United States v. Gray Television, Inc., et al.; Proposed Final Judgment and Competitive Impact Statement, 42883-42902 [2021-16682]

Agencies

• Antitrust Division
• Department of Justice

[Federal Register Volume 86, Number 148 (Thursday, August 5, 2021)]
[Notices]
[Pages 42883-42902]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-16682]


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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., et al., Civil Action No. 
1:21-cv-02041. On July, 28, 2021, the United States filed a Complaint 
alleging that Gray Television, Inc.'s (``Gray'') proposed acquisition 
of Quincy Media, Inc.'s (``Quincy'') commercial television broadcast 
stations would violate Section 7 of the Clayton Act, 15 U.S.C. 18. The 
proposed Final Judgment, filed at the same time as the Complaint, 
requires Gray and Quincy to divest commercial television broadcast 
stations in seven local television markets: (i) Tucson, Arizona; (ii) 
Madison, Wisconsin; (iii) Rockford, Illinois; (iv) Paducah, Kentucky-
Cape Girardeau, Missouri-Harrisburg-Mt. Vernon, Illinois; (v) Cedar 
Rapids-Waterloo-Iowa City-Dubuque, Iowa; (vi) La Crosse-Eau Claire, 
Wisconsin; and (vii) Wausau-Rhinelander, Wisconsin.
    Copies of the Complaint, proposed Final Judgment, and Competitive 
Impact Statement are available for inspection on the Antitrust 
Division's website 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

[[Page 42884]]

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 website, 
filed with the Court, and, under certain circumstances, published in 
the Federal Register. Comments should be submitted in English and 
directed to Scott Scheele, Chief, Media, Entertainment, and 
Communications Section, Antitrust Division, Department of Justice, 450 
Fifth Street NW, Suite 7000, Washington, DC 20530 (email address: 
[email protected]).

Suzanne Morris,
Chief, Premerger and Division Statistics, Antitrust Division.

United States District Court for the District of Columbia

    United States of America, 450 Fifth Street NW, Washington, DC 
20530, Plaintiff v. Gray Television, Inc., 4370 Peachtree Road NE, 
Atlanta, Georgia 30319; and Quincy Media, Inc., 130 South 5th 
Street, Quincy, Illinois 62301, Defendants.

Case No.: 1:21-cv-02041-CJN

Judge: Carl J. Nichols

Complaint

    The United States of America, acting under the direction of the 
Attorney General of the United States, brings this civil action against 
Gray Television, Inc. (``Gray'') and Quincy Media, Inc. (``Quincy'') to 
enjoin Gray's proposed acquisition of Quincy. The United States 
complains and alleges as follows:

I. Nature of the Action

    1. Pursuant to a Stock Purchase Agreement dated January 31, 2021, 
Gray plans to acquire Quincy for approximately $925 million in cash.
    2. The proposed acquisition would combine popular local television 
stations that compete against each other in several markets, likely 
resulting in significant harm to competition.
    3. In seven Designated Market Areas (``DMAs''), Gray and Quincy 
each own at least one broadcast television station that is affiliated 
with one of the ``Big Four'' television networks: NBC, CBS, ABC, or 
FOX. These seven DMAs, collectively referred to in this Complaint as 
the ``Overlap DMAs'' are: (i) Tucson, Arizona; (ii) Madison, Wisconsin; 
(iii) Rockford, Illinois; (iv) Paducah, Kentucky-Cape Girardeau, 
Missouri-Harrisburg-Mt. Vernon, Illinois; (v) Cedar Rapids-Waterloo-
Iowa City-Dubuque, Iowa; (vi) La Crosse-Eau Claire, Wisconsin; and 
(vii) Wausau-Rhinelander, Wisconsin.
    4. In each Overlap DMA, the proposed acquisition would eliminate 
competition between Gray and Quincy in the licensing of Big Four 
network content (``retransmission consent'') to cable, satellite, fiber 
optic television, and over-the-top providers (referred to collectively 
as multichannel video programming distributors or ``MVPDs''), for 
distribution to their subscribers. Additionally, in each Overlap DMA, 
the proposed acquisition would eliminate competition between Gray and 
Quincy in the sale of broadcast television spot advertising to 
advertisers interested in reaching viewers in the DMA.
    5. By eliminating a competitor, the acquisition would likely give 
Gray the power to charge MVPDs higher fees for its programming--fees 
that those companies would likely pass on, in large measure, to their 
subscribers. Additionally, the acquisition would likely allow Gray to 
charge local businesses and other advertisers higher prices to reach 
audiences in the Overlap DMAs.
    6. As a result, the proposed acquisition of Quincy by Gray likely 
would substantially lessen competition in the markets for 
retransmission consent in each of the Overlap DMAs, and in the markets 
for selling broadcast television spot advertising in each of the 
Overlap DMAs, in violation of Section 7 of the Clayton Act, 15 U.S.C. 
18.

II. The Defendants

    7. Gray is a Georgia corporation with its headquarters in Atlanta, 
Georgia. Gray owns 165 television stations in 94 DMAs, of which 139 are 
Big Four affiliates. In 2020, Gray reported revenues of $2.4 billion.
    8. Quincy is an Illinois corporation with its headquarters in 
Quincy, Illinois. Quincy owns 20 television stations in 16 DMAs, of 
which 19 are Big Four affiliates. In 2020, Quincy had revenues of 
approximately $338 million.

III. Jurisdiction and Venue

    9. The United States brings this action under Section 15 of the 
Clayton Act, 15 U.S.C. 25, as amended, to prevent and restrain 
Defendants from violating Section 7 of the Clayton Act, 15 U.S.C. 18.
    10. 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.
    11. Defendants sell broadcast television spot advertising to 
businesses (either directly or through advertising agencies) in the 
flow of interstate commerce, and such activities substantially affect 
interstate commerce.
    12. Gray and Quincy have each consented to venue and personal 
jurisdiction in this judicial district for purposes of this action. 
Both companies transact business in this district. Venue is proper in 
this district under Section 12 of the Clayton Act, 15 U.S.C. 22, and 
under 28 U.S.C. 1391(b) and (c).

IV. Big Four Television Retransmission Consent Markets

A. Background

    13. MVPDs, such as Comcast, DirecTV, and Mediacom, typically pay 
the owner of each local Big Four broadcast station in a given DMA a 
per-subscriber fee for the right to retransmit the station's content to 
the MVPDs' subscribers. The per-subscriber fee and other terms under 
which an MVPD is permitted to distribute a station's content to its 
subscribers are set forth in a retransmission agreement. A 
retransmission agreement is negotiated directly between a broadcast 
station group, such as Gray or Quincy, and a given MVPD, and this 
agreement typically covers all of the station group's stations located 
in the MVPD's service area, or ``footprint.''
    14. Each broadcast station group typically renegotiates 
retransmission agreements with the MVPDs every few years. If an MVPD 
and a broadcast station group cannot agree on a retransmission consent 
fee at the expiration of a retransmission agreement, the result may be 
a ``blackout'' of the broadcast group's stations from the particular 
MVPD--i.e., an open-ended period during which the MVPD may not 
distribute those stations to its subscribers until a new contract is 
successfully negotiated.

B. Relevant Markets

1. Product Market
    15. Big Four broadcast content has special appeal to television 
viewers in comparison to the content that is available through other 
broadcast stations and cable networks. Big Four stations usually are 
the highest ranked in terms of audience share and ratings in each DMA, 
largely because of unique offerings such as local news, sports, and 
highly ranked primetime programs.
    16. Because of Big Four stations' popular national content and 
valued local coverage, MVPDs regard Big Four programming as highly 
desirable for inclusion in the packages they offer subscribers.
    17. Non-Big Four broadcast stations are typically not close 
substitutes for viewers of Big Four stations. Stations that are 
affiliates of networks other than the Big Four, such as the CW Network,

[[Page 42885]]

MyNetworkTV, or Telemundo, typically feature niche programming without 
local news, weather or sports--or, in the case of Telemundo, only offer 
local news, weather, and sports aimed at a Spanish-speaking audience. 
Stations that are unaffiliated with any network are similarly unlikely 
to carry programming with broad popular appeal.
    18. If an MVPD suffers a blackout of a Big Four station in a given 
DMA, many of the MVPD's subscribers in that DMA are likely to turn to 
other Big Four stations in the DMA to watch similar content, such as 
sports, primetime shows, and local news and weather. This willingness 
of viewers to switch between competing Big Four broadcast stations 
limits an MVPD's expected losses in the case of a blackout, and thus 
limits a broadcaster's ability to extract higher fees from that MVPD--
since an MVPD's willingness to pay higher retransmission consent fees 
for content rises or falls with the harm it would suffer if that 
content were lost.
    19. Due to the limited programming typically offered by non-Big 
Four stations, viewers are much less likely to switch to a non-Big Four 
station than to switch to other Big Four stations in the event of a 
blackout of a Big Four station. Accordingly, competition from non-Big 
Four stations does not typically impose a significant competitive 
constraint on the retransmission consent fees charged by the owners of 
Big Four stations.
    20. For the same reasons, subscribers--and therefore MVPDs--
generally do not view cable network programming as a close substitute 
for Big Four network content. This is primarily because cable networks 
offer different content. For example, cable networks generally do not 
offer local news, which provides a valuable connection to the local 
community that is important to viewers of Big Four stations.
    21. Because viewers do not regard non-Big Four broadcast stations 
or cable networks as close substitutes for the programming they receive 
from Big Four stations, these other sources of programming are not 
sufficient to discipline an increase in the fees charged for Big Four 
television retransmission consent.
    22. For all of these reasons, a hypothetical monopolist of Big Four 
television stations likely could impose a small but significant and 
non-transitory increase in the price (``SSNIP'') it charges MVPDs for 
retransmission consent without losing sufficient sales to render the 
price increase unprofitable.
    23. The licensing of Big Four television retransmission consent 
therefore constitutes a relevant product market and line of commerce 
under Section 7 of the Clayton Act, 15 U.S.C. 18.
2. Geographic Markets
    24. A DMA is a geographic unit for which The Nielsen Company (US), 
LLC --a firm that surveys television viewers--furnishes broadcast 
television stations, MVPDs, cable networks, advertisers, and 
advertising agencies in a particular area with data to aid in 
evaluating audience size and composition. DMAs are widely accepted by 
industry participants as the standard geographic areas to use in 
evaluating television audience size and demographic composition. The 
Federal Communications Commission (``FCC'') also uses DMAs as 
geographic units with respect to its MVPD regulations.
    25. In the event of a blackout of a Big Four network station, FCC 
rules generally prohibit an MVPD from importing the same network's 
content from another DMA. Thus, MVPD subscribers in one DMA cannot 
switch to Big Four programming in another DMA in the face of a 
blackout. Therefore, substitution to stations outside the DMA cannot 
discipline an increase in the fees charged for retransmission consent 
for broadcast stations in the DMA. Each DMA thus constitutes a relevant 
geographic market for the licensing of Big Four television 
retransmission consent within the meaning of Section 7 of the Clayton 
Act, 15 U.S.C. 18.

C. Likely Anticompetitive Effects

    26. The more concentrated a market would be as a result of a 
proposed merger, the more likely it is that the proposed merger would 
substantially lessen competition. Concentration can be measured by the 
widely used Herfindahl-Hirschman Index (``HHI'').\1\ Under the 
Horizontal Merger Guidelines issued by the Department of Justice and 
the Federal Trade Commission, mergers that result in highly 
concentrated markets (i.e., with an HHI over 2,500) and that increase 
the HHI by more than 200 points are presumed likely to enhance market 
power and substantially lessen competition. See, e.g., United States v. 
Anthem, Inc., 855 F.3d 345, 349 (D.C. Cir. 2017).
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    \1\ The HHI is calculated by squaring the market share of each 
firm competing in the market and then summing the resulting numbers. 
For example, for a market consisting of four firms with shares of 
30, 30, 20, and 20 percent, the HHI is 2,600 (30\2\ + 30\2\ + 20\2\ 
+20\2\ = 2,600). The HHI takes into account the relative size 
distribution of the firms in a market. It approaches zero when a 
market is occupied by a large number of firms of relatively equal 
size, and reaches its maximum of 10,000 points when a market is 
controlled by a single firm. The HHI increases both as the number of 
firms in the market decreases and as the disparity in size between 
those firms increases.
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    27. The chart below summarizes Defendants' approximate Big Four 
television retransmission consent market shares, based on revenue 
figures in BIA Advisory Services' Investing in Television Market Report 
2020 (1st edition), and the effect of the transaction on the HHI in 
each Overlap DMA.\2\
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    \2\ In this chart, sums that do not agree precisely reflect 
rounding.

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                                                                                    Pre-      Post-
                  Overlap DMA                      Gray      Quincy     Merged     merger     merger      HHI
                                                share (%)  share (%)  share (%)     HHI        HHI      increase
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Tucson, AZ....................................         30         24         54      2,564      4,010      1,446
Madison, WI...................................         30         23         53      2,556      3,956      1,400
Paducah-Harrisburg, KY-IL.....................         30         23         53      2,622      4,022      1,400
Cedar Rapids, IA..............................         26         20         46      2,533      3,600      1,067
La Crosse-Eau Claire, WI......................         33         20         53      2,622      3,956      1,333
Rockford, IL..................................         27         20         47      2,533      3,600      1,066
Wausau-Rhinelander, WI........................         44         33         77      3,580      6,543      2,963
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    28. As indicated by the preceding chart, the post-merger HHI in 
each Overlap DMA is well above 2,500, and the HHI increase in each 
Overlap DMA far exceeds the 200-point threshold. Thus, the proposed 
acquisition presumptively violates Section 7 of the Clayton Act in each 
Overlap DMA.

