Proposed Final Judgment and Competitive Impact Statement; United States of America versus American Radio Systems Corporation and EZ Communications, Inc.

DEPARTMENT OF JUSTICE

Antitrust Division

Proposed Final Judgment and Competitive Impact Statement; United

States of America versus American Radio Systems Corporation and EZ

Communications, Inc.

Notice is hereby given pursuant to the Antitrust Procedures and

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

Judgment, Stipulation, and Competitive Impact Statement have been filed

with the United States District Court for the District of Columbia in

United States v. American Radio Systems and EZ Communications, Inc.

Civ. Action No. 97 CV 405. 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. Sec. 16(b)-(h).

Plaintiff filed a civil antitrust Compliant on February 27, 1997,

alleging that the proposed acquisition of EZ Communications (``EZ'') by

American Radio Systems Corporation (``ARS'') would violate Section 7 of

the Clayton Act, 15 U.S.C. Sec. 18. The Complaint alleges that ARS and

EZ own and operate numerous radio stations throughout the United

States, and that after the transaction ARS would own eight radio

stations in the Sacramento, California area, including six of the 12

stations authorized and operating as Class B broadcast facilities in

that area. This acquisition would give ARS half of the most

competitively significant radio signals, and a significant share of the

radio advertising market, including a large percentage of advertising

directed to certain target audiences in Sacramento. As a result, the

combination of these companies would substantially lessen competition

in the sale of radio advertising time in Sacramento, California and the

surrounding area.

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

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

preliminary and permanent injunctive relief preventing the consummation

of the proposed acquisition; (c) an award to the United States of the

costs of this action; and (d) 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 EZ, 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 defendants to divest KSSJ-FM.

Unless the United States grants a time extension, defendants must

divest this radio station either within six months after the filing of

the Complaint, or within five (5) business days after notice of entry

of the Final Judgment,

[[Page 15921]]

whichever is later. If defendants do not divest KSSJ-FM within the

divestiture period, the Court shall, upon plaintiff's application,

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

requires defendants to ensure that, until the divestiture mandated by

the Final Judgment has been accomplished, KSSJ-FM will be operated

independently as a viable, ongoing business, and kept separate and

apart from ARS's and EZ's other Sacramento radio stations.

Additionally, the proposed Final Judgment provides that if KSSJ-FM's

Class B license has not been issued by the FCC on or before December

31, 1997, the United States has the right to designate one additional

ARS or EZ Class B radio station for divestiture. Further, the proposed

Final Judgment requires defendants to give plaintiff prior notice

regarding future radio station acquisitions or certain agreements

pertaining to the sale of radio advertising time in Sacramento.

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, DC 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 U.S. Department of Justice, Antitrust

Division, 325 7th Street, NW., Washington, DC 20530 (telephone: (202)

514-2481) and at the office of the Clerk of the United States District

Court for the District of Columbia, 3rd Street and Constitution Avenue,

NW., Washington, DC.

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.

United States District Court for The District of Columbia

United States of America, Plaintiff, v. American Radio Systems

Corporation and EZ Communications, Inc., Defendants. Civil Action

No. 1:97CV00405, Filed 2/27/97, Judge Oberdorfer.

Stipulation and Order

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. Sec. 16), and 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 the entry of the proposed Final

Judgment by serving notice thereof on defendants and by filing that

notice with the Court.

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

proposed Final Judgment pending entry of the Final Judgment, or until

expiration of time for all appeals of any Court ruling declining entry

of the proposed Final Judgment, and shall, from the date of the signing

of this Stipulation by the parties, 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.

(4) Defendants shall not consummate the transaction sought to be

enjoined by the complaint herein before the Court has signed this

Stipulation and Order.

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

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

divestiture required by Section IV of the Final Judgment,

notwithstanding the good faith efforts of defendants and any

prospective Acquirer, as defined in the Final Judgment. In this

circumstance, plaintiff will, in the exercise of its sole discretion,

acting in good faith, give special consideration to forbearing from

apply 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: (a) defendants have entered into a

definitive agreement to divest the KSSJ-FM Assets, or, if necessary,

the Optional ARS Station Assets, and such agreement and the Acquirer

have been approved by plaintiff; (b) all papers necessary to secure any

governmental approvals and/or rulings to effectuate such divestiture

(including but not limited to FCC, SEC and IRS approvals or rulings)

have been field with the appropriate agency; (c) receipt of such

approvals are the only closing conditions that have not been satisfied

or waived; and (d) defendants have demonstrated that neither they nor

the prospective Acquirer are responsible for any such delay.

