United States v. Daily Gazette Company and Medianews Group, Inc.; Proposed Final Judgment and Competitive Impact Statement, 11682-11727 [2010-5095]

Agencies

• Antitrust Division
• Department of Justice

[Federal Register Volume 75, Number 47 (Thursday, March 11, 2010)]
[Notices]
[Pages 11682-11727]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-5095]



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Part III





Department of Justice





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Antitrust Division



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United States v. Daily Gazette Company and Medianews Group, Inc.; 
Proposed Final Judgment and Competitive Impact Statement; Notice

Federal Register / Vol. 75, No. 47 / Thursday, March 11, 2010 / 
Notices

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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Daily Gazette Company and Medianews Group, Inc.; 
Proposed Final Judgment and Competitive Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment, 
Stipulation, and Competitive Impact Statement have been filed with the 
United States District Court for the Southern District of West Virginia 
in United States of America v. Daily Gazette Company and MediaNews 
Group, Inc, No. 2:07-cv-0329. On May 22, 2007, the United States filed 
a Complaint alleging that the Defendants violated Section 7 of the 
Clayton Act, 15 U.S.C. 18, and Sections 1 and 2 of the Sherman Act, 15 
U.S.C. 1 & 2, by entering into a May 2004 transaction that consolidated 
ownership and control of the only two daily newspapers in Charleston, 
West Virginia under the Daily Gazette Company and eliminated 
competition between the Defendants. The proposed Final Judgment, filed 
on January 20, 2010, requires the Defendants to restructure their joint 
operating arrangement to provide MediaNews Group with governance rights 
and independent control over the editorial operations of the Charleston 
Daily Mail; prohibits the Defendants from discriminating against the 
Daily Mail in circulation and advertising sales and other key aspects 
of newspaper operations; requires the Defendants to take remedial 
action to rebuild the circulation of the Daily Mail by offering 
specially-discounted subscriptions for a period of six months; 
establishes various economic incentives for MediaNews to compete with 
the Daily Gazette Company for readers; prevents the unjustified 
termination of publication of the Daily Mail unless it is financially 
failing and the United States approves; and specifies procedures for 
the disposition of the Daily Mail's intellectual property in the event 
that the newspaper ceases publication. The Final Judgment will expire 
ten years from the date of entry unless the Court grants an extension.
    Copies of the Complaint, proposed Final Judgment and Competitive 
Impact Statement are available for inspection at the Department of 
Justice, Antitrust Division, Antitrust Documents Group, 450 5th Street, 
NW., Room 1010, Washington, DC 20530 (telephone: 202-514-2481), on the 
Department of Justice's Web site at https://www.usdoj.gov/atr, and at 
the Office of the Clerk of the United States District Court for the 
Southern District of West Virginia. Copies of these materials may be 
obtained from the Antitrust Division upon request and payment of the 
copying fee set by Department of Justice regulations.
    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 addressed 
to John R. Read, Chief, Litigation III Section, Antitrust Division, 
U.S. Department of Justice, 450 5th Street, NW., Suite 4000, 
Washington, DC 20530, (202) 307-0468.

J. Robert Kramer II,
Director of Operations, Antitrust Division.

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF WEST VIRGINIA 
CHARLESTON DIVISION

    UNITED STATES OF AMERICA, Plaintiff, v. DAILY GAZETTE COMPANY, and 
MEDIANEWS GROUP, INC. Defendants.
    Civil Action No. 2:07-0329.
    Filed: May 22, 2007.
    Stamp: COPY--The original was filed in the Clerk's Office at 
Charleston on May 22, 2007.
TERESA L. DEPPNER, CLERK, U.S. District Court, Southern District of 
West Virginia

Complaint

    The United States of America, acting under the direction of the 
Attorney General of the United States, brings this civil antitrust 
action to obtain equitable and other relief to prevent and restrain 
defendants Daily Gazette Company (``Gazette Company'') and MediaNews 
Group, Inc. (``MediaNews Group'') from continuing to violate Section 7 
of the Clayton Act, 15 U.S.C. 18, and Sections 1 and 2 of the Sherman 
Act, 15 U.S.C. 1 & 2, as amended. The United States complains and 
alleges as follows:

I. Nature of the Action

    1. This lawsuit challenges a series of transactions in 2004 that 
extinguished competition between Charleston's two daily newspapers by 
combining The Charleston Gazette and the Charleston Daily Mail under 
the common ownership of Gazette Company as part of a plan to terminate 
the publication of the Charleston Daily Mail and leave Charleston with 
a single daily newspaper.
    2. For over 100 years, the citizens of Charleston have enjoyed the 
benefits of two local daily newspapers. Between 1958 and May 7, 2004, 
the owners of the Charleston Gazette and the Charleston Daily Mail 
eliminated some--but not all--elements of competition between the two 
newspaper owners by forming a joint operating agreement (``JOA''), 
referred to as Charleston Newspapers. Under the agreement, the two 
newspapers coordinated certain financial and operational aspects of 
producing the two newspapers--principally, the printing, distribution, 
and sales of subscriptions and advertisements. Importantly, however, 
the two newspapers did not combine all of their operations or 
ownership. Until May 2004, the Gazette Company maintained separate 
ownership of and independently made decisions regarding the content and 
style of the Charleston Gazette that determined the attractiveness and 
worth of the paper to readers. Similarly, MediaNews Group and its 
predecessors maintained separate ownership of the Charleston Daily Mail 
and independently made all decisions regarding the content and style of 
the Charleston Daily Mail that determined the attractiveness and worth 
of the paper to readers in the Charleston area. The attractiveness to 
readers of each paper directly affected the value of the separate 
ownership interest of each company.
    3. On May 7, 2004, Gazette Company, the Charleston Gazette's owner, 
acquired all of the assets of the Charleston Daily Mail, its only 
competitor, from MediaNews Group. On that same day, Gazette Company and 
MediaNews Group also entered into a new arrangement that gave MediaNews 
Group nominal responsibility for the news and editorial content of the 
Charleston Daily Mail, but gave Gazette Company ultimate control over 
the budgets, management, and news gathering and reporting of both 
newspapers, as well as the right to receive all the profits of both 
newspapers. The arrangement also gave Gazette Company the unilateral 
right to shut down the Charleston Daily Mail.
    4. The May 2004 transactions eliminated all remaining competition 
between the owners of the papers by consolidating the two papers under 
the ownership and control of Gazette Company as part of a plan by the 
Gazette Company to terminate publication of the Charleston Daily Mail 
and thereby force upon consumers in Charleston a single newspaper. 
Gazette Company's plan was to use that control to weaken the Daily Mail 
to the point where it would fail and could be eliminated as a 
competitor to the Charleston Gazette, and Gazette Company acted quickly 
to carry out that

