United States v. Citadel Communications Corporation, Triathlon Broadcasting Company, and Capstar Broadcasting Corporation

DEPARTMENT OF JUSTICE

Antitrust Division

United States v. Citadel Communications Corporation, Triathlon

Broadcasting Company, and Capstar Broadcasting Corporation

Notice is hereby given pursuant to the Antitrust Procedures and

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

Final Judgment, Stipulation and Amended Competitive Impact Statement

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

of the District of Columbia in United States of America v. Citadel

Communications Corporation, Capstar Broadcasting Corporation and

Triathlon Broadcasting Company, Civil Action No. 99-CV01043. On April

30, 1999, the United States filed an Amended Complaint alleging that

the Joint Sales Agreement (``JSA'') in Colorado Springs, Colorado, and

Spokane, Washington and Triathlon's acquisition of certain radio

stations in Spokane, Washington violates Section One of the Sherman

Act, 15 U.S.C. 1. The proposed Final Judgment, filed the same time as

the Complaint, requires Citadel and Capstar to terminate the JSA

pursuant to the Final Judgment and Capstar to divest a particular

station in Spokane, Washington. Copies of the Amended Complaint,

proposed Final Judgment and Amended Competitive Impact Statement are

available for inspection at the Department of Justice in Washington,

D.C. in Room 200, 325 Seventh Street, N.W., and at the Office of the

Clerk of the United States District Court for the District of the

District of Columbia.

Public comment is invited within 60 days of the date of this

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

Federal Register and filed with the Court. Comments should be directed

to Craig W. Conrath, Chief, Merger Task Force, Antitrust Division,

Department of Justice, 1401 H St N.W., Suite 4000, Washington, D.C.

20530 (telephone: (202) 307-0001).

Rebecca P. Dick,

Director of Civil Non-Merger Enforcement.

Stipulation

It is stipulated by and between the United States Department of

Justice Antitrust Division (``Antitrust Division''), Citadel

Communications Corporation (``Citadel''), and Capstar Broadcasting

Corporation (``Capstar''), by their respective attorneys, as follows:

1. This Court has jurisdiction over the subject matter of this

action and the parties have agreed to waive all objections to personal

jurisdiction and venue in the United States District Court for the

District of Columbia.

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

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

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

the requirements of the Antitrust Procedures and Penalties Act, 15

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

proceedings, provided that 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 though the

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

4. Citadel and Capstar have agreed to terminate the Citadel-

Triathlon Joint Sales Agreement (``JSA'') (defined in Section II(e) of

the Final Judgment) pursuant to the Final Judgment, but subject to

Paragraph 9 of this stipulation. In addition, the parties have agreed

to make certain transfers of radio stations. Capstar's transfer of

KEYF-FM to Citadel in Spokane is part of the agreement memorialized in

the Final Judgment.

5. The parties have agreed to take the following actions that the

United States has agreed not to oppose. In Colorado Springs, Capstar

has agreed to transfer KSPZ-FM, KVOR-AM, and KTWK-AM to Citadel while

Citadel has agreed to transfer KKLI-FM to Capstar. In Spokane, Capstar

has agreed to transfer KEYF-FM and KEYF-AM to Citadel. Also in Spokane,

Citadel has entered into an agreement with an unrelated third party to

acquire KNJY-FM. Although the Final Judgment is not contingent upon

these exchanges and acquisitions, the Antitrust Division has analyzed

the transactions and has no objection to them.

6. Citadel and Capstar state that there are no agreements or

understandings between them that will affect how they will program or

format the radio stations that they own in Colorado Springs or Spokane.

7. 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. 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.

8. Defendants represent that the JSA will be terminated and the

divestiture of KEYF-FM will be made as ordered, 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.

9. If Capstar does not acquire Triathlon Broadcasting Company by

June 2, 1999, the Antitrust Division will

[[Page 26777]]

withdraw the proposed Final Judgment and dismiss Capstar as a defendant

in this matter.