(6) This Stipulation shall apply with equal force and effect to any

amended proposed Final Judgment agreed upon in writing by the parties

and submitted to the Court.

(7) In the event (a) plaintiff withdraws its consent, as provide in

paragraph 2 above, or (b) the proposed Final Judgment is not entered

pursuant to this Stipulation, the time has expired for all appeals of

any Court ruling declining entry of the proposed Final Judgment, and

the Court has not otherwise ordered continued compliance with the terms

and provisions of the proposed Final Judgment, then the parties are

released from all further obligations under this Stipulation, and the

making of this Stipulation shall be without prejudice to any party in

this or any other proceeding.

(8) Defendants represent that the divestiture ordered in the

proposed Final Judgment can and will be made, and that defendants will

alter raise no claim of hardship or difficulty as grounds for asking

the Court to modify any of the divestiture provisions contained

therein.

Dated: February 26, 1997.

For Plaintiff United States of America:

Dando B. Cellim,

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

H. Street, N.W., Suite 4000, Washington, D.C. 20005, (202) 307-0829.

For Defendant American Radio Systems Corporation`

James R. Loftis, III,

Joseph J. Simons,

Collier Shannon Rill & Scott, PLLC,

3050 K Street, N.W., Suite 400, Washington, DC 20007, (202) 342-8480.

For Defendant EZ Communications, Inc.

Ray V. Hartwell, III,

Andrew J. Strenio, Jr.,

Hunton & Williams,

1900 K Street, NW, Washington, DC 20006-1109, (202) 955-1639.

Final Judgment

Whereas, plaintiff, the United States of America, having filed its

Complaint herein on February 27, 1997, and defendants American Radio

Systems Corporation (``ARS'') and EZ Communications, Inc. (``EZ''), by

their 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.

[[Page 15922]]

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, plaintiff requires defendants to make certain

divestitures for the purpose of remedying the loss of competition

alleged in the Complaint;

And whereas, defendants have represented to plaintiff that the

divestitures ordered herein can and will be made and that defendants

will later raise no claim of hardship or difficulty as grounds for

asking the Court to modify any of the divestiture provisions contained

below;

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

trial 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

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 EZ, as

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

U.S.C. 18).

II. Definitions

As used in this Final Judgment:

A. ARS means defendant American Radio Systems Corporation, a

Delaware corporation with its headquarters in Boston, Massachusetts,

and includes its successors and assigns, its subsidiaries, and

directors, officers, managers, agents and employees acting for or on

behalf of ARS.

B. EZ means defendant EZ Communications, Inc., a Virginia

corporation with its headquarters in Fairfax, Virginia, and includes

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

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

C. KSSJ-FM Assets means all of the assets, tangible or intangible,

used in the operation of KSSJ 101.9 FM radio station in the Sacramento

Area, including but not limited to: all real property (owned or leased)

used in the operation of that station; all broadcast equipment,

personal property, inventory, office furniture, fixed assets and

fixtures, materials supplies and other tangible property used in the

operation of that station; all licenses, permits, authorizations and

applications therefor issued by the Federal Communications Commission

(``FCC'') and other government agencies relating to that station; all

contracts, agreements, leases and commitments of defendants pertaining

to that station and its operations; all trademarks, service marks,

trade names, copyrights, patents, slogans, programming materials and

promotional materials relating to that station, and all logs and other

records maintained by defendants or that station in connection with its

business.

D. Sacramento Area means the Sacramento, California Metro Survey

Area as identified by The Arbitron Radio Market Report for Sacramento

(Fall 1996), which is made up of the following counties: El Dorado,

Placer, Sacramento and Yolo.

E. Acquirer means the entity to whom defendants divest the KSSJ-FM

Assets or the Optional ARS Station Assets under this Final Judgment.

F. ARS Radio Station means any radio station owned by ARS or EZ and

licensed to a community in the Sacramento Area, other than KSSJ-FM.

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

community in the Sacramento Area that is not an ARS Radio Station.

