United States of America v. CBS Corporation and American Radio Systems Corporation; Proposed Final Judgment and Competitive Impact Statement
Federal RegisterApr 13, 1998
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DEPARTMENT OF JUSTICE
Antitrust Division
United States of America v. CBS Corporation and American Radio
Systems Corporation; Proposed Final Judgment and Competitive Impact
Statement
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. CBS Corporation and American Radio Systems
Corporation, Case No. 1:98CV00819. The proposed Final Judgment is
subject to approval by the Court after the expiration of the statutory
60-day pubic comment period and compliance with the Antitrust
Procedures and Penalties Act. 15 U.S.C. Sec. 16(b)-(h).
The United States filed a civil antitrust Complaint on March 31,
1998, alleging that the proposed acquisition of American Radio Systems
Corporation (``ARS'') by CBS Corporation (``CBS'') would violate
Section 7 of the Clayton Act, 15 U.S.C. Sec. 18. The Complaint alleges
that CBS and ARS own and operate numerous radio stations throughout the
United States, and that they each own and operate radio stations in the
Boston, Massachusetts, St. Louis, Missouri and Baltimore, Maryland
metropolitan areas. This acquisition would give CBS control over more
than 40 percent of the radio advertising revenues in those metropolitan
areas, and would give CBS the ability to raise prices and reduce
services to many advertisers. As a result, the combination of these
companies would substantially lessen competition in the sale of radio
advertising time in the Boston, St. Louis and Baltimore metropolitan
areas.
The prayer for relief seeks: (a) Adjudication that CBS's proposed
acquisition of ARS 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 CBS to complete its acquisition of ARS, yet
preserves competition in the markets in which the transaction would
raise significant competitive concerns. A Stipulation, proposed Final
Judgment embodying the settlement, and Competitive Impact Statement
were filed with the Court at the same time the Complaint was filed.
The proposed Final Judgment orders CBS to divest WEEI-AM, WAAF-FM,
WEGQ-FM and WRKO-AM in Boston, KSD-FM and KLOU-FM in St. Louis, and
WOCT-FM in Baltimore, all of which are currently owned by ARS. Unless
the United States grants an extension of time, CBS must divest these
radio stations within six months after CBS places certain stations
which it is required to dispose of by FCC rules into FCC disposition
trusts (with an outside date of nine months after the Complaint was
filed) or within five business days after notice of entry of the Final
Judgment, whichever is later.
If CBS does not divest these stations within the divestiture
period, the Court, upon application of the United States, is to appoint
a trustee to sell the assets. The proposed Final Judgment also requires
CBS to ensure that, until the divestitures mandated by the Final
Judgment have been accomplished, these stations will be operated
independently as viable, ongoing businesses, and kept separate and
apart from CBS's other radio stations in Boston, St. Louis and
Baltimore. Further, the proposed Final Judgment requires defendants to
give the United States prior notice regarding future radio station
acquisitions or certain agreements pertaining to the sale of radio
advertising time in Boston, St. Louis or Baltimore.
The United States and CBS and ARS 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.
A Competitive Impact Statement filed by the United States describes
the Compliant, 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 Antitrust Division, Department of
Justice, 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, Third Street and Constitution
Avenue, NW., Washington, DC 20001.
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Copies of any of these materials may be obtained upon request and
payment of a copying fee.
Constance K. Robinson,
Director of Operations & Merger Enforcement Antitrust Division.
United States District Court for the District of Columbia
United States of America, Plaintiff, v. CBS Corporation and
American Radio Systems Corporation, Defendants
[No. 98-0819]
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 by the
Court, 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 through the
same were in full force and effect as an Order of the Court.
(4) The parties recognize that there could be a delay in obtaining
approval by or a ruling of a government agency related to the
divestitures required by Section IV of the Final Judgment,
notwithstanding the good faith efforts of the 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 forebearing from
applying for the appointment of a trustee pursuant to Section V of the
Final Judgment, or from pursuing legal remedies available to it as a
result of such delay, provided that: (i) Defendants have entered into
one or more definitive agreements to divest the WOCT-FM Assets, the
WEGO-FM Assets, the WAAF-FM Assets, the WEEI-AM Assets, the WRKO-AM
Assets, the KSD-FM Assets, and the KLOU-FM Assets, as defined in the
Final Judgment, and such agreements and the Acquirer or Acquiers have
been approved by plaintiff; (ii) All papers necessary to secure any
governmental approvals and/or rulings to effectuate such divestitures
(including but not limited to FCC, SEC and IRS approvals or rulings)
have been filed wit the appropriate agency; (iii) Receipt of such
approvals are the only closing conditions that have not been satisfied
or waived; and (iv) Defendants have demonstrated that neither they nor
the prospective Acquirer or Acquiers are responsible for any such
delay.
(5) 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.
(6) In the event plaintiff withdraws its consent, as provided in
paragraph 2 above, or in the event 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.
(7) Defendants represent that the divestitures ordered in the
proposed Final Judgment 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
therein.
Dated: March 31, 1998.
For Plaintiff United States of America:
Allen P. Grunes,
U.S. Department of Justice, Antitrust Division, Merger Task Force, 1401
H Street, N.W., Suite 4000, Washington, D.C. 20005, (202) 307-0001.
For Defendant CBS Corporation:
Joe Sims,
Jones, Day, Reavis & Pogue, 1450 G Street, N.W., Washington, D.C.
20005, (202) 879-3939.
For Defendant American Radio Systems Corporation:
Timothy J. O'Rourke,
Dow, Lohnes & Albertson, 1200 New Hampshire Avenue, N.W., Washington,
D.C. 20036, (202) 776-2000.
So Ordered:
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United States District Judge
Certificate of Service
I, Allen P. Grunes, hereby certify that, on March 31, 1998, I
caused the foregoing document to be served on defendants CBS
Corporation and American Radio Systems Corporation by having a copy
mailed, first-class, postage prepaid, to:
Joe Sims,
Jones, Day, Reavis, & Pogue, 1450 G St., N.W., Washington, D.C. 20005,
Counsel for CBS Corporation.
Timothy J. O'Rourke,
Dow, Lohnes & Albertson, 1200 New Hampshire Avenue, N.W., Washington,
D.C. 20036, Counsel for American Radio Systems Corporation.
Allen P. Grunes.