Dated: April 7, 1999.

For Plaintiff United States of America.

Karl D. Knutsen,

United States Department of Justice, Antitrust Division, Merger Task

Force, 1401 H Street, N.W., Washington, D.C. 20530, (202) 514-0976.

For Defendant Capstar Broadcasting Corporation.

Neil W. Imus,

Vinson & Elkin L.L.P., 1455 Pennsylvania Avenue, N.W., Washington, D.C.

20006, (202) 639-6675.

Dated: April 8, 1999.

For Defendant Citadel Communications Corporation.

Debra H. Dermody,

Reed, Smith, Shaw, & McClay, 435 Sixth Ave., Pittsburgh, PA 15219,

(412) 288-3302.

Final Judgment

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

complaint in this action, and plaintiff and defendants Citadel

Communications Corporation (``Citadel'') and Capstar Broadcasting

Corporation (``Capstar'') 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, these defendants have agreed to be bound by the

provisions of this Final Judgment pending its approval by the Court.

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

likely termination of the Joint Sales Agreement ``JSA'' in Colorado

Springs, Colorado and Spokane, Washington, identified below, which will

help ensure that competition is substantially preserved;

And whereas, plaintiff requires Citadel and Capstar to terminate

the JSA for the purpose of restoring competition in the sale of radio

advertising;

And whereas, Citadel and Capstar have represented to the plaintiff

that the JSA can and will be terminated, subject to paragraph 9 of the

Stipulation, and that Citadel and Capstar will not later raise claims

of hardship, contractual bar, or difficulty as grounds for asking the

Court to delay or modify termination of the JSA described 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 defendants and over

the subject matter of this action, and defendants have agreed to waive

any objection to personal jurisdiction. The Complaint states a claim

upon which relief may be granted against the defendants, as hereinafter

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

II. Definitions

As used in this Final Judgment:

A. ``Capstar'' means defendant Capstar Broadcasting Corporation, a

Delaware corporation with its headquarters in Austin, Texas, and its

successors, assigns, subsidiaries, divisions, groups, affiliates,

partnerships and joint ventures, and directors, officers, managers,

agents, and employees, including but not limited to Hicks, Muse, Tate,

& Furst Incorporated (``Hicks-Muse''), a Delaware corporation with its

headquarters in Dallas, Texas.

B. ``Citadel'' means defendant Citadel Communications Corporation,

a Nevada corporation with its headquarters in Las Vegas, Nevada, and

its successors, assigns, subsidiaries, divisions, groups, affiliates,

partnerships and joint ventures, and directors, officers, managers,

agents, and employees.

C. ``Defendants'' means Citadel and Capstar.

D. ``Antitrust Division'' means the Antitrust Division of the

United States Department of Justice.

E. ``JSA'' means the Joint Sales Agreement entered on or around

December 15, 1995 among Citadel and Pourtales Radio Partnership (to

which Triathlon is successor), providing for the sale of radio

advertising time in Colorado Springs, Colorado and Spokane, Washington.

F. ``Radio Assets'' means all of the assets, tangible or

intangible, used in the operation of the following radio stations that

sell advertising time in Colorado Springs, Colorado, and Spokane,

Washington, including all real property (owned or leased) used in the

operation of these stations, all broadcast equipment, office equipment,

office furniture, fixtures, materials, supplies, and other tangible

property used in the operation of these stations; all licenses,

permits, authorizations, and applications therefor issued by the

Federal Communications Commission and other government agencies related

to these stations; all contracts, agreements, leases and commitments of

defendants relating to their operation; all trademarks, service marks,

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

promotional materials relating to these stations; and all logs and

other records maintained by the operator or owner in connection with

its business:

(1) In Colorado Springs, KSPZ-FM, KKFM-FM, KKMG-FM, KVUU-FM, KKLI-

FM, KVOR-AM, and KTWK-AM; and

(2) In Spokane, KAEP-FM, KDRK-FM, KEYF-FM, KNFR-FM, KISC-FM, KKZK-

FM, KGA-AM, KEYF-AM, KAQQ-AM, KJRB-AM, and KUDY-AM.