H. Optional ARS Station Assets means the full class B FM radio

station assets designated by plaintiff pursuant to Section IV (B) of

this Final Judgment, and include all the assets, tangible or

intangible, used in the operation of any one radio station with a full

class B license broadcast facility owned by ARS or EZ, so chosen by the

plaintiff, and licensed to a community in the Sacramento Area, other

than KSSJ-FM, including but not limited to all real property (owned or

leased) used in the operation of that station; all broadcast equipment,

personal property, inventory, office furniture, fixed assets and

fixtures, materials, supplies and other tangible property used in the

operation of that station; all licenses, permits, authorizations and

applications therefor issued by the Federal Communications Commission

(``FCC'') and other governmental agencies relating to that station; all

contracts, agreements, leases and commitments of defendants pertaining

to that station and its operations; all trademarks, service marks,

trade names, copyrights, patents, slogans, programming materials and

promotional materials relating to that station, and all logs and other

records maintained by defendants or that station in connection with its

business.

III. Applicability

A. The provisions of this Final Judgment apply to 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 them who shall have

received actual notice of the 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

Sacramento 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 in connection with

the divestiture of the KSSJ-FM Assets or the Optional ARS Station

Assets.

IV. Divestiture

A. Defendants are hereby ordered and directed, in accordance with

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

filing of the complaint in this action, or within five (5) business

days after notice of entry of this Final Judgment, whichever is later,

to divest the KSSJ-FM Assets to an Acquirer acceptable to plaintiff, in

its sole discretion.

B. In the event that KSSJ-FM's class B FM license has not been

issued by the FCC on or before December 31, 1997, plaintiff shall

thereafter have the right, exercisable at any time during the term of

this Final Judgment, to designate the Optional ARS Station Assets.

Plaintiff's designation shall be communicated to defendants in writing,

which notification shall identify one class B FM station and

accompanying assets that shall constitute the Optional ARS Station

Assets In the event plaintiff designates the Optional ARS Station

Assets pursuant to this Section IV(B), defendants shall, in accordance

with the terms of this Final Judgment, within six (6) months of written

notification to defendants of plaintiff's designation of the Optional

ARS Station Assets, in addition to the KSSJ-FM Assets, divest the

Optional ARS Station Assets to an Acquirer acceptable to plaintiff, in

its sole discretion.

C. Unless plaintiff otherwise consents in writing, the divestiture

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

appointed pursuant to Section V, shall include all the KSSJ-FM Assets

and the Optional ARS Station Assets, and shall be accomplished in such

a way as to satisfy plaintiff, in its sole discretion, that the KSSJ-FM

Assets and Optional ARS Station Assets can and will be used by

[[Page 15923]]

an Acquirer as a viable, ongoing commercial radio business. The

divestiture, whether pursuant to Section IV or V of this Final

Judgment, shall be made (1) to an Acquirer that, in the sole judgment

of plaintiff, 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 Sacramento Area; and (2)

pursuant to agreements the terms of which shall not, in the sole

judgment of plaintiff, interfere with the ability of the Acquirer to

compete effectively.

D. Defendants agree to use their best efforts to divest the KSSJ-FM

Assets and the Optional ARS Station Assets, and to obtain all

regulatory approvals necessary for such divestiture, as expeditiously

as possible. Plaintiff, in its sole discretion, may extend the time

period for the divestiture set forth in Section IV (A) or Section IV

(b), as the case may be, for two (2) additional thirty (30)-day periods

of time, not to exceed sixty (60) calendar days in total in each case.

E. In accomplishing the divestiture ordered by this Final Judgment,

defendants promptly shall make known, by usual and customary means, the

availability of the KSSJ-FM Assets and the Optional ARS Station Assets.

Defendants shall inform any person making a bona fide inquiry regarding

a possible purchase that the sale is being made pursuant to this Final

Judgment and provide such person with a copy of the Final Judgment.

Defendants shall make known to any person making an inquiry regarding a

possible purchase of the KSSJ-FM Assets and the Optional ARS Station

Assets, that the assets described in Section II (C) and Section II (H)

are being offered for sale. Defendants shall also offer to furnish to

all bona fide prospective purchasers, subject to customary

confidentiality assurances, all information regarding the KSSJ-FM

Assets and the Optional ARS Station Assets customarily provided in a

due diligence process, except such information that is subject to

attorney-client privilege or attorney work-product privilege.

Defendants shall make available such information to plaintiff at the

same time that such information is made available to any other person.

F. Defendants shall permit bona fide prospective purchasers of the

KSSJ-FM Assets or the Optional ARS Station 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, as is

customary in a due diligence process.

