Street N.W., Room 8100, Washington, D.C. 20001, (202) 514-5621.

[FR Doc. 96-3398 Filed 2-14-96; 8:45 am]

BILLING CODE 4410-01-M