(G) ``Triathlon'' means Triathlon Broadcasting Company, a Delaware

corporation with its headquarters in San Diego, California, named as a

defendant in this action.

III. Applicability

A. The provisions of this Final Judgment apply to the defendants,

their successors and assigns, their subsidiaries, 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. The defendants shall require, as a condition of the sale or

other disposition of any of the Radio Assets, that the acquirer or

acquirers agree to be bound by the provisions of this Final Judgment.

IV. Termination of JSA and Divestment of KEYF-FM

A. Citadel and Capstar are hereby ordered and directed in

accordance with the terms of this Final Judgment to terminate the JSA

as quickly as possible, but no later than June 2, 1999.

B. Capstar is also ordered to divest KEYF-FM in Spokane as quickly

as possible, but no later than June 2, 1999.

C. The Antitrust Division, in its sole discretion, may extend the

time period for termination for two (2) additional thirty (30) day

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

D. Citadel and Capstar shall not acquire any other radio stations

that sell radio advertising time in either Colorado Springs or Spokane

except under the procedures stated in Section V. Further, Citadel and

Capstar shall not enter into any JSA or any cooperative selling

arrangement with any other operator of radio stations serving listeners

in either Colorado Springs or Spokane except under the procedures and

conditions stated in Section V.

E. Citadel shall not confer with operators of other radio stations

that sell advertising time in Colorado Springs or Spokane regarding the

price of radio advertising time--including any discounts for

advertisers or classes of

[[Page 26778]]

advertisers or the availability of added value such as free or bonus

spots, remote broadcasts, or other promotions.

V. Notice

Capstar and Citadel shall provide advance notification to the

Antitrust Division when they directly or indirectly acquire any assets

of or any interest (including any financial, security, loan, equity or

management interest) in any radio station that sells advertising time

in Colorado Springs, Colorado, or Spokane, Washington, or enter into

any JSA or any cooperative selling arrangement with any other operator

of radio stations serving listeners in either city. This obligation to

provide notice is met under this section when a transaction is 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''),

Notification under this section shall be provided to the Antitrust

Division 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 about the sales of radio advertising time in Colorado

Springs and Spokane. Notification shall be provided at least thirty

(30) days prior to the acquisition of any such interest, 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 Antitrust Division 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. 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.

Citadel shall not enter into any JSA or any other cooperative

selling arrangement with any other operator of radio stations that

sells or helps to sell radio advertising time in either Colorado

Springs or Spokane without advance written approval from the Antitrust

Division.

VI. Preservation of Assets

Unitl the termination of the JSA required by Section IV has been

accomplished, Citadel shall take all steps necessary to maintain and

operate the Radio Assets as active and viable entities to the extent it

is able under the JSA; maintain the management, staffing, sales and

marketing of the Radio Assets; and maintain the Radio Assets in

operable condition at current capacity configurations. Citadel and

Capstar agree that they may hire each other's employees and that they

will not enforce any non-complete provisions in the employment

contracts of any sales employee of any radio station they own in

Colorado Springs.

VII. Financing

Citadel and Capstar shall not finance for each other all or any

part of any transaction related to this Final Judgment.

VIII. Compliance Inspection

For purposes of determining or securing compliance with the Final

Judgment or determining whether the Final Judgment should be modified

or terminated and subject to any legally recognized privilege, from

time to time:

A. Duly authorized representatives of the plaintiff, upon the

written request of the Assistant Attorney General in charge of the

Antitrust Division, and on reasonable notice to the defendants made to

their principal offices, shall be permitted:

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

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

other records and documents in the possession or under the control

of the defendants, who may have counsel present, relating to the

matters contained in this Final Judgment; and

(2) Subject to the reasonable convenience of the defendants and

without restraint or interference from any of them, to interview,

either informally or on the record, their officers, employees, and

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

B. Upon the written request of the Assistant Attorney General in

charge of the Antitrust Division, made to the defendants' principal

offices, the defendants shall submit written reports, under oath if

requested, with respect to any matter contained in the Final Judgment.