[[Page 42886]]

    29. The proposed transaction would give Gray the ability to black 
out more Big Four stations simultaneously in each of the Overlap DMAs 
than either Gray or Quincy could black out independently today. This 
would increase Gray's bargaining leverage with MVPDs, likely leading to 
increased retransmission consent fees charged to such MVPDs.

V. Broadcast Television Spot Advertising Markets

A. Background

    31. Broadcast television stations, including both Big Four and non-
Big Four stations in the Overlap DMAs, sell advertising ``spots'' 
during breaks in their programming. Advertisers purchase spots from a 
broadcast station to communicate with viewers within the DMA in which 
the broadcast television station is located. Broadcast television spot 
advertising is distinguished from ``network'' advertising, which 
consists of advertising time slots sold on nationwide broadcast 
networks by those networks, and not by local broadcast television 
stations or their representatives.
    32. Gray and Quincy each own at least one Big Four affiliated 
television station in each of the Overlap DMAs and compete with one 
another to sell broadcast television spot advertising in each of the 
Overlap DMAs.

B. Relevant Markets

1. Product Market
    33. Broadcast television spot advertising constitutes a relevant 
product market and line of commerce under Section 7 of the Clayton Act, 
15 U.S.C. 18. Advertisers' inability or unwillingness to substitute to 
other types of advertising in response to a price increase in broadcast 
television spot advertising supports this relevant market definition.
i. Overview of Broadcast Television Spot Advertising
    34. Typically, an advertiser purchases broadcast television 
advertising spots as one component of an advertising strategy that may 
also include cable television advertising spots, newspaper 
advertisements, billboards, radio spots, digital advertisements, email 
advertisements, and direct mail.
    35. Different components of an advertising strategy generally 
target different audiences and serve distinct purposes. Advertisers 
that advertise on broadcast television stations do so because the 
stations offer popular programming such as local news, sports, and 
primetime and syndicated shows that are especially attractive to a 
broad demographic base and a large audience of viewers. Other 
categories of advertising may offer different characteristics, but are 
not close substitutes for broadcast television spot advertising. For 
example, ads associated with online search results target individual 
consumers or respond to specific keyword searches, whereas broadcast 
television spot advertising reaches a broad audience throughout a DMA.
    36. Technological developments may bring various advertising 
categories into closer competition with each other. For example, 
broadcasters and cable networks are developing technology to make their 
spot advertising addressable, meaning that broadcasters could deliver 
targeted advertising in live broadcast and on-demand formats to smart 
televisions or streaming devices. For certain advertisers, these 
technological changes may make other categories of advertising closer 
substitutes for advertising on broadcast television in the future. 
However, at this time, for many broadcast television spot advertising 
advertisers, these projected developments are insufficient to mitigate 
the anticompetitive effects of the proposed acquisition in the Overlap 
DMAs.
ii. Cable Television Spot Advertising Is Not a Reasonable Substitute
    37. MVPDs sell spot advertising to be shown during breaks in cable 
network programming. For viewers, these advertisements are similar to 
broadcast television spot ads. However, cable television spot 
advertising is not at this time a reasonable substitute for broadcast 
television spot advertising for most advertisers.
    38. First, broadcast television spot advertising is a more 
efficient option than cable television spot advertising for many 
advertisers. Because broadcast television offers highly rated 
programming with broad appeal, each broadcast television advertising 
spot typically offers the opportunity to reach more viewers (more 
``ratings points'') than a single spot on a cable network. By contrast, 
MVPDs offer dozens of cable networks with specialized programs that 
appeal to niche audiences. This fragmentation allows advertisers to 
target narrower demographic subsets by buying cable spots on particular 
channels, but it does not meet the needs of advertisers who want to 
reach a large percentage of a DMA's population.
    39. Second, households that have access to cable networks are 
divided among multiple MVPDs within a DMA. In contrast, broadcast 
television spot advertising reaches all households that subscribe to an 
MVPD and, through an over-the-air signal, most households with a 
television that do not.
    40. Finally, MVPDs' inventory of cable television spot advertising 
is limited--typically to two minutes per hour--contrasting sharply with 
broadcast stations' much larger number of advertising minutes per hour. 
The inventory of DMA-wide cable television spot advertising is 
substantially further reduced by the large portion of those spots 
allocated to local zone advertising, in which an MVPD sells spots by 
geographic zones within a DMA, allowing advertisers to target smaller 
geographic areas. Due to the limited inventories and lower ratings 
associated with cable television spot programming, cable television 
spot advertising does not offer a sufficient volume of ratings points, 
or broad enough household penetration, to provide a viable alternative 
to broadcast television spot advertising.
iii. Digital Advertising Is Not a Reasonable Substitute
    41. Digital advertising is also not a sufficiently close substitute 
for broadcast television spot advertising. Some digital advertising, 
such as static and floating banner advertisements, static images, text 
advertisements, wallpaper advertisements, pop-up advertisements, flash 
advertisements, and paid search results, lacks the combination of 
sight, sound, and motion that makes television spot advertising 
particularly impactful and memorable and therefore effective for 
advertisers. Digital video advertisements, on the other hand, do allow 
for a combination of sight, sound, and motion, and on this basis are 
more comparable to broadcast television spot advertising than other 
types of digital advertising. However, they are still not close 
substitutes for broadcast television spot advertising because digital 
advertisements typically have a different scope of reach compared to 
broadcast television spot advertising. For example, while advertisers 
use broadcast television spots to reach a large percentage of 
households within a given DMA, advertisers use digital advertising to 
reach a variety of different audiences. While a small portion of 
advertisers purchase DMA-wide advertisements on digital platforms, 
digital advertisements usually are targeted either very broadly, such 
as nationwide or regional, or to a geographic target smaller than a 
DMA, such as a city or a zip code, or to narrow demographic subsets of 
a population.

[[Page 42887]]

iv. Other Forms of Advertising Are Not Reasonable Substitutes
    42. Other forms of advertising, such as radio, newspaper, 
billboard, and direct-mail advertising, also do not constitute 
effective substitutes for broadcast television spot advertising. These 
forms of media do not reach as many local viewers or drive brand 
awareness to the same extent as broadcast television spot advertising 
does. Broadcast television spot advertising possesses a unique 
combination of attributes that advertisers value in a way that sets it 
apart from advertising on other media. Broadcast television spot 
advertising combines sight, sound, and motion in a way that makes 
television advertisements particularly memorable and impactful.
    43. For all of these reasons, a hypothetical monopolist of 
broadcast television spot advertising likely could impose a SSNIP 
without losing sufficient sales to render the price increase 
unprofitable.
    44. The sale of broadcast television spot advertising therefore 
constitutes a relevant product market and line of commerce under 
Section 7 of the Clayton Act, 15 U.S.C. 18.
2. Geographic Markets
    45. For an advertiser seeking to reach potential customers in a 
given DMA, broadcast television stations located outside of the DMA do 
not provide effective access to the advertiser's target audience. The 
signals of broadcast television stations located outside of the DMA 
generally do not reach any significant portion of the target DMA 
through either over-the-air signal or MVPD distribution. Because 
advertisers cannot reach viewers inside a DMA by advertising on 
stations outside the DMA, a hypothetical monopolist of broadcast 
television spot advertising on stations in a given DMA could likely 
profitably impose at least a SSNIP.
    46. Each of the Overlap DMAs accordingly constitutes a relevant 
geographic market for the sale of broadcast television spot advertising 
within the meaning of Section 7 of the Clayton Act, 15 U.S.C. 18.

C. Likely Anticompetitive Effects

    47. The chart below summarizes Defendants' approximate market 
shares, based on figures in BIA Advisory Services' Investing in 
Television Market Report 2020 (1st edition), and the result of the 
transaction on the HHIs in the sale of broadcast television spot 
advertising in each of the Overlap DMAs.

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                                                                                    Pre-      Post-
                  Overlap DMA                      Gray      Quincy     Merged     merger     merger      HHI
                                                share (%)  share (%)  share (%)     HHI        HHI      increase
----------------------------------------------------------------------------------------------------------------
Tucson, AZ....................................         27         25         52      2,059      3,389      1,330
Madison, WI...................................         31         20         51      2,540      3,745      1,205
Paducah-Harrisburg, KY-IL.....................         26         22         48      2,886      4,022      1,136
Cedar Rapids, IA..............................         41         34         75      3,108      5,852      2,744
La Crosse-Eau Claire, WI......................         33         23         56      2,587      4,084      1,497
Rockford, IL..................................         28         35         63      3,348      5,319      1,971
Wausau-Rhinelander, WI........................         40         38         78      3,479      6,489      3,010
----------------------------------------------------------------------------------------------------------------

    48. Defendants' large market shares reflect the fact that, in each 
Overlap DMA, Gray and Quincy each own one or more significant broadcast 
television stations. As indicated by the preceding chart, the post-
merger HHI in each Overlap DMA is well above 2,500 and the HHI increase 
in each Overlap DMA far exceeds the 200-point threshold above which a 
transaction is presumed to enhance market power and harm competition. 
Defendants' proposed transaction is thus presumptively unlawful in each 
Overlap DMA.
    49. In addition to substantially increasing the concentration 
levels in each Overlap DMA, the proposed acquisition would combine 
Gray's and Quincy's broadcast television stations, which are generally 
close competitors in the sale of broadcast television spot advertising. 
In each Overlap DMA, Defendants' broadcast stations compete head-to-
head in the sale of broadcast television spot advertising. Advertisers 
obtain lower prices as a result of this competition. In particular, 
advertisers in the Overlap DMAs can respond to an increase in one 
station's spot advertising prices by purchasing, or threatening to 
purchase, advertising spots on one or more stations owned by different 
broadcast station groups, thereby ``buying around'' the station that 
raises its prices. This practice allows the advertisers either to avoid 
the first station's price increase, or to pressure the first station to 
lower its prices.
    50. If Gray acquires Quincy's stations, advertisers seeking to 
reach audiences in the Overlap DMAs would have fewer competing 
broadcast television alternatives available to meet their advertising 
needs, and would find it more difficult and costly to buy around higher 
prices imposed by the combined stations. This would likely result in 
increased advertising prices, lower quality local programming to which 
the spot advertising is attached (for example, less investment in local 
news), and less innovation in providing advertising solutions to 
advertisers.
    51. For these reasons, the proposed acquisition likely would 
substantially lessen competition in the sale of broadcast television 
spot advertising in each of the Overlap DMAs, in violation of Section 7 
of the Clayton Act, 15 U.S.C. 18.

VI. Absence of Countervailing Factors

    52. De novo entry into each Overlap 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 were to become available, commercial 
success would come over a period of many years, if at all. Because Big 
Four affiliated stations generally have the highest ratings in each 
DMA, they are more successful at selling broadcast television spot ads 
compared to non-Big Four affiliated broadcast stations. Thus, entry of 
a new broadcast station into an Overlap DMA would not be timely, 
likely, or sufficient to prevent or remedy the proposed acquisition's 
likely anticompetitive effects in the relevant markets.
    53. Defendants cannot demonstrate transaction-specific, verifiable 
efficiencies sufficient to offset the proposed acquisition's likely 
anticompetitive effects.

VII. Violations Alleged

    54. The United States hereby incorporates the allegations of 
paragraphs 1 through 53 above as if set forth fully herein.
    55. Gray's proposed acquisition of Quincy likely would 
substantially lessen competition in the relevant markets, in violation 
of Section 7 of the

[[Page 42888]]

Clayton Act, 15 U.S.C. 18. The acquisition would likely have the 
following anticompetitive effects, among others:
    a. Competition in the licensing of Big Four television 
retransmission consent in each of the Overlap DMAs likely would be 
substantially lessened;
    b. competition between Gray and Quincy in the licensing of Big Four 
television retransmission consent in each of the Overlap DMAs would be 
eliminated;
    c. the fees charged to MVPDs for the licensing of retransmission 
consent in each of the Overlap DMAs likely would increase;
    d. competition in the sale of broadcast television spot advertising 
in each of the Overlap DMAs likely would be substantially lessened;
    e. competition between Gray and Quincy in the sale of broadcast 
television spot advertising in each of the Overlap DMAs would be 
eliminated; and
    f. prices for spot advertising on broadcast television stations in 
each of the Overlap DMAs likely would increase, the quality of local 
programming likely would decrease, and Defendants likely would be less 
innovative in providing advertising solutions to advertisers.

VIII. Relief Requested

    56. The United States requests that:
    a. The Court adjudge the proposed acquisition to violate Section 7 
of the Clayton Act, 15 U.S.C. 18;
    b. the Court enjoin and restrain Defendants from carrying out the 
acquisition, or entering into any other agreement, understanding, or 
plan by which Gray would merge with, acquire, or be acquired by Quincy, 
or Gray and Quincy would combine any of their respective Big Four 
stations in the Overlap DMAs;
    c. the Court award the United States its costs of this action; and
    d. the Court award such other relief to the United States as the 
Court may deem just and proper.

    Dated: July 28, 2021.