G. Defendants shall not interfere with any efforts by any Acquirer

to employ the general manager or any other employee of KSSJ-FM or the

Optional ARS Station Assets.

V. Appointment of Trustee

A. In the event that defendants have not divested the KSSJ-FM

Assets or the Optional ARS Station Assets within the time periods

specified in Section IV of this Final Judgment, the Court shall

appoint, on application of plaintiff, a trustee selected by plaintiff

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 KSSJ-FM Assets or the Optional

ARS Station 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 VII of this Final Judgment and consistent with FCC regulations,

and shall have such 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 defendants

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

plaintiff in its sole judgment, and shall have such other powers at

this Court shall deem appropriate. Defendants shall not object to the

sale of the KSSJ-FM Assets or the Optional ARS Station Assets by the

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

objection by defendants must be conveyed in writing to plaintiff and

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

has provided the notice required under Section VII of this Final

Judgment.

C. The trustee shall serve at the cost and expense of defendants,

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 defendants, 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. Defendants shall take no action to interfere with or impede the

trustee's accomplishment of the divestiture of the KSSJ-FM Assets or

the Optional ARS Station Assets, and shall use their 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 KSSJ-FM Assets and the Optional ARS Station Assets, and

defendants shall develop such financial or other information as may be

necessary for the divestiture of the KSSJ-FM Assets and the Optional

ARS Station Assets. Defendants shall permit prospective purchasers of

the KSSJ-FM Assets and Optional ARS Station 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 defendants, plaintiff and the Court, setting forth

the trustee's efforts to accomplish divestiture of the KSSJ-FM Assets

and the Optional ARS Station 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 KSSJ-FM Assets or

the Optional ARS Station 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 assets.

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)

[[Page 15924]]

the reasons, in the trustee's judgment, why the required divestiture

has not been accomplished, and (3) the trustee's recommendations;

provided, 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 plaintiff and defendants, which 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. Preservation of Assets/Hold Separate

Until the divestiture of the KSSJ-FM Assets required by Section IV

of the Final Judgment has been accomplished.

A. Defendants shall take all steps necessary to operate KSSJ-FM as

a separate, independent, ongoing, economically viable and active

competitor to defendants' other stations in the Sacramento Area, and

shall take all steps necessary to ensure 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 station, including the

performance of decision-making functions regarding marketing and

pricing, will be kept separate and apart from, and not influenced by,

defendants.

B. Defendants shall use all reasonable efforts to maintain and

increase sales of advertising time by KSSJ-FM and the Optional ARS

Station Assets, and shall maintain at 1996 or previously approved

levels for 1997, whichever are higher, promotional advertising, sales,

marketing and merchandising support for such radio station.

C. Defendants shall take all steps necessary to ensure that the

assets used in the operation of KSSJ-FM and the Optional ARS Station

Assets are fully maintained. KSSJ-FM's and the Optional ARS Station

Assets' sales and marketing employees shall not be transferred or

reassigned to any other station, except for transfer bids initiated by

employees pursuant to defendants' regular, established job posting

policies, provided that defendants give plaintiff and Acquirer ten (10)

days' notice of such transfer.

D. Defendants shall not, except as part of a divestiture approved

by plaintiff, sell any KSSJ-FM Assets or the Optional ARS Station

Assets.

E. Defendants shall take no action that would jeopardize the sale

of the KSSJ-FM Assets or the Optional ARS Station Assets.

F. Defendants shall appoint a person or persons to oversee the

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

compliance with Section VI of this Final Judgment.

VII. Notification

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

agreement to divest, including all contemplated ancillary agreements

(e.g., financing), to effect any proposed divestiture pursuant to

Sections IV or V of this Final Judgment, defendants or the trustee,

whichever is then responsible for effecting the divestiture, shall

notify plaintiff of the proposed divestiture. If the trustee is

responsible, it shall similarly notify defendants. 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 KSSJ-FM Assets of the Optional ARS Station

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

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

request from defendants, 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. Defendants and the

trustee shall furnish any additional information requested within

fifteen (15) calendar days of the receipt of the request. Within thirty

(30) calender days after receipt of the notice or within twenty (20)

calendar days after plaintiff has been provided the additional

information, whichever is later, plaintiff shall provide written notice

to defendants and the trustee, if there is one, stating whether or not

it objects to the proposed divestiture. If plaintiff fails to object

within the period specified, or if the plaintiff provides written

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

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

defendants' 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 plaintiff objects to it. Upon objection by plaintiff,

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

proposed under Section V shall not be consummated unless approved by

the Court.