United States District Court for the District of Columbia
United States of America, Plaintiff, v. CBS Corporation and
American Radio Systems Corporation, Defendants
[No. 98-0819]
Final Judgment
WHEREAS, plaintiff, the United States of America, filed its
Complaint in this action on March 31, 1998, and plaintiff and
defendants by their respective attorneys, having consented to the entry
of this Final Judgment without trial or adjudication of any issue of
fact or law herein, and without this Final Judgment constituting any
evidence against or an admission by any party with respect to any issue
of law or fact herein;
AND WHEREAS, defendants have agreed to be bound by the provisions
of this Final Judgment pending its approval by the Court;
AND WHEREAS, the purpose of this Final Judgment is prompt and
certain divestiture of certain assets to assure
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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 claims 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 CBS and ARS, as
hereinafter defined, under Section 7 of the Clayton Act, as amended (15
U.S.C. Sec. 18).
II. Definitions
As used in this Final Judgment:
A. ``CBS'' means defendant CBS Corporation, a Pennsylvania
corporation with its headquarters in New York, New York, and includes
its successors and assigns, its subsidiaries, and directors, officers,
managers, agents and employees acting for or on behalf of CBS.
B. ``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.
C. ``WOCT-FM Assets'' means all of the assets, tangible or
intangible, used in the operation of the WOCT 104.3 FM radio station in
Baltimore, Maryland, including but not limited to: all real property
(owned and 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 and 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.
D. ``WEGQ-FM Assets'' means all of the assets, tangible or
intangible, used in the operation of the WEGQ 93.7 FM radio station in
Boston, Massachusetts, including but not limited to: all real property
(owned and 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 and authorizations
and applications therefor issued by the 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.
E. ``WAAF-FM Assets'' means all of the assets, tangible or
intangible, used in the operation of the WAAF 107.3 FM radio station in
Worcester, Massachusetts, including but not limited to: all real
property (owned and 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
and authorizations and applications therefor issued by the 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.
F. ``WEEI-AM Assets'' means all of the assets, tangible or
intangible, used in the operation of the WEEI 850 AM radio station in
Boston, Massachusetts, including but not limited to: all real property
(owned and 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 and authorizations
and applications therefor issued by the 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.
G. ``WRKO-AM Assets'' means all of the assets, tangible or
intangible, used in the operation of the WRKO 680 AM radio station in
Boston, Massachusetts, including but not limited to: all real property
(owned and 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 and authorizations
and applications therefor issued by the 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.
H. ``KSD-FM Assets'' means all of the assets, tangible or
intangible, used in the operation of the KSD 93.7 FM radio station in
St. Louis, Missouri, including but not limited to: all real property
(owned and 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 and authorizations
and applications therefor issued by the 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.
I. ``KLOU-FM Assets'' means all of the assets, tangible or
intangible, used in the operation of the KLOU 103.3 FM radio station in
St. Louis, Missouri, including but not limited to: All real
[[Page 18039]]
property (owned and 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
and authorizations and applications therefor issued by the 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.
J. ``Baltimore Area'' means the Baltimore, Maryland Metro Survey
Area as identified by The Arbitron Radio Market Report for Baltimore
(Spring 1997), which is made up of the following counties: Anne
Arundel, Baltimore, Baltimore City, Carroll, Harford, Howard, and Queen
Annes.
K. ``Boston Area'' means the Boston, Massachusetts Metro Survey
Area as identified by The Arbitron Radio Market Report for Boston
(Spring 1997), which is made up of the following counties: Essex,
Middlesex, Norfolk, Plymouth, and Suffolk.
L. ``St. Louis Area'' means the St. Louis, Missouri Survey Area as
identified by The Arbitron Radio Market Report for St. Louis (Spring
1997), which is made up of the following counties: Clinton, Franklin,
Jefferson, Jersey, Lincoln, Madison, Monroe, St. Charles, St. Clair,
St. Louis, St. Louis City, and Warren.
M. ``CBS Radio Station'' means any radio station owned by CBS or
ARS and licensed to a community in the Baltimore Area, the Boston Area,
or the St. Louis Area, other than WOCT-FM in the Baltimore Area, WEGQ-
FM, WAAF-FM, WEEI-AM and WRKO-AM in the Boston Area, and KSD-FM, and
KLOU-FM in the St. Louis Area.
N. ``Non-CBS Radio Station'' means any radio station licensed to a
community in the Baltimore Area, the Boston Area, or the St. Louis Area
that is not a CBS Radio Station.
O. ``Acquirer'' means the entity or entities to whom defendants
divest the WOCT-FM Assets, the WEGQ-FM Assets, the WAAF-FM Assets, the
WEEI-AM Assets, the WRKO-AM Assets, the KSD-FM Assets, and/or the KLOU-
FM Assets under this Final Judgment.
P. ``FCC Disposition Trust'' means the FCC-approved trust or trusts
established for the purpose of insuring compliance with FCC numerical
limitations on radio local ownership.
Q. ``FCC Trust Radio Stations'' means those stations which CBS will
transfer into the FCC Disposition Trust prior to consummation of the
proposed acquisition.
III. Applicability
A. The provisions of this Final Judgment apply to each of the
defendants, their successors and assigns, their subsidiaries,
affiliates, directors, officers, managers, agents and employees, and
all other persons in active concert or participation with any of them
who shall have received actual notice of this Final Judgment by
personal service or otherwise.
B. Each defendant shall require, as a condition of the sale or
other disposition of all or substantially all of the assets used in its
business of owning and operating its portfolio of radio stations in the
Baltimore Area, the Boston Area, or the St. Louis Area, that the
acquiring party or parties agree to be bound by the provisions of this
Final Judgment; provided, however, that defendants need not obtain such
an agreement from an Acquirer in connection with the divestiture of the
WOCT-FM Assets, the WEGQ-FM Assets, the WAAF-FM Assets, the WEEI-AM
Assets, the WRKO-AM Assets, the KSD-FM Assets, and/or the KLOU-FM
Assets; and provided further that if any divestiture assets are placed
in an FCC Disposition Trust, defendants shall undertake to require that
the trustee be bound by the provisions of this Final Judgment.
