United States v. Gray Television, Inc., et al.; Proposed Final Judgment and Competitive Impact Statement, 81356-81367 [2015-32785]

Agencies

• Antitrust Division
• Department of Justice

[Federal Register Volume 80, Number 249 (Tuesday, December 29, 2015)]
[Notices]
[Pages 81356-81367]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-32785]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Gray Television, Inc., et al.; 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 District of Columbia in United 
States of America v. Gray Television, Inc., Civil Action No. 1:15-cv-
02232. On December 22, 2015, the United States filed a Complaint 
alleging that Gray Television, Inc.'s proposed acquisition of Schurz 
Communications, Inc. would violate Section 7 of the Clayton Act, 15 
U.S.C. 18. The proposed Final Judgment, filed on the same day as the 
Complaint, requires Gray to divest certain broadcast television 
stations in South Bend, Indiana and Wichita, Kansas.
    Copies of the Complaint, proposed Final Judgment, and Competitive 
Impact Statement are available for inspection on the Antitrust 
Division's Web site at https://www.justice.gov/atr and at the Office of 
the Clerk of the United States District Court for the District of 
Columbia. 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, including the name of the submitter, and 
responses thereto, will be posted on the Antitrust Division's Web site, 
filed with the Court, and, under certain circumstances, published in 
the Federal Register. Comments should be directed to David Kully, 
Chief, Litigation III, Antitrust Division, Department of Justice, 450 
Fifth Street NW., Washington, DC 20530, (telephone: 202-305-9969).

Patricia A. Brink,
Director of Civil Enforcement.

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

    United States of America, Department of Justice, Antitrust 
Division, 450 Fifth Street NW., Suite 7000, Washington, DC 20530 
Plaintiff, v.  Gray Television, Inc., 4370 Peachtree Road NE., 
Atlanta, GA 30319 and Schurz Communications, Inc., 1301 E. Douglas 
Road, Mishawaka, IN 46545 Defendants.

Case No. 1:15-cv-02232

Judge: Rudolph Contreras

Filed: 12/22/2015

COMPLAINT

    The United States of America, acting under the direction of the 
Attorney General of the United States brings this civil action to 
enjoin the acquisition by Gray Television, Inc. (``Gray'') of Schurz 
Communications, Inc. (``Schurz'') and to obtain other equitable relief.

I. NATURE OF THE ACTION

    1. Gray and Schurz own and operate broadcast television stations in 
multiple Designated Market Areas (``DMAs'') in the United States.
    2. Gray's and Schurz's television stations compete head to head for 
the business of local and national companies that seek to advertise on 
broadcast television stations in the South Bend, Indiana DMA, and the 
Wichita, Kansas DMA.
    3. In the South Bend, Indiana DMA, the two broadcast television 
stations that Gray and Schurz operate account for approximately 67 
percent of all broadcast television station gross revenues in that DMA.
    4. In the Wichita, Kansas DMA, the three stations that Gray and 
Schurz operate account for approximately 57 percent of all broadcast 
television station gross advertising revenues in that DMA.
    5. Pursuant to an Asset Purchase Agreement dated September 14, 
2015, Gray agreed to acquire Schurz for approximately $440 million.
    6. If consummated, the proposed acquisition would eliminate the 
substantial head-to-head competition between Gray and Schurz in the 
South Bend, Indiana DMA, and the Wichita, Kansas DMA (collectively 
``the DMA Markets''). Unless enjoined, the proposed transaction is 
likely to lead to higher prices and substantially lessen competition 
for broadcast television spot advertising in each of the DMA Markets in 
violation of Section 7 of the Clayton Act, 15 U.S.C. 18.

II. JURISDICTION, VENUE, AND COMMERCE

    7. The United States brings this action pursuant to Section 15 of 
the Clayton Act, as amended, 15 U.S.C. 25, to prevent and restrain Gray 
and Schurz from violating Section 7 of the Clayton Act, 15 U.S.C. 18.
    8. The Court has subject-matter jurisdiction over this action 
pursuant to Section 15 of the Clayton Act, 15 U.S.C. 25, and 28 U.S.C. 
1331, 1337(a), and 1345.

[[Page 81357]]

    9. Gray and Schurz are engaged in interstate commerce and in 
activities substantially affecting interstate commerce. They each own 
and operate broadcast television stations in various locations 
throughout the United States and sell television advertising for those 
stations. Their television advertising sales have had a substantial 
effect upon interstate commerce.
    10. Defendants have consented to venue and personal jurisdiction in 
this District. Therefore, venue is proper in this District under 
Section 12 of the Clayton Act, 15 U.S.C. 22, and 28 U.S.C. 1391(c).

III. THE DEFENDANTS

    11. Gray is incorporated in the state of Georgia, with its 
headquarters in Atlanta, Georgia. Gray reported operating revenues of 
over $508 million for the year ended December 31, 2014. As of February 
1, 2015, Gray owned and operated broadcast television stations in 44 
geographic markets. It owns and operates broadcast television stations 
in each of the DMA Markets.
    12. Schurz is a privately owned radio, television, cable TV and 
newspaper company, with its headquarters in Mishawaka, Indiana. Schurz 
owns and operates 10 broadcast television stations in 7 markets. It 
also owns and operates broadcast television stations in each of the DMA 
Markets.

IV. RELEVANT MARKET

    13. The relevant market for Section 7 of the Clayton Act is the 
sale of television spot advertising to advertisers targeting viewers in 
each of the DMA Markets.
    14. A DMA is a geographical unit for which A.C. Nielsen Company, a 
firm that surveys television viewers, furnishes broadcast television 
stations, advertisers, and advertising agencies in a particular area 
with data to aid in evaluating audience size and composition. DMAs are 
widely accepted by television stations, advertisers, and advertising 
agencies as the standard geographic area to use in evaluating 
television audience size and demographic composition.
    15. Gray and Schurz sell television advertising to local and 
national advertisers in each of the DMA Markets. Gray and Schurz 
television stations in each of the DMA Markets generate almost all of 
their revenues by selling advertising to local and national advertisers 
who want to reach viewers in those markets. Spot advertising placed on 
television stations in a DMA is aimed at reaching viewing audiences in 
that DMA, and television stations broadcasting outside that DMA do not 
provide effective access to those audiences.
    16. Spot advertising differs from network and syndicated television 
advertising. In contrast to spot advertising sales, television networks 
and producers of syndicated programs sell network and syndicated 
television advertising on a nationwide basis for broadcast in every 
market where the network or syndicated program is aired.
    17. Broadcast television stations attract viewers through their 
programming, which is delivered for free over the air or retransmitted 
to viewers, primarily through wired cable or other terrestrial 
television systems and through satellite television systems. Broadcast 
television stations then sell advertising to businesses that want to 
advertise their products to television viewers. A television station's 
advertising rates typically are based on the station's ability, 
relative to competing television stations, to attract viewing audiences 
that have certain demographic characteristics that advertisers want to 
reach.
    18. Broadcast television spot advertising possesses a unique 
combination of attributes that set it apart from advertising using 
other types of media. Television combines sight, sound, and motion, 
thereby creating a more memorable advertisement. Moreover, of all 
media, broadcast television spot advertising generally reaches the 
largest percentage of all potential customers in a particular target 
geographic area and is therefore especially effective in introducing, 
establishing, and maintaining the image of a product. For a significant 
number of advertisers, broadcast television spot advertising, because 
of its unique combination of attributes, is an advertising medium for 
which there is no close substitute. Other media, such as radio, 
newspapers, or outdoor billboards, are not desirable substitutes for 
broadcast television advertising. None of these media can provide the 
important combination of sight, sound, and motion that makes television 
unique and impactful as a medium for advertising.
    19. Like broadcast television, subscription television channels 
such as those carried over cable or satellite television combine 
elements of sight, sound, and motion, but they are not a desirable 
substitute for broadcast television spot advertising for two important 
reasons. First, broadcast television can reach well over 90 percent of 
homes in a DMA, while satellite, cable and other subscription services 
often reach many fewer homes. Even when several subscription television 
companies within a DMA jointly offer cable television spot advertising 
through a consortium called an interconnect, cable spot advertising 
does not match the reach of broadcast television spot advertising. As a 
result, an advertiser can achieve greater audience penetration through 
broadcast television spot advertising than through advertising on a 
subscription television channel. Second, because subscription services 
may offer more than 100 channels, they fragment the audience into small 
demographic segments. Because broadcast television programming 
typically has higher rating points than subscription television 
programming, broadcast television provides a much easier and more 
efficient means for an advertiser to reach a high proportion of its 
target demographic.
    20. While media buyers often buy advertising on subscription 
television channels, they do so not as a substitute for broadcast 
television spot advertising, but rather as a supplement, in order to 
reach a narrow demographic (e.g., 18-24 year olds) with greater 
frequency, or to target narrow geographic areas within a DMA. A small 
but significant price increase by broadcast television spot advertising 
providers would not be made unprofitable by advertisers switching to 
advertising on subscription television channels.
    21. Internet-based media is not currently a substitute for 
broadcast television spot advertising. Although Online Video 
Distributors (``OVDs'') such as Netflix and Hulu are important sources 
of video programming, as with cable television advertising, the local 
video advertising of OVDs lacks the reach of broadcast television spot 
advertising. Non-video Internet advertising, e.g., Web site banner 
advertising, lacks the important combination of sight, sound, and 
motion that gives television its impact. Consequently, local media 
buyers currently purchase Internet-based advertising primarily as a 
supplement to broadcast television spot advertising, and a small but 
significant price increase by broadcast television spot advertising 
providers would not be made unprofitable by advertisers switching to 
Internet-based advertising.
    22. In addition, broadcast television stations negotiate prices 
individually with advertisers; consequently, television stations can 
charge different advertisers different prices. Broadcast television 
stations generally can identify advertisers with strong preferences to 
advertise on broadcast television stations in their DMAs. Because of 
this ability to price discriminate among