VIII. Financing

Defendants are 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 plaintiff.

IX. 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, defendants shall deliver to plaintiff

an affidavit as to the fact and manner of defendants' 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 defendants, 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 KSSJ-FM Assets or the Optional ARS Station 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 defendants have taken to solicit a buyer for the KSSJ-FM

Assets or the Optional ARS Station Assets.

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

Judgment, defendants shall deliver to plaintiff an affidavit which

describes in reasonable detail all actions defendants have taken and

all steps defendants have implemented on an on-going basis to preserve

KSSJ-FM or the Optional ARS Station Assets pursuant to Section VI of

this Final Judgment. Defendants shall deliver to plaintiff an affidavit

describing any changes to the efforts and actions outlined in their

earlier affidavit(s) filed pursuant to this section within fifteen (15)

calendar days after such change is implemented.

C. Defendants shall preserve all records of all efforts made to

preserve and divest the KSSJ-FM Assets and the Optional ARS Station

Assets.

X. 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''),

defendants, without providing advance notification to the plaintiff,

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

[[Page 15925]]

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

in any Non-ARS Radio Station.

B. Defendants, without providing advance notification to the

plaintiff, shall not directly or indirectly enter into any agreement or

understanding that would allow defendants 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 United States Department of Justice 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 the information requested in Items

5-9 of the instructions must be provided only with respect to ARS Radio

Stations in the Sacramento Area. Notification shall be provided at

least thirty (30) days prior to acquiring any such interest 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

plaintiff make a written request for additional information, defendants

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.

XI. 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 plaintiff, including

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

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

Assistant Attorney General in charge of the Antitrust Division, and on

reasonable notice to defendants made to their principal offices, be

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 defendants, 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, 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

Section IX or this Section XI shall be divulged by any representative

of the United States 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 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 a

defendant to plaintiff, 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 plaintiff 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.

XII. 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.

XIII. Termination

Unless this Court grants an extension, this Final Judgment will

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

XIV. Public Interest

Entry of this Final Judgment is in the public interest.

Certificate of Service

I, Dando B. Cellini, hereby certify that, on February 27, 1997, I

caused the foregoing documents to be served on defendants American

Radio Systems Corporation and EZ Communications, Inc., by having a copy

mailed, first-class, postage prepaid, to:

James R. Loftis, III,

Joseph J. Simons,

Collier Shannon Rill & Scott, PLLC,

3050 K Street, N.W., Suit 400, Washington, DC 20007, (202) 342-8480,

Counsel for American Radio Systems Corporation.

Ray V. Hartwell, III,

Andrew J. Strenio, Jr.,

Hunton & Williams,

1900 K Street, NW, Washington, DC 20006-1109, (202) 955-1639, Counsel

for EZ Communications, Inc.

Dando B. Cellini.

Competitive Impact Statement

Plaintiff, the United States of America, pursuant to Section 2(b)

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

Sec. 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

Plaintiff filed a civil antitrust Complaint on February 27, 1997,

alleging that the proposed acquisition of EZ of Communications (``EZ'')

by American Radio Systems Corporation (``ARS'') would violate Section 7

of the Clayton Act, 15 U.S.C. Sec. 18. The Complaint alleges that ARS

and EZ own and operate numerous radio stations throughout the United

States, and that after the transaction ARS would own eight radio

stations in the Sacramento, California area, including six of the 12

stations authorized and operating as Class B broadcast facilities in

that area.\1\

[[Page 15926]]

This acquisition would give ARS half of the most competitively

significant radio signals, and a significant share of the radio

advertising market, including a large percentage of advertising

directed to certain target audiences in Sacramento. As a result, the

combination of these companies would substantially lessen competition

in the sale of radio advertising time in Sacramento, California and the

surrounding area.

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\1\ The Telecommunications Act of 1996 provides that a party may

own up to a maximum of eight commercial radio stations in a radio

market, not more than five of which are in the same service (AM or

FM). However, a radio market for Federal Communications Commission

(``FCC'') purposes is delineated by examining overlapping principal

community contours. Because ARS defined two separate radio markets

in the Sacramento area for FCC purposes, based upon principal

community contours, it took the position in its FCC filings and with

the Department of Justice that the 1996 Telecommunications in its

FCC filings and with the Department of Justice that the 1996

Telecommunications Act did not require divestiture of any of the six

class B FM signals that it would own after the merger.

