[Federal Register Volume 64, Number 94 (Monday, May 17, 1999)]
[Notices]
[Pages 26776-26782]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-12339]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. Citadel Communications Corporation, Triathlon
Broadcasting Company, and Capstar Broadcasting Corporation
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. Section 16(b) through (h), that a proposed
Final Judgment, Stipulation and Amended Competitive Impact Statement
have been filed with the United States District Court for the District
of the District of Columbia in United States of America v. Citadel
Communications Corporation, Capstar Broadcasting Corporation and
Triathlon Broadcasting Company, Civil Action No. 99-CV01043. On April
30, 1999, the United States filed an Amended Complaint alleging that
the Joint Sales Agreement (``JSA'') in Colorado Springs, Colorado, and
Spokane, Washington and Triathlon's acquisition of certain radio
stations in Spokane, Washington violates Section One of the Sherman
Act, 15 U.S.C. 1. The proposed Final Judgment, filed the same time as
the Complaint, requires Citadel and Capstar to terminate the JSA
pursuant to the Final Judgment and Capstar to divest a particular
station in Spokane, Washington. Copies of the Amended Complaint,
proposed Final Judgment and Amended Competitive Impact Statement are
available for inspection at the Department of Justice in Washington,
D.C. in Room 200, 325 Seventh Street, N.W., and at the Office of the
Clerk of the United States District Court for the District of the
District of Columbia.
Public comment is invited within 60 days of the date of this
notice. Such comments, and responses thereto, will be published in the
Federal Register and filed with the Court. Comments should be directed
to Craig W. Conrath, Chief, Merger Task Force, Antitrust Division,
Department of Justice, 1401 H St N.W., Suite 4000, Washington, D.C.
20530 (telephone: (202) 307-0001).
Rebecca P. Dick,
Director of Civil Non-Merger Enforcement.
Stipulation
It is stipulated by and between the United States Department of
Justice Antitrust Division (``Antitrust Division''), Citadel
Communications Corporation (``Citadel''), and Capstar Broadcasting
Corporation (``Capstar''), by their respective attorneys, as follows:
1. This Court has jurisdiction over the subject matter of this
action and the parties have agreed to waive all objections to personal
jurisdiction and venue in the United States District Court for the
District of Columbia.
2. The parties stipulate that a Final Judgment in the form hereto
attached may be filed and entered by the Court, upon the motion of any
party or upon the Court's own motion, at any time after compliance with
the requirements of the Antitrust Procedures and Penalties Act, 15
U.S.C. 16, and without further notice to any party or other
proceedings, provided that plaintiff has not withdrawn its consent,
which it may do at any time before the entry of the proposed Final
Judgment by serving notice thereof on defendants and by filing that
notice with the Court.
3. Defendants shall abide by and comply with the provisions of the
proposed Final Judgment pending entry of the Final Judgment by the
Court, or until expiration of time for all appeals of any Court ruling
declining entry of the proposed Final Judgment, and shall, from the
date of the signing of this Stipulation by the parties, comply with all
the terms and provisions of the proposed Final Judgment as though the
same were in full force and effect as an Order of the Court.
4. Citadel and Capstar have agreed to terminate the Citadel-
Triathlon Joint Sales Agreement (``JSA'') (defined in Section II(e) of
the Final Judgment) pursuant to the Final Judgment, but subject to
Paragraph 9 of this stipulation. In addition, the parties have agreed
to make certain transfers of radio stations. Capstar's transfer of
KEYF-FM to Citadel in Spokane is part of the agreement memorialized in
the Final Judgment.
5. The parties have agreed to take the following actions that the
United States has agreed not to oppose. In Colorado Springs, Capstar
has agreed to transfer KSPZ-FM, KVOR-AM, and KTWK-AM to Citadel while
Citadel has agreed to transfer KKLI-FM to Capstar. In Spokane, Capstar
has agreed to transfer KEYF-FM and KEYF-AM to Citadel. Also in Spokane,
Citadel has entered into an agreement with an unrelated third party to
acquire KNJY-FM. Although the Final Judgment is not contingent upon
these exchanges and acquisitions, the Antitrust Division has analyzed
the transactions and has no objection to them.
6. Citadel and Capstar state that there are no agreements or
understandings between them that will affect how they will program or
format the radio stations that they own in Colorado Springs or Spokane.
7. This Stipulation shall apply with equal force and effect to any
amended proposed Final Judgment agreed upon in writing by the parties
and submitted to the Court. In the event plaintiff withdraws its
consent, as provided in paragraph 2 above, or in the event the proposed
Final Judgment is not entered pursuant to this Stipulation, the time
has expired for all appeals of any Court ruling declining entry of the
proposed Final Judgment, and the Court has not otherwise ordered
continued compliance with the terms and provisions of the proposed
Final Judgment, then the parties are released from all further
obligations under this Stipulation, and the making of this Stipulation
shall be without prejudice to any party in this or any other
proceeding.
8. Defendants represent that the JSA will be terminated and the
divestiture of KEYF-FM will be made as ordered, and that defendants
will later raise no claim of hardship or difficulty as grounds for
asking the Court to modify any of the divestiture provisions contained
therein.