[[Page 81358]]

customers, broadcast television stations may target with higher prices 
advertisers that view broadcast television in their DMA as particularly 
effective for their needs, while maintaining lower prices for more 
price-sensitive advertisers. As a result, a hypothetical monopolist 
could profitably raise prices to those advertisers that view broadcast 
television as a necessary advertising medium, either as their sole 
means of advertising or as a necessary part of a total advertising 
plan.

V. LIKELY ANTICOMPETITIVE EFFECTS

    23. Broadcast television station ownership in each of the DMA 
Markets is already significantly concentrated. In each of these 
markets, four stations, each affiliated with a major network, had more 
than 90 percent of gross advertising revenues in 2014. In the South 
Bend, Indiana DMA the two stations that Gray and Schurz operate have 
approximately 67 percent of all television station gross advertising 
revenues in that DMA. In the Wichita, Kansas DMA the three stations 
that Gray and Schurz operate have approximately 57 percent of all 
television station gross advertising revenues in that DMA.
    24. Market concentration is often one useful indicator of the 
likely competitive effects of a merger. Concentration in each of the 
DMA Markets would increase significantly as a result of the proposed 
acquisition.
    25. As articulated in the Horizontal Merger Guidelines issued by 
the Department of Justice and the Federal Trade Commission, the 
Herfindahl-Hirschman Index (``HHI'') is a measure of market 
concentration. The more concentrated a market, and the more a 
transaction would increase concentration in a market, the more likely 
it is that a transaction would result in a meaningful reduction in 
competition harming consumers. Mergers resulting in highly concentrated 
markets (with an HHI in excess of 2,500) that involve an increase in 
the HHI of more than 200 points are presumed to be likely to enhance 
market power under the merger guidelines.
    26. The post-acquisition HHI in each of the DMA Markets would be 
over 2,500. In the South Bend, Indiana DMA, the post-acquisition HHI 
would be approximately 4,800. In the Wichita, Kansas DMA, the post-
acquisition HHI would be approximately 4,200. Those HHIs are well above 
the 2,500 threshold at which the Department normally considers a market 
to be highly concentrated. In addition, Gray's proposed acquisition of 
Schurz would result in a substantial increase in the HHIs set forth 
above in excess of the 200 points presumed to be anticompetitive under 
the merger guidelines.
    27. In addition to increasing concentration in the DMA Markets, the 
proposed transaction combines stations that are close substitutes and 
vigorous competitors in markets with limited alternatives. In each of 
the DMA Markets, Defendants each have broadcast television stations 
that are affiliated with the major national television networks, ABC, 
CBS, NBC and FOX. In the South Bend, Indiana DMA, Schurz owns and 
operates WSBT-TV, a CBS affiliate; and Gray owns and operates WNDU-TV, 
an NBC affiliate. In the Wichita, Kansas DMA, Schurz owns and operates 
KWCH-DT, a CBS affiliate; and Gray owns and operates KAKE-TV, an ABC 
affiliate. Their respective affiliations with those networks, and their 
local news operations, provide the Defendants' stations with a variety 
of competing programming options that are often each other's next-best 
or second-best substitutes for many viewers and advertisers.
    28. Advertisers benefit from Defendants' head-to-head competition 
in the sale of broadcast television spot advertising in the South Bend, 
Indiana DMA and the Wichita, Kansas DMA. Advertisers purposefully 
spread their advertising dollars across numerous spot advertising 
suppliers to reach their marketing goals most efficiently. After the 
proposed acquisition, advertisers in each of the DMA Markets would 
likely find it more difficult to ``buy around'' the Defendants' 
combined stations in response to higher advertising rates, than to 
``buy around'' Gray's stations or Schurz's stations, as separate 
entities, as they could have done before the proposed acquisition. 
Because a significant number of advertisers would likely be unable to 
reach their desired audiences as effectively unless they advertise on 
at least one station that Gray would control after the proposed 
acquisition, those advertisers' bargaining positions would be weaker, 
and the advertising rates they pay would likely increase.
    29. De novo entry into the South Bend, Indiana DMA and the Wichita, 
Kansas DMA is unlikely. The FCC regulates entry through the issuance of 
broadcast television licenses, which are difficult to obtain because 
the availability of spectrum is limited and the regulatory process 
associated with obtaining a license is lengthy. Even if a new signal 
became available, commercial success would come, at best, over a period 
of many years. Thus, entry into each DMA Market's broadcast television 
spot advertising market would not be timely, likely, or sufficient to 
deter Gray from engaging in anticompetitive price increases or other 
anticompetitive conduct after the proposed acquisition occurs.
    30. Other broadcast television stations in the South Bend, Indiana 
DMA and the Wichita, Kansas DMA likely would not increase their 
advertising capacity in response to a price increase by Gray. The 
number of 30-second spots in a DMA is largely fixed by programming and 
time constraints. This fact makes the pricing of spot advertising 
responsive to changes in demand. Adjusting programming in response to a 
pricing change is risky, difficult, and time-consuming. Network 
affiliates are often committed to the programming provided by the 
network with which they are affiliated, and it often takes years for a 
station to build its audience. Programming schedules are complex and 
carefully constructed, taking many factors into account, such as 
audience flow, station identity, and program popularity. In addition, 
stations typically have multi-year contractual commitments for 
individual shows. Accordingly, a television station is unlikely to 
change its programming sufficiently or with sufficient rapidity to 
overcome a small but significant price increase imposed by Gray.
    31. Although Defendants assert that the proposed acquisition would 
produce efficiencies, they cannot demonstrate acquisition-specific and 
cognizable efficiencies that would be sufficient to offset the proposed 
acquisition's anticompetitive effects.
    32. The effect of the proposed acquisition of Schurz by Gray would 
be to substantially lessen competition in interstate trade and commerce 
in violation of Section 7 of the Clayton Act.