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

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

preliminary and permanent injunctive relief preventing the consummation

of the proposed acquisition; (c) an award to the United States of the

costs of this action; and (b) 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 EZ, 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 defendants to divest KSSJ-FM.

Unless the United States grants as a time extension, defendants must

divest this radio station either within six months after the filing of

the Complaint, or with five (5) business days after notice of entry of

the Final Judgment, whichever is later. If defendants do not divest

KSSJ-FM within the divestiture period, the Court shall, upon

plaintiff's application, appoint a trustee to sell the assets. The

proposed Final Judgment also requires defendants to ensure that, until

the divestiture mandated by the Final Judgment has been accomplished,

KSSJ-FM will be operated independently as a viable, ongoing business,

and kept separate and apart from ARS's and EZ's other Sacramento radio

stations. Additionally, the proposed Final Judgment provides that if

KSSJ-FM's Class B license has not been issued by the FCC on or before

December 31, 1997, the United States has the right to designate one

additional ARS or EZ Class B radio station for divestiture. Further,

the proposed Final Judgment requires defendants to give plaintiff prior

notice regarding future radio station acquisitions or certain

agreements pertaining to the sale of radio advertising time in

Sacramento.

The plaintiff 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 75 radio stations

in 14 metropolitan areas in the United States. Its 1996 revenues were

approximately $270 million. ARS owns four radio stations authorized and

operating as Class B broadcast facilities in the Sacramento area.

EZ is a Virginia corporation headquartered in Fairfax, Virginia. It

owns and operates twenty-three radio stations in seven metropolitan

areas in the United States. Its 1996 revenues were approximately $118

million. EZ owns two radio stations authorized and operating as Class B

broadcast facilities in the Sacramento area.

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

On August 5, 1996, ARS agreed to purchase EZ for approximately $655

million. As is more fully discussed below, ARS would control a

significant share of the radio advertising in Sacramento, as well as a

significant percentage of advertising directed to certain target

audiences in Sacramento. The proposed acquisition of EZ by ARS, and the

threatened loss of such competition that would be caused thereby,

precipitated the government's suit.

C. Anticompetitive Consequences of the Proposed Merger

1. Sale of Radio Advertising Time in Sacramento

The Complaint alleges that the provision of advertising time on

radio stations serving the Sacramento, California Metro Survey Area

(``MSA'') constitutes a line of commerce and section of the country, or

relevant market, for antitrust purposes. The Sacramento MSA is the

geographical unit for which Arbitron furnishes radio stations,

advertisers, and advertising agencies in Sacramento with data to aid in

evaluating radio audience size and composition. Advertisers use this

data in making decisions about which radio station or combination of

radio stations can deliver their target audiences in the most efficient

and cost-effective way. Local and national advertising that is placed

on radio stations within the Sacramento MSA is aimed at reaching

listening audiences in the Sacramento MSA, and radio stations outside

of the Sacramento MSA do not provide effective access to this audience.

Thus, if there were a small but significant nontransitory increase in

radio advertising prices within the Sacramento MSA, advertisers would

not buy enough advertising time from radio stations located outside of

the Sacramento MSA to defeat the increase.

Radio stations earn their revenues from the sale of advertising

time to local and national advertisers. Many local and national

advertisers purchase radio advertising time in Sacramento because such

advertising is preferable to advertising in other media for their

specific needs. For such advertisers, radio time: may be less expensive

and most 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 and others, many local and

national advertisers in Sacramento 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 Sacramento, the existence of such advertisers

would not prevent radio stations from profitably raising their prices a

small but significant amount to those advertisers who have strong

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

advertising campaigns. At a minimum, stations could profitably raise

prices to those advertisers who view radio either as a necessary

advertising medium for them, or as a necessary advertising complement

to other media. 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 among different

[[Page 15927]]

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 of Competition

The Complaint alleges that ARS's proposed acquisition of EX would

lessen competition substantially in the provision of radio advertising

time in the Sacramento MSA. The proposed acquisition would create

significant market concentration, and would permit ARS to control a

substantial share of the advertising revenues in Sacramento. The

transaction is likely to lead to further market concentration in view

of the fact that KSSJ-FM has recently been ungraded to a Class B FM

signal, which broadens that station's reach and is therefore likely to

increase its (and hence ARS's) market share. Moreover, the proposed

merger would concentrate many of Sacramento's strongest radio signals

into the hands of ARS. After all transactions are complete, ARS would

own six of the 12 stations in the Sacramento area authorized and

operating as Class B broadcast facilities. Because weaker signals

cannot penetrate as large as listening area, they do not have the

potential to reach as many listeners as strong signals. All else being

equal, concentrated ownership of strong signals is likely to create

more listenship dominance the concentrated ownership of weaker signals.