9. If Capstar does not acquire Triathlon Broadcasting Company by
June 2, 1999, the Antitrust Division will
[[Page 26777]]
withdraw the proposed Final Judgment and dismiss Capstar as a defendant
in this matter.
Dated: April 7, 1999.
For Plaintiff United States of America.
Karl D. Knutsen,
United States Department of Justice, Antitrust Division, Merger Task
Force, 1401 H Street, N.W., Washington, D.C. 20530, (202) 514-0976.
For Defendant Capstar Broadcasting Corporation.
Neil W. Imus,
Vinson & Elkin L.L.P., 1455 Pennsylvania Avenue, N.W., Washington, D.C.
20006, (202) 639-6675.
Dated: April 8, 1999.
For Defendant Citadel Communications Corporation.
Debra H. Dermody,
Reed, Smith, Shaw, & McClay, 435 Sixth Ave., Pittsburgh, PA 15219,
(412) 288-3302.
Final Judgment
Whereas, plaintiff, the United States of America, has filed its
complaint in this action, and plaintiff and defendants Citadel
Communications Corporation (``Citadel'') and Capstar Broadcasting
Corporation (``Capstar'') by their respective attorneys, having
consented to the entry of this Final Judgment without trial or
adjudication of any issue of fact or law herein, and without this Final
Judgment constituting any evidence against or an admission by any party
with respect to any issue of law or fact herein;
And whereas, these defendants have agreed to be bound by the
provisions of this Final Judgment pending its approval by the Court.
And whereas, the essence of this Final Judgment is the prompt and
likely termination of the Joint Sales Agreement ``JSA'' in Colorado
Springs, Colorado and Spokane, Washington, identified below, which will
help ensure that competition is substantially preserved;
And whereas, plaintiff requires Citadel and Capstar to terminate
the JSA for the purpose of restoring competition in the sale of radio
advertising;
And whereas, Citadel and Capstar have represented to the plaintiff
that the JSA can and will be terminated, subject to paragraph 9 of the
Stipulation, and that Citadel and Capstar will not later raise claims
of hardship, contractual bar, or difficulty as grounds for asking the
Court to delay or modify termination of the JSA described below:
Now, therefore, before the taking of any testimony, and without
trial or adjudication of any issue of fact or law herein, and upon
consent of the parties hereto, it is hereby ordered, adjudged, and
decreed as follows:
I. Jurisdiction
This Court has jurisdiction over each of the defendants and over
the subject matter of this action, and defendants have agreed to waive
any objection to personal jurisdiction. The Complaint states a claim
upon which relief may be granted against the defendants, as hereinafter
defined, under Section 1 of the Sherman Act, 15 U.S.C. 1.
II. Definitions
As used in this Final Judgment:
A. ``Capstar'' means defendant Capstar Broadcasting Corporation, a
Delaware corporation with its headquarters in Austin, Texas, and its
successors, assigns, subsidiaries, divisions, groups, affiliates,
partnerships and joint ventures, and directors, officers, managers,
agents, and employees, including but not limited to Hicks, Muse, Tate,
& Furst Incorporated (``Hicks-Muse''), a Delaware corporation with its
headquarters in Dallas, Texas.
B. ``Citadel'' means defendant Citadel Communications Corporation,
a Nevada corporation with its headquarters in Las Vegas, Nevada, and
its successors, assigns, subsidiaries, divisions, groups, affiliates,
partnerships and joint ventures, and directors, officers, managers,
agents, and employees.
C. ``Defendants'' means Citadel and Capstar.
D. ``Antitrust Division'' means the Antitrust Division of the
United States Department of Justice.
E. ``JSA'' means the Joint Sales Agreement entered on or around
December 15, 1995 among Citadel and Pourtales Radio Partnership (to
which Triathlon is successor), providing for the sale of radio
advertising time in Colorado Springs, Colorado and Spokane, Washington.
F. ``Radio Assets'' means all of the assets, tangible or
intangible, used in the operation of the following radio stations that
sell advertising time in Colorado Springs, Colorado, and Spokane,
Washington, including all real property (owned or leased) used in the
operation of these stations, all broadcast equipment, office equipment,
office furniture, fixtures, materials, supplies, and other tangible
property used in the operation of these stations; all licenses,
permits, authorizations, and applications therefor issued by the
Federal Communications Commission and other government agencies related
to these stations; all contracts, agreements, leases and commitments of
defendants relating to their operation; all trademarks, service marks,
trade names, copyrights, patents, slogans; programming materials, and
promotional materials relating to these stations; and all logs and
other records maintained by the operator or owner in connection with
its business:
(1) In Colorado Springs, KSPZ-FM, KKFM-FM, KKMG-FM, KVUU-FM, KKLI-
FM, KVOR-AM, and KTWK-AM; and
(2) In Spokane, KAEP-FM, KDRK-FM, KEYF-FM, KNFR-FM, KISC-FM, KKZK-
FM, KGA-AM, KEYF-AM, KAQQ-AM, KJRB-AM, and KUDY-AM.
(G) ``Triathlon'' means Triathlon Broadcasting Company, a Delaware
corporation with its headquarters in San Diego, California, named as a
defendant in this action.