VI. VIOLATIONS ALLEGED

    33. The United States hereby repeats and realleges the allegations 
of paragraphs 1 through 32 as if fully set forth herein.
    34. Gray's proposed acquisition of Schurz likely would 
substantially lessen competition in interstate trade and commerce, in 
violation of Section 7 of the Clayton Act, 15 U.S.C. 18. The proposed 
acquisition likely would have the following effects, among others:
    a. Competition in the sale of broadcast television spot advertising 
in each of the DMA Markets would be substantially lessened;
    b. Actual and potential competition among Gray and Schurz in the 
sale of broadcast television spot advertising in

[[Page 81359]]

each of the DMA Markets would be eliminated; and
    c. Prices for spot advertising on broadcast television stations in 
each of the DMA Markets would likely increase, and the quality of 
services would likely decline.

VII. REQUEST FOR RELIEF

    The United States requests:
    d. That the Court adjudge the proposed acquisition to violate 
Section 7 of the Clayton Act, 15 U.S.C. 18;
    e. That the Court permanently enjoin and restrain Defendants from 
carrying out the transaction, or entering into any other agreement, 
understanding, or plan by which Gray would acquire Schurz;
    f. That the Court award the United States the costs of this action; 
and
    g. That the Court award such other relief to the United States as 
the Court may deem just and proper.

Respectfully submitted,

FOR PLAINTIFF UNITED STATES:

William J. Baer (D.C. Bar #324723)
Assistant Attorney General

David I. Gelfand (D.C. Bar #416596)
Deputy Assistant Attorney General

Patricia A. Brink
Director of Civil Enforcement

David C. Kully (D.C. Bar #448763)
Chief, Litigation III Section

Mark A. Merva * (D.C. Bar #451743)
Trial Attorney

United States Department of Justice
Antitrust Division
Litigation III Section
450 Fifth Street, N.W., Suite 4000
Washington, D.C. 20530
Phone: 202[dash]616-1398
Facsimile: 202[dash]514[dash]7308
Email: Mark.Merva@usdoj.gov

* Attorney of Record

Dated: December 22, 2015

United States District Court for the District of Columbia

    UNITED STATES OF AMERICA, Plaintiff, v. GRAY TELEVISION, INC., 
and SCHURZ COMMUNICATIONS, INC., Defendants.
CASE NO. 1:15-cv-02232
JUDGE: Rudolph Contreras
FILED: 12/22/2015

COMPETITIVE IMPACT STATEMENT

    Pursuant to Section 2(b) of the Antitrust Procedures and Penalties 
Act (``APPA'' or ``Tunney Act''), 15 U.S.C. 16(b)-(h), plaintiff United 
States of America (``United States'') files this Competitive Impact 
Statement relating to the proposed Final Judgment submitted for entry 
in this civil antitrust proceeding.

I. NATURE AND PURPOSE OF THE PROCEEDING

    Defendants Gray Television, Inc. (``Gray'') and Schurz 
Communications, Inc. (``Schurz'') entered into an Asset Purchase 
Agreement, dated September 14, 2015, pursuant to which Gray would 
acquire Schurz for approximately $440 million. Defendants compete head-
to-head in the sale of broadcast television spot advertising in the 
following Designated Market Areas (``DMAs''): South Bend, Indiana; and 
Wichita, Kansas (collectively ``the DMA Markets'').
    The United States filed a civil antitrust Complaint on December 22, 
2015, seeking to enjoin the proposed acquisition. The Complaint alleges 
that the acquisition's likely effect would be to increase broadcast 
television spot advertising prices in each of the DMA Markets in 
violation of Section 7 of the Clayton Act, 15 U.S.C. 18.
    At the same time the Complaint was filed, the United States also 
filed a Hold Separate Stipulation and Order (``Hold Separate'') and 
proposed Final Judgment, which are designed to eliminate the 
anticompetitive effects of the acquisition. The proposed Final 
Judgment, which is explained more fully below, requires Defendants to 
divest the following broadcast television stations (the ``Divestiture 
Stations'') to Acquirers approved by the United States in a manner that 
preserves competition in each of the DMA Markets: WSBT-TV, located in 
the South Bend, Indiana DMA; and KAKE-TV, located in the Wichita, 
Kansas DMA. The Hold Separate requires Defendants to take certain steps 
to ensure that the Divestiture Stations are operated as competitively 
independent, economically viable, and ongoing business concerns, 
uninfluenced by the consummation of the acquisition so that competition 
is maintained until the required divestitures occur.
    The United States and Defendants have stipulated that the proposed 
Final Judgment may be entered after compliance with the APPA. Entry of 
the proposed Final Judgment would terminate this action, except that 
the Court would retain jurisdiction to construe, modify, or enforce the 
provisions of the proposed Final Judgment and to punish violations 
thereof.

II. DESCRIPTION OF THE EVENTS GIVING RISE TO THE ALLEGED VIOLATION

A. The Defendants and the Proposed Acquisition

    Gray is incorporated in the state of Georgia, with its headquarters 
in Atlanta, Georgia. Gray owns and operates broadcast television 
stations in 44 metropolitan areas. It owns and operates broadcast 
television stations in each of the DMA Markets.
    Schurz is an Indiana corporation, with its headquarters in 
Mishawaka, Indiana. Schurz owns and operates 10 broadcast television 
stations in 7 metropolitan areas. It also owns and operates, or 
provides programming, operating, or sales services to broadcast 
television stations in each of the DMA Markets.
    Pursuant to an Asset Purchase Agreement dated September 14, 2015, 
Gray agreed to acquire Schurz for approximately $440 million.
    Gray and Schurz compete head to head against one another for the 
business of local and national advertisers that seek to purchase 
television advertising time in each of the DMA Markets.

B. Anticompetitive Consequences of the Transaction

1. Broadcast Television Advertising

    The Complaint alleges that the sale of broadcast television spot 
advertising to advertisers targeting viewers located in each of the DMA 
Markets constitutes a relevant product market for analyzing this 
acquisition under Section 7 of the Clayton Act. Gray and Schurz sell 
television advertising to local and national advertisers that seek to 
target viewers in each of the DMA Markets. A DMA is a geographical unit 
designated by the A.C. Nielsen Company, a company that surveys 
television viewers and furnishes broadcast television stations, 
advertisers, and advertising agencies in a particular area with data to 
aid in evaluating television audiences. DMAs are widely accepted by 
television stations, advertisers, and advertising agencies as the 
standard geographic area to use in evaluating television audience size 
and demographic composition. A television station's advertising rates 
typically are based on the station's ability, relative to competing 
television stations, to attract viewing audiences that have certain 
demographic characteristics that advertisers are seeking to reach.
    Gray's and Schurz's broadcast television stations in the DMA 
Markets generate almost all of their revenues by selling advertising to 
local and national

[[Page 81360]]

advertisers who want to reach viewers present in those DMAs. 
Advertising placed on broadcast television stations in a DMA is aimed 
at reaching viewing audiences in that DMA, and television stations 
broadcasting outside that DMA do not provide effective access to these 
audiences.
    Broadcast television spot advertising possesses a unique 
combination of attributes that sets it apart from advertising using 
other types of media. Because of this unique combination of attributes, 
broadcast television spot advertising has no close substitute for a 
significant number of advertisers.
    Television combines sight, sound, and motion, thereby creating a 
more memorable advertisement when compared to other types of 
advertising. For example, radio spots lack the visual impact of 
television advertising; and newspaper and billboard ads lack sound and 
motion, as do many internet search engine and Web site banner ads.
    Broadcast television spot advertising also generally reaches the 
largest percentage of potential customers in a targeted geographic area 
and is therefore especially effective in introducing, establishing, and 
maintaining a product's image.
    Spot advertising differs from network and syndicated television 
advertising, which are sold on a nationwide basis by major television 
networks and by producers of syndicated programs and are broadcast in 
every market area in which the network or syndicated program is aired. 
Spot advertising on subscription television channels and internet-based 
video advertising also lacks the same reach as broadcast television 
spot advertising.
    In addition, through information provided during individualized 
price negotiations, broadcast television stations can identify 
advertisers with strong preferences for using broadcast television spot 
advertising and charge different prices to those advertisers. 
Consequently, if there were a small but significant and non-transitory 
increase in the price (``SSNIP'') of broadcast television spot 
advertising on broadcast television stations in the DMA Markets, 
advertisers would not reduce their purchases sufficiently to render the 
price increase unprofitable. Advertisers would not switch enough 
purchases of advertising time to television stations outside the DMA 
Markets, or to other media to render the price increase unprofitable.