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plan--until the Department's investigation interrupted those efforts.
    5. Because the May 2004 transactions were part of a plan to 
terminate the publication of one of the two newspapers, the 
transactions eliminated any claim that the arrangement is immune from 
antitrust scrutiny under the Newspaper Preservation Act (``NPA''), 15 
U.S.C. 1801, et seq. The NPA permits JOAs to be used to coordinate many 
of the commercial activities of otherwise independent newspapers, 
including the prices the newspapers charge for subscriptions and 
advertising, but only if the participants meet the Act's requirements 
by, inter alia, preserving the existence of two newspapers with 
independent editorial and reportorial operations. The May 2004 
transactions invalidated any claim by Charleston Newspapers to 
antitrust immunity under the NPA because they were part of a plan to 
terminate publication of the Charleston Daily Mail, leaving only one 
daily newspaper in the Charleston area.
    6. Without the benefit of antitrust immunity, the arrangement and 
the May 2004 transactions violated the antitrust laws. The Charleston 
Gazette and the Charleston Daily Mail are the only two daily newspapers 
in the Charleston area, so elimination of competition between them 
unreasonably restrains competition in two distinct respects. First, by 
consolidating ownership of the two newspapers under Gazette Company, 
the transactions eliminated the economic incentives that previously had 
existed for each owner to increase the attractiveness of its newspaper 
to readers in the Charleston area. This reduction in competition 
violated Sections 1 and 2 of the Sherman Act, 15 U.S.C. 1 and 2, and 
Section 7 of the Clayton Act, 15 U.S.C. 18. Second, the arrangement 
eliminated competition between the two newspapers in the sale of 
subscriptions and advertising. Because the two newspapers did not enjoy 
antitrust immunity under the NPA at least as of May 7, 2004, and 
because, as of May 2004, neither of the two papers qualified as a 
failing firm within the meaning of the antitrust laws, such an 
elimination of competition violated Sections 1 and 2 of the Sherman 
Act.
    7. Consequently, as discussed more fully herein, the United States 
seeks, inter alia, an order: (a) Rescinding the May 7 transactions; and 
(b) requiring Gazette Company and MediaNews Group to restore the 
Charleston Daily Mail's competitiveness to the level that existed prior 
to the May 7 transactions.

II. Jurisdiction and Venue

    8. Both Gazette Company and MediaNews Group are engaged in, and 
their activities substantially affect, interstate commerce. Through 
subsidiaries and partnerships it controls, Gazette Company sells 
advertising, which is published in the Charleston Gazette and the 
Charleston Daily Mail, to national advertisers located throughout the 
United States. In addition, Gazette Company and Media News Group 
regularly publish news, syndicated material, and other information in 
the Charleston Gazette and the Charleston Daily Mail that is gathered 
from other states and nations. In turn, they communicate to newspapers 
outside West Virginia the news and information that their staffs 
gather.
    9. The Court has subject matter jurisdiction under 15 U.S.C. 4 and 
25, and 28 U.S.C. 1331, 1337(a), and 1345, to prevent and restrain the 
Defendants from continuing to violate 15 U.S.C. 1, 2 and 18.
    10. The defendants maintain offices, transact business, and are 
found in Charleston, West Virginia. A substantial part of the events 
giving rise to the violations alleged herein occurred in Charleston, 
West Virginia. Accordingly, this Court has personal jurisdiction over 
the Defendants and venue is proper in this judicial district under 
Section 12 of the Clayton Act, 15 U.S.C. 22, and under 28 U.S.C. 1391.

III. Defendants

    11. Defendant Gazette Company, the owner and publisher of the 
Charleston Gazette and, since May 2004, the owner of the Charleston 
Daily Mail, is a privately-held corporation organized and existing 
under the laws of the State of West Virginia, with its principal place 
of business in Charleston, West Virginia. Through its subsidiaries, 
Daily Gazette Publishing Company LLC and Daily Gazette Holding Company 
LLC, and in its capacity as General Partner of Charleston Newspapers 
Holdings Limited Partnership, Gazette Company owns all the assets and 
controls all the business operations of Charleston Newspapers. 
Charleston Newspapers is responsible for printing, circulating, 
promoting and marketing both the Charleston Gazette and the Charleston 
Daily Mail.
    12. Defendant MediaNews Group, the owner and publisher of the 
Charleston Daily Mail from about September 1998 until May 2004, is a 
corporation organized and existing under the laws of the State of 
Delaware, with its principal place of business in Denver, Colorado. 
MediaNews Group owns and publishes several dozen daily newspapers in 
various markets throughout the United States. On or about May 7, 2004, 
MediaNews Group sold the Charleston Daily Mail and related assets to 
Gazette Company. Today, MediaNews Group purports to provide 
``management and supervision'' services for the Charleston Daily Mail 
in return for a fixed fee paid by Gazette Company. In reality, however, 
the news and editorial assets and resources of the Charleston Daily 
Mail are under the ownership and control of Gazette Company.

IV. Background

A. Competition Between the Two Newspaper Owners

    13. For many years, the Charleston Gazette, founded in 1873, and 
the Charleston Daily Mail, founded in 1880, operated completely 
independently. In 1958, the then-owners of the two newspapers entered 
into a JOA, which combined the two newspapers' printing, advertising, 
subscription sales, and distribution functions under a single 
management. Congress, in 1970, seeking to preserve the ability of 
independent newspapers to reduce operating expenses through JOAs, gave 
JOA arrangements then in effect explicit, but limited, antitrust 
immunity when it passed the Newspaper Preservation Act, 15 U.S.C. 1801, 
et seq., as long as they met certain requirements. To receive that 
immunity, Congress required, inter alia, that the newspapers in a JOA 
be separately owned or controlled, that they maintain separate newsroom 
staffs, that their editorial policies be ``independently determined,'' 
and that at the time the JOA was entered, no more than one newspaper in 
the JOA ``was likely to remain or become a financially sound 
publication * * *.'' Id.
    14. Until May 7, 2004, the Gazette Company and MediaNews Group were 
equal partners in the JOA, with each company separately owning its 
respective newspaper. In addition, each company appointed half of the 
representatives to a JOA committee that approved all significant 
decisions, including each newspaper's budget and its advertising and 
subscription rates. That committee also selected a General Manager who 
was responsible for the Charleston JOA's day-to-day operations.
    15. Within the Charleston JOA, each company shared profits and 
losses equally. However, each company had an independent economic 
incentive to increase the value of its respective newspaper ownership 
interest by attracting readers to that newspaper. The number of 
newspapers circulated or

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sold is an important yardstick for measuring the franchise or sales 
value of a newspaper asset. In general, a newspaper that invests in 
increasing its quality and its appeal will attract more readers and 
advertisers, will have a longer lifespan, and will have an increased 
market value. Maintaining or increasing the value of a newspaper within 
a JOA can affect the outcome of, among other things, renegotiations of 
the terms or renewal of a JOA, negotiations over one or both JOA 
newspapers operating outside a JOA, and the identity and viability of 
the newspapers following the expiration or termination of a JOA. Thus, 
the owners of the Charleston newspapers had a variety of long and 
short-term economic incentives to compete to attract readers to their 
respective newspapers.
    16. The owners of the Charleston Gazette and the Charleston Daily 
Mail competed vigorously against each other for readers prior to the 
May 7 transactions. They did so in various ways, such as seeking to 
generate original news and other content of interest to readers; trying 
to cover local news with greater depth, breadth and accuracy; breaking 
stories first; and offering the most attractive mix of news, features 
and editorials to readers. All of these decisions were outside the 
cooperation authorized under the JOA. This head to-head competition 
between the owners of the Charleston Gazette and the Charleston Daily 
Mail benefitted readers by giving them a choice between two daily 
newspapers with unique news and other content.
    17. The Charleston Gazette and the Charleston Daily Mail remained 
consistently profitable through May 2004. Neither newspaper was in 
danger of failing in the near future.