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

Section VIII of this Final Judgment shall be divulged by a

representative of the 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 the 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 the

defendants to the plaintiff, the defendants represent and identify 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 the defendants mark 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 the plaintiff to the defendants prior to

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

jury proceeding) to which the defendants are not a party.

IX. 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.

X. Termination

Unless this Court grants an extension, this Final Judgment will

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

XI. Public Interest

Entry of this Final judgment is in the public interest.

Dated ________

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

United States District Judge

Plaintiffs Explanation of Consent Decree Procedures

Plaintiff, the United States of America, submits this short

memorandum summarizing the procedures regarding the Court's entry of

the proposed Final Judgment. The Judgment would settle this case

pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C.

16(b)-(h) (the ``APPA''), which applies to civil

[[Page 26779]]

antitrust cases brought and settled by the United States.

1. Today, plaintiff has filed a Complaint, a proposed Final

Judgment, and a Stipulation by which the parties have agreed to the

Court's entry of the proposed Final Judgment following compliance with

the APPA, and a Motion to Enter the Stipulation and Order. The

defendants have agreed not to consummate their transaction until the

Court signs the Stipulation and Order. The Court's entry of the

Stipulation will enable it immediately to govern the parties's behavior

relating to the transaction, until such time as the Final Judgment is

entered pursuant to the APPA.

2. Plaintiff is also filing a Competitive Impact Statement relating

to the proposed Judgment [15 U.S.C. 16(b)].

3. The APPA requires that plaintiff publish the proposed Final

Judgment and Competitive Impact Statement in the Federal Register and

in certain newspapers at least 60 days prior to entry of the Final

Judgment. The notice will inform members of the public that they may

submit comments about the Final Judgment to the United States

Department of Justice, Antitrust Division [15 U.S.C. 16(b)-(c)].

4. During the sixty-day period, plaintiff will consider, and at the

close of that period respond to, any comments received, and it will

publish the comments and responses in the Federal Register.

5. After the expiration of the sixty-day period, plaintiff will

file with the Court the comments, the government's responses, and a

Motion for Entry of the Final Judgment (unless the United States has

decided to withdraw its consent to entry of the Final Judgment, as

permitted by Paragraph 2 of the Stipulation) [see 15 U.S.C. 16(d)].

6. At that time, pursuant to the APPA, 15 U.S.C. 16(e)-(f), the

Court may enter the Final Judgment without a hearing, if it finds that

the Final Judgment is in the public interest.

Dated: April 28, 1999.

Respectfully submitted.

Karl D. Knutsen,

Attorney, United States Department of Justice, Antitrust Division,

Merger Task Force, 1401 H St., NW, Suite 4000, Washington, DC 20530,

(202) 514-0976.

Certificate of Service

I, Karl D. Knutsen, of the Antitrust Division of the United States

Department of Justice, do hereby certify that true copies of the

foregoing Complaint, Final Judgment, Stipulation, Competition Impact

Statement, and Plaintiff's Explanation of Consent Decree Procedures

were served this 28th day of April, 1999, by hand and Fedex, to the

following:

Debra H. Dermody, Reed, Smith, Shaw, & McClay, 435 Sixth Avenue,

Pittsburgh, PA 15219, Counsel for Citadel Communications Corporation,

By Fedex.

David J. Laing, Baker & McKenzie, 815 Connecticut Avenue, N.W.,

Washington, D.C. 20006, Counsel for Triathlon Broadcasting Company, By

hand.