    Respectfully submitted,

Counsel for Plaintiff United States of America

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Richard A. Powers,
Acting Assistant Attorney General, Antitrust Division.

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Kathleen S. O'Neill,
Senior Director of Investigation and Litigation, Antitrust Division.

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Scott Scheele (D.C. Bar #429061),
Chief, Media, Entertainment, & Communications Section, Antitrust 
Division.

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Jared A. Hughes,
Assistant Chief, Media, Entertainment, & Communications Section, 
Antitrust Division.

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Brendan Sepulveda *
(D.C. Bar #1025074),
Trial Attorney, United States Department of Justice, Antitrust 
Division, Media, Entertainment, & Communications Section, 450 Fifth 
Street NW, Suite 7000, Washington, DC 20530, Telephone: (202) 316-
7258, Facsimile: (202) 514-6381, Email: [email protected].

* Lead Attorney To Be Noticed.

United States District Court For The District of Columbia

    United States of America, Plaintiff, v. Gray Television, Inc., 
and Quincy Media, Inc., Defendants.

Case No.: 1:21-cv-02041-CJN

Judge: Carl J. Nichols

Proposed Final Judgment

    Whereas, Plaintiff, United States of America, filed its Complaint 
on July 28, 2021;
    And Whereas, the United States and Defendants, Gray Television, 
Inc., and Quincy Media, Inc., have consented to entry of this Final 
Judgment without the taking of testimony, 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 make certain divestitures to 
remedy the loss of competition alleged in the Complaint;
    And Whereas, Defendants represent that the divestitures and other 
relief required by this Final Judgment can and will be made and that 
Defendants will not later raise a claim of hardship or difficulty as 
grounds for asking the Court to modify any provision of this Final 
Judgment;
    Now therefore, it is ordered, adjudged, and decreed:

I. Jurisdiction

    The 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).

II. Definitions

    As used in this Final Judgment:
    A. ``Acquirer'' means Allen or another entity or entities to whom 
Defendants divest the Divestiture Assets.
    B. ``Gray'' means Defendant Gray Television, Inc., a Georgia 
corporation with its headquarters 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.
    C. ``Quincy'' means Defendant Quincy Media, Inc., an Illinois 
corporation with its headquarters in Quincy, Illinois, its successors 
and assigns, and its subsidiaries, divisions, groups, affiliates, 
partnerships, and joint ventures, and their directors, officers, 
managers, agents, and employees.
    D. ``Allen'' means Allen Media Holdings, LLC, a Delaware limited 
liability company with its headquarters in Los Angeles, California, its 
successors and assigns, and its subsidiaries, divisions, groups, 
affiliates, partnerships, and joint ventures, and their directors, 
officers, managers, agents, and employees.
    E. ``Big Four Affiliation Agreement'' means an affiliation 
agreement with NBC, CBS, ABC, or FOX.
    F. ``Cooperative Agreement'' means (1) carriage agreements, joint 
sales agreements, joint operating agreements, local marketing 
agreements, news share agreements, shared services agreements, joint 
ventures, partnerships, or collaborations or (2) any agreement through 
which a person exercises control over any broadcast television station 
not owned by the person.
    G. ``Divestiture Assets'' means all of Defendants' rights, titles, 
and interests in and to all property and assets, tangible and 
intangible, wherever located, relating to or used in connection with 
the Divestiture Stations, including:
    1. The KWWL main transmitter site located at 2698 Lucas Avenue, 
Rowley, IA 52329 and the KWWL main studio located at 511 East 5th 
Street, Waterloo, IA 50703;
    2. the WAOW studio facility located at 1900-1908 Grand Avenue, 
Wausau, WI 55403 and the WAOW satellite location at 605 Kent Street 
East, Wausau, WI 55504;
    3. the WKOW studio facility located at 5725 Tokay Boulevard, 
Madison, WI 53719;
    4. the WQOW transmitter site located at 780th Avenue Rural Route 3, 
Colfax, WI 54730; the WQOW microwave repeater located at S17, T20N, 
R8W, Arcadia, WI; the WQOW studio facility located at 5545 Highway 93, 
Eau Claire, WI 54701; and the WQOW microwave tower located at S34, 
T24N, R9W, Albion Township, WI;

[[Page 42889]]

    5. the WREX studio and transmitter facility located at 10322 Auburn 
Road, Rockford, IL 61101;
    6. the WSIL studio and office located at 1416 Country Aire Drive, 
Carterville, IL 62918; the WSIL tower and transmitter building located 
at 1154 N Wagon Creek Road, Creal Springs, IL 62922; the WSIL tower 
located at 21 W Poplar Street, Harrisburg, IL 62946; and the WSIL tower 
and transmitter building located at 3690 Highway 67, Poplar Bluff, MO 
63901;
    7. the WXOW studio and transmitter facility located at 3705 County 
Road 25, La Crescent, MN 55947;
    8. the KVOA studio facility located at 209 W Elm Street, Tucson, AZ 
85705;
    9. all other real property, including fee simple interests and real 
property leasehold interests and renewal rights thereto, improvements 
to real property, and options to purchase any adjoining or other 
property, together with all buildings, facilities, and other 
structures;
    10. all tangible personal property, including fixed assets, 
machinery and manufacturing equipment, tools, vehicles, inventory, 
materials, office equipment and furniture, computer hardware, and 
supplies;
    11. all contracts, contractual rights, and customer relationships, 
and all other agreements, commitments, and understandings, including 
network affiliation agreements, supply agreements, teaming agreements, 
and leases, and all outstanding offers or solicitations to enter into a 
similar arrangement;
    12. all licenses, permits, certifications, approvals, consents, 
registrations, waivers, and authorizations issued or granted by the FCC 
or any other governmental organization, and all pending applications or 
renewals;
    13. all records and data, including (a) customer lists, accounts, 
sales, and credit records, (b) production, repair, maintenance, and 
performance records, (c) manuals and technical information Defendants 
provide to their own employees, customers, suppliers, agents, or 
licensees, (d) records and research data concerning historic and 
current research and development activities, including designs of 
experiments and the results of successful and unsuccessful designs and 
experiments, and (e) drawings, blueprints, and designs;
    14. all intellectual property owned, licensed, or sublicensed, 
either as licensor or licensee, including (a) patents, patent 
applications, and inventions and discoveries that may be patentable, 
(b) registered and unregistered copyrights and copyright applications, 
and (c) registered and unregistered trademarks, trade dress, service 
marks, trade names, and trademark applications; and
    15. all other intangible property, including (a) commercial names 
and d/b/a names, (b) technical information, (c) computer software and 
related documentation, know-how, trade secrets, design protocols, 
specifications for materials, specifications for parts, specifications 
for devices, safety procedures (e.g., for the handling of materials and 
substances), quality assurance and control procedures, (d) design tools 
and simulation capabilities, and (e) rights in internet websites and 
internet domain names; provided, however, that the assets specified in 
Paragraphs II(G)(1)-(15) above do not include the Excluded Assets.
    H. ``Divestiture Date'' means the date the Divestiture Assets are 
divested to Acquirer.
    I. ``Divestiture Stations'' means KPOB-TV, KVOA, KWWL, WAOW, WKOW, 
WMOW, WQOW, WREX, WSIL-TV, and WXOW.
    J. ``DMA'' means Designated Market Area as defined by The Nielsen 
Company (US), LLC, based upon viewing patterns and used by BIA Advisory 
Services' Investing in Television Market Report 2020 (1st edition).
    K. ``Excluded Assets'' means
    1. the CW affiliation agreement and programming stream (including 
any syndicated programming), receiver, program logs and related 
materials, related intellectual property and domain names, relating to 
KWWL and/or the Cedar Rapids-Waterloo-Iowa City-Dubuque, Iowa, DMA;
    2. the CW affiliation agreement and programming stream (including 
any syndicated programming), receiver, program logs and related 
materials, related intellectual property and domain names, relating to 
WMOW, WAOW and/or the Wausau-Rhinelander, Wisconsin, DMA;
    3. the CW affiliation agreement and programming stream (including 
any syndicated programming), receiver, program logs and related 
materials, related intellectual property and domain names, relating to 
WREX and/or the Rockford, Illinois, DMA;
    4. the CW affiliation agreement and programming stream (including 
any syndicated programming), receiver, program logs and related 
materials, related intellectual property and domain names, relating to 
WXOW, WQOW, and/or the La Crosse-Eau Claire, Wisconsin, DMA;
    5. the MeTV affiliation agreement and programming stream (including 
any syndicated programming), receiver, program logs and related 
materials, related intellectual property and domain names, relating to 
WKOW and/or the Madison, Wisconsin, DMA;
    6. the MeTV affiliation agreement and programming stream (including 
any syndicated programming), receiver, program logs and related 
materials, related intellectual property and domain names, relating to 
WXOW, WQOW, and/or the La Crosse-Eau Claire, Wisconsin, DMA;
    7. satellite station WYOW, Eagle River, Wisconsin and transmitter 
facilities located at 6425 Thunderlake Road in Rhinelander, Wisconsin 
54501;
    8. all real and tangible personal property owned by Quincy located 
at 501 and 513 Hampshire Street in Quincy, Illinois 62301;
    9. all tangible personal property owned by Quincy located at 130 
South 5th Street, Quincy, Illinois 62301; and
    10. all real and tangible personal property owned by Quincy at the 
Digital Realty Data Center located at 350 East Cermak, Chicago, 
Illinois 60616.
    L. ``FCC'' means the Federal Communications Commission.
    M. ``Overlap DMAs'' means the following seven DMAs: Tucson, 
Arizona; Madison, Wisconsin; Rockford, Illinois; Paducah, 
Kentucky[dash]Cape Girardeau, Missouri[dash]Harrisburg-Mt. Vernon, 
Illinois; Cedar Rapids-Waterloo-Iowa City-Dubuque, Iowa; La Crosse-Eau 
Claire, Wisconsin; and Wausau-Rhinelander, Wisconsin.
    N. ``Relevant Personnel'' means all full-time, part-time, or 
contract employees of Defendants, wherever located, whose job 
responsibilities primarily relate to the operation or management of the 
Divestiture Stations, at any time between February 1, 2021, and the 
Divestiture Date. The United States, in its sole discretion, will 
resolve any disagreement regarding which employees are Relevant 
Personnel.
    O. ``KPOB-TV'' means the ABC-affiliated broadcast station bearing 
that call sign located in the Paducah, Kentucky[dash]Cape Girardeau, 
Missouri[dash]Harrisburg-Mt. Vernon, Illinois, DMA and owned by Quincy.
    P. ``KVOA'' means the NBC-affiliated broadcast station bearing that 
call sign located in the Tucson, Arizona, DMA and owned by Quincy.
    Q. ``KWWL'' means the NBC-affiliated broadcast station bearing that 
call sign located in the Cedar Rapids-Waterloo-Iowa City-Dubuque, Iowa, 
DMA and owned by Quincy.
    R. ``WAOW'' means the ABC-affiliated broadcast station bearing that 
call sign located in the Wausau-Rhinelander, Wisconsin, DMA and owned 
by Quincy.

[[Page 42890]]

    S. ``WIFR-LD'' means the CBS-affiliated broadcast station bearing 
that call sign located in the Rockford, Illinois, DMA and owned by 
Gray.
    T. ``WKOW'' means the ABC-affiliated broadcast station bearing that 
call sign located in the Madison, Wisconsin DMA and owned by Quincy.
    U. ``WMOW'' means the ABC-affiliated broadcast station bearing that 
call sign located in the Wausau-Rhinelander, Wisconsin, DMA and owned 
by Quincy.
    V. ``WREX'' means the NBC-affiliated broadcast station bearing that 
call sign located in the Rockford, Illinois, DMA and owned by Quincy.
    W. ``WSIL-TV'' means the ABC-affiliated broadcast station bearing 
that call sign located in the Paducah, Kentucky[dash]Cape Girardeau, 
Missouri[dash]Harrisburg-Mt. Vernon, Illinois, DMA and owned by Quincy.
    X. ``WQOW'' means the ABC-affiliated broadcast station bearing that 
call sign located in the La Crosse-Eau Claire, Wisconsin, DMA and owned 
by Quincy.
    Y. ``WXOW'' means the ABC-affiliated broadcast station bearing that 
call sign located in the La Crosse-Eau Claire, Wisconsin, DMA and owned 
by Quincy.
    Z. ``WYOW'' means the satellite broadcast station bearing that call 
sign located in the Wausau-Rhinelander, Wisconsin, DMA and owned by 
Quincy.

III. Applicability

    A. This Final Judgment applies to Gray and Quincy, as defined 
above, and all other persons, in active concert or participation with 
any Defendant, who receive actual notice of this Final Judgment.
    B. If, prior to complying with Section IV and Section V of this 
Final Judgment, Defendants sell or otherwise dispose of all or 
substantially all of their assets or of business units that include the 
Divestiture Assets, Defendants must require any purchaser to be bound 
by the provisions of this Final Judgment. Defendants need not obtain 
such an agreement from Acquirer.