III. Applicability
A. The provisions of this Final Judgment apply to the defendants,
their successors and assigns, their subsidiaries, directors, officers,
managers, agents, and employees, and all other persons in active
concert or participation with any of them who shall have received
actual notice of this Final Judgment by personal service or otherwise.
B. The defendants shall require, as a condition of the sale or
other disposition of any of the Radio Assets, that the acquirer or
acquirers agree to be bound by the provisions of this Final Judgment.
IV. Termination of JSA and Divestment of KEYF-FM
A. Citadel and Capstar are hereby ordered and directed in
accordance with the terms of this Final Judgment to terminate the JSA
as quickly as possible, but no later than June 2, 1999.
B. Capstar is also ordered to divest KEYF-FM in Spokane as quickly
as possible, but no later than June 2, 1999.
C. The Antitrust Division, in its sole discretion, may extend the
time period for termination for two (2) additional thirty (30) day
periods of time, not to exceed sixty (60) calendar days in total.
D. Citadel and Capstar shall not acquire any other radio stations
that sell radio advertising time in either Colorado Springs or Spokane
except under the procedures stated in Section V. Further, Citadel and
Capstar shall not enter into any JSA or any cooperative selling
arrangement with any other operator of radio stations serving listeners
in either Colorado Springs or Spokane except under the procedures and
conditions stated in Section V.
E. Citadel shall not confer with operators of other radio stations
that sell advertising time in Colorado Springs or Spokane regarding the
price of radio advertising time--including any discounts for
advertisers or classes of
[[Page 26778]]
advertisers or the availability of added value such as free or bonus
spots, remote broadcasts, or other promotions.
V. Notice
Capstar and Citadel shall provide advance notification to the
Antitrust Division when they directly or indirectly acquire any assets
of or any interest (including any financial, security, loan, equity or
management interest) in any radio station that sells advertising time
in Colorado Springs, Colorado, or Spokane, Washington, or enter into
any JSA or any cooperative selling arrangement with any other operator
of radio stations serving listeners in either city. This obligation to
provide notice is met under this section when a transaction is subject
to the reporting and waiting period requirements of the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended, 15 U.S.C. 18a
(the ``HSR Act''),
Notification under this section shall be provided to the Antitrust
Division in the same format as, and per the instructions relating to
the Notification and Report Form set forth in the Appendix to Part 803
of Title 16 of the Code of Federal Regulations as amended, except that
the information requested in Items 5-9 of the instructions must be
provided only about the sales of radio advertising time in Colorado
Springs and Spokane. Notification shall be provided at least thirty
(30) days prior to the acquisition of any such interest, and shall
include, beyond what may be required by the applicable instructions,
the names of the principal representatives of the parties to the
agreement who negotiated the agreement, and any management or strategic
plans discussing the proposed transaction. If within the 30-day period
after notification, representatives of the Antitrust Division make a
written request for additional information, defendants shall not
consummate the proposed transaction or agreement until twenty (20) days
after submitting all such additional information. Early termination of
the waiting periods in this paragraph may be requested and, where
appropriate, granted in the same manner as is applicable under the
requirements and provisions of the HSR Act and rules promulgated
thereunder. This Section shall be broadly construed, and any ambiguity
or uncertainty regarding the filing of notice under this Section shall
be resolved in favor of filing notice.
Citadel shall not enter into any JSA or any other cooperative
selling arrangement with any other operator of radio stations that
sells or helps to sell radio advertising time in either Colorado
Springs or Spokane without advance written approval from the Antitrust
Division.
VI. Preservation of Assets
Unitl the termination of the JSA required by Section IV has been
accomplished, Citadel shall take all steps necessary to maintain and
operate the Radio Assets as active and viable entities to the extent it
is able under the JSA; maintain the management, staffing, sales and
marketing of the Radio Assets; and maintain the Radio Assets in
operable condition at current capacity configurations. Citadel and
Capstar agree that they may hire each other's employees and that they
will not enforce any non-complete provisions in the employment
contracts of any sales employee of any radio station they own in
Colorado Springs.
VII. Financing
Citadel and Capstar shall not finance for each other all or any
part of any transaction related to this Final Judgment.
VIII. Compliance Inspection
For purposes of determining or securing compliance with the Final
Judgment or determining whether the Final Judgment should be modified
or terminated and subject to any legally recognized privilege, from
time to time:
A. Duly authorized representatives of the plaintiff, upon the
written request of the Assistant Attorney General in charge of the
Antitrust Division, and on reasonable notice to the defendants made to
their principal offices, shall be permitted:
(1) Access during office hours of the defendants to inspect and
copy all books, ledgers, accounts, correspondence, memoranda, and
other records and documents in the possession or under the control
of the defendants, who may have counsel present, relating to the
matters contained in this Final Judgment; and
(2) Subject to the reasonable convenience of the defendants and
without restraint or interference from any of them, to interview,
either informally or on the record, their officers, employees, and
agents, who may have counsel present, regarding any such matters.
B. Upon the written request of the Assistant Attorney General in
charge of the Antitrust Division, made to the defendants' principal
offices, the defendants shall submit written reports, under oath if
requested, with respect to any matter contained in the Final Judgment.