2. Harm to Competition in Each of the DMA Markets

    The Complaint alleges that the proposed acquisition likely would 
substantially lessen competition in interstate trade and commerce, in 
violation of Section 7 of the Clayton Act, 15 U.S.C. 18, and likely 
would have the following effects, among others:
    a) competition in the sale of broadcast television spot advertising 
in each of the DMA Markets would be substantially lessened;
    b) competition between Gray broadcast television stations and 
Schurz broadcast television stations in the sale of broadcast 
television spot advertising in each of the DMA markets would be 
eliminated; and
    c) the prices for spot advertising on broadcast television stations 
in each of the DMA Markets likely would increase.
    The acquisition, by eliminating Schurz as a separate competitor and 
combining its operations with Gray's, would allow the combined entity 
to increase its market share of broadcast television spot advertising 
and revenues in each of the DMA Markets. In the South Bend, Indiana 
DMA, combining the two stations that Defendants operate would give Gray 
approximately 67 percent of all television station gross advertising 
revenues in that DMA. In the Wichita, Kansas DMA, combining the three 
stations that Defendants operate would give Gray approximately 57 
percent of all television station gross advertising revenues in that 
DMA.
    Gray's acquisition of Schurz would further concentrate the already 
highly concentrated broadcast television market in each of the DMA 
Markets. Using the Herfindahl-Hirschman Index (``HHI''), a standard 
measure of market, the post-acquisition HHI in each of the DMA Markets 
would be over 2,500. Gray's acquisition of Schurz would result in a 
substantial increase in the HHI set forth above for each DMA Market in 
excess of the 200 points presumed likely to enhance market power under 
the Horizontal Merger Guidelines issued by the Department of Justice 
and Federal Trade Commission.
    Moreover, the acquisition combines stations that are close 
substitutes and vigorous competitors in a product market with limited 
alternatives. In each of the DMA Markets, Defendants have broadcast 
stations that are affiliated with the major national television 
networks, ABC, CBS, NBC, and FOX. Their respective affiliations with 
those networks, and their local news operations, provide Defendants' 
stations with a variety of competing programming options that are often 
each other's next-best or second-best substitutes for viewers and 
advertisers.
    Finally, the Complaint alleges that entry or expansion in broadcast 
television spot advertising each of the DMA Markets would not be 
timely, likely, or sufficient to prevent any anticompetitive effects. 
New entry is unlikely because any new station would require an FCC 
license, which is difficult to obtain. Even if a new station became 
operational, commercial success would come over a period of many years. 
The number of 30-second spots available at a station is generally 
fixed. Accordingly, other television stations in each of the DMA 
Markets could not readily increase their advertising capacity in 
response to a small but significant price increase by Gray.
    In summary, for all these reasons, the Complaint alleges that 
Gray's proposed acquisition of Schurz would substantially lessen 
competition in the sale of television spot advertising time to 
advertisers targeting viewers in each of the DMA Markets, eliminate 
head-to-head competition between Gray and Schurz television stations in 
those markets, and result in increased prices and reduced quality of 
service for television advertisers in each of those markets, all in 
violation of Section 7 of the Clayton Act.

III. EXPLANATION OF THE PROPOSED FINAL JUDGMENT

    The divestiture requirement of the proposed Final Judgment will 
eliminate the anticompetitive effects of the acquisition in each of the 
DMA Markets by maintaining the Divestiture Stations as independent, 
economically viable competitors. The proposed Final Judgment requires 
Gray to divest WSBT-TV, located in South Bend, Indiana to Sinclair 
Broadcast Group; and KAKE-TV, located in Wichita, Kansas to Lockwood 
Broadcast Group. The United States has approved each of these 
divestiture buyers. The United States required Gray to identify each 
Acquirer of a Divestiture Station in order to provide greater certainty 
and efficiency in the divestiture process.
    The ``Divestiture Assets'' are defined in Paragraph II. I of the 
proposed Final Judgment to include all assets, tangible or intangible, 
principally devoted to or necessary for the operation of the 
Divestiture Stations as viable, ongoing commercial broadcast television 
stations. With respect to each Divestiture Station, the divestiture 
will include assets sufficient to satisfy the United States, in its 
sole discretion, that such assets can and will be used to operate each 
station as a viable, ongoing, commercial television business.
    To ensure that the Divestiture Stations are operated independently 
from Gray after the divestitures, Sections IV and XI of the proposed 
Final Judgment prohibit

[[Page 81361]]

Defendants from entering into any agreements during the term of the 
Final Judgment that create a long-term relationship with or any 
entanglements that affect competition between Gray and an Acquirer of a 
Divestiture Station concerning the Divestiture Assets after the 
divestitures are completed. Examples of prohibited agreements include 
agreements to reacquire any part of the Divestiture Assets, agreements 
to acquire any option to reacquire any part of the Divestiture Assets 
or to assign the Divestiture Assets to any other person, agreements to 
enter into any time brokerage agreement, local marketing agreement, 
joint sales agreement, other cooperative selling arrangement, or shared 
services agreement, or agreements to conduct other business 
negotiations jointly with the Acquirer(s) with respect to the 
Divestiture Assets, or providing financing or guarantees of financing 
with respect to the Divestiture Assets, during the term of the Final 
Judgment. The time brokerage agreement prohibition does not preclude 
Defendants from entering into an agreement pursuant to which an 
Acquirer can begin operating a Divestiture Station immediately after 
the Court's approval of the Hold Separate in this matter, so long as 
the agreement with the Acquirer expires upon the consummation of a 
final agreement to divest the Divestiture Assets to the Acquirer.
    Defendants are required to take all steps reasonably necessary to 
accomplish the divestitures quickly and to cooperate with prospective 
purchasers. Because transferring the broadcast license for each of the 
Divestiture Stations requires FCC approval, Defendants are specifically 
required to use their best efforts to obtain all necessary FCC 
approvals as expeditiously as possible. The divestiture of each of the 
Divestiture Stations must occur within 90 calendar days after the 
filing of the Complaint in this matter. If applications have been filed 
with the FCC within the period permitted for divestiture seeking 
approval to assign or transfer licenses to the Acquirers of the 
Divestiture Assets, but an order or other dispositive action by the FCC 
on such applications has not been issued before the end of the period 
permitted for divestiture, the period shall be extended with respect to 
divestiture of the Divestiture Assets for which no FCC order has issued 
until 5 calendar days after such order is issued. The United States, in 
its sole discretion, may agree to one or more extensions of this time 
period not to exceed 90 calendar days in total, and shall notify the 
Court in such circumstances.
    In the event that Defendants do not accomplish the divestitures 
within the periods prescribed in the proposed Final Judgment, the 
proposed Final Judgment provides that the Court, upon application of 
the United States, will appoint a trustee selected by the United States 
to effect the divestitures. If a trustee is appointed, the proposed 
Final Judgment provides that Gray will pay all costs and expenses of 
the trustee. The trustee's commission will be structured to provide an 
incentive for the trustee based on the price obtained and the speed 
with which the divestitures are accomplished. After his or her 
appointment becomes effective, the trustee will file monthly reports 
with the Court and the United States describing his or her efforts to 
accomplish the divestiture of any remaining stations. If the 
divestiture has not been accomplished after 6 months, the trustee and 
the United States will make recommendations to the Court, which shall 
enter such orders as appropriate, to carry out the purpose of the 
trust, including extending the trust or the term of the trustee's 
appointment.