IV. Divestiture

    A. Defendants are ordered and directed, within thirty (30) calendar 
days after the Court's entry of the Hold Separate Stipulation and Order 
in this matter to divest the Divestiture Assets in a manner consistent 
with this Final Judgment to Allen or another Acquirer 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 sixty (60) calendar days in total and will notify the Court 
of any extensions.
    B. If within the period required for divestiture in Paragraph 
IV(A), applications have been filed with the FCC seeking approval to 
assign or transfer licenses to Acquirer, but an order or other 
dispositive action by the FCC on such applications has not been issued 
before the end of the period required for divestiture, the required 
divestiture period shall be extended for any Divestiture Assets for 
which an FCC order has not been issued until five (5) business days 
after an FCC order is issued. Defendants must use best efforts to 
obtain all required FCC approvals as expeditiously as possible.
    C. Defendants must use best efforts to divest the Divestiture 
Assets as expeditiously as possible and may not take any action to 
impede the permitting, operation, or divestiture of the Divestiture 
Assets. Defendants must take no action that would jeopardize the 
divestiture ordered by the Court.
    D. Unless the United States otherwise consents in writing, 
divestiture pursuant to this Final Judgment must include the entire 
Divestiture Assets and must 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 Acquirer as part of a viable, ongoing 
commercial television broadcasting business and that the divestiture to 
Acquirer will remedy the competitive harm alleged in the Complaint.
    E. The divestiture must be made to an Acquirer that, in the United 
States' sole judgment, has the intent and capability, including the 
necessary managerial, operational, technical, and financial capability, 
to compete effectively in the business of commercial television 
broadcasting.
    F. The divestiture must be accomplished in a manner that satisfies 
the United States, in its sole discretion, that none of the terms of 
any agreement between Acquirer and Defendants gives Defendants the 
ability unreasonably to raise Acquirer's costs, to lower Acquirer's 
efficiency, or otherwise interfere in the ability of Acquirer to 
compete effectively in the business of commercial television 
broadcasting in the Overlap DMAs.
    G. Divestiture of the Divestiture Assets may be made to one or more 
Acquirers, provided that it is demonstrated to the sole satisfaction of 
the United States that the criteria required by Paragraphs IV(D), 
IV(E), and IV(F) will still be met.
    H. In the event Defendants are attempting to divest the Divestiture 
Assets to an Acquirer other than Allen, Defendants promptly must make 
known, by usual and customary means, the availability of the 
Divestiture Assets. Defendants must inform any person making an inquiry 
relating to a possible purchase of the Divestiture Assets that the 
Divestiture Assets are being divested in accordance with this Final 
Judgment and must provide that person with a copy of this Final 
Judgment. Defendants must offer to furnish to all prospective 
Acquirers, subject to customary confidentiality assurances, all 
information and documents relating to the Divestiture Assets that are 
customarily provided in a due-diligence process; provided, however, 
that Defendants need not provide information or documents subject to 
the attorney-client privilege or work-product doctrine. Defendants must 
make all information and documents available to the United States at 
the same time that the information and documents are made available to 
any other person.
    I. Defendants must provide prospective Acquirers with (1) access to 
personnel and to make inspections of the Divestiture Assets; (2) access 
to all environmental, zoning, and other permitting documents and 
information relating to the Divestiture Assets; and (3) access to all 
financial, operational, or other documents and information relating to 
the Divestiture Assets that would customarily be provided as part of a 
due diligence process. Defendants also must disclose all encumbrances 
on any part of the Divestiture Assets, including on intangible 
property.
    J. Defendants must cooperate with and assist Acquirer in 
identifying and, at the option of Acquirer, in hiring all Relevant 
Personnel, including:
    1. Within ten (10) business days following the filing of the 
Complaint in this matter, Defendants must identify all Relevant 
Personnel to Acquirer and the United States, including by providing 
organization charts covering all Relevant Personnel.
    2. Within ten (10) business days following receipt of a request by 
Acquirer or the United States, Defendants must provide to Acquirer and 
the United States additional information relating to Relevant 
Personnel, including name, job title, reporting relationships, past 
experience, responsibilities, training and educational histories, 
relevant certifications, and job performance evaluations. Defendants 
must also provide to Acquirer and the United States current, and 
accrued compensation and benefits, including most recent bonuses paid, 
aggregate annual compensation current target or

[[Page 42891]]

guaranteed bonus, if any, any retention agreement or incentives, and 
any other payments due, compensation or benefits accrued, or promises 
made to the Relevant Personnel. If Defendants are barred by any 
applicable law from providing any of this information, Defendants must 
provide, within ten (10) business days following receipt of the 
request, the requested information to the full extent permitted by law 
and also must provide a written explanation of Defendants' inability to 
provide the remaining information, including specifically identifying 
the provisions of the applicable laws.
    3. At the request of Acquirer, Defendants must promptly make 
Relevant Personnel available for private interviews with Acquirer 
during normal business hours at a mutually agreeable location.
    4. Defendants must not interfere with any effort by Acquirer to 
employ any Relevant Personnel. Interference includes offering to 
increase the compensation or improve the benefits of Relevant Personnel 
unless (a) the offer is part of a company-wide increase in compensation 
or improvement in benefits that was announced prior to February 1, 2021 
or (b) the offer is approved by the United States in its sole 
discretion. Defendants' obligations under this Paragraph will expire 
sixty (60) calendar days after the Divestiture Date.
    5. For Relevant Personnel who elect employment with Acquirer within 
sixty (60) calendar days of the Divestiture Date, Defendants must waive 
all non-compete and non-disclosure agreements; vest and pay to the 
Relevant Personnel (or to Acquirer for payment to the employee) on a 
prorated basis any bonuses, incentives, other salary, benefits or other 
compensation fully or partially accrued at the time of the transfer of 
the employee to Acquirer; vest any unvested pension and other equity 
rights; and provide all other benefits that those Relevant Personnel 
otherwise would have been provided had the Relevant Personnel continued 
employment with Defendants, including any retention bonuses or 
payments. Defendants may maintain reasonable restrictions on disclosure 
by Relevant Personnel of Defendants' proprietary non-public information 
that is unrelated to the operation of a commercial broadcast television 
station and not otherwise required to be disclosed by this Final 
Judgment.
    K. Defendants must warrant to Acquirer that (1) the Divestiture 
Assets will be operational and without material defect on the date of 
their transfer to Acquirer; and (2) there are no material defects in 
the environmental, zoning, or other permits relating to the operation 
of the Divestiture Assets. Following the sale of the Divestiture 
Assets, Defendants must not undertake, directly or indirectly, 
challenges to the environmental, zoning, or other permits relating to 
the operation of the Divestiture Assets.
    L. Defendants must assign, subcontract, or otherwise transfer all 
contracts, agreements, and relationships (or portions of such 
contracts, agreements, and relationships) included in the Divestiture 
Assets, including all supply and sales contracts and swap agreements, 
to Acquirer; provided, however, that for any contract or agreement that 
requires the consent of another party to assign, subcontract, or 
otherwise transfer, Defendants must use best efforts to accomplish the 
assignment, subcontracting, or transfer. Defendants must not interfere 
with any negotiations between Acquirer and a contracting party.
    M. Defendants must use best efforts to assist Acquirer to obtain 
all necessary licenses, registrations, and permits to operate the 
Divestiture Assets. Until Acquirer obtains the necessary licenses, 
registrations, and permits, Defendants must provide Acquirer with the 
benefit of Defendants' licenses, registrations, and permits to the full 
extent permissible by law.
    N. At the option of Acquirer, and subject to approval by the United 
States in its sole discretion, on or before the Divestiture Date, 
Defendants must enter into a contract to provide transition services 
for back office, human resources, accounting, and information 
technology services and support for a period of up to six (6) months on 
terms and conditions reasonably related to market conditions for the 
provision of the transition services. Any amendment to or modification 
of any provision of a contract to provide transition services is 
subject to approval by the United States, in its sole discretion. The 
United States, in its sole discretion, may approve one or more 
extensions of any contract for transition services, for a total of up 
to an additional six (6) months. If Acquirer seeks an extension of the 
term of any transition services contract, Defendants must notify the 
United States in writing at least one (1) month prior to the date the 
contract expires or, if Acquirer requests an extension less than one 
month prior to the date the contract expires, within two (2) days of 
the Acquirer's extension request. Acquirer may terminate a contract for 
transition services, or any portion of a contract for transition 
services, without cost or penalty at any time upon at least five (5) 
calendar days' written notice. The employee(s) of Defendants tasked 
with providing transition services must not share any competitively 
sensitive information of Acquirer with any other employee of 
Defendants.
    O. If any term of an agreement between Defendants and Acquirer to 
effectuate the divestiture required by this Final Judgment varies from 
a term of this Final Judgment, to the extent that Defendants cannot 
fully comply with both, this Final Judgment determines Defendants' 
obligations. Authorization by the FCC to conduct the divestiture of a 
Divestiture Asset in a particular manner will not change or modify any 
of the requirements of this Final Judgment.

V. Appointment of Divestiture Trustee

    A. If Defendants have not divested the Divestiture Assets within 
the time period specified in Paragraphs IV(A) and IV(B), Defendants 
must immediately notify the United States of that fact in writing. Upon 
application of the United States, which Defendants may not oppose, the 
Court will appoint a divestiture trustee selected by the United States 
and approved by the Court to effect the divestiture of the Divestiture 
Assets.
    B. After the appointment of a divestiture trustee by the Court, 
only the divestiture trustee will have the right to sell the 
Divestiture Assets. The divestiture trustee will have the power and 
authority to accomplish the divestiture to an Acquirer or Acquirers 
acceptable to the United States, in its sole discretion, at a price and 
on terms obtainable through reasonable effort by the divestiture 
trustee, subject to the provisions of Sections IV, V, and VI of this 
Final Judgment, and will have other powers as the Court deems 
appropriate. The divestiture trustee must sell the Divestiture Assets 
as quickly as possible.
    C. Defendants may not object to a sale by the divestiture trustee 
on any ground other than malfeasance by the divestiture trustee. 
Objections by Defendants must be conveyed in writing to the United 
States and the divestiture trustee within ten (10) calendar days after 
the divestiture trustee has provided the notice of proposed divestiture 
required by Section VI.
    D. The divestiture trustee will serve at the cost and expense of 
Defendants pursuant to a written agreement, on terms and conditions, 
including confidentiality requirements and conflict-of-interest 
certifications, approved by the United States in its sole discretion.

[[Page 42892]]

    E. The divestiture trustee may hire at the cost and expense of 
Defendants any agents or consultants, including investment bankers, 
attorneys, and accountants, that are reasonably necessary in the 
divestiture trustee's judgment to assist with the divestiture trustee's 
duties. These agents or consultants will be accountable solely to the 
divestiture trustee and will serve on terms and conditions, including 
confidentiality requirements and conflict-of-interest certifications, 
approved by the United States in its sole discretion.
    F. The compensation of the divestiture trustee and agents or 
consultants hired by the divestiture trustee must be reasonable in 
light of the value of the Divestiture Assets and based on a fee 
arrangement that provides the divestiture trustee with incentives based 
on the price and terms of the divestiture(s) and the speed with which 
it is accomplished. If the divestiture trustee and Defendants are 
unable to reach agreement on the divestiture trustee's compensation or 
other terms and conditions of engagement within fourteen (14) calendar 
days of the appointment of the divestiture trustee by the Court, the 
United States, in its sole discretion, may take appropriate action, 
including by making a recommendation to the Court. Within three (3) 
business days of hiring an agent or consultant, the divestiture trustee 
must provide written notice of the hiring and rate of compensation to 
Defendants and the United States.
    G. The divestiture trustee must account for all monies derived from 
the sale of the Divestiture Assets sold by the divestiture trustee and 
all costs and expenses incurred. Within thirty (30) calendar days of 
the Divestiture Date, the divestiture trustee must submit that 
accounting to the Court for approval. After approval by the Court of 
the divestiture trustee's accounting, including fees for unpaid 
services and those of agents or consultants hired by the divestiture 
trustee, all remaining money must be paid to Defendants and the trust 
will then be terminated.
    H. Defendants must use best efforts to assist the divestiture 
trustee to accomplish the required divestiture. Subject to reasonable 
protection for trade secrets, other confidential research, development, 
or commercial information, or any applicable privileges, Defendants 
must provide the divestiture trustee and agents or consultants retained 
by the divestiture trustee with full and complete access to all 
personnel, books, records, and facilities of the Divestiture Assets. 
Defendants also must provide or develop financial and other information 
relevant to the Divestiture Assets that the divestiture trustee may 
reasonably request. Defendants must not take any action to interfere 
with or to impede the divestiture trustee's accomplishment of the 
divestiture.
    I. The divestiture trustee must maintain complete records of all 
efforts made to sell the Divestiture Assets, including by filing 
monthly reports with the United States setting forth the divestiture 
trustee's efforts to accomplish the divestiture ordered by this Final 
Judgment. The reports must 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 must describe in detail each 
contact.
    J. If the divestiture trustee has not accomplished the divestiture 
ordered by this Final Judgment within six months of appointment, the 
divestiture trustee must promptly provide the United States with a 
report setting forth: (1) The divestiture trustee's efforts to 
accomplish the required divestiture; (2) the reasons, in the 
divestiture trustee's judgment, why the required divestiture has not 
been accomplished; and (3) the divestiture trustee's recommendations 
for completing the divestiture. Following receipt of that report, the 
United States may make additional recommendations to the Court. The 
Court thereafter may enter such orders as it deems appropriate to carry 
out the purpose of this Final Judgment, which may include extending the 
trust and the term of the divestiture trustee's appointment by a period 
requested by the United States.
    K. The divestiture trustee will serve until divestiture of all 
Divestiture Assets is completed or for a term otherwise ordered by the 
Court.
    L. If the United States determines that the divestiture trustee is 
not acting diligently or in a reasonably cost-effective manner, the 
United States may recommend that the Court appoint a substitute 
divestiture trustee.