C. No information or documents obtained by the means provided in
Section VIII of this Final Judgment shall be divulged by a
representative of the plaintiff to any person other than a duly
authorized representative of the Executive Branch of the United States,
except in the course of legal proceedings to which the plaintiff is a
party (including grand jury proceedings), or for the purpose of
securing compliance with this Final Judgment, or as otherwise required
by law.
D. If at the time information or documents are furnished by the
defendants to the plaintiff, the defendants represent and identify in
writing the material in any such information or documents to which a
claim of protection may be asserted under Rule 26(c)(7) of the Federal
Rules of Civil Procedure, and the defendants mark each pertinent page
of such material, ``Subject to claim of protection under Rule 26(c)(7)
of the Federal Rules of Civil Procedure,'' then ten (10) calendar days'
notice shall be given by the plaintiff to the defendants prior to
divulging such material in any legal proceeding (other than a grand
jury proceeding) to which the defendants are not a party.
IX. Retention of Jurisdiction
Jurisdiction is retained by this Court for the purpose of enabling
any of the parties to this Final Judgment to apply to this Court at any
time for such further orders and directions as may be necessary or
appropriate for the construction or carrying out of this Final
Judgment, for the modification of any of the provisions hereof, for the
enforcement of compliance herewith, and for the punishment of any
violations hereof.
X. Termination
Unless this Court grants an extension, this Final Judgment will
expire upon the tenth anniversary of the date of its entry.
XI. Public Interest
Entry of this Final judgment is in the public interest.
Dated ________
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United States District Judge
Plaintiffs Explanation of Consent Decree Procedures
Plaintiff, the United States of America, submits this short
memorandum summarizing the procedures regarding the Court's entry of
the proposed Final Judgment. The Judgment would settle this case
pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C.
16(b)-(h) (the ``APPA''), which applies to civil
[[Page 26779]]
antitrust cases brought and settled by the United States.
1. Today, plaintiff has filed a Complaint, a proposed Final
Judgment, and a Stipulation by which the parties have agreed to the
Court's entry of the proposed Final Judgment following compliance with
the APPA, and a Motion to Enter the Stipulation and Order. The
defendants have agreed not to consummate their transaction until the
Court signs the Stipulation and Order. The Court's entry of the
Stipulation will enable it immediately to govern the parties's behavior
relating to the transaction, until such time as the Final Judgment is
entered pursuant to the APPA.
2. Plaintiff is also filing a Competitive Impact Statement relating
to the proposed Judgment [15 U.S.C. 16(b)].
3. The APPA requires that plaintiff publish the proposed Final
Judgment and Competitive Impact Statement in the Federal Register and
in certain newspapers at least 60 days prior to entry of the Final
Judgment. The notice will inform members of the public that they may
submit comments about the Final Judgment to the United States
Department of Justice, Antitrust Division [15 U.S.C. 16(b)-(c)].
4. During the sixty-day period, plaintiff will consider, and at the
close of that period respond to, any comments received, and it will
publish the comments and responses in the Federal Register.
5. After the expiration of the sixty-day period, plaintiff will
file with the Court the comments, the government's responses, and a
Motion for Entry of the Final Judgment (unless the United States has
decided to withdraw its consent to entry of the Final Judgment, as
permitted by Paragraph 2 of the Stipulation) [see 15 U.S.C. 16(d)].
6. At that time, pursuant to the APPA, 15 U.S.C. 16(e)-(f), the
Court may enter the Final Judgment without a hearing, if it finds that
the Final Judgment is in the public interest.
Dated: April 28, 1999.
Respectfully submitted.
Karl D. Knutsen,
Attorney, United States Department of Justice, Antitrust Division,
Merger Task Force, 1401 H St., NW, Suite 4000, Washington, DC 20530,
(202) 514-0976.
Certificate of Service
I, Karl D. Knutsen, of the Antitrust Division of the United States
Department of Justice, do hereby certify that true copies of the
foregoing Complaint, Final Judgment, Stipulation, Competition Impact
Statement, and Plaintiff's Explanation of Consent Decree Procedures
were served this 28th day of April, 1999, by hand and Fedex, to the
following:
Debra H. Dermody, Reed, Smith, Shaw, & McClay, 435 Sixth Avenue,
Pittsburgh, PA 15219, Counsel for Citadel Communications Corporation,
By Fedex.
David J. Laing, Baker & McKenzie, 815 Connecticut Avenue, N.W.,
Washington, D.C. 20006, Counsel for Triathlon Broadcasting Company, By
hand.
Neil W. Imus, Vinson & Elkins L.L.P., 1455 Pennsylvania Avenue, N.W.,
Washington, D.C. 20006, Counsel for Capstar Broadcasting Corporation,
By hand.
Karl D. Knutsen
Amended Competitive Impact Statement
The United States, pursuant to Section 2(b) of the Antitrust
Procedures and Penalties Act (``APPA''), 15 U.S.C. 16(b)-(h), files
this Amended Competitive Impact Statement relating to the proposed
Final Judgment submitted for entry in this civil antitrust proceeding.