Neil W. Imus, Vinson & Elkins L.L.P., 1455 Pennsylvania Avenue, N.W.,

Washington, D.C. 20006, Counsel for Capstar Broadcasting Corporation,

By hand.

Karl D. Knutsen

Amended Competitive Impact Statement

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

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

this Amended Competitive Impact Statement relating to the proposed

Final Judgment submitted for entry in this civil antitrust proceeding.

I. Nature and Purpose of the Proceeding

The plaintiff filed an amended civil antitrust Complaint on April

30, 1999 (``Complaint'') alleging that Citadel Communication

Corporation's (``Citadel'') ``Joint Sale Agreement'' (``JSA'') with

Triathlon Broadcasting (``Triathlon'') violates Section One of the

Sherman Act, 15 U.S.C. 1. The Complaint alleges that the JSA between

Citadel and Triathlon is anticompetitive in the Colorado Springs,

Colorado, and Spokane, Washington, radio advertising markets. The

Complaint also alleges that Triathlon's acquisition of additional radio

stations in Spokane is anticompetitive.

The Complaint alleges that in Colorado Springs, Citadel's KKFM-FM,

and KKMG-FM competed against Triathlon's KSPZ-FM, KVUU-FM, KTWK-AM, and

KVOR-AM prior to the JSA, and that since the creation of the JSA,

Citadel has acquired KKLI-FM. The complaint further alleges that since

Citadel and Triathlon instituted the JSA in Colorado Springs, Citadel

now sets the prices for radio advertising for both its and Triathlon's

stations. In addition, the complaint alleges that Citadel approached

its remaining competitors in Colorado Springs and suggested that they

could all make more money if they were to eliminate a discount to

certain advertisers, thus indicating its intent and willingness to

collude and avoid price competition.

The complaint alleges that in Spokane, Citadel's KAEP-FM, KDRK-FM,

KJRB-AM, and KGA-AM competed against Triathlon's KKZX-FM, KEYF-FM,

KEYF-AM, and KUDY-AM prior to the JSA. The complaint further alleges

that since Citadel and Triathlon instituted the JSA in Spokane, Citadel

now sets the prices for radio advertising for both its and these

Triathlon stations. In addition, the complaint alleges that Triathlon

later acquired KNFR-FM, KISC-FM, and KAQQ-AM in Spokane, and has a

reduced incentive to compete against the JSA because it receives a

share of the profits from the JSA.

Finally, the complaint alleges that Capstar Broadcasting

Corporation (``Capstar'') has announced its agreement to acquire

Triathlon, including its stations in Colorado Springs and Spokane.

After it acquires Triathlon, Capstar would become a party to the JSA,

if the JSA were still in existence.

The prayer for relief seeks: (a) adjudication that Citadel's JSA

with Triathlon in Colorado Springs violates Section One of the Sherman

Act, 15 U.S.C. 1; (b) adjudication that Citadel's JSA with Triathlon

and Triathlon's acquisition of non-JSA stations in Spokane violate

Section One of the Sherman Act, 15 U.S.C. 1; (c) entry of an injunction

terminating the JSA in both Colorado Springs and Spokane and requiring

Capstar to divest KEF-FM in Spokane; (d) entry of an injunction

preventing Citadel from discussing the price of radio advertising time

with competitors in Colorado Springs and Spokane; and (e) such other

relief as is proper.

The United States has reached a proposed settlement with Citadel

and Capstar which is memorialized in the proposed Final Judgment filed

with the Court. Under the terms of the proposed Final Judgment, Citadel

and Capstar will terminate the JSA and Capstar will divest KEYF-FM.

The plaintiff and defendants Citadel and Capstar have stipulated

that the proposed Final Judgment may be entered after compliance with

the APPA and that they can fulfill their obligations under the Final

Judgment. 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 Final Judgment and to punish

violations thereof.

II. The Alleged Violation

A. The Defendants

Citadel is a Nevada corporation with its headquarters in Las Vegas,

Nevada.