VI. Notice of Proposed Divestiture

    A. Within two (2) business days following execution of a definitive 
divestiture agreement with an Acquirer other than Allen to divest the 
Divestiture Assets, Defendants or the divestiture trustee, whichever is 
then responsible for effecting the divestiture, must notify the United 
States of the proposed divestiture. If the divestiture trustee is 
responsible for completing the divestiture, the divestiture trustee 
also must notify Defendants. The notice must 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.
    B. Within fifteen (15) calendar days of receipt by the United 
States of this notice, the United States may request from Defendants, 
the proposed Acquirer(s), other third parties, or the divestiture 
trustee additional information concerning the proposed divestiture, the 
proposed Acquirer(s), and other prospective Acquirers. Defendants and 
the divestiture trustee must furnish the additional information 
requested within fifteen (15) calendar days of the receipt of the 
request, unless the United States provides written agreement to a 
different period.
    C. Within forty-five (45) calendar days after receipt of the notice 
required by Paragraph VI(A) or within twenty (20) calendar days after 
the United States has been provided the additional information 
requested pursuant to Paragraph VI(B), whichever is later, the United 
States must provide written notice to Defendants and any divestiture 
trustee that states whether the United States, in its sole discretion, 
objects to Acquirer(s) or any other aspect of the proposed divestiture. 
Without written notice that the United States does not object, a 
divestiture may not be consummated. 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 Paragraph V(C) of this Final Judgment. Upon objection by 
Defendants pursuant to Paragraph V(C), a divestiture by the divestiture 
trustee may not be consummated unless approved by the Court.
    D. No information or documents obtained pursuant to this Section VI 
may 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, for the purpose of 
evaluating a proposed Acquirer or securing compliance with this Final 
Judgment, or as otherwise required by law.
    E. In the event of a request by a third party for disclosure of 
information under the Freedom of Information Act, 5 U.S.C. 552, the 
Antitrust Division will act in accordance with that statute and the 
Department of Justice regulations at

[[Page 42893]]

28 CFR part 16, including the provision on confidential commercial 
information at 28 CFR 16.7. Persons submitting information to the 
Antitrust Division should designate the confidential commercial 
information portions of all applicable documents and information under 
28 CFR 16.7. Designations of confidentiality expire ten years after 
submission, ``unless the submitter requests and provides justification 
for a longer designation period.'' See 28 CFR 16.7(b).
    F. If at the time that a person furnishes information or documents 
to the United States pursuant to this Section VI, that person 
represents and identifies in writing information or documents for which 
a claim of protection may be asserted under Rule 26(c)(1)(G) of the 
Federal Rules of Civil Procedure, and marks each pertinent page of such 
material, ``Subject to claim of protection under Rule 26(c)(1)(G) of 
the Federal Rules of Civil Procedure,'' the United States must give 
that person ten (10) calendar days' notice before divulging the 
material in any legal proceeding (other than a grand-jury proceeding).

VII. Financing

    Defendants may not finance all or any part of any Acquirer's 
purchase of all or part of the Divestiture Assets.

VIII. Hold Separate

    Defendants must take all steps necessary to comply with the Hold 
Separate Stipulation and Order entered by the 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 required by this Final Judgment has been completed, 
each Defendant must deliver to the United States an affidavit, signed 
by each Defendant's Chief Financial Officer and General Counsel, 
describing in reasonable detail the fact and manner of that Defendant's 
compliance with this Final Judgment. The United States, in its sole 
discretion, may approve different signatories for the affidavits.
    B. Each affidavit required by Paragraph IX(A) must include: (1) 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, an 
interest in the Divestiture Assets and describe in detail each contact 
with such persons during that period; (2) a description of the efforts 
Defendants have taken to solicit buyers for and complete the sale of 
the Divestiture Assets, including efforts to secure other regulatory 
approvals, and to provide required information to prospective 
Acquirers; and (3) a description of any limitations placed by 
Defendants on information provided to prospective Acquirers. Objection 
by the United States to information provided by Defendants to 
prospective Acquirers must be made within fourteen (14) calendar days 
of receipt of the affidavit, except that the United States may object 
at any time if the information set forth in the affidavit is not true 
or complete.
    C. Defendants must keep all records of any efforts made to divest 
the Divestiture Assets until one year after the Divestiture Date.
    D. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, each Defendant must deliver to the United States an 
affidavit signed by each Defendant's Chief Financial Officer and 
General Counsel, that describes in reasonable detail all actions that 
Defendant has taken and all steps that Defendants has implemented on an 
ongoing basis to comply with Section VIII of this Final Judgment. The 
United States, in its sole discretion, may approve different 
signatories for the affidavits.
    E. If a Defendant makes any changes to the efforts and actions 
described in affidavits provided pursuant to Paragraph IX(D), Defendant 
must, within fifteen (15) calendar days after any change is 
implemented, deliver to the United States an affidavit describing those 
changes.
    F. Defendants must keep all records of any efforts made to comply 
with Section VIII until one year after the Divestiture Date.

X. Compliance Inspection

    A. For the purposes of determining or securing compliance with this 
Final Judgment, or of any related orders such as the Hold Separate 
Stipulation and Order or of determining whether this Final Judgment 
should be modified or vacated, upon written request of an authorized 
representative of the Assistant Attorney General for the Antitrust 
Division, and reasonable notice to Defendants, Defendants must permit, 
from time to time and subject to legally recognized privileges, 
authorized representatives, including agents retained by the United 
States:
    (1) To have access during Defendants' office hours to inspect and 
copy, or at the option of the United States, to require Defendants to 
provide electronic copies 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, relating to any matters contained in this Final Judgment. The 
interviews must 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 for the Antitrust Division, Defendants must 
submit written reports or respond to written interrogatories, under 
oath if requested, relating to any of the matters contained in this 
Final Judgment.
    C. No information or documents obtained by the United States 
pursuant to this Section X may 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, 
for the purpose of securing compliance with this Final Judgment, or as 
otherwise required by law.
    D. In the event of a request by a third party for disclosure of 
information under the Freedom of Information Act, 5 U.S.C. 552, the 
Antitrust Division will act in accordance with that statute and the 
Department of Justice regulations at 28 CFR part 16, including the 
provision on confidential commercial information at 28 CFR 16.7. 
Defendants submitting information to the Antitrust Division should 
designate the confidential commercial information portions of all 
applicable documents and information under 28 CFR 16.7. Designations of 
confidentiality expire ten years after submission, ``unless the 
submitter requests and provides justification for a longer designation 
period.'' See 28 CFR 16.7(b).
    E. If at the time that Defendants furnish information or documents 
to the United States pursuant to this Section X, Defendants represent 
and identify in writing information or documents for 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,'' the United States must give 
Defendants ten (10) calendar days' notice before divulging the material 
in any legal

[[Page 42894]]

proceeding (other than a grand jury proceeding).

XI. Notification

    A. Unless a transaction is otherwise subject to the reporting and 
waiting period requirements of the Hart-Scott-Rodino Antitrust 
Improvements Act of 1976, as amended, 15 U.S.C. 18a (the ``HSR Act''), 
Defendants may not, without first providing notification to the United 
States, directly or indirectly acquire (including through an asset swap 
agreement) any Big Four Affiliation Agreement in a DMA in which either 
Defendant has an existing Big Four Affiliation Agreement in place.
    B. Defendants must provide the notification required by this 
Section XI in the same format as, and in accordance with the 
instructions relating to, the Notification and Report Form set forth in 
the Appendix to Part 803 of Title 16 of the Code of Federal Regulations 
as amended, except that the information requested in Items 5 through 8 
of the instructions must be provided only about the business of 
commercial television broadcasting. Notification must be provided at 
least thirty (30) calendar days before acquiring any assets or 
interest, and must include, beyond the information required by the 
instructions, the names of the principal representatives who negotiated 
the transaction on behalf of each party and all management or strategic 
plans discussing the proposed transaction. If, within the thirty (30) 
calendar days following notification, representatives of the United 
States make a written request for additional information, Defendants 
may not consummate the proposed transaction until thirty (30) calendar 
days after submitting all requested information.
    C. Early termination of the waiting periods set forth in this 
Section XI may be requested and, where appropriate, granted in the same 
manner as is applicable under the requirements and provisions of the 
HSR Act and rules promulgated thereunder. This Section XI must be 
broadly construed and any ambiguity or uncertainty relating to whether 
to file a notice under this Section XI must be resolved in favor of 
filing notice.

XII. No Reacquisition and Limitations on Collaborations

    A. Unless approved by the United States in its sole discretion, 
during the term of this Final Judgment, Defendants may not (1) 
reacquire any part of or any interest in the Divestiture Assets; (2) 
acquire any option to reacquire any part of the Divestiture Assets or 
to assign any part of the Divestiture Assets to any other person; (3) 
enter into or expand the scope of any Cooperative Agreement relating to 
the Divestiture Assets; (4) conduct any business negotiations jointly 
with any Acquirer relating to the Divestiture Assets divested to such 
Acquirer; or (5) provide financing or guarantees of financing with 
respect to the Divestiture Assets.
    B. Paragraph XII(A)(3) does not preclude Defendants from:
    1. Continuing existing agreements or entering into new agreements 
in a form customarily used in the industry to (a) share news 
helicopters or (b) 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 approved by the United States in its sole discretion;
    2. entering into agreements to provide news programming to 
broadcast television stations included in the Divestiture Assets, 
provided that Defendants do not sell, price, market, hold out for sale, 
or profit from the sale of advertising associated with the news 
programming provided by Defendants under such agreements except by 
approval of the United States in its sole discretion; or
    3. rebroadcasting WIFR-LD's CBS program stream on a digital 
subchannel of WREX, provided that (1) Acquirer rebroadcasts the WIFR-LD 
CBS program stream on a pass-through basis and coextensively with its 
main WREX signal, and (2) Defendants and Acquirer continue to operate 
WIFR-LD and WREX as separate commercial broadcast television stations 
with no common ownership or control, revenue sharing, or joint sales.

XIII. Retention of Jurisdiction

    The Court retains jurisdiction to enable any party to this Final 
Judgment to apply to the 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.

XIV. Enforcement of Final Judgment

    A. The United States retains and reserves all rights to enforce the 
provisions of this Final Judgment, including the right to seek an order 
of contempt from the Court. Defendants agree that in any civil contempt 
action, any motion to show cause, or any similar action brought by the 
United States regarding an alleged violation of this Final Judgment, 
the United States may establish a violation of the decree and the 
appropriateness of any remedy therefor by a preponderance of the 
evidence, and Defendants waive any argument that a different standard 
of proof should apply.
    B. The Final Judgment should be interpreted to give full effect to 
the procompetitive purposes of the antitrust laws and to restore the 
competition the United States alleges was harmed by the challenged 
conduct. Defendants agree that they may be held in contempt of, and 
that the Court may enforce, any provision of this Final Judgment that, 
as interpreted by the Court in light of these procompetitive principles 
and applying ordinary tools of interpretation, is stated specifically 
and in reasonable detail, whether or not it is clear and unambiguous on 
its face. In any such interpretation, the terms of this Final Judgment 
should not be construed against either party as the drafter.
    C. In an enforcement proceeding in which the Court finds that 
Defendants have violated this Final Judgment, the United States may 
apply to the Court for a one-time extension of this Final Judgment, 
together with other relief that may be appropriate. In connection with 
a successful effort by the United States to enforce this Final Judgment 
against a Defendant, whether litigated or resolved before litigation, 
that Defendant agrees to reimburse the United States for the fees and 
expenses of its attorneys, as well as all other costs including 
experts' fees, incurred in connection with that enforcement effort, 
including in the investigation of the potential violation.

XV. Expiration of Final Judgment

    Unless the Court grants an extension, this Final Judgment will 
expire ten (10) years from the date of its entry, except that after 
five (5) years from the date of its entry, this Final Judgment may be 
terminated upon notice by the United States, to the Court and 
Defendants that the divestiture has been completed and continuation of 
this Final Judgment is no longer necessary or in the public interest.

XVI. 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 by making available to the 
public copies of this Final Judgment and the Competitive Impact 
Statement, public comments thereon, and any response to comments by the 
United States. Based upon the record before the Court, which includes 
the Competitive Impact Statement and, if applicable, any comments and 
response to comments filed with the

[[Page 42895]]

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]
-----------------------------------------------------------------------

United States District Judge

United States District Court for the District of Columbia

    United States of America, Plaintiff, v. Gray Television, Inc., 
and Quincy Media, Inc., Defendants.
Case No.: 1:21-cv-02041-CJN
Judge: Carl J. Nichols

Competitive Impact Statement

    In accordance with the Antitrust Procedures and Penalties Act, 15 
U.S.C. 16(b)-(h) (the ``APPA'' or ``Tunney Act''), the United States of 
America files this Competitive Impact Statement relating to the 
proposed Final Judgment filed in this civil antitrust proceeding.