B. Prelude to the May 7 Transactions

    18. In late 2003, MediaNews Group negotiated to sell the Charleston 
Daily Mail along with MediaNews Group's 50 percent stake in the 
Charleston JOA to an experienced third-party newspaper company. On 
December 18, 2003, that company signed a Letter of Intent to purchase 
the Charleston Daily Mail and MediaNews Group's share of the Charleston 
JOA for $55 million. MediaNews Group, pursuant to a Right of First 
Refusal provision included in the Charleston JOA, was required to 
notify Gazette Company of the Letter of Intent and give Gazette Company 
the opportunity to match the terms offered by the third party.
    19. Gazette Company sought to eliminate competition from the 
Charleston Daily Mail, rather than have a new owner continue that 
competition. Gazette Company achieved that goal by matching the third 
party's $55 million offer to acquire all of the ownership interest in 
the Charleston Daily Mail. During this time, Gazette Company developed 
a plan to shut down the Charleston Daily Mail and thus become the 
publisher of the sole remaining daily newspaper in Charleston. This 
plan, formulated with the advice of an outside consultant and shared 
with Gazette Company's lenders, called for the rapid reduction of the 
Charleston Daily Mail's circulation to a level at which the newspaper 
would no longer be economically viable (projected to be achieved within 
two or three years). Gazette Company believed it could then 
successfully argue to the Department of Justice that it should not 
oppose the termination of the JOA because the Charleston Daily Mail 
would be a ``failing company.'' Over the years, the Department of 
Justice has elected not to challenge the decision of several newspaper 
companies to stop publishing one of the newspapers in a JOA based on a 
demonstration that circulation for the newspaper had shrunk to the 
point where the paper was not economically viable and no buyer could be 
found.

C. The May 7 Transactions

    20. On May 7, 2004, Gazette Company and MediaNews Group entered 
into two simultaneous transactions that had the purpose and effect of 
lessening competition between the Charleston Gazette and the Charleston 
Daily Mail, with the ultimate goal of creating a monopoly. First, 
Gazette Company acquired from MediaNews Group control of the Charleston 
Daily Mail's assets and MediaNews Group's 50 percent ownership interest 
in the Charleston JOA, for a purchase price of approximately $55 
million. Second, the parties entered into a new contract that preserved 
the appearance that the Charleston Daily Mail was still being published 
by MediaNews Group but, in fact, gave Gazette Company control over 
Charleston Newspapers, which is now owned 100 percent by Gazette 
Company. Under the new arrangement, MediaNews Group no longer shares in 
the profits or losses of the two newspapers nor contributes to the 
capital costs of the business. The arrangement allows Gazette Company 
unfettered discretion to set the news and editorial budget for the 
Charleston Daily Mail and gives Gazette Company the sole power to 
terminate publication of the Charleston Daily Mail when it sees fit.
    21. The May 7 transactions ended the prior JOA and created an 
entirely new arrangement between Gazette Company and MediaNews Group 
that does not meet the statutory definition of a JOA under Newspaper 
Preservation Act. The arrangement created by the May 7 transactions 
does not qualify for the limited antitrust immunity under the Newspaper 
Preservation Act for several reasons, including that it has not been 
approved by the Attorney General and that it was part of a plan to 
terminate one of the two daily newspapers.
    22. The May 7 transactions gave Gazette Company, acting through its 
control of Charleston Newspapers, the unilateral right to take 
immediate and deliberate steps to implement its plan to shut down the 
Charleston Daily Mail by 2007. Shortly after the May 7 transactions 
were consummated, Gazette Company stopped all promotions and discounts 
for the Charleston Daily Mail; it stopped soliciting new readers for 
the Charleston Daily Mail; it stopped delivering the Charleston Daily 
Mail to thousands of customers; it attempted to convert existing 
Charleston Daily Mail home delivery subscribers to Charleston Gazette 
subscriptions; it stopped publishing a Saturday edition of the 
Charleston Daily Mail; it allowed almost half of the Charleston Daily 
Mail's reporters to leave the newspaper without permitting 
replacements, thus crippling the ability of the Charleston Daily Mail 
to cover the news; and it cut the Charleston Daily Mail's newsroom 
budget substantially in both 2004 and 2005, which forced the Charleston 
Daily Mail to continue reducing the breadth and depth of its news 
coverage.
    23. As a result of Gazette Company's actions following the May 7 
transactions, the Charleston Daily Mail's circulation dropped from 
35,076 in February 2004 to 23,985 in January 2005. This decline in 
circulation matched almost precisely the projections that Gazette 
Company and its consultants made as part of Gazette Company's pre-
acquisition plan to shut down the Charleston Daily Mail by 2007. During 
that same February 2004 to January 2005 time period, the Charleston 
Gazette's circulation increased slightly, peaking at over 52,000. Only 
after learning in or about December 2004 that the Antitrust Division of 
the Department of Justice was investigating the May 7 transactions did 
defendant Gazette Company take any steps to limit further damage to the 
Charleston Daily Mail caused by the actions described above. These 
steps, however, failed to restore the competitive conditions that had 
existed prior to the May 7 transactions.

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V. Relevant Markets

A. The Relevant Product Markets

    24. Local daily newspapers, such as the Charleston Gazette and the 
Charleston Daily Mail, provide a unique package of attributes for their 
readers. They provide national, state, and local news in a timely 
manner and in a convenient, hardcopy format. The news stories featured 
in such newspapers are more detailed, when compared to the news 
reported by radio or television, and they cover a wide range of topics 
of interest to local readers, not just major news highlights. 
Newspapers, such as the Charleston Gazette and the Charleston Daily 
Mail, are portable and allow the reader to read the news, 
advertisements, and other information at his or her own convenience. 
Readers also value other features of local daily newspapers, such as 
calendars of local events, movie and TV listings, classified 
advertisements, commercial advertisements, legal notices, comics, 
syndicated columns, and obituaries. Most readers of local daily 
newspapers in the Charleston area do not consider weekly newspapers, 
radio news, television news, Internet news, or any other media to be 
adequate substitutes for the two local daily newspapers serving the 
Charleston area. Thus, in the event of a small but significant increase 
in the price of local daily newspapers, the number of readers who would 
switch to other sources of local news and information, and would stop 
buying any daily local newspaper, would not be sufficient to make such 
a price increase unprofitable.
    25. Advertising in the Charleston Gazette and the Charleston Daily 
Mail allows advertisers to reach a broad cross-section of consumers in 
the Charleston metropolitan area with a detailed message in a timely 
manner. A substantial portion of advertisers seeking to reach 
Charleston area consumers do not consider other types of advertising, 
such as that in weekly newspapers, on radio, on television, or on the 
Internet to be adequate substitutes for advertising in a local daily 
newspaper. Thus, in the event of a small but significant increase in 
the price of daily newspaper local advertising, the number of 
advertisers seeking to reach Charleston area consumers that would 
substitute these other types of advertising for advertising in a local 
daily newspaper, or would reduce their purchase of advertising in a 
local daily newspaper, would not be sufficient to make such a price 
increase unprofitable.
    26. Accordingly, the sale of local daily newspapers to readers, and 
the sale of access to those readers to advertisers in those newspapers, 
each constitutes a line of commerce and a relevant product market 
within the meaning of Section 7 of the Clayton Act and for purposes of 
Sections 1 and 2 of the Sherman Act.