I. Nature and Purpose of the Proceeding
The plaintiff filed an amended civil antitrust Complaint on April
30, 1999 (``Complaint'') alleging that Citadel Communication
Corporation's (``Citadel'') ``Joint Sale Agreement'' (``JSA'') with
Triathlon Broadcasting (``Triathlon'') violates Section One of the
Sherman Act, 15 U.S.C. 1. The Complaint alleges that the JSA between
Citadel and Triathlon is anticompetitive in the Colorado Springs,
Colorado, and Spokane, Washington, radio advertising markets. The
Complaint also alleges that Triathlon's acquisition of additional radio
stations in Spokane is anticompetitive.
The Complaint alleges that in Colorado Springs, Citadel's KKFM-FM,
and KKMG-FM competed against Triathlon's KSPZ-FM, KVUU-FM, KTWK-AM, and
KVOR-AM prior to the JSA, and that since the creation of the JSA,
Citadel has acquired KKLI-FM. The complaint further alleges that since
Citadel and Triathlon instituted the JSA in Colorado Springs, Citadel
now sets the prices for radio advertising for both its and Triathlon's
stations. In addition, the complaint alleges that Citadel approached
its remaining competitors in Colorado Springs and suggested that they
could all make more money if they were to eliminate a discount to
certain advertisers, thus indicating its intent and willingness to
collude and avoid price competition.
The complaint alleges that in Spokane, Citadel's KAEP-FM, KDRK-FM,
KJRB-AM, and KGA-AM competed against Triathlon's KKZX-FM, KEYF-FM,
KEYF-AM, and KUDY-AM prior to the JSA. The complaint further alleges
that since Citadel and Triathlon instituted the JSA in Spokane, Citadel
now sets the prices for radio advertising for both its and these
Triathlon stations. In addition, the complaint alleges that Triathlon
later acquired KNFR-FM, KISC-FM, and KAQQ-AM in Spokane, and has a
reduced incentive to compete against the JSA because it receives a
share of the profits from the JSA.
Finally, the complaint alleges that Capstar Broadcasting
Corporation (``Capstar'') has announced its agreement to acquire
Triathlon, including its stations in Colorado Springs and Spokane.
After it acquires Triathlon, Capstar would become a party to the JSA,
if the JSA were still in existence.
The prayer for relief seeks: (a) adjudication that Citadel's JSA
with Triathlon in Colorado Springs violates Section One of the Sherman
Act, 15 U.S.C. 1; (b) adjudication that Citadel's JSA with Triathlon
and Triathlon's acquisition of non-JSA stations in Spokane violate
Section One of the Sherman Act, 15 U.S.C. 1; (c) entry of an injunction
terminating the JSA in both Colorado Springs and Spokane and requiring
Capstar to divest KEF-FM in Spokane; (d) entry of an injunction
preventing Citadel from discussing the price of radio advertising time
with competitors in Colorado Springs and Spokane; and (e) such other
relief as is proper.
The United States has reached a proposed settlement with Citadel
and Capstar which is memorialized in the proposed Final Judgment filed
with the Court. Under the terms of the proposed Final Judgment, Citadel
and Capstar will terminate the JSA and Capstar will divest KEYF-FM.
The plaintiff and defendants Citadel and Capstar have stipulated
that the proposed Final Judgment may be entered after compliance with
the APPA and that they can fulfill their obligations under the Final
Judgment. Entry of the proposed Final Judgment would terminate this
action, except that the Court would retain jurisdiction to construe,
modify, or enforce the provisions of the Final Judgment and to punish
violations thereof.
II. The Alleged Violation
A. The Defendants
Citadel is a Nevada corporation with its headquarters in Las Vegas,
Nevada.
[[Page 26780]]
According to industry estimates, it owns 107 radio stations in 20 U.S.
markets. Triathlon is a Delaware Corporation with its headquarters in
San Diego, California. According to industry estimates, it currently
owns 31 radio stations in six U.S. markets. Capstar has announced its
agreement to acquire Triathlon.
Capstar is a Delaware corporation with its headquarters in Austin,
Texas. It is associated with Hicks, Muse, Tate, & Furst Incorporated
(``Hicks-Muse''), a Delaware corporation with its headquarters in
Irving, Texas. According to industry estimates, Capstar owns
approximately 309 radio stations in 76 U.S. markets. Chancellor Media
Company, a company with which Capstar shares some directors and owners,
has announced its intention to acquire Capstar.
B. Description of the Events Giving Rise to the Alleged Violation
Prior to December, 1995, the Citadel and Triathlon radio stations
in Colorado Springs and Spokane competed against each other within
their respective cities. On or about December 15, 1995, however,
Citadel and Triathlon's predecessor corporation entered into a Joint
Sales Agreement (``JSA''). Under the terms of the JSA, Citadel sets
prices and sells advertising time on the radio stations subject to the
JSA in both Colorado Springs and Spokane. Citadel also collects
payments from advertisers, makes a monthly report to Triathlon, deducts
expenses, and divides the profits between the parties. Citadel and
Triathlon have operated under the JSA since December, 1995. Later,
Triathlon acquired another group of radio stations in Spokane.
C. Anticompetitive Consequences of the JSA
1. The Sale of Radio Advertising Time in Colorado Springs, Colorado,
and Spokane, Washington, Are The Appropriate Markets in Which To
Analyze This Antitrust Action
The Complaint alleges that the provision of advertising time on
radio stations serving Colorado Springs, Colorado, and Spokane,
Washington, constitutes a line of commerce and sections of the country,
or relevant markets, for antitrust purposes. Radio stations, by their
programming, seek to attract listeners. The radio stations then sell
advertising time to advertisers who want to reach those listeners.