[[Page 26780]]

According to industry estimates, it owns 107 radio stations in 20 U.S.

markets. Triathlon is a Delaware Corporation with its headquarters in

San Diego, California. According to industry estimates, it currently

owns 31 radio stations in six U.S. markets. Capstar has announced its

agreement to acquire Triathlon.

Capstar is a Delaware corporation with its headquarters in Austin,

Texas. It is associated with Hicks, Muse, Tate, & Furst Incorporated

(``Hicks-Muse''), a Delaware corporation with its headquarters in

Irving, Texas. According to industry estimates, Capstar owns

approximately 309 radio stations in 76 U.S. markets. Chancellor Media

Company, a company with which Capstar shares some directors and owners,

has announced its intention to acquire Capstar.

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

Prior to December, 1995, the Citadel and Triathlon radio stations

in Colorado Springs and Spokane competed against each other within

their respective cities. On or about December 15, 1995, however,

Citadel and Triathlon's predecessor corporation entered into a Joint

Sales Agreement (``JSA''). Under the terms of the JSA, Citadel sets

prices and sells advertising time on the radio stations subject to the

JSA in both Colorado Springs and Spokane. Citadel also collects

payments from advertisers, makes a monthly report to Triathlon, deducts

expenses, and divides the profits between the parties. Citadel and

Triathlon have operated under the JSA since December, 1995. Later,

Triathlon acquired another group of radio stations in Spokane.

C. Anticompetitive Consequences of the JSA

1. The Sale of Radio Advertising Time in Colorado Springs, Colorado,

and Spokane, Washington, Are The Appropriate Markets in Which To

Analyze This Antitrust Action

The Complaint alleges that the provision of advertising time on

radio stations serving Colorado Springs, Colorado, and Spokane,

Washington, constitutes a line of commerce and sections of the country,

or relevant markets, for antitrust purposes. Radio stations, by their

programming, seek to attract listeners. The radio stations then sell

advertising time to advertisers who want to reach those listeners.

Radio's unique characteristics as an inexpensive drive-time and

workplace news and entertainment companion has given it distinct and

special qualities. Retailers, in an effort to reach potential

customers, use a mix of electronic and print media to deliver their

advertising messages. In so doing, they have learned that certain media

are more cost-effective than others in meeting certain of their

advertising goals and that radio can serve several such goals.

When radio advertisers use radio as part of a ``media mix,'' they

often view the other advertising media (such as television or

newspapers) as a complement to, and not a substitute for, radio

advertising. Many advertisers who use radio as part of a multi-media

campaign do so because they believe that the radio component enhances

the effectiveness of their overall advertising campaign. They view

radio as giving them unique and cost-effective access to certain

audiences. They recognize that because radio is portable, people can

listen to it anywhere--especially in places and situations where other

media are not present, such as in the office and car. In addition, they

know that radio formats are designed to attract listeners in specific

demographic groups. As a consequence of the foregoing factors, the

closest substitute to advertising on one radio station, for many

advertisers, is advertising on other radio stations.

In addition to accomplishing these goals more efficiently than

other media, radio advertising is the relevant market in which to

evaluate the JSA because a hypothetical monopolist of radio stations

could profitably raise prices. Although some local and national

advertisers may switch some of their advertising to other media rather

than absorb a price increase in the cost of radio advertising time, the

existence of such advertisers would not prevent all radio stations in

the Colorado Springs and Spokane markets from profitably raising their

prices a small but significant amount. At a minimum, stations could

profitably raise prices to those advertisers who view radio as a

necessary advertising medium for them, or as a necessary advertising

complement to other media. Radio stations negotiate prices individually

with advertisers; consequently, radio stations can charge different

advertisers different prices. Radio stations generally can identify

advertisers with strong radio preferences. Because of this ability to

price discriminate among customers, radio stations may charge higher

prices to advertisers that view radio as particularly effective for

their needs, while maintaining lower prices for other advertisers.