IX. Nature and Purpose of the Proceeding

    On January 31, 2021, Defendant Gray Television, Inc. (``Gray'') 
agreed to acquire Defendant Quincy Media, Inc. (``Quincy'') for 
approximately $925 million in cash. The United States filed a civil 
antitrust Complaint on July 28, 2021, seeking to enjoin the proposed 
acquisition. The Complaint alleges that the likely effect of this 
acquisition would be to substantially lessen competition for licensing 
the television programming of NBC, CBS, ABC, and FOX (collectively, 
``Big Four'') affiliate stations to cable, satellite, fiber optic 
television, and over-the-top providers (referred to collectively as 
multichannel video programming distributors, or ``MVPDs'') for 
retransmission to their subscribers and the sale of broadcast 
television spot advertising in seven local geographic markets in 
violation of Section 7 of the Clayton Act, 15 U.S.C. 18. The seven 
Designated Market Areas (``DMAs'') in which a substantial reduction in 
competition is alleged are: (i) Tucson, Arizona; (ii) Madison, 
Wisconsin; (iii) Rockford, Illinois; (iv) Paducah, Kentucky/Cape 
Girardeau, Missouri/Harrisburg-Mt. Vernon, Illinois; (v) Cedar Rapids-
Waterloo-Iowa City-Dubuque, Iowa; (vi) La Crosse-Eau Claire, Wisconsin; 
and (vii) Wausau-Rhinelander, Wisconsin (collectively, ``the Overlap 
DMAs'').\3\ In each Overlap DMA, Gray and Quincy each own at least one 
broadcast television station that is affiliated with one of the Big 
Four television networks. The loss of competition alleged in the 
Complaint likely would result in an increase in retransmission consent 
fees charged to MVPDs, much of which would be passed through to MVPD 
subscribers, and higher prices for broadcast television spot 
advertising in each Overlap DMA.
---------------------------------------------------------------------------

    \3\ A DMA is a geographic unit for which The Nielsen Company 
(US), LLC--a firm that surveys television viewers--furnishes 
broadcast television stations, MVPDs, cable networks, advertisers, 
and advertising agencies in a particular area with data to aid in 
evaluating audience size and composition. DMAs are widely accepted 
by industry participants as the standard geographic areas to use in 
evaluating television audience size and demographic composition. The 
Federal Communications Commission (``FCC'') also uses DMAs as 
geographic units with respect to its broadcast television 
regulations.
---------------------------------------------------------------------------

    At the same time the Complaint was filed, the United States filed a 
proposed Final Judgment and Hold Separate Stipulation and Order 
(``Stipulation and Order''), which are designed to remedy the loss of 
competition alleged in the Complaint. Under the proposed Final 
Judgment, which is explained more fully below, Defendants are required 
to divest the following broadcast television stations (the 
``Divestiture Stations'') and related assets to an acquirer or 
acquirers acceptable to the United States in its sole discretion: KPOB-
TV and WSIL-TV in the Paducah, Kentucky/Cape Girardeau, Missouri/
Harrisburg-Mt. Vernon, Illinois, DMA; KVOA in the Tucson, Arizona, DMA; 
KWWL in the Cedar Rapids-Waterloo-Iowa City-Dubuque, Iowa, DMA; WAOW 
and WMOW in the Wausau-Rhinelander, Wisconsin, DMA; WKOW in the 
Madison, Wisconsin, DMA; WQOW and WXOW in the La Crosse-Eau Claire, 
Wisconsin, DMA; and WREX in the Rockford, Illinois, DMA.
    Under the terms of the Stipulation and Order, Defendants must take 
certain steps to ensure that each Divestiture Station is operated as a 
competitively independent, economically viable, and ongoing business 
concern, which must remain independent and uninfluenced by Defendants, 
and that competition is maintained during the pendency of the required 
divestiture.
    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 will terminate this action, except that the 
Court will retain jurisdiction to construe, modify, or enforce the 
provisions of the proposed Final Judgment and to punish violations 
thereof.

X. Description of Events Giving Rise to the Alleged Violation

(A) The Defendants and the Proposed Transaction

    Gray is a Georgia corporation with its headquarters in Atlanta, 
Georgia. Gray owns 165 television stations in 94 DMAs, of which 139 are 
Big Four affiliates. In 2020, Gray reported revenues of $2.4 billion.
    Quincy is an Illinois corporation with its headquarters in Quincy, 
Illinois. Quincy owns 20 television stations in 16 DMAs, of which 19 
are Big Four affiliates. In 2020, Quincy had revenues of approximately 
$338 million.

(B) The Competitive Effects of the Transaction in the Market for Big 
Four Television Retransmission Consent

1. Background
    MVPDs, such as Comcast, DirecTV, and Mediacom, typically pay the 
owner of each local Big Four broadcast station in a given DMA a per-
subscriber fee for the right to retransmit the station's content to the 
MVPDs' subscribers. The per-subscriber fee and other terms under which 
an MVPD is permitted to distribute a station's content to its 
subscribers are set forth in a retransmission agreement. A 
retransmission agreement is negotiated directly between a broadcast 
station group, such as Gray or Quincy, and a given MVPD, and this 
agreement typically covers all of the station group's stations located 
in the MVPD's service area, or ``footprint.''
2. Relevant Markets
    Big Four broadcast content has special appeal to television viewers 
in comparison to the content that is available through other broadcast 
stations and cable networks. Big Four stations usually are the highest 
ranked in terms of audience share and ratings in each DMA, largely 
because of unique offerings such as local news, sports, and highly-
ranked primetime programs. Viewers typically consider the Big Four 
stations to be close substitutes for one another. Because of Big Four 
stations' popular national content and valued local coverage, MVPDs 
regard Big Four programming as highly desirable for inclusion in the 
packages they offer subscribers. Non-Big Four broadcast stations are 
typically not close substitutes for viewers of Big Four stations. 
Stations that are affiliates of networks other than the Big Four, such 
as the CW Network, MyNetworkTV, or Telemundo, typically feature niche 
programming without local news, weather or sports--or, in the case of

[[Page 42896]]

Telemundo, only offer local news, weather, and sports aimed at a 
Spanish-speaking audience. Stations that are unaffiliated with any 
network are similarly unlikely to carry programming with broad popular 
appeal.
    If an MVPD suffers a blackout of a Big Four station in a given DMA, 
many of the MVPD's subscribers in that DMA are likely to turn to other 
Big Four stations in the DMA to watch similar content, such as sports, 
primetime shows, and local news and weather. This willingness of 
viewers to switch between competing Big Four broadcast stations limits 
an MVPD's expected losses in the case of a blackout, and thus limits a 
broadcaster's ability to extract higher fees from that MVPD--since an 
MVPD's willingness to pay higher retransmission consent fees for 
content rises or falls with the harm it would suffer if that content 
were lost. Due to the limited programming typically offered by non-Big 
Four stations, viewers are much less likely to switch to a non-Big Four 
station than to switch to other Big Four stations in the event of a 
blackout of a Big Four station. Accordingly, competition from non-Big 
Four stations does not typically impose a significant competitive 
constraint on the retransmission consent fees charged by the owners of 
Big Four stations. For the same reasons, subscribers--and therefore 
MVPDs--generally do not view cable network programming as a close 
substitute for Big Four network content. This is primarily because 
cable networks offer different content than Big Four stations. For 
example, cable networks generally do not offer local news, which 
provides a valuable connection to the local community that is important 
to viewers of Big Four stations.
    Because viewers do not regard non-Big Four broadcast stations or 
cable networks as close substitutes for the programming they receive 
from Big Four stations, these other sources of programming are not 
sufficient to discipline an increase in the fees charged for Big Four 
television retransmission consent. Accordingly, a small but significant 
increase in the retransmission consent fees of Big Four affiliates 
would not cause enough MVPDs to forego carrying the content of the Big 
Four stations to make such an increase unprofitable for the Big Four 
stations.
    The relevant geographic markets for the licensing of Big Four 
television retransmission consent are the individual DMAs in which such 
licensing occurs. The Complaint alleges a substantial reduction of 
competition in the market for the licensing of Big Four television 
retransmission consent in the Overlap DMAs.
    In the event of a blackout of a Big Four network station, FCC rules 
generally prohibit an MVPD from importing the same network's content 
from another DMA. Thus, MVPD subscribers in one DMA cannot switch to 
Big Four programming in another DMA in the face of a blackout. 
Therefore, substitution to stations outside the DMA cannot discipline 
an increase in the fees charged for retransmission consent for 
broadcast stations in the DMA.
3. Anticompetitive Effects
    In each of the Overlap DMAs, Gray and Quincy each own at least one 
Big Four affiliate broadcast television station. By combining the 
Defendants' Big Four stations, the proposed merger would increase the 
Defendants' market shares in the licensing of Big Four television 
retransmission consent in each Overlap DMA, and would increase the 
market concentration in that business in each Overlap DMA. The chart 
below summarizes Defendants' approximate Big Four retransmission 
consent market shares, based on figures in BIA Advisory Services' 
Investing in Television Market Report 2020 (1st edition), and market 
concentrations measured by the widely used Herfindahl-Hirschman Index 
(``HHI''),\4\ in each Overlap DMA, before and after the proposed 
merger.
---------------------------------------------------------------------------

    \4\ The HHI is calculated by squaring the market share of each 
firm competing in the market and then summing the resulting numbers. 
For example, for a market consisting of four firms with shares of 
30, 30, 20, and 20 percent, the HHI is 2,600 (30\2\ + 30\2\ + 20\2\ 
+20\2\ = 2,600). The HHI takes into account the relative size 
distribution of the firms in a market. It approaches zero when a 
market is occupied by a large number of firms of relatively equal 
size, and reaches its maximum of 10,000 points when a market is 
controlled by a single firm. The HHI increases both as the number of 
firms in the market decreases and as the disparity in size between 
those firms increases.

----------------------------------------------------------------------------------------------------------------
                                                                                    Pre-      Post-
                  Overlap DMA                      Gray      Quincy     Merged     merger     merger      HHI
                                                share (%)  share (%)  share (%)     HHI        HHI      increase
----------------------------------------------------------------------------------------------------------------
Tucson, AZ....................................         30         24         54      2,564      4,010      1,446
Madison, WI...................................         30         23         53      2,556      3,956      1,400
Paducah-Harrisburg, KY-IL.....................         30         23         53      2,622      4,022      1,400
Cedar Rapids, IA..............................         26         20         46      2,533      3,600      1,067
La Crosse-Eau Claire, WI......................         33         20         53      2,622      3,956      1,333
Rockford, IL..................................         27         20         47      2,533      3,600      1,066
Wausau-Rhinelander, WI........................         44         33         77      3,580      6,543      2,963
----------------------------------------------------------------------------------------------------------------

    As indicated by the preceding chart, in each Big Four Overlap DMA 
the post-merger HHI would exceed 2,500, and the merger would increase 
the HHI by more than 200 points. As a result, the proposed merger is 
presumed likely to enhance market power under the Horizontal Merger 
Guidelines issued by the Department of Justice and the Federal Trade 
Commission.
    The proposed merger would enable Gray to black out more Big Four 
stations simultaneously in each of the Overlap DMAs than either Gray or 
Quincy could black out independently today, likely leading to increased 
retransmission consent fees to any MVPD whose footprint includes any of 
the Overlap DMAs. Retransmission consent fees generally are passed 
through to an MVPD's subscribers in the form of higher subscription 
fees or as a line item on their bills.

(C) The Competitive Effects of the Transaction in the Market for 
Broadcast Television Spot Advertising

1. Background
    Broadcast television stations sell advertising ``spots'' during 
breaks in their programming. Advertisers purchase spots from a 
broadcast station to communicate with viewers within the DMA in which 
the broadcast television station is located. Broadcast television spot 
advertising is distinguished from ``network'' advertising, which 
consists