IV. REMEDIES AVAILABLE TO POTENTIAL PRIVATE LITIGANTS

    Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal court to recover three times 
the damages the person has suffered, as well as costs and reasonable 
attorneys' fees. Entry of the proposed Final Judgment will neither 
impair nor assist the bringing of any private antitrust damage action. 
Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C. 
16(a), the proposed Final Judgment has no prima facie effect in any 
subsequent private lawsuit that may be brought against Defendants.

V. PROCEDURES AVAILABLE FOR MODIFICATION OF THE PROPOSED FINAL JUDGMENT

    The United States and 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, or the last date of 
publication in a newspaper of the summary of this Competitive Impact 
Statement, whichever is later. All comments received during this period 
will be considered by the United States Department of Justice, which 
remains free to withdraw its consent to the proposed Final Judgment at 
any time prior to the Court's entry of judgment. The comments and the 
response of the United States will be filed with the Court. In 
addition, comments will be posted on the United States Department of 
Justice, Antitrust Division's Internet Web site and, under certain 
circumstances, published in the Federal Register.
    Written comments should be submitted to: David C. Kully, Chief, 
Litigation III Section, Antitrust Division, United States Department of 
Justice, 450 5th Street NW., Suite 4000, Washington, DC 20530.
    The proposed Final Judgment provides that the Court retains 
jurisdiction over this action, and Defendants 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 United States considered, as an alternative to the proposed 
Final Judgment, a full trial on the merits against Defendants. The 
United States could have continued the litigation and sought 
preliminary and permanent injunctions against Gray's acquisition of 
Schurz. The United States is satisfied, however, that the divestiture 
of assets described in the proposed Final Judgment will preserve 
competition for the sale of broadcast television spot advertising in 
each of the DMA Markets. Thus, the proposed Final Judgment would 
achieve all or substantially all of the relief the United States 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 THE PROPOSED FINAL JUDGMENT

    The Clayton Act, as amended by the APPA, requires that proposed 
consent judgments in antitrust cases brought by the United States be 
subject to a sixty-day comment period, after which the Court shall 
determine whether entry of the proposed Final Judgment ``is in the 
public interest.'' 15 U.S.C. 16(e)(1). In

[[Page 81362]]

making that determination, the Court, in accordance with the statute as 
amended in 2004, is required to consider:

    (A) the competitive impact of such judgment, including 
termination of alleged violations, provisions for enforcement and 
modification, duration of relief sought, anticipated effects of 
alternative remedies actually considered, whether its terms are 
ambiguous, and any other competitive considerations bearing upon the 
adequacy of such judgment that the court deems necessary to a 
determination of whether the consent judgment is in the public 
interest; and
    (B) the impact of entry of such judgment upon competition in the 
relevant market or markets, 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)(1)(A) & (B). In considering these statutory factors, 
the Court's inquiry is necessarily a limited one as the government is 
entitled to ``broad discretion to settle with the defendant within the 
reaches of the public interest.'' United States v. Microsoft Corp., 56 
F.3d 1448, 1461 (D.C. Cir. 1995); see generally United States v. SBC 
Commc'ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007) (assessing public 
interest standard under the Tunney Act); United States v, U.S. Airways 
Group, Inc., 38 F. Supp. 3d 69, 75 (D.D.C. 2014) (explaining that the 
``court's inquiry is limited'' in Tunney Act settlements); United 
States v. InBev N.V./S.A., No. 08-1965 (JR), 2009-2 Trade Cas. (CCH) ] 
76,736, 2009 U.S. Dist. LEXIS 84787, at *3, (D.D.C. Aug. 11, 2009) 
(noting that the court's review of a consent judgment is limited and 
only inquires ``into whether the government's determination that the 
proposed remedies will cure the antitrust violations alleged in the 
complaint was reasonable, and whether the mechanism to enforce the 
final judgment are clear and manageable.'').\1\
---------------------------------------------------------------------------

    \1\ The 2004 amendments substituted ``shall'' for ``may'' in 
directing relevant factors for court to consider and amended the 
list of factors to focus on competitive considerations and to 
address potentially ambiguous judgment terms. Compare 15 U.S.C. 
16(e) (2004) with 15 U.S.C. 16(e)(1) (2006); see also SBC Commc'ns, 
489 F. Supp. 2d at 11 (concluding that the 2004 amendments 
``effected minimal changes'' to Tunney Act review).
---------------------------------------------------------------------------

    As the United States Court of Appeals for the District of Columbia 
Circuit has held, under the APPA a court considers, 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 
Microsoft, 56 F.3d at 1458-62. 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) (quoting 
United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see 
also Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152 
F. Supp. 2d 37, 40 (D.D.C. 2001); InBev, 2009 U.S. Dist. LEXIS 84787, 
at *3. Courts have held that:

    [t]he 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.

Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\2\ In 
determining whether a proposed settlement is in the public interest, a 
district court ``must accord deference to the government's predictions 
about the efficacy of its remedies, and may not require that the 
remedies perfectly match the alleged violations.'' SBC Commc'ns, 489 F. 
Supp. 2d at 17; see also U.S. Airways, 38 F. Supp. 3d at 75 (noting 
that a court should not reject the proposed remedies because it 
believes others are preferable); Microsoft, 56 F.3d at 1461 (noting the 
need for courts to be ``deferential to the government's predictions as 
to the effect of the proposed remedies''); United States v. Archer-
Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (noting that 
the court should grant due respect to the United States' prediction as 
to the effect of proposed remedies, its perception of the market 
structure, and its views of the nature of the case).
---------------------------------------------------------------------------

    \2\ Cf. BNS, 858 F.2d at 464 (holding that the court's 
``ultimate authority under the [APPA] is limited to approving or 
disapproving the consent decree''); United States v. Gillette Co., 
406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the 
court is constrained to ``look at the overall picture not 
hypercritically, nor with a microscope, but with an artist's 
reducing glass''). See generally Microsoft, 56 F.3d at 1461 
(discussing 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' '').
---------------------------------------------------------------------------

    Courts have greater flexibility in approving proposed consent 
decrees than in crafting their own decrees following a finding of 
liability in a litigated matter. ``[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.' '' United States v. Am. Tel. & Tel. Co., 
552 F. Supp. 131, 151 (D.D.C. 1982) (citations omitted) (quoting United 
States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)), aff'd 
sub nom. Maryland v. United States, 460 U.S. 1001 (1983); see also U.S. 
Airways, 38 F. Supp. 3d at 76 (noting that room must be made for the 
government to grant concessions in the negotiation process for 
settlements) (citing Microsoft, 56 F.3d at 1461); United States v. 
Alcan Aluminum Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 1985) (approving 
the consent decree even though the court would have imposed a greater 
remedy). To meet this standard, the United States ``need only provide a 
factual basis for concluding that the settlements are reasonably 
adequate remedies for the alleged harms.'' SBC Commc'ns, 489 F. Supp. 
2d at 17.
    Moreover, the Court's role under the APPA is limited to reviewing 
the remedy in relationship to the violations that the United States has 
alleged in its Complaint, and does not authorize the Court to 
``construct [its] own hypothetical case and then evaluate the decree 
against that case.'' Microsoft, 56 F.3d at 1459; see also U.S. Airways, 
38 F. Supp. 3d at 75 (noting that the court must simply determine 
whether there is a factual foundation for the government's decisions 
such that its conclusions regarding the proposed settlements are 
reasonable); InBev, 2009 U.S. Dist. LEXIS 84787, at *20 (``the `public 
interest' is not to be measured by comparing the violations alleged in 
the complaint against those the court believes could have, or even 
should have, been alleged''). Because the ``court's authority to review 
the decree depends entirely on the government's exercising its 
prosecutorial discretion by bringing a case in the first place,'' it 
follows that ``the court is only authorized to review the decree 
itself,'' and not to ``effectively redraft the complaint'' to inquire 
into other matters that the United States did not pursue. Microsoft, 56 
F.3d at 1459-60. As this Court confirmed in SBC Communications, courts 
``cannot look beyond the complaint in making the public interest 
determination unless the complaint is drafted so narrowly as to make a 
mockery of judicial power.'' SBC Commc'ns, 489 F. Supp. 2d at 15.
    In its 2004 amendments, Congress made clear its intent to preserve 
the practical benefits of utilizing consent decrees in antitrust 
enforcement, adding