2. Harm to Competition

a. The concentration of radio stations in Colorado Springs and

Spokane substantially harms competition. The Complaint alleges that

Citadel's JSA with Triathlon in Colorado Springs and Spokane along with

Triathlon's subsequent acquisition of additional stations in Spokane

harms competition. Prior to the JSA, an advertiser buying radio

advertising time could select a combination of Citadel, Triathlon, and

independent stations that would allow it to exclude either the

Triathlon or Citadel stations--thus giving both Citadel and Triathlon

an incentive to negotiate with the advertiser. After the JSA, however,

the Citadel and Triathlon stations subject to the JSA no longer compete

with each other. Because the JSA represents a large percentage of the

radio advertising available in those geographic markets, many

advertisers in those markets cannot meet their listener goals without

using the JSA stations. Realizing that these advertisers cannot buy

around its JSA, Citadel can raise prices to many advertisers.

b. Advertisers could not turn to other Colorado Springs or Spokane

radio stations to prevent Citadel from imposing an anticompetitive

price increase. If Citadel and Triathlon raised prices to advertisers

in Colorado Springs or Spokane, other radio stations in Colorado

Springs and Spokane would not and could not profitably offer additional

advertising inventory or change their formats to provide access to

different audiences, thus mitigating the effect of the price increase.

Stations are constrained in their ability to play additional

commercials by the tendency of listeners to avoid stations that play

too much advertising and the insistence of advertisers on

``separation'' from similar advertisers. Thus, even if advertisers

trying to avoid a price increase wanted to run additional commercials

on non-Citadel and non-Triathlon stations, the alternative stations

would likely be unable to accommodate them. Moreover, even assuming

that such a station could accommodate an increase in advertisers, it

would perceive the increase in demand for its product and would have an

incentive to raise its prices as well. Finally, successful stations are

reluctant to change formats because of the risk and costs involved in a

format change and unsuccessful stations may not be able to gain a large

enough audience to undermine a supra-competitive price increase. In

addition, an advertiser wishing to reach a broad audience cannot simply

run more commercials on fewer stations, because the advertiser will not

reach a broad enough audience without a range of stations.

In both the Colorado Springs and Spokane radio advertising markets,

new

[[Page 26781]]

entry is unlikely as a response to a supra-competitive price increase

from the JSA. In addition, it is unlikely that stations in adjacent

communities could boost their power so as to enter the Colorado Springs

or Spokane markets without interfering with other stations and thus

violating Federal Communications Commission regulations.

III. Explanation of the Proposed Final Judgment

The proposed Final Judgment would preserve competition in the sale

of radio advertising time in both Colorado Springs and Spokane. It

requires Citadel and Capstar \1\ to terminate their JSA as soon as

possible, but no later than June 2, 1999. Plaintiff, at its sole

discretion, may extend the time period for the parties to comply with

the terms of the Final Judgment for two additional 30-day periods. In

addition, the proposed Final Judgment requires Capstar to divest KEYF-

FM in Spokane. Defendants have also expressed their desire to exchange

certain other stations among themselves and plaintiff has stipulated

that it will not contest any or all of their proposed exchanges. See

Stipulation and Order, Paras. 4 & 5. The Final Judgment provides that

neither defendant, nor their successors, can acquire any other radio

station in either Colorado Springs or Spokane without giving the

Antitrust Division of the Department of Justice prior notice.

Furthermore, the Final Judgment places conditions on the parties if

they wish to enter any subsequent JSA in either Colorado Springs or

Spokane. Capstar (never a party to the JSA) may not enter into a JSA in

those cities without notifying that Antitrust Division; Citadel may not

enter a JSA in those cities without permission from the Antitrust

Division. Despite their clear competitive significance. JSAs may not

all be reportable to the Department under the Hart-Scott-Rodino

Antitrust Improvements Act of 1976, as amended, 15 U.S.C. 18a (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 these radio advertising markets. Finally, the proposed Final

Judgment prevents Citadel from discussing radio advertising prices and

discounts with other radio stations in both Colorado Springs and

Spokane. Nothing in this proposed Final Judgment limits the plaintiff's

ability to investigate or bring actions, where appropriate, challenging

other past or future activities of defendants in Colorado Springs,

Spokane, or any other markets, including their entry into a JSA or any

other agreements related to the sale of advertising time except those

specifically identified in the Complaint.