IV. Divestitures
A. Defendants are hereby ordered and directed, in accordance with
the terms of this Final Judgment, within six (6) months after CBS
assigns the FCC Trust Radio Stations to the FCC Disposition Trust, or
nine (9) months after the filing of the complaint in this action,
whichever is earlier, to divest the WOCT-FM Assets, the WEGQ-FM Assets,
the WAAF-FM Assets, the WEEI-AM Assets, the WRKO-AM Assets, the KSD-FM
Assets, and the KLOU-FM Assets to one or more Acquirers acceptable to
plaintiff in its sole discretion; provided, however, notwithstanding
the foregoing, the divestitures required by this Final Judgment need
not be accomplished prior to five (5) days after notice of the entry of
this Final Judgment by the Court.
B. Defendants agree to use their best efforts to divest the WOCT-FM
Assets, the WEGQ-FM Assets, the WAAF-FM Assets, the WEEI-AM Assets, the
WRKO-AM Assets, the KSD-FM Assets, and the KLOU-FM Assets, and to
obtain all regulatory approvals necessary for such divestitures, as
expeditiously as possible. Plaintiff, in its sole discretion, may
extend the time period for the divestitures for two (2) additional
thirty (30)-day periods of time, not to exceed sixty (60) calendar days
in total.
C. In accomplishing the divestitures ordered by this Final
Judgment, defendants promptly shall make known, by usual and customary
means, the availability for sale of the WOCT-FM Assets, the WEGQ-FM
Assets, the WAAF-FM Assets, the WEEI-AM Assets, the WRKO-AM Assets, the
KSD-FM Assets, and the KLOU-FM Assets. Defendants shall inform any
person making a bonafide 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
WOCT-FM Assets, the WEGQ-FM Assets, the WAAF-FM Assets, the WEEI-AM
Assets, the WRKO-AM Assets, the KSD-FM Assets, and/or the KLOU-FM
Assets that the assets described in Section II (C) through (I) are
being offered for sale and may be purchased separately or as a multi-
station package of two or more stations. Defendants shall also offer to
furnish to all bona fide prospective purchasers, subject to customary
confidentiality assurances, all information regarding the WOCT-FM
Assets, the WEGQ-FM Assets, the WAAF-FM Assets, the WEEI-AM Assets, the
WRKO-AM Assets, the KSD-FM Assets, and the KLOU-FM Assets customarily
provided in a due diligence process, except such information 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.
D. Defendants shall permit bona fide prospective purchasers of the
WOCT-FM Assets, the WEGQ-FM Assets, the WAAF-FM Assets, the WEEI-AM
Assets, the WRKO-AM Assets, the KSD-FM Assets, and/or the KLOU-FM
Assets to have access to personnel and to make such inspection of the
assets, and any and all financial, operational or other documents and
information customarily provided as part of a due diligence process.
E. Unless plaintiff otherwise consents in writing, the divestitures
pursuant to Section IV of this Final Judgment, or by the trustee
appointed pursuant to Section V, shall include all the WOCT-
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FM Assets, the WEGQ-FM Assets, the WAAF-FM Assets, the WEEI-AM Assets,
the WRKO-AM Assets, the KSD-FM Assets, and the KLOU-FM Assets, and
shall be accomplished in such a way as to satisfy plaintiff, in its
sole discretion, that such assets can and will be used by an Acquirer
or Acquirers as viable, ongoing commercial radio businesses. The
divestitures, whether pursuant to Section IV or V of this Final
Judgment, shall be made (i) to an Acquirer or Acquirers that (a) in
plaintiff's sole judgment, has or have the capability and intent of
competing effectively, and has or have the managerial, operational and
financial capability to compete effectively as radio station operators
in the Baltimore Area, the Boston Area, and the St. Louis Area, and (b)
intends or intend in good faith to continue the operations of the radio
station as were in effect in the period immediately prior to the filing
of the complaint in this action (unless any significant change in the
operations planned by an Acquirer is accepted by the plaintiff in its
sole discretion); and (ii) pursuant to agreements the terms of which
shall not, in the sole judgment of plaintiff, interfere with or
otherwise diminish the ability of the Acquirer or Acquirers to compete
effectively against defendants.
F. Defendants shall not interfere with any efforts by any Acquirer
or Acquirers to employ the general manager or any other employee of
WOCT-FM, WEGQ-FM, WAAF-FM, WEEI-AM, WRKO-AM, KSD-FM or KLOU-FM.
V. Appointment of Trustee
A. In the event that defendants have not divested the WOCT-FM
Assets, the WEGQ-FM Assets, the WAAF-FM Assets, the WEEI-AM Assets, the
WRKO-AM Assets, the KSD-FM Assets, and the KLOU-FM Assets within the
time 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 WOCT-FM Assets, the WEGQ-FM
Assets, the WAAF-FM Assets, the WEEI-AM Assets, the WRKO-AM Assets, the
KSD-FM Assets, and the KLOU-FM Assets. The trustee shall have the power
and authority to accomplish the divestitures at the best price then
obtainable upon a reasonable effort by the trustee, subject to the
provisions of Section IV 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
divestitures, and such professionals and agents shall be accountable
solely to the trustee. The trustee shall have the power and authority
to accomplish the divestitures at the earliest possible time to a
purchaser acceptable to plaintiff, in its sole judgment, and shall have
such other powers as this Court shall deem appropriate. Defendants
shall not object to the sale of the WOCT-FM Assets, the WEGQ-FM Assets,
the WAAF-FM Assets, the WEEI-AM Assets, the WRKO-AM Assets, the KSD-FM
Assets, or the KLOU-FM 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 within ten (10)
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 money shall be paid to defendants, and the trust 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 divestitures and based on a fee arrangement
providing the trustee with an incentive based on the price and terms of
the divestitures and the spend with which they are accomplished.
D. Defendants shall use their best efforts to assist the trustee in
accomplishing the required divestitures, including best efforts to
effect all necessary regulatory approvals. The trustee and any
consultants, accountants, attorneys and any other persons retained by
the trustee shall have full and complete access to the personnel,
books, records and facilities related to the WOCT-FM Assets, the WEGQ-
FM Assets, the WAAF-FM Assets, the WEEI-AM Assets, the WRKO-AM Assets,
the KSD-FM Assets, and the KLOU-FM Assets, and defendants shall develop
financial or other information relevant to the assets to be divested
customarily provided in a due diligence process as the trustee may
reasonably request, subject to customary confidentiality assurances.