B. The Relevant Geographic Market

    27. The Charleston Gazette and the Charleston Daily Mail are both 
produced, published, and distributed to readers in the Charleston, West 
Virginia area (primarily Kanawha and Putnam Counties). Both newspapers 
provide news relating to the Charleston area in addition to state and 
national news.
    28. Local daily newspapers that serve areas outside of the 
Charleston area do not regularly provide local news specific to the 
Charleston area. From a reader's standpoint, local daily newspapers 
serving areas outside of the Charleston area are not acceptable 
substitutes for the Charleston Gazette and the Charleston Daily Mail. 
For this reason, local daily newspapers outside of the Charleston area 
do not have any significant circulation or sales in Charleston. In the 
event of a small but significant increase in the price of local daily 
newspapers in Charleston, the number of readers who would substitute 
local daily newspapers outside of the Charleston area, and would stop 
buying any daily local newspaper, would not be sufficient to make such 
a price increase unprofitable.
    29. The Charleston Gazette and the Charleston Daily Mail allow 
advertisers to target readers in the Charleston area. From the 
standpoint of an advertiser selling goods or services in the Charleston 
area, advertising in local daily newspapers serving areas outside of 
the Charleston area is not an acceptable substitute for advertising in 
the Charleston Gazette and the Charleston Daily Mail. In the event of a 
small but significant increase in the price of advertisements in local 
daily newspapers serving the Charleston area, the number of advertisers 
that would substitute local daily newspapers outside of the Charleston 
area, and would reduce their purchase of advertising in a local daily 
newspaper, would not be sufficient to make such a price increase 
unprofitable.
    30. Accordingly, the Charleston, West Virginia area is a section of 
the country and a relevant geographic market within the meaning of 
Section 7 of the Clayton Act and for purposes of Sections 1 and 2 of 
the Sherman Act.

VI. Anticompetitive Effects

    31. The May 7 transactions have and will continue to substantially 
lessen competition in the local daily newspaper market in the 
Charleston, West Virginia area by giving Gazette Company a monopoly in 
the Charleston local daily newspaper market. These transactions gave 
Gazette Company control over and the power to weaken or eliminate the 
Charleston Daily Mail and have already had, and will continue to have, 
among others, the following adverse effects on competition:
    a. Reduced output (both quantity and quality) of newspapers; and
    b. Increased prices to readers and advertisers.

VII. Entry

    32. Entry by local daily newspapers into the Charleston, West 
Virginia, area is time-consuming and difficult, and is not likely to 
prevent the anticompetitive effects of the May 7 transactions by 
constraining Gazette Company's market power in the foreseeable future. 
Local daily newspapers incur significant fixed costs, many of which are 
sunk. Examples of these sunk costs include building or gaining access 
to a printing facility, establishing a distribution network, hiring 
reporters and editors, news gathering, and marketing the very existence 
of the new paper, all of which take substantial time. These costs often 
are termed ``first copy'' costs because they are costs that newspaper 
companies must incur before they print the first copies of their 
newspapers. In the event that the entrant fails or exits the newspaper 
industry, it cannot recover all of these costs, making entry risky and 
likely unprofitable. As a result, entry into Charleston daily newspaper 
market would not be timely, likely, or sufficient to prevent the harm 
to competition resulting from the May 7 transactions. Since May 7, 2004 
there have been no attempts to enter the local daily newspaper market 
in the Charleston area.

VIII. Violations

Count One

(Violation of Section 7 of the Clayton Act)
    33. Each and every allegation in paragraphs 1 through 32 of this 
Complaint is here realleged with the same force and effect as though 
said paragraphs were here set forth in full.
    34. Gazette Company and MediaNews Group are hereby named as 
defendants on Count One of this Complaint.
    35. The May 7 transactions constitute an acquisition of assets by 
Gazette Company from MediaNews Group, the effect of which has been and 
is likely to continue to be to lessen competition substantially and to 
tend to create a monopoly in interstate trade and

[[Page 11686]]

commerce in the sale of local daily newspapers and advertising in those 
newspapers in the Charleston, West Virginia area, in violation of 
Section 7 of the Clayton Act, 15 U.S.C. 18.
    36. The May 7 transactions, in violation of Section 7 of the 
Clayton Act, 15 U.S.C. 18, have had the substantial anticompetitive 
effects set forth in ] 31 above, and, unless rescinded and restrained, 
those effects likely will continue.

Count Two

(Violation of Section 1 of the Sherman Act)
    37. Each and every allegation in paragraphs 1 through 32 of this 
Complaint is here realleged with the same force and effect as though 
said paragraphs were here set forth in full.
    38. Gazette Company and MediaNews Group are hereby named as 
defendants on Count Two of this Complaint.
    39. The May 7 transactions have eliminated the incentives and 
ability for MediaNews Group to compete effectively with Gazette Company 
in Charleston and have given Gazette Company the power to control and, 
ultimately, eliminate the Charleston Daily Mail. The arrangement 
created by the May 7 transactions is not immune under the Newspaper 
Preservation Act. For the above reasons, the May 7 transactions 
constitute a contract, combination or conspiracy by and among 
defendants that has unreasonably restrained trade and commerce in 
violation of Section 1 of the Sherman Act, 15 U.S.C. 1.
    40. The May 7 transactions have had and will continue to have 
anticompetitive effects in the relevant market, including among others, 
those set forth in ] 31, above.
    41. The above violation is continuing and will continue unless the 
relief requested hereinafter is granted.

Count Three

(Violation of Section 2 of the Sherman Act)
    42. Each and every allegation in paragraphs 1 through 32 of this 
Complaint is here realleged with the same force and effect as though 
said paragraphs were here set forth in full.
    43. Gazette Company is hereby named as the defendant on Count Three 
of this Complaint.
    44. Through the anticompetitive conduct described herein, Gazette 
Company has monopolized the Charleston, West Virginia, local daily 
newspaper market. As a result of defendants' actions, Gazette Company 
now possesses substantial monopoly power in the sale of local daily 
newspapers in the Charleston area. Gazette Company has willfully 
maintained, and unless restrained by the Court will continue to 
willfully maintain, this unlawful monopoly power through 
anticompetitive and unreasonably exclusionary conduct. Defendants' 
actions and practices constitute unlawful monopolization in violation 
of Section 2 of the Sherman Act, 15 U.S.C. 2.