Radio's unique characteristics as an inexpensive drive-time and
workplace news and entertainment companion has given it distinct and
special qualities. Retailers, in an effort to reach potential
customers, use a mix of electronic and print media to deliver their
advertising messages. In so doing, they have learned that certain media
are more cost-effective than others in meeting certain of their
advertising goals and that radio can serve several such goals.
When radio advertisers use radio as part of a ``media mix,'' they
often view the other advertising media (such as television or
newspapers) as a complement to, and not a substitute for, radio
advertising. Many advertisers who use radio as part of a multi-media
campaign do so because they believe that the radio component enhances
the effectiveness of their overall advertising campaign. They view
radio as giving them unique and cost-effective access to certain
audiences. They recognize that because radio is portable, people can
listen to it anywhere--especially in places and situations where other
media are not present, such as in the office and car. In addition, they
know that radio formats are designed to attract listeners in specific
demographic groups. As a consequence of the foregoing factors, the
closest substitute to advertising on one radio station, for many
advertisers, is advertising on other radio stations.
In addition to accomplishing these goals more efficiently than
other media, radio advertising is the relevant market in which to
evaluate the JSA because a hypothetical monopolist of radio stations
could profitably raise prices. Although some local and national
advertisers may switch some of their advertising to other media rather
than absorb a price increase in the cost of radio advertising time, the
existence of such advertisers would not prevent all radio stations in
the Colorado Springs and Spokane markets from profitably raising their
prices a small but significant amount. At a minimum, stations could
profitably raise prices to those advertisers who view radio as a
necessary advertising medium for them, or as a necessary advertising
complement to other media. Radio stations negotiate prices individually
with advertisers; consequently, radio stations can charge different
advertisers different prices. Radio stations generally can identify
advertisers with strong radio preferences. Because of this ability to
price discriminate among customers, radio stations may charge higher
prices to advertisers that view radio as particularly effective for
their needs, while maintaining lower prices for other advertisers.
2. Harm to Competition
a. The concentration of radio stations in Colorado Springs and
Spokane substantially harms competition. The Complaint alleges that
Citadel's JSA with Triathlon in Colorado Springs and Spokane along with
Triathlon's subsequent acquisition of additional stations in Spokane
harms competition. Prior to the JSA, an advertiser buying radio
advertising time could select a combination of Citadel, Triathlon, and
independent stations that would allow it to exclude either the
Triathlon or Citadel stations--thus giving both Citadel and Triathlon
an incentive to negotiate with the advertiser. After the JSA, however,
the Citadel and Triathlon stations subject to the JSA no longer compete
with each other. Because the JSA represents a large percentage of the
radio advertising available in those geographic markets, many
advertisers in those markets cannot meet their listener goals without
using the JSA stations. Realizing that these advertisers cannot buy
around its JSA, Citadel can raise prices to many advertisers.
b. Advertisers could not turn to other Colorado Springs or Spokane
radio stations to prevent Citadel from imposing an anticompetitive
price increase. If Citadel and Triathlon raised prices to advertisers
in Colorado Springs or Spokane, other radio stations in Colorado
Springs and Spokane would not and could not profitably offer additional
advertising inventory or change their formats to provide access to
different audiences, thus mitigating the effect of the price increase.
Stations are constrained in their ability to play additional
commercials by the tendency of listeners to avoid stations that play
too much advertising and the insistence of advertisers on
``separation'' from similar advertisers. Thus, even if advertisers
trying to avoid a price increase wanted to run additional commercials
on non-Citadel and non-Triathlon stations, the alternative stations
would likely be unable to accommodate them. Moreover, even assuming
that such a station could accommodate an increase in advertisers, it
would perceive the increase in demand for its product and would have an
incentive to raise its prices as well. Finally, successful stations are
reluctant to change formats because of the risk and costs involved in a
format change and unsuccessful stations may not be able to gain a large
enough audience to undermine a supra-competitive price increase. In
addition, an advertiser wishing to reach a broad audience cannot simply
run more commercials on fewer stations, because the advertiser will not
reach a broad enough audience without a range of stations.
In both the Colorado Springs and Spokane radio advertising markets,
new
[[Page 26781]]
entry is unlikely as a response to a supra-competitive price increase
from the JSA. In addition, it is unlikely that stations in adjacent
communities could boost their power so as to enter the Colorado Springs
or Spokane markets without interfering with other stations and thus
violating Federal Communications Commission regulations.
III. Explanation of the Proposed Final Judgment
The proposed Final Judgment would preserve competition in the sale
of radio advertising time in both Colorado Springs and Spokane. It
requires Citadel and Capstar \1\ to terminate their JSA as soon as
possible, but no later than June 2, 1999. Plaintiff, at its sole
discretion, may extend the time period for the parties to comply with
the terms of the Final Judgment for two additional 30-day periods. In
addition, the proposed Final Judgment requires Capstar to divest KEYF-
FM in Spokane. Defendants have also expressed their desire to exchange
certain other stations among themselves and plaintiff has stipulated
that it will not contest any or all of their proposed exchanges. See
Stipulation and Order, Paras. 4 & 5. The Final Judgment provides that
neither defendant, nor their successors, can acquire any other radio
station in either Colorado Springs or Spokane without giving the
Antitrust Division of the Department of Justice prior notice.