Defendants shall permit prospective purchasers of the WOCT-FM Assets,
the WEGQ-FM Assets, the WAAF-FM Assets, the WEEI-AM Assets, the WRKO-AM
Assets, the KSD-FM Assets, and the KLOU-FM 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 divestitures required by this Final Judgment.
E. After its appointment, the trustee shall file monthly reports
with the parties and the Court setting forth the trustee's efforts to
accomplish the divestitures ordered 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 WOCT-FM Assets, the WEGQ-
FM Assets, the WAAF-FM Assets, the WEEI-AM Assets, the WRKO-AM Assets,
the KSD-FM Assets, or the KLOU-FM 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. If the trustee has not accomplished such divestitures within six
(6) months after its appointment, the trustee thereupon shall file
promptly with the Court a report setting forth (1) the trustee's
efforts to accomplish the required divestitures, (2) the reasons, in
the trustee's judgment, why the required divestitures have not been
accomplished, and (3) the trustee's recommendations; provided, however,
that to the extent such reports contain information that the trustee
deems confidential, such reports shall not be filed in the public
docket of the Court. The trustee shall at the same time furnish such
reports to the parties, who shall each have the right to be heard and
to make additional recommendations consistent with the purpose of the
trust. The Court shall thereafter enter such orders as it shall deem
appropriate in order to carry out the purpose of the trust, which may,
if necessary, include extending the trust and the term of the trustee's
appointment.
[[Page 18041]]
VI. Preservation of Assets/Hold Separate
Until the divestiture of the WOCT-FM Assets, the WEGQ-FM Assets,
the WAAF-FM Assets, the WEEI-AM Assets, the WRKO-AM Assets, the KSD-FM
Assets, and the KLOU-FM Assets required by Section IV of the Final
Judgment has been accomplished:
A. Prior to the consummation of CBS's acquisition of ARS,
defendants shall maintain the independence of their respective radio
stations in the Baltimore Area. Following the consummation of CBS's
acquisition of ARS, defendants shall take all steps necessary to
operate WOCT-FM as a separate, independent, ongoing, economically
viable and active competitor to CBS's other stations in the Baltimore
Area, and shall take all steps necessary to insure that, except as
necessary to comply with Section IV and paragraphs (D) and (K) 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, CBS.
B. Prior to the consummation of CBS's acquisition of ARS,
defendants shall maintain the independence of their respective radio
stations in the Boston Area. Following the consummation of CBS's
acquisition of ARS, defendants shall take all steps necessary to
operate WEGQ-FM, WAAF-FM, WEEI-AM and WRKO-AM as separate, independent,
ongoing, economically viable and active competitors to CBS's other
stations in the Boston Area, and shall take all steps necessary to
insure that, except as necessary to comply with Section IV and
paragraphs (E), (F), (G), (H), (L), (M), (N) and (O) of this Section of
the Final Judgment, the management of said stations, including the
performance of decision-making functions regarding marketing and
pricing, will be kept separate and apart from, and not influenced by,
CBS.
C. Prior to the consummation of CBS's acquisition of ARS,
defendants shall maintain the independence of their respective radio
stations in the St. Louis Area. Following the consummation of CBS's
acquisition of ARS, defendants shall take all steps necessary to
operate KSD-FM and KLOU-FM as separate, independent, ongoing,
economically viable and active competitors to CBS's other stations in
the St. Louis Area, and shall take all steps necessary to insure that,
except as necessary to comply with Section IV and paragraphs (I), (J),
(P) and (Q) of this Section of the Final Judgment, the management of
said stations, including the performance of decision-making functions
regarding marketing and pricing, will be kept separate and apart from,
and not influenced by, CBS.
D. Defendants shall use all reasonable efforts to maintain and
increase sales of advertising time by WOCT-FM, and shall maintain at
1997 or previously approved levels for 1998, whichever are higher,
promotional advertising, sales, marketing and merchandising support for
said station.
E. Defendants shall use all reasonable efforts to maintain and
increase sales of advertising time by WEGQ-FM, and shall maintain at
1997 or previously approved levels for 1998, whichever are higher,
promotional advertising, sales, marketing and merchandising support for
said station.
F. Defendants shall use all reasonable efforts to maintain and
increase sales of advertising time by WAAF-FM, and shall maintain at
1997 or previously approved levels for 1998, whichever are higher,
promotional advertising, sales, marketing and merchandising support for
said station.
G. Defendants shall use all reasonable efforts to maintain and
increase sales of advertising time by WEEI-AM, and shall maintain at
1997 or previously approved levels for 1998, whichever are higher,
promotional advertising, sales, marketing and merchandising support for
said station.
H. Defendants shall use all reasonable efforts to maintain and
increase sales of advertising time by WRKO-AM, and shall maintain at
1997 or previously approved levels for 1998, whichever are higher,
promotional advertising, sales, marketing and merchandising support for
said station.
I. Defendants shall use all reasonable efforts to maintain and
increase sales of advertising time by KSD-FM, and shall maintain at
1997 or previously approved levels for 1998, whichever are higher,
promotional advertising, sales, marketing and merchandising support for
said station.
J. Defendants shall use all reasonable efforts to maintain and
increase sales of advertising time by KLOU-FM, and shall maintain at
1997 or previously approved levels for 1998, whichever are higher,
promotional advertising, sales, marketing and merchandising support for
said station.
K. Defendants shall take all steps necessary to ensure that the
assets used in the operation of WOCT-FM are fully maintained. WOCT-FM's
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 any such transfer.
L. Defendants shall take all steps necessary to ensure that the
assets used in the operation of WEGQ-FM are fully maintained. WEGQ-FM's
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 any such transfer.
M. Defendants shall take all steps necessary to ensure that the
assets used in the operation of WAAF-FM are fully maintained. WAAF-FM's
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 any such transfer.
N. Defendants shall take all steps necessary to ensure that the
assets used in the operation of WEEI-AM are fully maintained. WEEI-AM's
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 any such transfer.
O. Defendants shall take all steps necessary to ensure that the
assets used in the operation of WRKO-AM are fully maintained. WRKO-AM's
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 any such transfer.
P. Defendants shall take all steps necessary to ensure that the
assets used in the operation of KSD-FM are fully maintained. KSD-FM's
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 any such transfer.
Q. Defendants shall take all steps necessary to ensure that the
assets used in the operation of KLOU-FM are fully maintained. KLOU-FM's
sales and marketing employees shall not be
[[Page 18042]]
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 any such transfer.