IX. Requested Relief

    45. The United States requests that the Court:
    a. Adjudge and decree that the May 7, 2004, transactions are 
illegal, and their effects may be substantially to lessen competition, 
or to tend to create a monopoly in violation of Section 7 of the 
Clayton Act, 15 U.S.C. 18;
    b. Adjudge and decree that the May 7 transactions constitute an 
illegal restraint of interstate trade and commerce in violation of 
Section 1 of the Sherman Act, 15 U.S.C. 1;
    c. Adjudge and decree that Gazette Company has unlawfully 
monopolized the Charleston daily newspaper market in violation of 
Section 2 of the Sherman Act, 15 U.S.C. 2;
    d. Rescind the May 7 transactions;
    e. Direct the defendants to restore the Charleston Daily Mail to 
its pre-May 7, 2004 competitive condition;
    f. Award the United States such other and further relief as the 
Court may deem just and proper to redress and prevent recurrence of the 
above violations, to dissipate their anticompetitive effects, and to 
restore effective competition in the Charleston daily newspaper market; 
and
    g. Award the United States the costs of this action.

DATED: May 22, 2007

FOR PLAINTIFF UNITED STATES OF AMERICA

THOMAS O. BARNETT,

Assistant Attorney General, Antitrust Division

DAVID L. MEYER,

Deputy Assistant Attorney General, Antitrust Division

J. ROBERT KRAMER II,

Director of Operations
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CHARLES T. MILLER,

United States Attorney, Southern District of West Virginia, by 
Stephen M. Horn /s/by CAD, Assistant United States Attorney, WV 
State Bar Number 1788, P.O. Box 1713, Charleston, WV 25326, Phone: 
304-345-2200 Fax: 304-347-5443, E-mail: steve.horn@usdoj.gov

JOHN R. READ,

Chief, Litigation III

NINA B. HALE,

Assistant Chief, Litigation III

THOMAS J. HORTON
BENNETT J. MATELSON
WILLIAM H. JONES II
MARK A. MERVA
MATTHEW J. BESTER
JENNIFER A. WAMSLEY

BERNARD M. HOLLANDER,

Senior Trial Attorney, Attorneys for the United States, United 
States Department of Justice, Antitrust Division, Litigation III 
Section, 325 7th Street, NW., Suite 300, Washington, DC 20530, 
Phone: 202-616-5871 Fax: 202-514-7308, E-mail: 
Thomas.Horton@usdoj.gov, Bennett.Matelson@usdoj.gov

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF WEST VIRGINIA

CHARLESTON DIVISION

    UNITED STATES OF AMERICA, Plaintiff, v. DAILY GAZETTE COMPANY, and 
MEDIANEWS GROUP, INC., Defendants.
    Civil Action No. 2:07-0329.
    Judge Copenhaver.
    Magistrate Judge Stanley.
    Filed: January 20, 2010

[Proposed] Final Judgment

    Whereas, Plaintiff, United States of America, filed its Complaint 
on May 22, 2007, the United States and Defendants, Daily Gazette 
Company and MediaNews Group, Inc., by their respective attorneys, have 
consented to the entry of this Final Judgment without trial or 
adjudication of any issue of fact or law, and without this Final 
Judgment constituting any evidence against or admission by any party 
regarding any issue of fact or law;
    And whereas, Defendants agree 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 
adoption of certain procedures and prohibitions by Defendants to assure 
that competition is not substantially lessened;
    And whereas, the United States requires Defendants to agree to 
certain procedures and prohibitions for the purpose of remedying the 
loss of competition alleged in the Complaint;
    And whereas, Defendants have represented to the United States that 
the actions required below 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 provisions contained below;
    Now therefore, before any testimony is taken, without trial or 
adjudication of any issue of fact or law, and upon

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consent of the parties, it is ordered, adjudged and decreed:

I. Jurisdiction

    This Court has jurisdiction over the subject matter of and each of 
the parties to this action. The Complaint states a claim upon which 
relief may be granted against Defendants under Section 7 of the Clayton 
Act, as amended (15 U.S.C. 18), and Sections 1 and 2 of the Sherman 
Act, as amended (15 U.S.C. 1 & 2).

II. Definitions

    As used in this Final Judgment:
    A. ``Charleston Daily Mail'' means the Daily Newspaper of that name 
distributed in the Charleston, West Virginia Area.
    B. ``Charleston Gazette'' means the Daily Newspaper of that name 
distributed in the Charleston, West Virginia Area.
    C. ``Charleston Newspapers'' means the unincorporated joint venture 
operating under the laws of West Virginia, with its principal place of 
business in Charleston, West Virginia, its successors and assigns, and 
its subsidiaries, divisions, groups, affiliates, partnerships and joint 
ventures, and their shareholders, directors, officers, managers, 
agents, and employees.
    D. ``Charleston Newspapers Holdings, L.P.'' means the Delaware 
Limited Partnership formed on May 7, 2004.
    E. ``Charleston, West Virginia Area'' means Kanawha and Putnam 
Counties in West Virginia.
    F. ``Daily Newspaper'' means a print publication which is published 
no fewer than five days per week and in which a substantial portion of 
the content is devoted to the dissemination of news and editorial 
opinion.
    G. ``Editorial Content'' means the news, feature, and opinion 
content of, and the format, dress, makeup, and design of, a Daily 
Newspaper.
    H. ``Failing Firm'' means a firm that has satisfied all of the 
conditions stated in the U.S. Department of Justice and Federal Trade 
Commission Horizontal Merger Guidelines as applied by the Department of 
Justice and/or federal courts to newspapers published in a joint 
operating agreement under the Newspaper Preservation Act, 15 U.S.C. 
1801-1804.
    I. ``Final Judgment'' includes the following agreements attached as 
Exhibit A: Amended and Restated Limited Partnership Agreement for 
Charleston Newspapers Holdings L.P.; Amended and Restated Operating 
Agreement of Daily Gazette Holding Company, LLC; Second Amended and 
Restated Joint Operating Agreement; the Put/Call Agreement; and the 
Charleston Newspapers Holdings L.P. Warrant to Purchase Class B Limited 
Partnership Units Initially Constituting a 20% Percentage Interest.
    J. ``Gazette Company'' means defendant Daily Gazette Company, a 
privately-held corporation organized and existing under the laws of the 
State of West Virginia, with its principal place of business in 
Charleston, West Virginia, its successors and assigns, and its 
subsidiaries, divisions, groups, affiliates, partnerships and joint 
ventures, and their shareholders, directors, officers, managers, 
agents, and employees. Without limiting the foregoing, Gazette Company 
shall include Charleston Newspapers.
    K. ``Intellectual Property of the Charleston Daily Mail'' includes 
the masthead, trademarks, copyrights, trade names, service names and 
service marks of the Charleston Daily Mail; its subscriber lists and 
advertiser lists; print and electronic archives; associated Web sites 
and URLs (including ``dailymail.com''); and all legal rights associated 
with these assets.
    L. ``MediaNews Group'' means defendant MediaNews Group, Inc., now 
known as Affiliated Media, Inc., a corporation organized and existing 
under the laws of the State of Delaware, with its principal place of 
business in Denver, Colorado, its successors and assigns, and their 
shareholders, subsidiaries, divisions, groups, affiliates, partnerships 
and joint ventures, and their directors, officers, managers, agents, 
and employees. Without limiting the foregoing, MediaNews Group shall 
include Charleston Publishing Company.
    M. ``Person'' means any natural person, corporate entity, 
partnership, joint venture, association, government entity, trust, or 
other business or legal entity, whether private or governmental.
    N. ``Publication'' means all activities associated with the 
business of offering a Daily Newspaper to the public as a commercial 
endeavor, including but not limited to, editing, writing, printing, 
circulating, operating, marketing, and distributing such Daily 
Newspapers and selling advertisements and promotions therein.
    O. ``Relating to'' or ``Relates to'' means in whole or in part 
constituting, containing, concerning, discussing, describing, 
analyzing, identifying, or stating.
    P. ``United States'' means the Department of Justice, Antitrust 
Division.
    Q. The terms ``and'' and ``or'' have both conjunctive and 
disjunctive meanings.