Furthermore, the Final Judgment places conditions on the parties if
they wish to enter any subsequent JSA in either Colorado Springs or
Spokane. Capstar (never a party to the JSA) may not enter into a JSA in
those cities without notifying that Antitrust Division; Citadel may not
enter a JSA in those cities without permission from the Antitrust
Division. Despite their clear competitive significance. JSAs may not
all be reportable to the Department under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, 15 U.S.C. 18a (the
``HSR Act''). Thus, this provision in the proposed Final Judgment
ensures that the Department will receive notice of and be able to act,
if appropriate, to stop any agreements that might have anticompetitive
effects in these radio advertising markets. Finally, the proposed Final
Judgment prevents Citadel from discussing radio advertising prices and
discounts with other radio stations in both Colorado Springs and
Spokane. Nothing in this proposed Final Judgment limits the plaintiff's
ability to investigate or bring actions, where appropriate, challenging
other past or future activities of defendants in Colorado Springs,
Spokane, or any other markets, including their entry into a JSA or any
other agreements related to the sale of advertising time except those
specifically identified in the Complaint.
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\1\ Although this action names Triathlon as a defendant, the
Department expects that Triathlon will be acquired by Capstar soon
and will be acquired by Capstar soon and will then cease to have a
separate legal existence. Hence, relief against it is unnecessary.
When Triathlon's separate existence is terminated, the Department
will move to dismiss it as a defendant. This will occur before the
Department moves for entry of the proposed Final Judgment at the
conclusion of the Tunney Act review process.
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IV. Remedies Available to Potential Private Litigants
Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any
person who has been injured as a result of conducted prohibited by the
antitrust laws may bring suit in federal court to recover three times
the damages the person has suffered, as well as costs and reasonable
attorneys' fees. Entry of the proposed Final Judgment will neither
impair nor assist the bringing of any private antitrust damage action.
V. Procedures Available for Modification of the Proposed Final
Judgment
The plaintiff and the defendants have stipulated that the proposed
Final Judgment may be entered by the Court after compliance with the
provisions of the APPA, provided that the United States has not
withdrawn its consent. The APPA conditions entry upon the Court's
determination that the proposed Final Judgment is in the public
interest.
The APPA provides a period of at least sixty (60) days preceding
the effective date of the proposed Final Judgment within which any
person may submit to the United States written comments regarding the
proposed Final Judgment. Any person who wishes to comment should do so
within sixty (60) days of the date of publication of this Competitive
Impact Statement in the Federal Register. The United States will
evaluate and respond to the comments. All comments will be given due
consideration by the Department of Justice, which remains free to
withdraw its consent to the proposed Final Judgment at any time prior
to its entry. The comments and the response of the United States will
be filed with the Court and published in the Federal Register.
Any such written comments should be submitted to: Craig W. Conrath,
Chief, Merger Task Force, Antitrust Division, United States Department
of Justice, 1401 H Street, N.W., Suite 4000, Washington, D.C. 20530.
The proposed Final Judgment provides that the Court retains
jurisdiction over this action, and the parties may apply to the Court
for any order necessary or appropriate for the modification,
interpretation, or enforcement of the Final Judgment.
VI. Alternatives to the Proposed Final Judgment
The plaintiff considered, as an alternative to the proposed Final
Judgment, a full trial on the merits of its complaint against
defendants. The plaintiff is satisfied, however, that the termination
of the JSA and other relief contained in the proposed Final Judgment
will preserve viable competition in the sale of radio advertising time
in the Colorado Springs and Spokane radio advertising markets. Thus,
the proposed Final Judgment achieves all of the relief the Government
would have obtained through litigation, but avoids the time, expense
and uncertainty of a full trial on the merits of the complaint.
VII. Standard of Review Under the APPA for Proposed Final Judgment
The APPA requires that proposed consent judgments in antitrust
cases brought by the United States be subject to a sixty (60) day
comment period, after which the court shall determine whether entry of
the proposed Final Judgment ``is in the public interest.''
In making that determination, the court may consider--
(1) the competitive impact of such judgment, including
termination of alleged violations, provisions for enforcement and
modification, duration or relief sought, anticipated effects of
alternative remedies actually considered, and any other
considerations bearing upon the adequacy of such judgment;
(2) the impact of entry of such judgment upon the public
generally and individuals alleging specific injury from the
violations set forth in the complaint including consideration of the
public benefit, if any, to be derived from a determination of the
issues at trial.
15 U.S.C. 16(e). As the United States Court of Appeals for the District
of Columbia Circuit recently held, this statute permits a court to
consider, among other things, the relationship between the remedy
secured and the specific allegations set forth in the government's
complaint, whether the decree is sufficiently clear, whether
enforcement mechanisms are sufficient, and whether the decree may
positively harm third parties. See United States v. Microsoft Corp., 56
F.3d 1448, 1461-62 (D.C. Cir. 1995). In conducting this inquiry.