[[Page 81363]]

the unambiguous instruction that ``[n]othing in this section shall be 
construed to require the court to conduct an evidentiary hearing or to 
require the court to permit anyone to intervene.'' 15 U.S.C. 16(e)(2); 
see also U.S. Airways, 38 F. Supp. 3d at 76 (indicating that a court is 
not required to hold an evidentiary hearing or to permit intervenors as 
part of its review under the Tunney Act). The language wrote into the 
statute what Congress intended when it enacted the Tunney Act in 1974, 
as Senator Tunney explained: ``[t]he court is nowhere compelled to go 
to trial or to engage in extended proceedings which might have the 
effect of vitiating the benefits of prompt and less costly settlement 
through the consent decree process.'' 119 Cong. Rec. 24,598 (1973) 
(statement of Sen. Tunney). Rather, the procedure for the public 
interest determination is left to the discretion of the Court, with the 
recognition that the Court's ``scope of review remains sharply 
proscribed by precedent and the nature of Tunney Act proceedings.'' SBC 
Commc'ns, 489 F. Supp. 2d at 11.\3\ A court can make its public 
interest determination based on the competitive impact statement and 
response to public comments alone. U.S. Airways, 38 F. Supp. 3d at 76.
---------------------------------------------------------------------------

    \3\ See United States v. Enova Corp., 107 F. Supp. 2d 10, 17 
(D.D.C. 2000) (noting that the ``Tunney Act expressly allows the 
court to make its public interest determination on the basis of the 
competitive impact statement and response to comments alone''); 
United States v. Mid-Am. Dairymen, Inc., No. 73-CV-681-W-1, 1977-1 
Trade Cas. (CCH) ] 61,508, at 71,980, *22 (W.D.Mo. 1977) (``Absent 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.''); S. Rep. No. 93-298, at 6 (1973) (``Where the 
public interest can be meaningfully evaluated simply on the basis of 
briefs and oral arguments, that is the approach that should be 
utilized.'').
---------------------------------------------------------------------------

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.

Dated: December 22, 2015

Respectfully submitted,

/s/ Mark A. Merva
Mark A. Merva* (D.C. Bar #451743)
Trial Attorney
United States Department of Justice
Antitrust Division
Litigation III Section
450 Fifth Street, N.W., Suite 4000
Washington, D.C. 20530
Phone: 202-616-1398
Facsimile: 202-514-7308
Email: Mark.Merva@usdoj.gov

*Attorney of Record

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

    UNITED STATES OF AMERICA, Plaintiff, v. GRAY TELEVISION, INC., 
and SCHURZ COMMUNICATIONS, INC., Defendants.

CASE NO. 1:15-cv-02232
JUDGE: Rudolph Contreras
FILED: 12/22/2015

PROPOSED FINAL JUDGMENT

    WHEREAS, Plaintiff, the United States of America, filed its 
Complaint on December 22, 2015, and Defendant Gray Television, Inc. 
(``Gray'') and Defendant Schurz Communications, Inc. (``Schurz''), 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 and 
certain divestiture of certain rights or assets by the Defendants to 
assure that competition is not substantially lessened;
    AND WHEREAS, the United States requires Defendants to make certain 
divestitures for the purpose of remedying the loss of competition 
alleged in the Complaint;
    AND WHEREAS, Defendants have represented to the United States that 
the divestitures 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 divestiture 
provisions contained below;
    NOW THEREFORE, before any testimony is taken, without trial or 
adjudication of any issue of fact or law, and upon consent of the 
parties, it is ORDERED, ADJUDGED, AND DECREED:

I. JURISDICTION

    This Court has jurisdiction over the subject matter 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.

II. DEFINITIONS

    As used in this Final Judgment:
    A. ``Gray'' means Defendant Gray Television, Inc., a Georgia 
corporation headquartered in Atlanta, Georgia, its successors and 
assigns, and its subsidiaries, divisions, groups, affiliates, 
partnerships, and joint ventures, and their directors, officers, 
managers, agents, and employees.
    B. ``Schurz'' means Defendant Schurz Communications, Inc., a 
Indiana corporation headquartered in Mishawaka, Indiana, its successors 
and assigns, and its subsidiaries, divisions, groups, affiliates, 
partnerships, and joint ventures, and their directors, officers, 
managers, agents, and employees.
    C. ``Sinclair'' means Sinclair Broadcast Group, Inc., a Maryland 
corporation headquartered in Hunt Valley, Maryland, its successor and 
assigns, and its subsidiaries, divisions, groups, affiliates, 
partnerships, and joint ventures, and their directors, officers, 
managers, agents, and employees.
    D. ``Lockwood'' means Lockwood Broadcast Group, a Virginia 
corporation headquartered in Hampton, Virginia, its successor and 
assigns, and its subsidiaries, divisions, groups, affiliates, 
partnerships, and joint ventures, and their directors, officers, 
managers, agents, and employees.
    E. ``Acquirer'' means Sinclair, Lockwood, or another entity to 
which Defendants divest any of the Divestiture Assets.
    F. ``DMA'' means Designated Market Area as defined by A.C. Nielsen 
Company based upon viewing patterns and used by the Investing in 
Television BIA Market Report 2015 (1st edition). DMAs are ranked 
according to the number of households therein and are used by 
broadcasters, advertisers, and advertising agencies to aid in 
evaluating television audience size and composition.
    G. ``WSBT-TV'' means the CBS-affiliated broadcast television 
station located in the South Bend, Indiana DMA owned by Defendant 
Schurz.
    H. ``KAKE-TV'' means the ABC-affiliated broadcast television 
station located in the Wichita, Kansas DMA owned by Defendant Gray.
    I. ``Divestiture Assets'' means the WSBT-TV and KAKE-TV broadcast 
television stations and all assets, tangible or intangible, principally 
devoted to or necessary for the operations of the stations as viable, 
ongoing commercial broadcast television stations, including, but not 
limited to, all real property (owned or leased), all broadcast 
equipment, office equipment, office furniture, fixtures, materials, 
supplies, and other tangible property; all licenses, permits, 
authorizations, and applications therefore issued by the Federal 
Communications Commission (``FCC'')

[[Page 81364]]

and other government agencies related to the stations; all contracts 
(including programming contracts and rights), agreements, network 
affiliation agreements, leases, and commitments and understandings of 
Defendants; all trademarks, service marks, trade names, copyrights, 
patents, slogans, programming materials, and promotional materials 
relating to the stations; all customer lists, contracts, accounts, and 
credit records; and all logs and other records maintained by Defendants 
in connection with the stations.

III. APPLICABILITY

    A. This Final Judgment applies to Defendants, 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.
    B. If, prior to complying with Sections IV and V of this Final 
Judgment, Defendants sell or otherwise dispose of all or substantially 
all of their assets or of lesser business units that include the 
Defendants' Divestiture Assets, they shall require the purchaser to be 
bound by the provisions of this Final Judgment. Defendants need not 
obtain such an agreement from the Acquirers of the assets divested 
pursuant to this Final Judgment.