R. Defendants shall not, except as part of a divestiture approved
by plaintiff, sell any WOCT-FM Assets, WEGQ-FM Assets, WAAF-FM Assets,
WEEI-AM Assets, WRKO-AM Assets, KSD-FM Assets, or KLOU-FM Assets.
S. Defendants shall take no action that would jeopardize the sale
of the WOCT-FM Assets, the WEGQ-FM Assets, the WAAF-FM Assets, the
WEEI-AM Assets, the WRKO-AM Assets, the KSD-FM Assets, or the KLOU-FM
Assets.
T. 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 definitive
agreement, contingent upon compliance with the terms of this Final
Judgment, to effect, in whole or in part, any proposed divestitures
pursuant to Sections IV or V of this Final Judgment, defendants or the
trustee, whichever is then responsible for effecting the divestitures,
shall notify plaintiff of the proposed divestitures. 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 WOCT-FM Assets, the WEGQ-FM Assets, the WAAF-
FM Assets, the WEEI-AM Assets, the WRKO-AM Assets, the KSD-FM Assets,
or the KLOU-FM 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, or any other third party, additional information concerning
the proposed divestitures and the proposed purchaser. Defendants and
the trustee shall furnish any additional information requested from
them within fifteen (15) calendar days of the receipt of the request,
unless the parties shall otherwise agree. Within thirty (30) calendar
days after receipt of the notice or within twenty (20) calendar days
after plaintiff has been provided the additional information requested
from defendants, the proposed purchaser or purchasers, and any third
party, 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 provides written
notice to defendants and the trustee 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.
Absent written notice that plaintiff does not object to the proposed
purchaser or upon objection by the plaintiff, a divestiture proposed
under Section IV or Section V may not be consummated. Upon objection by
defendants under the provision 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 the Complaint
in this matter and every thirty (30) calendar days thereafter until the
divestitures have 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 their compliance with
Sections 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, 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 WOCT-FM Assets, the WEGQ-
FM Assets, the WAAF-FM Assets, the WEEI-AM Assets, the WRKO-AM Assets,
the KSD-FM Assets, and/or the KLOU-FM 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 or buyers for the WOCT-FM
Assets, the WEGQ-FM Assets, the WAAF-FM Assets, the WEEI-AM Assets, the
WRKO-AM Assets, the KSD-FM Assets, or the KLOU-FM Assets.
B. Within twenty (20) calendar days of the filing of the Complaint
in this matter, 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 WOCT-FM, WEGQ-FM, WAAF-FM, WEEI-AM, WRKO-AM, KSD-FM, and KLOU-
FM 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 efforts made to
preserve the assets to be divested and effect the divestitures.
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. Sec. 18a (the ``HSR
Act''), defendants, without providing advance notification to the
plaintiff, shall not directly or indirectly acquire any assets of or
any interest, including any financial, security, loan, equity or
management interest, in any Non-CBS Radio Station; provided, however,
that defendants need not provide notice under this provision for any
direct or indirect acquisition of equity of a Non-CBS Radio Station
that would result in defendants' holding no more than five percent of
the total equity of the 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-CBS Radio Station.
C. Notification described in (A) and (B) 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 CBS Radio Stations
in the Baltimore Area, the Boston Area, and the St. Louis 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
[[Page 18043]]
discussing the proposed transaction. If within the 30-day period after
notification, representatives of the Department 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 United States Department
of Justice, including consultants and other persons retained by the
plaintiff, upon written request of the 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, shall
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 the matters
contained in this Final Judgment; and
(2) Subject to the reasonable convenience of defendants and without
restraint or interference from them, to interview, either informally or
on the record, directors, officers, employees and agents of defendants,
who may have counsel present, regarding any such matters.
B. Upon the written request of the 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 the Final Judgment as may be requested.
C. No information or documents obtained by the means provided in
this Section XI shall be divulged by any representative of plaintiff 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 either
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 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 and directions as may be necessary or
appropriate for the construction or carrying out of this Final
Judgment, for the modification of any of the provisions hereof, for the
enforcement of compliance herewith, and for the punishment of any
violations 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. Pubic Interest
Entry of this Final Judgment is in the public interest.
Dated ________________.
----------------------------------------------------------------------
United States District Judge
Certificate of Service
I, Allen P. Grunes, hereby certify that, on March 31, 1998, I
caused the foregoing document to be served on defendants CBS
Corporation and American Radio Systems Corporation by having a copy
mailed, first-class, postage prepaid, to:
Joe Sims,
Jones, Day, Reavis & Pogue, 1450 G St., NW., Washington, DC 20005,
Counsel for CBS Corporation.
Timothy J. O'Rourke,
Dow, Lohnes & Albertson, 1200 New Hampshire Avenue, NW., Washington, DC
20036, Counsel for American Radio Systems Corporation.
Allen P. Grunes.
United States District Court for the District of Columbia
United States of America, Plaintiff, v. CBS Corporation and
American Radio Systems Corporation, Defendants
[Case Number 1:98CV00819]
JUDGE: Emmet G. Sullivan
DECK TYPE: Antitrust
DATE STAMP: 03/31/98
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 March 31, 1998,
alleging that a proposed acquisition of American Radio Systems
Corporation (``ARS'') by CBS Corporation (``CBS'') would violate
Section 7 of the Clayton Act, 15 U.S.C. Sec. 18. The Complaint alleges
that CBS and ARS both own and operate numerous radio stations
throughout the United States, and that they each own and operate radio
stations in the Boston, St. Louis, and Baltimore metropolitan areas.
The acquisition would give CBS a significant share of the radio
advertising market in each of these metropolitan areas, control over a
high percentage of the available radio signals which cover the markets,
and control over stations that are close substitutes for each other
based on their specific audience characteristics. In Boston, according
to 1997 industry estimates, the acquisition would give CBS control of 3
out of 5 top radio stations or 59 percent of the radio advertising
revenues. In St. Louis, CBS would control 4 out of the 7 top radio
stations or 49 percent of the radio advertising revenues. Finally, CBS
would control 5 of the top 9 radio stations or 46 percent of the radio
advertising revenues in Baltimore. As a result, the combination would
substantially lessen competition in the sale of radio advertising time
in
[[Page 18044]]
the Boston, St. Louis, and Baltimore metropolitan areas.