[[Page 42897]]

of advertising time slots sold on nationwide broadcast networks by 
those networks, and not by local broadcast television stations or their 
representatives. Gray and Quincy each own at least one Big Four 
affiliated television station in each of the Overlap DMAs and compete 
with one another to sell broadcast television spot advertising in each 
of the Overlap DMAs.
2. Relevant Markets
    Broadcast television spot advertising constitutes a relevant 
product market and line of commerce under Section 7 of the Clayton Act, 
15 U.S.C. 18. Advertisers' inability or unwillingness to substitute to 
other types of advertising in response to a price increase in broadcast 
television spot advertising supports this relevant market definition.
    Typically, an advertiser purchases broadcast television advertising 
spots as one component of an advertising strategy that may also include 
cable television advertising spots, newspaper advertisements, 
billboards, radio spots, digital advertisements, email advertisements, 
and direct mail. Different components of an advertising strategy 
generally target different audiences and serve distinct purposes. 
Advertisers that advertise on broadcast television stations do so 
because the stations offer popular programming such as local news, 
sports, and primetime and syndicated shows that are especially 
attractive to a broad demographic base and a large audience of viewers. 
Other categories of advertising may offer different characteristics, 
but are not close substitutes for broadcast television spot 
advertising. For example, ads associated with online search results 
target individual consumers or respond to specific keyword searches, 
whereas broadcast television spot advertising reaches a broad audience 
throughout a DMA. In the future, technological developments may bring 
various advertising categories into closer competition with each other. 
For example, broadcasters and cable networks are developing technology 
to make their spot advertising addressable, meaning that broadcasters 
could deliver targeted advertising in live broadcast and on-demand 
formats to smart televisions or streaming devices. For certain 
advertisers, these technological changes may make other categories of 
advertising closer substitutes for advertising on broadcast television 
in the future. However, at this time, for many broadcast television 
spot advertising advertisers, these projected developments are 
insufficient to mitigate the anticompetitive effects of the merger in 
the Overlap DMAs.
    MVPDs sell spot advertising to be shown during breaks in cable 
network programming. For viewers, these advertisements are similar to 
broadcast television spot ads. However, cable television spot 
advertising is not at this time a reasonable substitute for broadcast 
television spot advertising for most advertisers. First, broadcast 
television spot advertising is a more efficient option than cable 
television spot advertising for many advertisers. Because broadcast 
television offers highly rated programming with broad appeal, each 
broadcast television advertising spot typically offers the opportunity 
to reach more viewers (more ``ratings points'') than a single spot on a 
cable channel. By contrast, MVPDs offer dozens of cable networks with 
specialized programs that appeal to niche audiences. This fragmentation 
allows advertisers to target narrower demographic subsets by buying 
cable spots on particular channels, but it does not meet the needs of 
advertisers who want to reach a large percentage of a DMA's population. 
Second, households that have access to cable networks are divided among 
multiple MVPDs within a DMA. In contrast, broadcast television spot 
advertising has a much broader reach because it reaches all households 
that subscribe to an MVPD and, through an over-the-air signal, most 
households with a television that do not. Third and finally, MVPDs' 
inventory of cable television spot advertising is limited--typically to 
two minutes per hour--contrasting sharply with broadcast stations' much 
larger number of advertising minutes per hour. The inventory of DMA-
wide cable television spot advertising is substantially further reduced 
by the large portion of those spots allocated to local zone 
advertising, in which an MVPD sells spots by geographic zones within a 
DMA, allowing advertisers to target smaller geographic areas. Due to 
the limited inventories and lower ratings associated with cable 
television spot programming, cable television spot advertising does not 
offer a sufficient volume of ratings points, or broad enough household 
penetration, to provide a reasonable alternative to broadcast 
television spot advertising.
    Digital advertising is also not a sufficiently close substitute for 
broadcast television spot advertising. Some digital advertising, such 
as static and floating banner advertisements, static images, text 
advertisements, wallpaper advertisements, pop-up advertisements, flash 
advertisements, and paid search results, lacks the combination of 
sight, sound, and motion that makes television spot advertising 
particularly impactful and memorable and therefore effective for 
advertisers. Digital video advertisements, on the other hand, do allow 
for a combination of sight, sound, and motion, and on this basis are 
more comparable to broadcast television spot advertising than other 
types of digital advertising. However, they are still not close 
substitutes for broadcast television spot advertising because digital 
advertisements typically have a different scope of reach compared to 
broadcast television spot advertising. For example, while advertisers 
use broadcast television spots to reach a large percentage of 
households within a given DMA, advertisers use digital advertising to 
reach a variety of different audiences. While a small portion of 
advertisers purchase DMA-wide advertisements on digital platforms, 
digital advertisements usually are targeted either very broadly, such 
as nationwide or regional, or to a geographic target smaller than a 
DMA, such as a city or a zip code, or to narrow demographic subsets of 
a population.
    Other forms of advertising, such as radio, newspaper, billboard, 
and direct-mail advertising, also do not constitute effective 
substitutes for broadcast television spot advertising. These forms of 
media do not reach as many local viewers or drive brand awareness to 
the same extent as broadcast television spot advertising does. 
Broadcast television spot advertising possesses a unique combination of 
attributes that advertisers value in a way that sets it apart from 
advertising on other media. Broadcast television spot advertising 
combines sight, sound, and motion in a way that makes television 
advertisements particularly memorable and impactful.
    The relevant geographic markets for the sale of broadcast 
television spot advertising are the individual DMAs in which such 
advertising is viewed. The Complaint alleges a substantial reduction of 
competition in the market for sale of broadcast television advertising 
in the Overlap DMAs. For an advertiser seeking to reach potential 
customers in a given DMA, broadcast television stations located outside 
of the DMA do not provide effective access to the advertiser's target 
audience. The signals of broadcast television stations located outside 
of the DMA generally do not reach any significant portion of the target 
DMA through either over-the-air signal or MVPD distribution. 
Accordingly, a small but significant increase in the spot advertising 
prices of stations broadcasting into the DMA would not cause a 
sufficient number of

[[Page 42898]]

advertisers to switch to stations outside the DMA to make such an 
increase unprofitable for the station.
3. Anticompetitive Effects
    In each of the Overlap DMAs, Gray and Quincy each own at least one 
Big Four affiliate broadcast television station. By combining the 
Defendants' stations, the proposed merger would increase the 
Defendants' market shares in the sale of broadcast television spot 
advertising in each Overlap DMA, and would increase the market 
concentration in that business in each Overlap DMA. The chart below 
summarizes Defendants' approximate market shares, based on figures in 
BIA Advisory Services' Investing in Television Market Report 2020 (1st 
edition), and the result of the transaction on the HHIs in the sale of 
broadcast television spot advertising.

----------------------------------------------------------------------------------------------------------------
                                                                                    Pre-      Post-
                  Overlap DMA                      Gray      Quincy     Merged     merger     merger      HHI
                                                share (%)  share (%)  share (%)     HHI        HHI      increase
----------------------------------------------------------------------------------------------------------------
Tucson, AZ....................................         27         25         52      2,059      3,389      1,330
Madison, WI...................................         31         20         51      2,540      3,745      1,205
Paducah-Harrisburg, KY-IL.....................         26         22         48      2,886      4,022      1,136
Cedar Rapids, IA..............................         41         34         75      3,108      5,852      2,744
La Crosse-Eau Claire, WI......................         33         23         56      2,587      4,084      1,497
Rockford, IL..................................         28         35         63      3,348      5,319      1,971
Wausau-Rhinelander, WI........................         40         38         78      3,479      6,489      3,010
----------------------------------------------------------------------------------------------------------------

    Defendants' large market shares reflect the fact that, in each 
Overlap DMA, Gray and Quincy each own one or more significant broadcast 
television stations. As indicated by the preceding chart, the post-
merger HHI in each Overlap DMA is well above 2,500, and the HHI 
increase in each Overlap DMA far exceeds the 200-point threshold above 
which a transaction is presumed to enhance market power and harm 
competition under the Horizontal Merger Guidelines. Defendants' 
proposed transaction is thus presumptively unlawful in each Overlap 
DMA.
    In addition to substantially increasing the concentration levels in 
each Overlap DMA, the proposed acquisition would combine Gray's and 
Quincy's broadcast television stations, which are generally close 
competitors in the sale of broadcast television spot advertising. In 
each Overlap DMA, Defendants' broadcast stations compete head-to-head 
in the sale of broadcast television spot advertising. Advertisers 
obtain lower prices as a result of this competition. In particular, 
advertisers in the Overlap DMAs can respond to an increase in one 
station's spot advertising prices by purchasing, or threatening to 
purchase, advertising spots on one or more stations owned by different 
broadcast station groups, thereby ``buying around'' the station that 
raises its prices. This practice allows the advertisers either to avoid 
the first station's price increase, or to pressure the first station to 
lower its prices. If Gray acquires Quincy's stations, advertisers 
seeking to reach audiences in the Overlap DMAs would have fewer 
competing broadcast television alternatives available to meet their 
advertising needs, and would find it more difficult and costly to buy 
around higher prices imposed by the combined stations. This would 
likely result in increased advertising prices, lower quality local 
programming to which the spot advertising is attached (for example, 
less investment in local news), and less innovation in providing 
advertising solutions to advertisers.

(D) Entry

    De novo entry into each Overlap 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 were to become available, commercial success would 
come over a period of many years, if at all. Because Big Four 
affiliated stations generally have the highest ratings in each DMA, 
they are more successful at selling broadcast television spot ads 
compared to non-Big Four affiliated broadcast stations. Thus, entry of 
a new broadcast station into an Overlap DMA would not be timely, 
likely, or sufficient to prevent or remedy the proposed acquisition's 
likely anticompetitive effects in the relevant markets.

XI. Explanation of the Proposed Final Judgment

    The relief required by the proposed Final Judgment will remedy the 
loss of competition alleged in the Complaint by establishing an 
independent and economically viable competitor in the markets for the 
licensing of Big Four television retransmission consent and the sale of 
broadcast television spot advertising. The proposed Final Judgment 
requires Defendants to divest the Divestiture Stations within 30 days 
after the entry of the Stipulation and Order to Allen Media Holdings, 
LLC (``Allen'') or an alternative acquirer approved by the United 
States. Where Defendants have filed applications with the FCC seeking 
approval to assign or transfer any licenses to acquirer, the 30-day 
time period will be extended until five business days after an FCC 
order has been issued. The assets must be divested in such a way as to 
satisfy the United States in its sole discretion that the assets can 
and will be operated by the acquirer as a viable, ongoing business that 
can compete effectively in the licensing of Big Four television 
retransmission consent and the sale of broadcast television spot 
advertising. Defendants must take all reasonable steps necessary to 
accomplish the divestiture quickly, including obtaining any necessary 
FCC approvals as expeditiously as possible, and must cooperate with the 
acquirer.

(A) The Divestiture Assets

    The Divestiture Assets, which are defined in Paragraph II(G) of the 
proposed Final Judgment, include all tangible and intangible assets of 
the Divestiture Stations. The assets include all tangible property; all 
licenses, permits, and authorizations; all contracts (including 
programming contracts and rights), agreements, network affiliation 
agreements, leases, and commitments and understandings; all trademarks, 
service marks, trade names, copyrights, patents, slogans, programming 
materials, and promotional materials; all customer lists, contracts, 
accounts, and credit records; all logs and other records; and the 
content and affiliation of each digital subchannel.

(B) The Excluded Assets

    Certain assets are excluded from the Divestiture Assets, as 
described in Paragraph II(J) of the proposed Final Judgment. The assets 
that are excluded

[[Page 42899]]

relate to: (1) The CW programming stream currently broadcast on KWWL in 
the Cedar Rapids-Waterloo-Iowa City-Dubuque, Iowa, DMA; (2) the CW 
programming stream currently broadcast on WMOW and WAOW in the Wausau-
Rhinelander, Wisconsin, DMA; (3) the CW programming stream currently 
broadcast on WREX in the Rockford, Illinois, DMA; (4) the CW and MeTV 
programming streams currently broadcast on WXOW and WQOW in the La 
Crosse-Eau Claire, Wisconsin, DMA; (5) the MeTV programming stream 
currently broadcast on WKOW in the Madison, Wisconsin, DMA; (6) 
satellite station WYOW, Eagle River, Wisconsin; (7) all real and 
tangible personal property owned by Quincy located at 501 and 513 
Hampshire Street in Quincy, Illinois 62301; (8) all tangible personal 
property owned by Quincy located at 130 South 5th Street, Quincy, 
Illinois 62301; and (9) all real and tangible personal property owned 
by Quincy at the Digital Realty Data Center located at 350 East Cermak, 
Chicago, Illinois 60616.
    The excluded CW and MeTV programming streams currently are derived 
from separate network affiliations and are broadcast from digital 
subchannels of the Divestiture Stations. As a result, the Defendants' 
retention of those CW and MeTV programming streams will not prevent the 
divestiture buyer from operating the Divestiture Stations as viable, 
independent competitors. Nor will Defendants' retention of these assets 
substantially lessen competition. Divesting one of the Defendants' Big 
Four affiliates in each Overlap DMA will ensure that competition in the 
licensing of Big Four television retransmission consent is not 
diminished. Also, nearly all of the merger-induced increase in 
concentration in the sale of broadcast television spot advertising in 
each Overlap DMA is avoided by the sale of one of Defendants' Big Four 
affiliates in each Overlap DMA, as the broadcast television spot 
advertising revenues attributable to non-Big Four affiliates (e.g., CW 
and MeTV) is very small, relative to that of the Big Four affiliates.

(C) General Conditions

    The proposed Final Judgment contains provisions intended to 
facilitate the acquirer's efforts to hire certain employees. 
Specifically, Paragraph IV(J) of the proposed Final Judgment requires 
Defendants to provide the acquirer and the United States with 
organization charts and information relating to these employees and to 
make them available for interviews. It also provides that Defendants 
must not interfere with any negotiations by the acquirer to hire these 
employees. In addition, for employees who elect employment with the 
acquirer, Defendants must waive all non-compete and non-disclosure 
agreements, vest all unvested pension and other equity rights, provide 
any pay pro-rata, provide all compensation and benefits that those 
employees have fully or partially accrued, and provide all other 
benefits that the employees would generally be provided had those 
employees continued employment with Defendants, including but not 
limited to any retention bonuses or payments. This paragraph further 
provides that Defendants may not solicit to hire any of those employees 
who were hired by the acquirer, unless an employee is terminated or 
laid off by the acquirer or the acquirer agrees in writing that 
Defendants may solicit to hire that individual. The non-solicitation 
period runs for sixty (60) days from the date of the divestiture.
    Paragraph IV(L) of the proposed Final Judgment will facilitate the 
transfer to the acquirer of customers and other contractual 
relationships that are included within the Divestiture Assets. 
Defendants must transfer all contracts, agreements, and relationships 
to the acquirer and must make best efforts to assign, subcontract, or 
otherwise transfer contracts or agreements that require the consent of 
another party before assignment, subcontracting, or other transfer.
    The proposed Final Judgment requires Defendants to provide certain 
transition services to maintain the viability and competitiveness of 
the Divestiture Stations during the transition to the acquirer. 
Paragraph IV(N) of the proposed Final Judgment requires Defendants, at 
the acquirer's option, to enter into a transition services agreement 
for back office, human resources, accounting, and information 
technology services for a period of up to six (6) months. The acquirer 
may terminate the transition services agreement, or any portion of it, 
without cost or penalty at any time upon commercially reasonable 
notice. The paragraph further provides that the United States, in its 
sole discretion, may approve one or more extensions of this transition 
services agreement for a total of up to an additional six (6) months 
and that any amendments to or modifications of any provisions of a 
transition services agreement are subject to approval by the United 
States in its sole discretion. Paragraph IV(N) also provides that 
employees of Defendants tasked with supporting this agreement must not 
share any competitively sensitive information of the acquirer with any 
other employee of Defendants, unless such sharing is for the sole 
purpose of providing transition services to the acquirer.