IV. DIVESTITURES

    A. Defendants are ordered and directed, within ninety (90) calendar 
days after the filing of the Complaint in this matter, or five (5) 
calendar days after notice of entry of this Final Judgment by the 
Court, whichever is later, to divest the Divestiture Assets in a manner 
consistent with this Final Judgment to one or more Acquirers acceptable 
to the United States, in its sole discretion. The United States, in its 
sole discretion, may agree to one or more extensions of this time 
period not to exceed ninety (90) calendar days in total, and shall 
notify the Court in such circumstances. With respect to divestiture of 
the Divestiture Assets by Defendants or a trustee appointed pursuant to 
Section V of this Final Judgment, if applications have been filed with 
the FCC within the period permitted for divestiture seeking approval to 
assign or transfer licenses to the Acquirers of the Divestiture Assets, 
but an order or other dispositive action by the FCC on such 
applications has not been issued before the end of the period permitted 
for divestiture, the period shall be extended with respect to 
divestiture of the Divestiture Assets for which no FCC order has issued 
until five (5) days after such order is issued. Defendants agree to use 
their best efforts to divest the Divestiture Assets as expeditiously as 
possible, including using their best efforts to obtain all necessary 
FCC approvals as expeditiously as possible. This Final Judgment does 
not limit the FCC's exercise of its regulatory powers and process with 
respect to the Divestiture Assets. Authorization by the FCC to conduct 
the divestiture of a Divestiture Asset in a particular manner will not 
modify any of the requirements of this Final Judgment.
    B. In the event that Defendants are attempting to divest assets 
related to WSBT-TV to an Acquirer other than Sinclair, or assets 
related to KAKE-TV to an Acquirer other than Lockwood:
    (1) Defendants, in accomplishing the divestitures ordered by this 
Final Judgment, promptly shall make known, by usual and customary 
means, the availability of the Divestiture Assets not yet divested;
    (2) Defendants shall inform any person making an inquiry regarding 
a possible purchase of the applicable Divestiture Assets that they are 
being divested pursuant to this Final Judgment and provide that person 
with a copy of this Final Judgment;
    (3) Defendants shall offer to furnish to all prospective Acquirers, 
subject to customary confidentiality assurances, all information and 
documents relating to the applicable Divestiture Assets customarily 
provided in a due diligence process except such information or 
documents subject to the attorney-client privilege or work-product 
doctrine; and
    (4) Defendants shall make available such information to the United 
States at the same time that such information is made available to any 
other person.
    C. Defendants shall provide the Acquirers and the United States 
information relating to the personnel involved in the operation and 
management of the applicable Divestiture Assets to enable the Acquirers 
to make offers of employment. Defendants shall not interfere with any 
negotiations by the Acquirers to employ or contract with any employee 
of any Defendant whose primary responsibility relates to the operation 
or management of the applicable Divestiture Assets.
    D. Defendants shall permit the prospective Acquirers of the 
Divestiture Assets to have reasonable access to personnel and to make 
inspections of the physical facilities of the applicable stations; 
access to any and all environmental, zoning, and other permit documents 
and information; and access to any and all financial, operational, or 
other documents and information customarily provided as part of a due 
diligence process.
    E. Defendants shall warrant to the Acquirers that each Divestiture 
Asset will be operational on the date of sale.
    F. Defendants shall not take any action that will impede in any way 
the permitting, operation, or divestiture of the Divestiture Assets.
    G. At the option of the Acquirer(s), Defendants shall enter into a 
transition services agreement with the Acquirer(s) for a period of up 
to six (6) months to facilitate the continuous operations of the 
Divestiture Assets until the Acquirer can provide such capabilities 
independently. The terms and conditions of any contractual arrangement 
intended to satisfy this provision must be reasonably related to market 
conditions and shall be subject to the approval of the United States, 
in its sole discretion. Additionally, the United States in its sole 
discretion may approve one or more extensions of this agreement for a 
total of up to an additional six (6) months.
    H. Defendants shall warrant to the Acquirers that there are no 
material defects in the environmental, zoning, or other permits 
pertaining to the operation of each asset, and that, following the sale 
of the Divestiture Assets, Defendants will not undertake, directly or 
indirectly, any challenges to the environmental, zoning, or other 
permits relating to the operation of the Divestiture Assets.
    I. Unless the United States otherwise consents in writing, the 
divestitures pursuant to Section IV, or by trustee appointed pursuant 
to Section V of this Final Judgment, shall include the entire 
Divestiture Assets and be accomplished in such a way as to satisfy the 
United States, in its sole discretion, that the Divestiture Assets can 
and will be used by the Acquirers as part of a viable, ongoing 
commercial television broadcasting business. Divestiture of the 
Divestiture Assets may be made to one or more Acquirers, provided that 
in each instance it is demonstrated to the sole satisfaction of the 
United States that the Divestiture Assets will remain viable, and the 
divestiture of such assets will achieve the purposes of this Final 
Judgment and remedy the competitive harm alleged in the Complaint. The 
divestitures, whether pursuant to Section IV or Section V of this Final 
Judgment:
    (1) shall be made to Acquirers that, in the United States' sole 
judgment, have the intent and capability (including the necessary 
managerial, operational, technical, and financial capability) of 
competing effectively in the commercial television broadcasting 
business; and

[[Page 81365]]

    (2) shall be accomplished so as to satisfy the United States, in 
its sole discretion, that none of the terms of any agreement between 
Acquirers and Defendants gives Defendants the ability unreasonably to 
raise any of the Acquirers' costs, to lower any of the Acquirers' 
efficiency, or otherwise to interfere in the ability of any of the 
Acquirers to compete effectively.

V. APPOINTMENT OF TRUSTEE

    A. If Defendants have not divested the Divestiture Assets within 
the time period specified in Section IV(A), Defendants shall notify the 
United States of that fact in writing, specifically identifying the 
Divestiture Assets that have not been divested. Upon application of the 
United States, the Court shall appoint a trustee selected by the United 
States and approved by the Court to effect the divestiture of the 
Divestiture Assets that have not yet been divested.
    B. After the appointment of a trustee becomes effective, only the 
trustee shall have the right to sell the applicable Divestiture Assets. 
The trustee shall have the power and authority to accomplish the 
divestiture to an Acquirer acceptable to the United States at such 
price and on such terms as are then obtainable upon reasonable effort 
by the trustee, subject to the provisions of Sections IV, V, and VI of 
this Final Judgment, and shall have such other powers as this Court 
deems appropriate. Subject to Section V(D) of this Final Judgment, the 
trustee may hire at the cost and expense of Defendants any investment 
bankers, attorneys, or other agents, who shall be solely accountable to 
the trustee, reasonably necessary in the trustee's judgment to assist 
in the divestiture. Any such investment bankers, attorneys, or other 
agents shall serve on such terms and conditions as the United States 
approves, including confidentiality requirements and conflict of 
interest certifications.
    C. Defendants shall not object to a sale by the trustee on any 
ground other than the trustee's malfeasance. Any such objections by 
Defendants must be conveyed in writing to the United States and the 
trustee within ten (10) calendar days after the trustee has provided 
the notice required under Section VI.
    D. The trustee shall serve at the cost and expense of Defendants 
pursuant to a written agreement, on such terms and conditions as the 
United States approves, including confidentiality requirements and 
conflict of interest certifications. The trustee shall account for all 
monies derived from the sale of the applicable Divestiture Assets and 
all costs and expenses so incurred. After approval by the Court of the 
trustee's accounting, including fees for its services yet unpaid and 
those of any professionals and agents retained by the trustee, all 
remaining money shall be paid to Defendants and the trust shall then be 
terminated. The compensation of the trustee and any professionals and 
agents retained by the trustee shall be reasonable in light of the 
value of the Divestiture Assets subject to sale by the trustee and 
based on a fee arrangement providing the trustee with an incentive 
based on the price and terms of the divestiture and the speed with 
which it is accomplished, but timeliness is paramount. If the trustee 
and Defendants are unable to reach agreement on the trustee's or any 
agents' or consultants' compensation or other terms and conditions of 
engagement within 14 calendar days of appointment of the trustee, the 
United States may, in its sole discretion, take appropriate action, 
including making a recommendation to the Court. The trustee shall, 
within three (3) business days of hiring any other professionals or 
agents, provide written notice of such hiring and the rate of 
compensation to Defendants and the United States.
    E. Defendants shall use their best efforts to assist the trustee in 
accomplishing the required divestiture. The trustee and any 
consultants, accountants, attorneys, and other agents retained by the 
trustee shall have full and complete access to the personnel, books, 
records, and facilities of the business to be divested, and Defendants 
shall develop financial and other information relevant to such business 
as the trustee may reasonably request, subject to reasonable protection 
for trade secret or other confidential research, development, or 
commercial information or any applicable privileges. Defendants shall 
take no action to interfere with or to impede the trustee's 
accomplishment of the divestiture.
    F. After its appointment, the trustee shall file monthly reports 
with the United States and, as appropriate, the Court setting forth the 
trustee's efforts to accomplish the applicable divestiture ordered 
under this Final Judgment. To the extent such reports contain 
information that the trustee deems confidential, such report shall not 
be filed in the public docket of the Court. Such report shall include 
the name, address, and telephone number of each person who, during the 
preceding month, made an offer to acquire, expressed an interest in 
acquiring, entered into negotiations to acquire, or was contacted or 
made an inquiry about acquiring, any interest in the Divestiture 
Assets, and shall describe in detail each contact with any such person. 
The trustee shall maintain full records of all efforts made to divest 
the applicable Divestiture Assets.
    G. If the trustee has not accomplished any applicable divestiture 
ordered under this Final Judgment within six (6) months after its 
appointment, the trustee shall promptly file with the Court a report 
setting forth (1) the trustee's efforts to accomplish the required 
divestiture, (2) the reasons, in the trustee's judgment, why the 
required divestiture has not been accomplished, and (3) the trustee's 
recommendations. To the extent such report contains information that 
the trustee deems confidential, such report shall not be filed in the 
public docket of the Court. The trustee shall at the same time furnish 
such report to the United States which shall have the right to make 
additional recommendations consistent with the purpose of the trust. 
The Court thereafter shall enter such orders as it shall deem 
appropriate to carry out the purpose of the Final Judgment, which may, 
if necessary, include extending the trust and the term of the trustee's 
appointment by a period requested by the United States.
    H. If the United States determines that the trustee has ceased to 
act or failed to act diligently or in a reasonably cost-effective 
manner, it may recommend the Court appoint a substitute trustee.