``[t]he Court is nowhere compelled to go to trial or to engage in
[[Page 26782]]
extended proceedings which might have the effect of vitiating the
benefits of prompt and less costly settlement through the consent
decree process.'' \2\ Rather,
\2\ 119 Cong. Rec. 24598 (1973). See United States v. Gillette
Co., 406 F. Supp. 713, 715 (D. Mass. 1975). A ``public interest''
determination can be made properly on the basis of the Competitive
Impact Statement and Response to Comments filed pursuant to the
APPA. Although the APPA authorizes the use of additional procedures,
15 U.S.C. 16(f), those procedures are discretionary. A court need
not invoke any of them unless it believes that the comments have
raised significant issues and that further proceedings would aid the
court in resolving those issues. See H.R. Rep. 93-1463, 93rd Cong.
2d Sess. 8-9 (1974), Reprinted in U.S.C.C.A.N. 6535, 6538.
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[a]bsent a showing of corrupt failure of the government to discharge
its duty, the Court, in making its public interest finding, should *
* * carefully consider the explanations of the government in the
competitive impact statement and its responses to comments in order
to determine whether those explanations are reasonable under the
circumstances.
United States v. Mid-America Dairymen, Inc., 1977-1 Trade Cas. para.
61,508, at 71,980 (W.D. Mo. 1977).
Accordingly, with respect to the adequacy of the relief secured by
the decree, a court may not ``engage in an unrestricted evaluation of
what relief would best serve the public.'' United States v. BNS, Inc.,
858 F.2d 456, 462 (9th Cir. 1988) (citing United States v. Bechtel
Corp., 648 F.2d 660, 666 (9th Cir.)); see also Microsoft, 56 F.3d at
1460-62. Rather,
the balancing of competing social and political interests affected
by a proposed antitrust consent decree must be left, in the first
instance, to the discretion of the Attorney General. The court's
role in protecting the public interest is one of insuring that the
government has not breached its duty to the public in consenting to
the decree. The court is required to determine not whether a
particular decree is the one that will best serve society, but
whether the settlement is ``within the reaches of the public
interest.'' More elaborate requirements might undermine the
effectiveness of antitrust enforcement by consent decree.\3\
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\3\ Bechtel, 648 F.2d at 666 (citations omitted) (emphasis
added); see BNS, 858 F.2d at 463; United States v. National Broad,
Co., 449 F. Supp. 1127, 1143 (C.D. Cal. 1978); Gillette, 406 F.
Supp. at 716. See also Microsoft, 56 F.3d at 1461 (whether ``the
remedies [obtained in the decree are] so inconsonant with the
allegations charged as to fall outside of the `reaches of the public
interest' '') (citations omitted).
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The proposed Final Judgment, therefore, need not be certain to
eliminate every anticompetitive effect of a particular practice. Court
approval of a final judgment requires a more flexible and less strict
standard than the standard required for a finding of liability. ``[A]
proposed decree must be approved even if it falls short of the remedy
the court would impose on its own, as long as it falls within the range
of acceptability or is `within the reaches of public interest.' '' \14\
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\4\ United States v. American Tel. and Tel. Co., 552 F. Supp.
131, 151 (D.D.C. 1982), aff'd. sub nom. Maryland v. United States,
460 U.S. 1001 (1983) (quoting Gillette Co., 406 F. Supp. at 716
(citations omitted)); United States v. Alcan Aluminum, Ltd., 605 F.
Supp. 619, 622 (W.D. Ky. 1985). Washington, D.C. 20530
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In this case, the proposed Final Judgment meets the appropriate
standard. The Final Judgment dissolves the JSA. In addition, Capstar's
divestiture of KEYF-FM in Spokane will cure the anticompetitive effects
of Triathlon's prior acquisitions there. The exchanges of stations
anticipated by defendants Citadel and Capstar leave both surviving
parties with radio advertising market shares of approximately 40% or
less in both Colorado Springs and Spokane.
VIII. Determinative Documents
There are no determinative materials or documents within the
meaning of the APPA that were considered by the United States in
formulating the proposed Final Judgment.
Respectfully submitted.
Karl D. Knutsen,
Attorney, Colorado Bar Reg. No. 23997, Merger Task Force, U.S.
Department of Justice, Antitrust Division, 1401 H Street, N.W.,
Washington, D.C. 20530, (202) 514-0976.
Certificate of Service
I, Karl D. Knutsen, of the Antitrust Division of the United States
Department of Justice, do hereby certify that true copies of the
foregoing Amended Complaint and amended Competitive Impact Statement
were served this 26th day of April, 1999, by United States mail, to the
following:
Debra H. Dermody, Reed, Smith, Shaw, & McClay, 435 Sixth Ave.,
Pittsburgh, PA 15219, Counsel for Citadel Communications Corporation
David J. Laing, Baker & McKenzie, 815 Connecticut, Washington, D.C.
20006, Counsel for Triathlon Broadcasting Company
Neil W. Imus, Vinson & Elkins, 1455 Pennsylvania Avenue, N.W.,
Washington, D.C. 20006, Counsel for Capstar Broadcasting Corporation
Karl D. Knutsen
[FR Doc. 99-12339 Filed 5-14-99; 8:45 am]
BILLING CODE 4410-11-M