The prayer for relief seeks: (a) An adjudication that the proposed
transactions described in the Complaint would violate Section 7 of the
Clayton Act; (b) preliminary and permanent injunctive relief preventing
the consummation of the transaction; (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 CBS to complete its acquisition of ARS, yet
preserves competition in the markets in which the transactions 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 CBS to divest WEEI-AM, WEGQ-FM,
WAAF-FM and WRKO-AM in Boston, KSD-FM and KLOU-FM in St. Louis, and
WOCT-FM in Baltimore. These stations are currently owned by ARS. Unless
the plaintiff grants a time extension, CBS must divest these radio
stations within six months after CBS places certain stations which it
is required to dispose of by FCC rules into FCC disposition trusts. The
FCC disposition trusts require disposition within six months, with the
result that the divestitures required under the Final Judgment for
antitrust purposes and the divestitures required for FCC regulatory
purposes will be accomplished during the same period of time. In order
to insure prompt divestiture, the proposed Final Judgment provides that
the divestitures shall take place within 6 months of the date CBS
places stations into the FCC disposition trusts or 9 months from the
date the Complaint in this action is filed, whichever is sooner. This
provision establishes an outside date based on the filing of the
Complaint in the event that there is any delay associated with the
establishment of the FCC disposition trusts. (Plaintiff has no reason
to believe that there will be any such delay.) Finally, in the event
that the Court does not, for any reason, enter the Final Judgment
within the time period measured by the establishment of the FCC
disposition trusts or the filing of the complaint, the divestitures are
to occur within five (5) business days after notice of entry of the
Final Judgment.
If CBS does not divest these stations within the divestiture
period, the Court, upon plaintiff's application, is to appoint a
trustee to sell the assets. The proposed Final Judgment also requires
CBS to ensure that, until the divestitures mandated by the Final
Judgment have been accomplished, these stations will be operated
independently as viable, ongoing businesses, and kept separate and
apart from CBS's other radio stations in Boston, St. Louis and
Baltimore. 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 Boston, St. Louis or Baltimore.
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
CBS is a Pennsylvania corporation with its headquarters in New
York, New York. It currently operates 76 radio stations located in 17
metropolitan areas in the United States. It owns four radio stations in
the Boston area (WBCN-FM, WBZ-AM, WODS-FM and WZLX-FM), one station in
the St. Louis area (KMOX-AM), and five radio stations in the Baltimore
area (WCAO-AM, WHFS-FM, WJFK-AM, WLIF-FM and WXYV-FM). In 1996, its
revenues from its Boston stations were approximately $69,600,000, its
revenues from its St. Louis station were approximately $21,900,000, and
its revenues from its Baltimore stations were approximately
$15,900,000.
ARS is a Delaware corporation headquartered in Boston,
Massachusetts. It owns and operates 85 radio stations located in 19
metropolitan areas nationwide. It owns six radio stations in the Boston
area (WAAF-FM, WBMX-FM, WEEI-AM, WEGQ-FM, WNFT-AM, and WRKO-AM), four
radio stations in the St. Louis area (KEZK-FM, KLOU-FM, KSD-FM, and
KYKY-FM), and five radio stations in the Baltimore area (WBGR-AM, WBMD-
AM, WOCT-FM, WQSR-FM and WWMX-FM). In 1996, its revenues from its
Boston stations were approximately $55,700,000, its revenues from its
St. Louis stations were approximately $26,950,000, and its revenues
from its Baltimore stations were approximately $26,850,000.
B. Description of the Events Giving Rise to the Alleged Violations
On September 19, 1997, CBS (formerly known as Westinghouse Electric
Corporation) entered into an Agreement and Plan of Merger with ARS.
This Agreement was amended and restated on December 18, 1997, and
further amended on December 19, 1997. Pursuant to the Agreement, ARS's
radio operations will be acquired by CBS. ARS's tower operations will
be separately spun off and will not be acquired by CBS. The transaction
is valued at approximately $1.6 billion. The result of this
transaction, as is more fully discussed below, would be to give CBS a
significant share of the radio advertising market in Boston, St. Louis,
and Baltimore as well as a significant percentage of advertising
directed to certain target audiences in these areas.
CBS and ARS previously have competed for the business of local and
national companies seeking to advertise in the Boston, St. Louis, and
Baltimore areas. The proposed acquisition by CBS of ARS, and the
threatened loss of competition that would be caused thereby,
precipitated the government's suit.
C. Anticompetitive Consequences of the Proposed Transaction
1. Sale of Radio Advertising Time in Boston
The Complaint alleges that the provision of advertising time on
radio stations serving the Boston, St. Louis, and Baltimore Metro
Service Area (``MSA'') constitutes a line of commerce and section of
the country, or relevant market, for antitrust purposes. The MSA is the
geographical unit for which Arbitron furnishes radio stations,
advertisers and advertising agencies 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. The Boston MSA includes five counties: Essex,
Middlesex, Norfolk, Plymouth, and Suffolk. The St. Louis MSA includes
twelve counties: Clinton, Franklin, Jefferson, Jersey, Lincoln,
Madison, Monroe, St. Charles, St. Clair, St. Louis, St. Louis City, and
Warren. The Baltimore MSA includes seven counties: Anne Arundel,
Baltimore, Baltimore City, Carroll, Hartford, Howard, and Queen Anne's.
Local and national advertising that is placed on radio stations
within the Boston, St. Louis, and Baltimore MSAs is aimed at reaching
listening audiences
[[Page 18045]]
within the respective MSAs, and other radio stations do not provide
effective access to these audiences. Thus, if there were a small but
significant nontransitory increase in radio advertising prices within
one of these MSAs, advertisers would not buy enough advertising time
from radio stations outside of the Boston, St. Louis, or Baltimore MSAs
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 Boston, St. Louis, or
Baltimore because they find such advertising preferable to advertising
in other media for their specific needs. For such advertisers, radio
time (a) may be less expensive and more cost-efficient than other media
at reaching the advertiser's target audience (individuals most likely
to purchase the advertiser's products or services); (b) may reach
certain target audiences that cannot be reached as effectively through
other media; or (c) may offer promotional opportunities to advertisers
that they cannot exploit as effectively using other media. For these
and other reasons, many local and national advertisers in Boston, St.