ARS presently controls approximately 21% of radio advertising

revenues in Sacramento, and its market share would rise to

approximately 36% 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 1895, which would rise by 998 points to 2893

after the merger. This substantial increase in concentration,

exacerbated by the upgrade of KSSJ-FM's signal to Class B and the

resultant likely increase of ARS's future market share, will give ARS

the unilateral power to raise advertising prices and reduce the level

of service provided to advertisers in Sacramento.

Furthermore, the proposed transactions would eliminate head-to-head

competition between ARS and EZ for advertisers seeking to reach

specific audiences. 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, the

characteristics of its audience, and the geographic reach of a

station's signal. Many advertisers seek to reach a large percentage of

their target audience by selecting those stations whose audience has a

high correlation with 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 EZ stations compete head-to-head to reach the

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

in Sacramento, they are close substitutes for each other based on their

specific audience characteristics. The proposed merger would eliminate

such competition, notably including competition for advertisers seeking

to reach female listeners in Sacramento.

Advertisers seeking to reach female listeners in Sacramento

currently help to ensure competitive rates by ``playing off'' ARS

stations against EZ stations. Because the direct competition between

the ARS and EZ stations would be eliminated by the proposed merger, and

because advertisers seeking to reach female listeners would have

inferior alternatives to the merged entity, the acquisition would give

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

services to a significant number of its advertisers on its Sacramento

stations. This is particularly true because of the merged entity's

ability to charge different prices to different advertisers.

Format changes are unlikely to deter the anticompetitive

consequences of the proposed merger. If ARS raised prices or reduced

services to those advertisers who buy time on ARS and EZ stations

because of their strength in delivering access to certain specific

audiences, non-ARS radio stations in Sacramento would not be induced to

change their formats to attract those audiences in sufficiently large

numbers to defeat a price increase. 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 lose a substantial

portion of their existing audiences. Even if less successful or less

powerful stations did change format, they would still be unlikely to

attract enough listeners to provide suitable alternatives to the merged

entity.

Finally, new entry into the Sacramento radio advertising market is

highly unlikely in response to a price increase by the merged parties.

No unallocated radio broadcast frequencies exist in Sacramento. Also,

stations located in adjacent communities cannot boost their power so as

to enter the Sacramento market without interfering with other stations

on the same or similar frequencies, a violation of Federal

Communications Commission (``FCC'') regulations.

For these reasons, plaintiff concludes that the merger as proposed

would substantially lessen competition in the sale of radio advertising

time in the Sacramento MSA, eliminate actual competition between ARS

and EZ, and result in increased rates for radio advertising time in the

Sacramento MSA, all in violation of Section 7 of the Clayton Act.

III. Explanation of the Proposed Final Judgment

The proposed Final Judgment would preserve competition in the sale

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

divestiture of KSSJ-FM, a station oriented toward female listeners, and

one of only 12 radio signals in the Sacramento area authorized and

operating as Class B FM broadcast facilities. Class B signals are the

strongest, and therefore the most competitively significant, radio

broadcasting signals in the Sacramento area. Absent the divestiture,

ARS would have controlled six of 12 of Sacramento's Class B signals.

Such concentrated ownership of the most competitively significant

signals in the area, coupled with the likely increase in ARS's revenue

share following KSSJ-FM's signal upgrade, would enable ARS to maintain

a dominant share of listeners that would be difficult for competing

radio stations to challenge effectively, thereby reducing the choices

available to radio advertisers in Sacramento, and diminishing

competition. The divestiture of KSSJ-FM leaves ARS with five of the 12

Class B FM signals and less than 35 percent of the advertising revenues

in Sacramento, and puts the station in the hands of a competitor, who

will have the competitive benefit of the station's signal upgrade. In

particular, the divestiture of KSSJ-FM, upgraded to a Class B signal,

will permit ARS and the remaining radio stations in Sacramento to

compete vigorously for advertisers seeking to reach female listeners.