III. Applicability

    This Final Judgment applies to Gazette Company and MediaNews Group, 
as defined above, and all other persons in active concert or 
participation with any of them who receive actual notice of this Final 
Judgment by personal service or otherwise.

IV. Required and Prohibited Conduct

    A. (1) Within 5 business days after the entry of this Final 
Judgment, Gazette Company and MediaNews Group shall enter into, and 
abide by the terms of, the Amended and Restated Limited Partnership 
Agreement for Charleston Newspapers Holdings L.P.; the Amended and 
Restated Operating Agreement of Daily Gazette Holding Company, LLC; the 
Second Amended and Restated Joint Operating Agreement; the Put/Call 
Agreement; and the Charleston Newspapers Holdings L.P. Warrant to 
Purchase Class B Limited Partnership Units Initially Constituting a 20% 
Percentage Interest, which are incorporated into this Final Judgment 
and attached hereto as Exhibit A. Gazette Company and MediaNews Group 
shall operate Charleston Newspapers, Charleston Newspapers Holdings 
L.P., the Charleston Gazette and the Charleston Daily Mail in 
accordance with the terms of the agreements in Exhibit A. No agreement 
in Exhibit A may be modified, amended, superseded or terminated without 
the prior written approval of the United States for the term of the 
Final Judgment. Upon entering into the contracts in Exhibit A, any 
existing agreements between Gazette Company and MediaNews Group 
relating to the Publication of any Daily Newspaper in Charleston, West 
Virginia, other than those contained in Exhibit A, shall be void and 
shall not be enforced thereafter. Except as expressly authorized by the 
agreements in Exhibit A, Gazette Company and MediaNews Group shall not 
directly or indirectly enter into any agreement subsequent to the entry 
of this Final Judgment that relates to the Publication of any Daily 
Newspaper in Charleston, West Virginia, other than agreements entered 
into with third parties in the ordinary course of business, without the 
prior written consent of the United States.
    (2) Defendants shall not, without the prior written consent of the 
United States, pledge or otherwise offer as security or collateral, the 
assets comprising the Intellectual Property of the Charleston Daily 
Mail, in whole or in part, for credit or other consideration, to a 
greater extent than such assets were

[[Page 11688]]

pledged or offered as security or collateral as of December 11, 2009.
    B. The Charleston Daily Mail shall continue to be published as a 
Daily Newspaper. The publication of the Charleston Daily Mail as a 
Daily Newspaper shall not be terminated unless it is a Failing Firm and 
the United States has given its prior written approval, which approval 
shall not be unreasonably withheld. Prior to receiving written approval 
from the United States to terminate publication of the Charleston Daily 
Mail as a Daily Newspaper, Gazette Company and MediaNews Group may not 
establish a termination date for the Charleston Daily Mail. Disputes 
regarding the application of the provisions of this Section IV(B) may 
be submitted to the Court for resolution.
    C. If during the term of this Final Judgment the Charleston Daily 
Mail shall cease publication as a Daily Newspaper, or the operating 
agreement between Defendants governing Charleston Newspapers is 
dissolved or terminated, or Charleston Newspapers Holdings, L.P. is 
dissolved or terminated (collectively referred to as ``Termination 
Events''), ownership of the Intellectual Property of the Charleston 
Daily Mail shall, after the prior satisfaction of the claims of all 
creditors of Charleston Newspapers Holdings, L.P. in accordance with 
the provisions of Section 7.3 of the Amended and Restated Limited 
Partnership Agreement for Charleston Newspapers Holdings, L.P., 
immediately transfer to MediaNews Group at no cost. Within ninety days 
prior to the occurrence of any of the Termination Events, Gazette 
Company shall hire, subject to the approval of the United States, an 
appraiser experienced in the newspaper industry to perform an 
assessment of the fair market value, separately, of each asset 
comprising the Intellectual Property of the Charleston Daily Mail. To 
the extent the valuations determine that any assets comprising the 
Intellectual Property of the Charleston Daily Mail may be freely 
disposed of by Gazette Company under the terms of Section 7.8 of the 
United Bank Loan Agreement or the equivalent provision of any future 
credit agreement, Gazette Company shall transfer those assets to 
MediaNews Group (or its assignee) at no cost. In the event Gazette 
Company is unable to transfer immediately all or some of the assets 
comprising the Intellectual Property of the Charleston Daily Mail due 
to any security interest or lien held on those assets by any creditor, 
Gazette Company shall use its good faith efforts to (1) persuade any 
such creditor to release the security interest or lien on those assets; 
(2) assist any third party seeking such a release; or (3) transfer the 
assets as soon as possible in the next fiscal year (to the extent 
permissible under the United Bank Loan Agreement or any future credit 
agreement). Any assets that are released by the creditors shall be 
transferred to MediaNews Group (or its assignee) at no cost. In the 
event that the Charleston Daily Mail's print and electronic archives 
are not transferred to MediaNews Group, Charleston Newspapers will 
grant to MediaNews Group (or its assignee) a royalty-free license to 
use the Charleston Daily Mail's print and electronic archives for the 
sole purpose of continuing to publish the Charleston Daily Mail for so 
long as MediaNews Group (or its assignee) publishes the Charleston 
Daily Mail as a Daily Newspaper in Charleston. Except as expressly 
authorized by this Final Judgment, Gazette Company shall not directly 
or indirectly transfer to any other Person the ownership of some or all 
of the Intellectual Property of the Charleston Daily Mail without the 
prior written consent of the United States. If during the term of this 
Final Judgment the ownership of some or all of the Intellectual 
Property of the Charleston Daily Mail is transferred from Gazette 
Company to any other Person, Gazette Company shall not reacquire any 
part of the Intellectual Property of the Charleston Daily Mail during 
the term of this Final Judgment. Transfer of title to the Intellectual 
Property of the Charleston Daily Mail by Gazette Company shall be made 
free and clear of any liens or other encumbrances to the free transfer 
of title by the acquirer (including but not limited to rights of first 
refusal).
    D. The Editorial Content of the Charleston Daily Mail shall be 
determined solely by MediaNews Group and the staff of the Charleston 
Daily Mail. The Editorial Content of the Charleston Gazette shall be 
determined solely by Gazette Company and the staff of the Charleston 
Gazette. Gazette Company shall not, directly or indirectly, take any 
action to influence the Editorial Content of the Charleston Daily Mail, 
nor shall MediaNews Group, directly or indirectly, take any action to 
influence the Editorial Content of the Charleston Gazette. Gazette 
Company and MediaNews Group shall not enter into any agreement limiting 
the separate and independent determination of the Editorial Content of 
their respective Daily Newspapers.
    E. Gazette Company and MediaNews Group shall not take any action 
with the intent to cause the Charleston Daily Mail to become a Failing 
Firm. Neither Gazette Company nor MediaNews Group shall discriminate 
against, or cause Charleston Newspapers to discriminate against, the 
Charleston Daily Mail in performing circulation sales or advertising 
sales activities.
    F. Commencing no later than thirty (30) days after the entry of 
this Final Judgment and continuing for a period of no less than six (6) 
months thereafter, Defendants shall cause Charleston Newspapers to 
offer the Charleston Daily Mail at a discount of no less than fifty 
(50) percent off the regular retail price to all new subscribers. 
Charleston Newspapers shall inform prospective new subscribers of this 
discount in any subscription solicitation efforts that it undertakes. 
During this period, Charleston Newspapers may not extend this same 
discount, or any greater discount, to subscribers of the Charleston 
Gazette.