Louis, or Baltimore 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 Boston, St. Louis, or Baltimore, the
existence of such advertisers would not prevent radio stations from
raising their prices a small but significant amount. At a minimum,
stations could raise prices profitably 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 between different customers, radio
stations may charge higher rates to advertisers that view radio as
particularly effective for their needs, while maintaining lower rates
for other advertisers.
2. Harm to Competition
The Complaint alleges that CBS's proposed acquisition of ARS would
lessen competition substantially in the provision of radio advertising
time on stations in the Boston, St. Louis, or Baltimore MSAs. The
proposed transactions would create further market concentration in
already highly concentrated markets, and CBS would control a
substantial share of the advertising revenues in these markets. CBS's
market share of radio advertising revenues in Boston would rise from 33
percent to 59 percent after the proposed transaction (BIA Investing in
Radio 4th ed. 1997). According to the Herfindahl-Hirschman Index
(``HHI''), a widely-used measure of market concentration defined and
explained in Appendix A, CBS's post-transaction HHI in Boston would be
4059, representing an increase of 1746 points. In St. Louis, CBS's
post-transaction share of radio advertising revenue would increase from
22 to 49 percent. CBS's post-transaction HHI would equal 3075,
representing an increase of 1200 points. In Baltimore, CBS's market
share of radio advertising revenue would increase from 17 to 46 percent
as a result of the transaction. CBS's post-transaction HHI in Baltimore
would be 3077, an increase of 985 points. These substantial increases
in concentration are likely to give CBS the unilateral power to raise
advertising prices and reduce the level of service provided to
advertisers in Boston, St. Louis, and Baltimore.
Furthermore, the proposed transactions would eliminate head-to-head
competition between CBS and ARS 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 best
correlates to their target audience. Today, several CBS and ARS
stations in Boston, St. Louis, and Baltimore compete head-to-head to
reach the same audiences and, for many local and national advertisers
buying time in those markets, the stations are close substitutes for
each other based on their specific audience characteristics. The
proposed transaction would eliminate such competition.
Format changes are unlikely to deter the anticompetitive
consequences of this transaction. If CBS raised prices or lowered
services to those advertisers who buy ARS and CBS stations because of
their strength in delivering access to certain specific audiences, non-
CBS radio stations in Boston, St. Louis, and Baltimore respectively,
would not be induced to change their formats to attract a greater share
of the same listeners and to serve better those advertisers seeking to
reach such listeners. Successful radio stations are unlikely to
undertake a format change solely in response to small but significant
increases in price being charged to advertisers by a multi-station firm
such as CBS, because they would likely lose a substantial portion of
their existing audiences. Even if less successful stations did change
format, they still would be unlikely to attract enough listeners to
provide a suitable alternative to CBS.
Finally, new entry into the Boston, St. Louis, or Baltimore radio
advertising markets is highly unlikely in response to a price increase
by CBS. No unallocated radio broadcast frequencies exist in these
markets. Also, it is unlikely that stations located in adjacent
communities could boost their power so as to enter the Boston, St.
Louis, or Baltimore markets without interfering with other stations on
the same or similar frequencies, a violation of FCC regulations.
For all of these reasons, plaintiff concludes that the proposed
transactions would lessen competition substantially in the sale of
radio advertising time on radio stations serving the Boston, St. Louis,
and Baltimore MSAs, eliminate actual competition between CBS and ARS,
and result in increased prices and reduced quality of service for radio
advertising time on stations in the Boston, St. Louis, and Baltimore
MSAs, 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 Boston, St. Louis, and Baltimore MSAs.
It requires the divestiture of WEEI-AM, WEGQ-FM, WAAF-FM, and WRKO-FM
in Boston, the divestiture of KSD-FM and KLOU-FM in St. Louis, and the
divestiture of WOCT-FM in Baltimore. This relief will reduce the market
share in advertising revenues CBS would have achieved through the
proposed transaction from 59 percent to 39 percent in the Boston
market, 49 percent to 39 percent in the St. Louis market, and from 46
percent to about 40 percent in the Baltimore radio market.
The divestitures will ensure that the affected markets will remain
competitive. First, no firm will dominate the competitively
significantly radio signals in any market. Second, advertisers will
have sufficient alternatives to the merged firm in reaching groups of
radio listeners most
[[Page 18046]]
affected by the transaction; that is, advertisers can reasonably
efficiently reach such audiences (``buy around'') without using the
merged firm. Third, the ownership structure in each market is such that
it will allow for the possibility of at least three significant
competitors who may compete for advertisers' business.
Unless plaintiff grants an extension of time, CBS must divest WEEI-
AM, WEGQ-FM, WAAF-FM, and WRKO-AM in Boston, KSD-FM and KLOU-FM in St.
Louis, and WOCT-FM in Baltimore, within six months after CBS places
stations into FCC disposition trusts (with an outside date of nine
months after the Complaint 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, these stations will be maintained as
viable and independent competitors to CBS's other stations in the
Boston, St. Louis, and Baltimore MSAs.
The divestitures must be to a purchaser or purchasers acceptable to
the plaintiff in its sole discretion. Unless plaintiff otherwise
consents in writing, the divestitures shall include all the assets of
the stations being divested, and shall be accomplished in such a way as
to satisfy plaintiff, in its sole discretion, that such assets can and
will be used as viable, ongoing commercial radio businesses. In
addition, the purchaser or purchasers must intend in good faith to
continue the operations of the radio stations as were in effect in the
period immediately prior to the filing of the complaint, unless any
significant change in the operations planned by a purchaser is accepted
by the plaintiff in its sole discretion. This provision is intended to
insure that the stations to be divested remain competitive with CBS's
other stations in Boston, St. Louis, and Baltimore.
If defendants fail to divest these stations within the time periods
specified in the Final Judgment, the Court, upon plaintiff's
application, is to appoint a trustee nominated by plaintiff to effect
the divestitures. 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 WEEI-AM,
WEGQ-FM, WAAF-FM, and WRKO-AM in Boston, KSD-FM and KLOU-FM in St.
Louis, and WOCT-FM in Baltimore, 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 they are accomplished. After
appointment the trustee will file monthly reports with the plaintiff,
defendants and the Court, setting forth the trustee's efforts to
accomplish the divestitures ordered under the proposed Final Judgment.