VI. NOTICE OF PROPOSED DIVESTITURE

    A. Within two (2) business days following execution of a definitive 
divestiture agreement, Defendants or the trustee, whichever is then 
responsible for effecting the divestitures required herein, shall 
notify the United States of any proposed divestiture required by 
Section IV or V of this Final Judgment. If the trustee is responsible, 
it shall similarly notify Defendants. The notice shall set forth the 
details of the proposed divestiture and list the name, address, and 
telephone number of each person not previously identified who offered 
or expressed an interest in or desire to acquire any ownership interest 
in the Divestiture Assets, together with full details of the same.
    B. Within fifteen (15) calendar days of receipt by the United 
States of such notice, the United States may request from Defendants, 
the proposed Acquirer, any other third party, or the trustee, if 
applicable, additional information concerning the proposed divestiture, 
the proposed Acquirer, and any other potential Acquirers. Defendants 
and the trustee shall furnish any additional information requested

[[Page 81366]]

within fifteen (15) calendar days of the receipt of the request, unless 
the parties shall otherwise agree.
    C. Within thirty (30) calendar days after receipt of the notice or 
within twenty (20) calendar days after the United States has been 
provided the additional information requested from Defendants, the 
proposed Acquirer, any third party, and the trustee, whichever is 
later, the United States shall provide written notice to Defendants and 
the trustee, if there is one, stating whether or not it objects to the 
proposed divestiture. If the United States provides written notice that 
it does not object, the divestiture may be consummated, subject only to 
Defendants' limited right to object to the sale under Section V(C) of 
this Final Judgment. Absent written notice that the United States does 
not object to the proposed Acquirer or upon objection by the United 
States, a divestiture proposed under Section IV or Section V shall not 
be consummated. Upon objection by Defendants under Section V(C), a 
divestiture proposed under Section V shall not be consummated unless 
approved by the Court.

VII. FINANCING

    Defendants shall not finance all or any part of any purchase made 
pursuant to Section IV or V of this Final Judgment.

VIII. HOLD SEPARATE

    Until the divestitures required by this Final Judgment has been 
accomplished, Defendants shall take all steps necessary to comply with 
the Hold Separate Stipulation and Order entered by this Court. 
Defendants shall take no action that would jeopardize the divestiture 
ordered by this Court.

IX. AFFIDAVITS

    A. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, and every thirty (30) calendar days thereafter until 
the divestiture has been completed under Section IV or V 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 or V of this 
Final Judgment. Each such affidavit shall include the name, address, 
and telephone number of each person who, during the preceding thirty 
(30) calendar days, made an offer to acquire, expressed an interest in 
acquiring, entered into negotiations to acquire, or was contacted or 
made an inquiry about acquiring, any interest in the Divestiture 
Assets, and shall describe in detail each contact with any such person 
during that period. Each such affidavit shall also include a 
description of the efforts Defendants have taken to solicit buyers for 
and complete the sale of the Divestiture Assets, including efforts to 
secure FCC or other regulatory approvals, and to provide required 
information to prospective Acquirers, including the limitations, if 
any, on such information. Assuming the information set forth in the 
affidavit is true and complete, any objection by the United States to 
information provided by Defendants, including limitations on 
information, shall be made within fourteen (14) calendar days of 
receipt of such affidavit.
    B. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, Defendants shall deliver to the United States an 
affidavit that describes in reasonable detail all actions Defendants 
have taken and all steps Defendants have implemented on an ongoing 
basis to comply with Section VIII of this Final Judgment. Each such 
affidavit shall also include a description of the efforts Defendants 
have taken to complete the sale of the Divestiture Assets, including 
efforts to secure FCC or other regulatory approvals. Defendants shall 
deliver to the United States an affidavit describing any changes to the 
efforts and actions outlined in Defendants' earlier affidavits filed 
pursuant to this section within fifteen (15) calendar days after the 
change is implemented.
    C. Defendants shall keep all records of all efforts made to 
preserve and divest the Divestiture Assets until one year after such 
divestiture has been completed.

X. COMPLIANCE INSPECTION

    A. For the purposes of determining or securing compliance with this 
Final Judgment, or of any related orders such as any Hold Separate 
Stipulation and Order, or of determining whether the Final Judgment 
should be modified or vacated, and subject to any legally recognized 
privilege, from time to time authorized representatives of the United 
States Department of Justice, 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 copies or electronic copy of, all books, ledgers, accounts, 
records, data, and 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 responses 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).

XI. NO REACQUISITION OR OTHER PROHIBITED ACTIVITIES

    Defendants may not (1) reacquire any part of the Divestiture 
Assets, (2) acquire any option to reacquire any part of the Divestiture 
Assets or to assign the Divestiture Assets to any other person, (3) 
enter into any local marketing agreement, joint sales agreement, other 
cooperative selling arrangement, or shared services agreement, or 
conduct other business negotiations jointly with the Acquirers with 
respect to the Divestiture Assets, or (4) provide financing or 
guarantees of financing with respect to the Divestiture Assets, during 
the term of this Final Judgment. The shared services prohibition does 
not preclude Defendants from

[[Page 81367]]

continuing or entering into agreements in a form customarily used in 
the industry to (1) share news helicopters or (2) pool generic video 
footage that does not include recording a reporter or other on-air 
talent, and does not preclude Defendants from entering into any non-
sales-related shared services agreement or transition services 
agreement that is approved in advance by the United States in its sole 
discretion.

XII. 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, to modify any of its provisions, to enforce 
compliance, and to punish violations of its provisions.

XIII. EXPIRATION OF FINAL JUDGMENT

    Unless this Court grants an extension, this Final Judgment shall 
expire ten years from the date of its entry.

XIV. 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' 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.

Date:------------------------------------------------------------------

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

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United States District Judge

[FR Doc. 2015-32785 Filed 12-28-15; 8:45 am]
 BILLING CODE P