V. Affidavits

    Within sixty (60) calendar days of the entry of this Final Judgment 
in this matter, and every year thereafter until the expiration of this 
Final Judgment, Defendants shall deliver to the United States an 
affidavit as to the fact and manner of their compliance with Section IV 
of this Final Judgment. Assuming the information set forth in the 
affidavit is true and complete, any objection by the United States to 
information provided by Defendants, including limitation on 
information, shall be made within fourteen (14) calendar days of 
receipt of such affidavit.

VI. Compliance Inspection

    A. For the purposes of determining or securing compliance with this 
Final Judgment, or of determining whether the Final Judgment should be 
modified or vacated, or determining whether to consent to any proposed 
agreement per Section IV(A), or whether to approve a termination of 
publication per Section IV(B), or whether to consent to any transfer 
per Section IV(C), and subject to any legally recognized privilege, 
from time to time authorized representatives of the United States, 
including consultants and other persons retained by the United States, 
shall, upon written request of an authorized representative of the 
Assistant Attorney General in charge of the Antitrust Division, and on 
reasonable notice to defendants, be permitted:

    (1) access during defendants' office hours to inspect and copy, 
or at the option of the United States, to require defendants to 
provide hard copy or electronic copies of, all books, ledgers, 
accounts, records, data, and

[[Page 11689]]

documents in the possession, custody, or control of defendants, 
relating to any matters contained in this Final Judgment; and
    (2) to interview, either informally or on the record, 
defendants' officers, employees, or agents, who may have their 
individual counsel present, regarding such matters. The interviews 
shall be subject to the reasonable convenience of the interviewee 
and without restraint or interference by defendants.

    B. Upon the written request of an authorized representative of the 
Assistant Attorney General in charge of the Antitrust Division, 
defendants shall submit written reports or response to written 
interrogatories, under oath if requested, relating to any of the 
matters contained in this Final Judgment as may be requested.
    C. No information or documents obtained by the means provided in 
this Section shall be divulged by the United States to any person other 
than an authorized representative of the executive branch of the United 
States, except in the course of legal proceedings to which the United 
States is a party (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 
defendants to the United States, 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)(1)(G) of the 
Federal Rules of Civil Procedure, and defendants mark each pertinent 
page of such material, ``Subject to claim of protection under Rule 
26(c)(1)(G) of the Federal Rules of Civil Procedure,'' then the United 
States shall give defendants ten (10) calendar days notice prior to 
divulging such material in any legal proceeding (other than a grand 
jury proceeding).

VII. Retention of Jurisdiction

    This Court retains jurisdiction to enable any party to this Final 
Judgment to apply to this Court at any time for further orders and 
directions as may be necessary or appropriate to carry out or construe 
this Final Judgment, including the agreements of the parties attached 
hereto as Exhibit A, to modify any of their provisions, to enforce 
compliance, and to punish violations of their provisions.

VIII. Expiration of Final Judgment

    Unless this Court grants an extension, this Final Judgment shall 
expire ten (10) years from the date of its entry. The expiration of 
this Final Judgment shall not automatically trigger the termination of 
the agreements contained in Exhibit A. After the expiration of this 
Final Judgment, the agreements contained in Exhibit A will be governed 
by their own terms.

IX. Public Interest Determination

    Entry of this Final Judgment is in the public interest. The parties 
have complied with the requirements of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16, including making copies available to the 
public of this Final Judgment, the Competitive Impact Statement, and 
any comments thereon and the United States's responses to comments. 
Based upon the record before the Court, which includes the Competitive 
Impact Statement and any comments and response to comments filed with 
the Court, entry of this Final Judgment is in the public interest.

Court approval subject to procedures of Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16.

Dated:
John T. Copenhaver, Jr.

United States District Judge

EXHIBIT A

AMENDED AND RESTATED

LIMITED PARTNERSHIP AGREEMENT

FOR

CHARLESTON NEWSPAPERS HOLDINGS, L.P.

A DELAWARE LIMITED PARTNERSHIP

    ------------------------, 2009
    THIS AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT is entered 
into as of ------------------------, 2009 by and among Daily Gazette 
Holding Company, LLC, a Delaware limited liability company (``DGHC'') 
and Charleston Publishing Company, a Delaware corporation (``CPC'').

Recitals

    Whereas, the Partnership was formed on May 7, 2004 in connection 
with the transactions contemplated by that certain Master Restructuring 
and Purchase Agreement (the ``Master Restructuring Agreement'') entered 
into on May 7, 2004, by Daily Gazette Company, MediaNews Group, Inc. 
(now known as Affiliated Media, Inc.) (``MNG''), CPC and the Joint 
Venture;
    Whereas, the Partnership has managed and will, pursuant to the 
Second Amended and Restated Joint Venture Agreement dated as of even 
date herewith (the ``JOA''), continue to manage the business and 
affairs of the Joint Venture; and
    Whereas, DGHC and CPC desire to amend various provisions of the 
Limited Partnership Agreement dated May 7, 2004 (the ``Prior 
Partnership Agreement''), by and among DGHC, CPC and ABRY/Charleston, 
Inc. to restate it in its entirety and to supplement it, as herein 
provided; Now, therefore, the parties agree as follows:

Article I

Definitions

    1.1 Definitions. As used herein, the following terms shall have the 
following meanings:
    1.1.1 Act: the Delaware Revised Uniform Limited Partnership Act, 6 
Del. Code, as it may be amended from time to time, and any successor to 
such Act.
    1.1.2 Affiliate: with respect to any Person, any other Person 
directly or indirectly controlling or controlled by such Person or 
under direct or indirect common control with such Person.
    1.1.3 Adjusted Capital Account: with respect to any Partner, the 
deficit balance, if any, in such Partner's Capital Account as of the 
end of the relevant Fiscal Year or other period, after giving effect to 
the following adjustments:
    (i) Crediting to such Capital Account any amounts that such Partner 
is obligated to restore to the Partnership pursuant to this Agreement 
or as otherwise described Treasury Regulations Section 1.704-
1(b)(2)(ii)(c) or is deemed to be obligated to restore pursuant to the 
penultimate sentences of Treasury Regulations Sections 1.704-2(g)(1) 
and 1.704-2(i)(5); and
    (ii) Debiting from such Capital Account the items described in 
Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-
1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6).
    The foregoing definition of Adjusted Capital Account is intended to 
comply with the provisions of Treasury Regulations Section 1.704-
1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
    1.1.4 Agreement: this Amended and Restated Limited Partnership 
Agreement, as it may be amended from time to time.
    1.1.5 Capital Account: with respect to any Partner, the account 
maintained for such Partner in accordance with the capital accounting 
rules of Section 704(b) of the Code and the provisions of Treasury 
Regulations Section 1.704-1(b)(2)(iv). Subject to any contrary 
requirements of the Code and the Treasury Regulations issued 
thereunder, each Partner's Capital Account shall equal (1)(i) the 
amount set forth as such Partner's capital account as of the date 
hereof as set forth on Exhibit B; (ii) the amount of money which has 
been contributed by that Partner to the

[[Page 11690]]

Partnership after the date hereof, if any; (ii) the fair market value, 
determined without regard to Code Section 7701(g) of the property, if 
any, which has been contributed by that Partner to the Partnership 
after the date hereof (net of any liabilities that are secured by such 
contributed property or that the Partnership or any other Partner is 
considered to assume under Code Section 752); (iii) allocations which 
have been made to that Partner of Net Profit and items of income and 
gain pursuant to Article V after the date hereof; and (iv) other 
additions which have been made in accordance with the Code after the 
date hereof, decreased by (2)(i) the amount of cash which has been 
distributed to that Partner by the Partnership after the date hereof; 
(ii) allocations which have been made to that Partner of Net Loss and 
items of loss and deduction pursuant to Article V after the date 
hereof; (iii) the fair market value, determined without regard to Code 
Section 7701(g), of any property which has been distributed to that 
Partner by the Partnership after the date hereof (net of any 
liabilities that are secured by such distributed property or that such 
Partner is considered to assume or take under Code Section 752); and 
(iv) other deductions which have been made in accordance with the Code 
after the date hereof.
    1.1.6 Capital Contribution: with respect to any Partner, any cash 
or other property that such Partner has contributed to the capital of 
the Partnership pursuant to the terms of this Agreement.
    1.1.7 Certificate of Limited Partnership: the certificate of 
limited partnership of the Partnership, as amended.
    1.1.8 Class A Limited Partner: a Person owning Class A Limited 
Partner Units that has been admitted to the Partnership as a Limited 
Partner pursuant to the terms of this Agreement.
    1.1.9 Class A Limited Partnership Interest: the Partnership 
Interest with respect to the Class A Limited Partner Units.
    1.1.10 Class A Limited Partner Unit: any Partnership Unit having 
the rights and obligations specified in this Agreement with respect to 
a Class A Limited Partner Unit.
    1.1.11 Class B Limited Partner: a Person owning Class B Limited 
Partner Units that has been admitted to the Partnership as a Limited 
Partner pursuant to the terms of this Agreement.
    1.1.12 Class B Limited Partner Unit: any Partnership Unit having 
the rights and obligations specified in this Agreement with respect to 
a Class B Limited Partner Unit.
    1.1.13 Code: the Internal Revenue Code of 1986, as amended.
    1.1.14 Depreciation: with respect to each Fiscal Year, an amount 
equal to the depreciation, amortization or other cost recovery 
deduction allowable with respect to an asset for such Fiscal Year, 
except that if the Gross Asset Value of an asset differs from its 
adjusted basis for federal income tax purposes at the beginning of such 
Fiscal Year, Depreciation shall be determined in the manner that is 
described in Treasury Regulations Section 1.704-1(b)(2)(iv)(g)(3) or 
Treasury Regulations Section 1.704-3(d)(2), as applicable.
    1.1.15 Fair Market Value of the Partnership: has the meaning given 
such term in Section 5.2.3(b).
    1.1.16 Fiscal Year: the calendar year or, in the case of the first 
and the last fiscal years, the fraction thereof commencing on the date 
on which the Partnership is formed under the Act or ending on the date 
on which the winding up of the Partnership is completed, as the case 
may be.
    1.1.17 General Partner: DGHC and any successor General Partner.
    1.1.18 General Partner Unit: any Partnership Unit having the rights 
and obligations specified in this Agreement with respect to a General 
Partner Unit.
    1.1.19 GP Board: has the meaning given such term in Section 4.5.2.
    1.1.20 Gross Asset Value: with respect to any asset, the asset's 
adjusted basis for Federal income tax purposes, except as follows:
    (i) The initial Gross Asset Value of any asset contributed by a 
Partner to the Partnership after the date hereof shall be the gross 
fair market value of such asset as determined by the contributing 
Partner and the General Partner;
    (ii) The Gross Asset Value of each Partnership asset shall be 
adjusted to equal its gross fair market value, as determined by the 
General Partner, as of the following times: (a) The acquisition of an 
additional interest in the Partnership by any new or existing Partner 
in exchange for more than a de minimis Capital Contribution; (b) the 
distribution by the Partnership to a Partner of more than a de minimis 
amount of Partnership property as consideration for an interest in the 
Partnership; and (c) the liquidation of the Partnership within the 
meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g). However, 
the adjustments which are described in clauses (a) and (b) above shall 
be made only if the General Partner reasonably determines that such 
adjustments are necessary or appropriate to reflect the relative 
economic interests of the Partners in the Partnership;
    (iii) The Gross Asset Value of any Partnership asset distributed to 
any Partner shall be adjusted to equal the gross fair market value of 
such asset on the date of distribution, as determined by the 
distributee Partner and the General Partner; and
    (iv) The Gross Asset Value of each Partnership asset shall be 
increased (or decreased) to reflect any adjustments to the adjusted 
basis of such asset pursuant to Code Section 734(b) or Code Section 
743(b), but only to the extent that such adjustments are taken into 
account in determining Capital Accounts pursuant to Treasury 
Regulations Section 1.704-1(b)(2)(iv)(m) and Section 5.3.8. However, 
Gross Asset Value shall not be adjusted pursuant to this clause (iv) to 
the extent that an adjustment pursuant to clause (ii) is necessary or 
appropriate in connection with a transaction that would otherwise 
result in an adjustment pursuant to this clause (iv).
    If the Gross Asset Value of an asset has been determined or 
adjusted pursuant to clauses (i), (ii) or (iv) of this definition, such 
Gross Asset Value shall thereafter be adjusted by the Depreciation 
taken into account with respect to such asset for purposes of computing 
Net Profit and Net Loss.
    1.1.21 Indemnified Person: has the meaning given such term in 
Section 4.7.
    1.1.22 JOA: has the meaning given such t