(D) Appointment of Divestiture Trustee

    If Defendants do not accomplish the divestiture within the period 
prescribed in Paragraph IV(A) of the proposed Final Judgment, Section V 
of the proposed Final Judgment provides that the Court will appoint a 
divestiture trustee selected by the United States to effect the 
divestiture. If a divestiture trustee is appointed, the proposed Final 
Judgment provides that Defendants must pay all costs and expenses of 
the trustee. The divestiture trustee's commission must be structured so 
as to provide an incentive for the trustee based on the price obtained 
and the speed with which the divestiture is accomplished. After the 
divestiture trustee's appointment becomes effective, the trustee must 
provide monthly reports to the United States setting forth his or her 
efforts to accomplish the divestiture. If the divestiture has not been 
accomplished within six months of the divestiture trustee's 
appointment, the divestiture trustee and the United States may make 
recommendations to the Court, which will enter such orders as 
appropriate, in order to carry out the purpose of the proposed Final 
Judgment, including by extending the trust or the term of the 
divestiture trustee's appointment.

(E) Notification Requirements

    Section XI of the proposed Final Judgment requires Defendants to 
notify the United States in advance of acquiring, directly or 
indirectly, in a transaction that would not otherwise be reportable 
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as 
amended, 15 U.S.C. 18a (the ``HSR Act''), any Big Four affiliation 
agreement in a DMA in which a Defendant already has a Big Four 
affiliation agreement in place. Pursuant to the proposed Final 
Judgment, Defendants must notify the United States of such acquisitions 
as it would for a required HSR Act filing, as specified in the Appendix 
to Part 803 of Title 16 of the Code of Federal Regulations. The 
proposed Final Judgment further provides for waiting periods and 
opportunities for the United States to obtain additional information 
analogous to the provisions of the HSR Act before such acquisitions can 
be consummated. Requiring notification before the acquisition of Big 
Four affiliation agreement in a DMA in which

[[Page 42900]]

a Defendant already has a Big Four affiliation agreement in place will 
permit the United States to assess the competitive effects of that 
acquisition before it is consummated and, if necessary, seek to enjoin 
the transaction.

(F) Prohibitions on Reacquisition and Limitations on Collaborations

    To ensure that the Divestiture Stations are operated independently 
from Defendants after the divestitures, Paragraph XII(A) of the 
proposed Final Judgment provides that during the term of the Final 
Judgment Defendants shall not (1) reacquire any part of the Divestiture 
Assets; (2) acquire any option to reacquire any part of the Divestiture 
Assets or to assign them to any other person; (3) enter into any 
carriage agreement, local marketing agreement, joint sales agreement, 
other cooperative selling arrangement, or shared services agreement 
(except as provided in in Section XII), or conduct other business 
negotiations jointly with any acquirer of any of the Divestiture Assets 
with respect to those Divestiture Assets; or (4) provide financing or 
guarantees of financing with respect to the Divestiture Assets.
    Under Paragraph XII(B)(1) of the proposed Final Judgment, the 
shared services prohibition does not preclude Defendants from 
continuing or entering into agreements in a form customarily used in 
the industry to (a) share news helicopters or (b) 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. Additionally, Paragraph XII(B)(2) provides that the 
restrictions of Paragraph XII(A) do not prevent Defendants from 
entering into agreements to provide news programming to the Divestiture 
Stations, provided that Defendants do not sell, price, market, hold out 
for sale, or profit from the sale of advertising associated with the 
news programming provided by Defendants under such agreements except by 
approval of the United States in its sole discretion.
    The proposed Final Judgment makes one exception to the general 
prohibition against carriage agreements between the Defendants and the 
acquirer in the Rockford, Illinois, DMA. Paragraph XII(B)(3) of the 
proposed Final Judgment provides that Defendants and acquirer may 
rebroadcast WIFR-LD's CBS program stream on a digital subchannel of 
WREX, provided that the acquirer rebroadcasts the WIFR-LD program 
stream on a pass-through basis and coextensively with its main WREX 
signal, and that Defendants and the acquirer continue to operate WIFR-
LD and WREX as separate commercial broadcast television stations. 
Currently, WIFR-LD's CBS program stream is broadcast on a low power 
signal. Rebroadcasting the program stream on a WREX digital subchannel 
would put the program stream on a full power signal, thereby allowing 
more viewers in the Rockford, Illinois, DMA to access WIFR-LD's CBS 
programming on an over-the-air basis. Rebroadcasting WIFR-LD's CBS 
program stream in this way will not prevent the acquirer from operating 
WREX as a viable, independent competitor, nor will it substantially 
lessen competition in the Rockford, Illinois, DMA.

(G) Enforcement and Expiration of the Final Judgment

    The proposed Final Judgment also contains provisions designed to 
promote compliance and will make enforcement of the Final Judgment as 
effective as possible. Paragraph XIV(A) provides that the United States 
retains and reserves all rights to enforce the Final Judgment, 
including the right to seek an order of contempt from the Court. Under 
the terms of this paragraph, Defendants have agreed that in any civil 
contempt action, any motion to show cause, or any similar action 
brought by the United States regarding an alleged violation of the 
Final Judgment, the United States may establish the violation and the 
appropriateness of any remedy by a preponderance of the evidence and 
that Defendants have waived any argument that a different standard of 
proof should apply. This provision aligns the standard for compliance 
with the Final Judgment with the standard of proof that applies to the 
underlying offense that the Final Judgment addresses.
    Paragraph XIV(B) provides additional clarification regarding the 
interpretation of the provisions of the proposed Final Judgment. The 
proposed Final Judgment is intended to remedy the loss of competition 
the United States alleges would otherwise be harmed by the transaction. 
Defendants agree that they will abide by the proposed Final Judgment, 
and that they may be held in contempt of the Court for failing to 
comply with any provision of the proposed Final Judgment that is stated 
specifically and in reasonable detail, as interpreted in light of this 
procompetitive purpose.
    Paragraph XIV(C) of the proposed Final Judgment provides that if 
the Court finds in an enforcement proceeding that a Defendant has 
violated the Final Judgment, the United States may apply to the Court 
for a one-time extension of the Final Judgment, together with such 
other relief as may be appropriate. In addition, to compensate American 
taxpayers for any costs associated with investigating and enforcing 
violations of the Final Judgment, Paragraph XIV(C) provides that, in 
any successful effort by the United States to enforce the Final 
Judgment against a Defendant, whether litigated or resolved before 
litigation, the Defendant must reimburse the United States for 
attorneys' fees, experts' fees, and other costs incurred in connection 
with any effort to enforce the Final Judgment, including the 
investigation of the potential violation.
    Finally, Section XV of the proposed Final Judgment provides that 
the Final Judgment will expire ten years from the date of its entry, 
except that after five years from the date of its entry, the Final 
Judgment may be terminated upon notice by the United States to the 
Court and Defendants that the divestiture has been completed and that 
continuation of the Final Judgment is no longer necessary or in the 
public interest.

XII. 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 neither impairs 
nor assists 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.

XIII. 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 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.

[[Page 42901]]

Any person who wishes to comment should do so within 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 U.S. Department 
of Justice, which remains free to withdraw its consent to the proposed 
Final Judgment at any time before the Court's entry of the Final 
Judgment. The comments and the response of the United States will be 
filed with the Court. In addition, the comments and the United States' 
responses will be published in the Federal Register unless the Court 
agrees that the United States may instead publish them on the U.S. 
Department of Justice, Antitrust Division's internet website.
    Written comments should be submitted in English to: Scott Scheele, 
Chief, Media, Entertainment, and Communications Section, Antitrust 
Division, U.S. Department of Justice, 450 Fifth Street NW, Suite 7000, 
Washington, DC 20530, [email protected].
    The proposed Final Judgment provides that the Court retains 
jurisdiction over this action, and the parties may apply to the Court 
for any order necessary or appropriate for the modification, 
interpretation, or enforcement of the Final Judgment.

XIV. Alternatives to the Proposed Final Judgment

    As an alternative to the proposed Final Judgment, the United States 
considered 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 Quincy. The United 
States is satisfied, however, that the relief required by the proposed 
Final Judgment will remedy the anticompetitive effects alleged in the 
Complaint, preserving competition for licensing Big Four television 
retransmission consent and the sale of broadcast television spot 
advertising in the Overlap DMAs. Thus, the proposed Final Judgment 
achieves 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.

XV. Standard of Review Under the APPA for the Proposed Final Judgment

    Under the Clayton Act and the APPA, proposed Final Judgments or 
``consent decrees'' in antitrust cases brought by the United States are 
subject to a 60-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 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); United States v. 
U.S. Airways Grp., 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 
U.S. Dist. LEXIS 84787, at *3 (D.D.C. Aug. 11, 2009) (noting that a 
court's review of a proposed Final 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'').
    As the U.S. 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 in 
the government's complaint, whether the proposed Final Judgment is 
sufficiently clear, whether its enforcement mechanisms are sufficient, 
and whether it may positively harm third parties. See Microsoft, 56 
F.3d at 1458-62. With respect to the adequacy of the relief secured by 
the proposed Final Judgment, a court may not ``make de novo 
determination of facts and issues.'' United States v. W. Elec. Co., 993 
F.2d 1572, 1577 (D.C. Cir. 1993) (quotation marks omitted); see also 
Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152 F. 
Supp. 2d 37, 40 (D.D.C. 2001); United States v. Enova Corp., 107 F. 
Supp. 2d 10, 16 (D.D.C. 2000); InBev, 2009 U.S. Dist. LEXIS 84787, at 
*3. Instead, ``[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.'' W. 
Elec. Co., 993 F.2d at 1577 (quotation marks omitted). ``The court 
should bear in mind the flexibility of the public interest inquiry: the 
court's function is not to determine whether the resulting array of 
rights and liabilities is one that will best serve society, but only to 
confirm that the resulting settlement is within the reaches of the 
public interest.'' Microsoft, 56 F.3d at 1460 (quotation marks 
omitted); see also United States v. Deutsche Telekom AG, No. 19 2232 
(TJK), 2020 WL 1873555, at *7 (D.D.C. Apr. 14, 2020). More demanding 
requirements would ``have enormous practical consequences for the 
government's ability to negotiate future settlements,'' contrary to 
congressional intent. Microsoft, 56 F.3d at 1456. ``The Tunney Act was 
not intended to create a disincentive to the use of the consent 
decree.'' Id.
    The United States' predictions about the efficacy of the remedy are 
to be afforded deference by the Court. See, e.g., Microsoft, 56 F.3d at 
1461 (recognizing courts should give ``due respect to the Justice 
Department's . . . view of the nature of its case''); United States v. 
Iron Mountain, Inc., 217 F. Supp. 3d 146, 152-53 (D.D.C. 2016) (``In 
evaluating objections to settlement agreements under the Tunney Act, a 
court must be mindful that [t]he government need not prove that the 
settlements will perfectly remedy the alleged antitrust harms[;] it 
need only provide a factual basis for concluding that the settlements 
are reasonably adequate remedies for the alleged harms.'') (internal 
citations omitted); United States v. Republic Servs., Inc., 723 F. 
Supp. 2d 157, 160 (D.D.C. 2010) (noting ``the deferential review to 
which the government's proposed remedy is accorded''); United States v. 
Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (``A 
district court must accord due respect to the government's prediction 
as to the effect of proposed remedies, its perception of the market 
structure, and its view of the nature of the case''). The ultimate 
question is whether ``the remedies [obtained by the

[[Page 42902]]

Final Judgment are] so inconsonant with the allegations charged as to 
fall outside of the `reaches of the public interest.''' Microsoft, 56 
F.3d at 1461 (quoting W. Elec. Co., 900 F.2d at 309).
    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 (``[T]he 
`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.
    In its 2004 amendments to the APPA, Congress made clear its intent 
to preserve the practical benefits of using judgments proposed by the 
United States in antitrust enforcement, Public Law 108-237 Sec.  221, 
and added 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). 
This language explicitly wrote into the statute what Congress intended 
when it first 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). ``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 (citing Enova Corp., 107 F. 
Supp. 2d at 17).

XVI. 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: July 28, 2021.

    Respectfully submitted,
-----------------------------------------------------------------------

Brendan Sepulveda (D.C. Bar #1025074),
United States Department of Justice, Antitrust Division, 450 Fifth 
Street NW, Suite 7000, Washington, DC 20530, Telephone: (202) 316-
7258, Facsimile: (202) 514-6381, Email: [email protected].

[FR Doc. 2021-16682 Filed 8-4-21; 8:45 am]
BILLING CODE 4410-11-P