Although KSSJ-FM is currently authorized and operating as a Class B

FM station, it is still awaiting the formal issuance of its Class B

license by the FCC. In the event that this license has not been issued

by the FCC on or before December 31, 1997, then the proposed Final

Judgment gives plaintiff the option to designate an additional

Sacramento Class B FM station for divestiture by defendants.

[[Page 15928]]

Unless plaintiff grants an extension of time, defendants must

divest KSSJ-FM 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, KSSJ-FM will be operated and maintained as an independent

competitor to defendants' other stations in the Sacramento MSA.

If defendants fail to divest KSSJ-FM within the prime periods

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

plaintiff, shall appoint a trustee nominated by the plaintiff to effect

the divestiture. If a trustee is appointed, the proposed Final Judgment

provides that defendants will pay all costs and expenses of the trustee

and any professionals and agents 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 KSSJ-FM, 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 defendants, the plaintiff 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 plaintiff and

defendants, who will each have the right to be heard and to make

additional recommendations.

The proposed Final Judgment requires that defendants maintain KSSJ-

FM separate and apart from their other stations, pending divestiture.

The Judgment also contains provisions to ensure that KSSJ-FM will be

preserved, so that it will remain a viable, aggressive competitor after

divestiture.

The proposed Final Judgment also prohibits defendants from entering

into certain agreements with other Sacramento radio stations without

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

Justice. Specifically, defendants must notify the Department before

acquiring any significant interest in another Sacramento radio station.

Such acquisitions could raise competitive concerns but might be too

small to be otherwise reportable under the Hart-Scott-Rodino (``HSR'')

premerger notification statute. Moreover, defendants may not agree to

sell radio advertising time for any other Sacramento radio station

without providing plaintiff with notice. This provision ensures that

plaintiff will receive advance notice of any acquisition, or

agreements, through which defendants would increase the amount of

advertising time on radio stations that they can sell. In particular,

this provision requires defendants to notify plaintiff 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 Sacramento MSA.

Agreements whereby defendants sell advertising for or manage other area

radio stations would effectively increase defendants' market share in

the Sacramento area MSA. Despite their clear competitive significance,

JSAs probably would not be reportable to the Department of Justice

under the HSR Act. Thus, this provision in the proposed Final Judgment

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 Sacramento market.

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

anticompetitive effects of the proposed acquisition of EZ by ARS.

Nothing in this Final Judgment is intended to limit the plaintiff's

ability to investigate or to bring actions, where appropriate,

challenging other past or future activities of defendants in the

Sacramento MSA.

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's 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 defendants.

V. Procedures Available for Modification of the Proposed Final Judgment

The plaintiff 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 plaintiff 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 plaintiff 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 plaintiff 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 plaintiff considered, as an alternative to the proposed Final

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

defendants. The plaintiff is satisfied, however, that the divestiture

of the KSSJ-FM Assets and other relief contained in the proposed Final

Judgment will preserve viable competition in the sale of radio

advertising time in the Sacramento 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 judgments in antitrust

cases

[[Page 15929]]

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. Sec. 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 (1073). 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. Sec. 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 governments to

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. No. 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\

\3\ Bechtel, 648 F.2d at 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).

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

standard of whether it is 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 falls 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 interest.' '' \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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This is strong and effective relief that should fully address the

competitive harm posed by the proposed merger.

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) 307-0829.

Dated: March 20, 1997.

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 (30\2\+30\2\+20\2\+20\2\=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.

Certificate of Service

I, Dando B. Cellini, hereby certify that, on March 20, 1997, I

caused the foregoing document to be served on defendants American Radio

Systems Corporation and EZ Communications, Inc. by having a copy

mailed, first-class, postage prepared, to:

James R. Loftis, III,

Joseph J. Simons,

Collier Shannon Rill & Scott, PLLC,

3050 K Street, NW., Suite 400, Washington, DC 20007, (202) 342-8480,

Counsel for American Radio Systems Corporation.

Ray V. Hartwell, III,

Andrew J. Strenio, Jr.,

Hunton & Williams,

1900 K Street, NW., Washington, DC 20006-1109, (202) 955-1639, Counsel

for EZ Communications, Inc.

Dando B. Cellini.

[FR Doc. 97-8459 Filed 4-2-97; 8:45 am]

BILLING CODE 4410-11-M