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\1\ Although this action names Triathlon as a defendant, the

Department expects that Triathlon will be acquired by Capstar soon

and will be acquired by Capstar soon and will then cease to have a

separate legal existence. Hence, relief against it is unnecessary.

When Triathlon's separate existence is terminated, the Department

will move to dismiss it as a defendant. This will occur before the

Department moves for entry of the proposed Final Judgment at the

conclusion of the Tunney Act review process.

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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 conducted 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.

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 United States written comments regarding the

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

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

Impact Statement in the Federal Register. The United States will

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

consideration by the Department of Justice, which remains free to

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

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

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

Any such 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 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 termination

of the JSA and other relief contained in the proposed Final Judgment

will preserve viable competition in the sale of radio advertising time

in the Colorado Springs and Spokane radio advertising markets. Thus,

the proposed Final Judgment achieves all of 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. 16(e). As the United States Court of Appeals for the District

of Columbia 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 Corp., 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

[[Page 26782]]

extended proceedings which might have the effect of vitiating the

benefits of prompt and less costly settlement through the consent

decree process.'' \2\ Rather,

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

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

determination can be made properly on the basis of the Competitive

Impact Statement and Response to Comments filed pursuant to the

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

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

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

raised significant issues and that further proceedings would aid the

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

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

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

its duty, the Court, in making its public interest 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.)); see also Microsoft, 56 F.3d at

1460-62. Rather,

the balancing of competing social and political interests affected

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

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

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

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

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

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

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

interest.'' More elaborate requirements might undermine the

effectiveness of antitrust enforcement by consent decree.\3\

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

added); see BNS, 858 F.2d at 463; United States v. National Broad,

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, need not be certain to

eliminate every anticompetitive effect of a particular practice. Court

approval of a final judgment requires a more flexible and less strict

standard 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.' '' \14\

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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). Washington, D.C. 20530

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In this case, the proposed Final Judgment meets the appropriate

standard. The Final Judgment dissolves the JSA. In addition, Capstar's

divestiture of KEYF-FM in Spokane will cure the anticompetitive effects

of Triathlon's prior acquisitions there. The exchanges of stations

anticipated by defendants Citadel and Capstar leave both surviving

parties with radio advertising market shares of approximately 40% or

less in both Colorado Springs and Spokane.

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.

Karl D. Knutsen,

Attorney, Colorado Bar Reg. No. 23997, Merger Task Force, U.S.

Department of Justice, Antitrust Division, 1401 H Street, N.W.,

Washington, D.C. 20530, (202) 514-0976.

Certificate of Service

I, Karl D. Knutsen, of the Antitrust Division of the United States

Department of Justice, do hereby certify that true copies of the

foregoing Amended Complaint and amended Competitive Impact Statement

were served this 26th day of April, 1999, by United States mail, to the

following:

Debra H. Dermody, Reed, Smith, Shaw, & McClay, 435 Sixth Ave.,

Pittsburgh, PA 15219, Counsel for Citadel Communications Corporation

David J. Laing, Baker & McKenzie, 815 Connecticut, Washington, D.C.

20006, Counsel for Triathlon Broadcasting Company

Neil W. Imus, Vinson & Elkins, 1455 Pennsylvania Avenue, N.W.,

Washington, D.C. 20006, Counsel for Capstar Broadcasting Corporation

Karl D. Knutsen

[FR Doc. 99-12339 Filed 5-14-99; 8:45 am]

BILLING CODE 4410-11-M