If the trustee has not accomplished the divestitures 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 divestitures, (2) the reasons, in the trustee's judgment,
why the required divestitures have not been accomplished and (3) the
trustee's recommendations. At the same time the trustee will furnish
such report to the plaintiff and defendants, who will each have the
right to be heard and to make additional recommendations.
The proposed Final Judgment requires that prior to the consummation
of the transaction, defendants will maintain the independence of their
respective radio stations in Boston, St. Louis, and Baltimore.
Following the consummation of CBS's acquisition of ARS, CBS is required
to maintain WEEI-AM, WEGQ-FM, WAAF-FM, and WRKO-AM in Boston, KSD-FM
and KLOU-FM in St. Louis, and WOCT-FM in Baltimore as separate and
apart from defendant CBS's other Boston, St. Louis, and Baltimore
stations, pending divestiture. The Judgment also contains provisions to
ensure that these stations will be preserved, so that the stations
remain viable, aggressive competitors after divestiture.
The proposed Final Judgment also prohibits CBS from entering into
certain agreements with other Boston, St. Louis, and Baltimore radio
stations without providing at least thirty (30) days' notice to the
Department of Justice. Specifically, CBS must notify the Department
before acquiring any interest in another Boston, St. Louis, or
Baltimore radio station. Such acquisitions could raise competitive
concerns but might be too small to be reported otherwise under the
Hart-Scott-Rodino (``HSR'') premerger notification statute. Moreover,
CBS may not agree to sell radio advertising time for any other Boston,
St. Louis, or Baltimore radio station without providing plaintiff with
notice. In particular, the provision requires CBS to notify the
Department before it enters into any Joint Sales Agreements (``JSAs''),
where one station takes over another station's advertising time, or any
Local Marketing Agreements (``LMAs''), where one station takes over
another station's broadcasting and advertising time, or other
comparable arrangements, in the Boston, St. Louis, or Baltimore areas.
Agreements whereby CBS sells advertising for or manages other Boston,
St. Louis, or Baltimore area radio stations would effectively increase
its market share in these MSAs. Despite their clear competitive
significance, JSAs probably would not be reportable to the Department
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 Boston, St. Louis, and Baltimore markets.
The relief in the proposed Final Judgment is intended to remedy the
likely anticompetitive effects of CBS's proposed transaction with ARS
in Boston, St. Louis, and Baltimore. 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 Boston, St. Louis, and Baltimore MSAs.
IV. Remedies Available to Potential Private Litigants
Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any
person who has been injured as a result of conduct prohibited by the
antitrust laws may bring suit in federal court to recover three times
the damages the person has suffered, as well as costs and reasonable
attorneys' fees. Entry of the proposed Final Judgment will neither
impair nor assist the bringing of any private antitrust damage action.
Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C.
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 plaintiff 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
[[Page 18047]]
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,
Manager Task Force, Antitrust Division, United States Department of
Justice, 1401 H Street, NW., Suite 4000, Washington, DC 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
Plaintiff considered, as an alternative to the proposed Final
Judgment, a full trial on the merits of its Complaint against
defendants. Plaintiff is satisfied, however, that the divestiture of
WEEI-AM, WEGQ-FM, WAAF-FM, and WRKO-AM in Boston, KSD-FM and KLOU-FM in
St. Louis, and WOCT-FM in Baltimore, and other relief contained in the
proposed Final Judgment will preserve viable competition in the sale of
radio advertising time on stations serving the Boston, St. Louis, and
Baltimore MSAs. 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 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 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.'' \1\ Rather,
\1\ 119 Cong. Rec. 24598 (1973). See United States v. Gillette
Co., 406 F. Supp. 713, 715 (D. Mass. 1975). A ``public interest''
determination can be made properly on he 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 government 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. Mo. 1977).
Accordingly, with respect to the adequacy of the relief secured by
the decree, a court may not ``engage in an unrestricted evaluation of
what relief would best serve the public.'' United States v. BNS, Inc.,
858 F.2d 456, 462 (9th Cir. 1988), citing United States v. Bechtel
Corp., 648 F.2d 660, 666 (9th Cir.), cert. denied. 454 U.S. 1083
(1981); see also Microsoft, 56 F.3d at 1460-62. Precedent requires that
the balancing of competing social and political interests affected
by a proposed antitrust consent decree must be left, in the first
instance, to the discretion of the Attorney General. The court's
role in protecting the public interest is one of insuring that the
government has not breached its duty to the public in consenting to
the decree. The court is required to determine not whether a
particular decree is the one that will best serve society, but
whether the settlement is ``within the reaches of the public
interest.'' More elaborate requirements might undermine the
effectiveness of antitrust enforcement by consent decree.\2\
\2\ 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.' '' \3\
---------------------------------------------------------------------------
\3\ 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 transactions.
VIII. Determinative Documents
There are no determinative materials or documents within the
meaning of the APPA that were considered by the plaintiff in
formulating the proposed Final Judgment.
Date: March 31, 1998.
Respectfully submitted,
Allen P. Grunes,
Merger Task Force, U.S. Department of Justice, Antitrust Division, 1401
H Street, N.W.; Suite 4000, Washington, D.C. 20530, (202) 307-0001.
Exhibit A--Definition of HHI and Calculations for Market
``HHI'' means the Herfindahl-Hirschman Index, a commonly accepted
measure of market concentration. It is calculated by squaring the
market share of each firm competing in the market and then summing the
resulting numbers. For example, for a market consisting of four firms
with shares of thirty, thirty, twenty and twenty percent, the HHI is
2600 (302 + 302 + 202 +202
= 2600). The HHI takes into account the relative size and distribution
of the firms in a market and approaches zero when a market consists of
a large numbers 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
[[Page 18048]]
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, Allen P. Grunes, hereby certify that, on March, 31, 1998, I
caused the foregoing document to be served on defendants CBS
Corporation and American Radio Systems Corporation by having a copy
mailed, first-class, postage prepaid, to:
Joe Sims,
Jones, Day, Reavis & Pogue, 1450 G St., N.W., Washington, D.C. 20005,
Counsel for CBS Corporation.
Timothy J. O'Rourke,
Dow, Lohnes & Albertson, 1200 New Hampshire Ave., N.W., Washington,
D.C. 20036, Counsel of American Radio Systems Corporation.
Allen P. Grunes,
[FR Doc. 98-9374 Filed 4-10-98; 8:45 am]
BILLING CODE 4410-11-M
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.