Wednesday, September 03, 2008

TV Station Divestiture Required to Satisfy Acquisition Concerns

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

The Department of Justice Antitrust Division has filed a complaint and proposed consent decree in the federal district court in Washington, D.C. that would require Raycom Media, Inc., an owner/operator of 46 television stations in 18 states, to divest the local CBS affiliate in Richmond, Virginia.

Earlier this year, Raycom agreed to divest the station (WTVR-TV) to obtain regulatory approval of its acquisition of three broadcast television stations, including the Richmond NBC affiliate, from Lincoln Financial Media Company.

FCC Ownership Limitations

Federal Communications Commission limitations on television station ownership required Raycom to sell one of its two Richmond stations. An agreement between the parties provided for the divestiture of the station within 90 days of closing the transaction with Lincoln Financial Media. If Raycom failed to divest the station within 90 days, the Justice Department would file suit seeking divestiture. The transaction has closed, but Raycom has not sold the Richmond station.

Without the divestiture, Raycom would own two of the four local broadcast stations in the Richmond market, which likely would have led to higher prices for those seeking to advertise on local broadcast television, according to the Justice Department. Prior to the transaction, the two stations competed head-to-head in Richmond for buyers of advertising time.

Spot Advertising Market

Combined, the two stations earned more than 50% of the broadcast television spot advertising revenue in Richmond. Thus, the government alleged that the divestiture was required to assure continued competition for spot advertising in the Richmond broadcast television market.

Under the prosposed consent decree, the Antitrust Division has the right to approve the purchaser of the station to ensure that the sale will restore the competition in the market that existed before Raycom purchased the Lincoln station.

The case is U.S. v. Raycom Media, Inc., Civil Action No. 1:08-cv-01510, filed August 28, 2008. A news release appears here on the Department of Justice Antitrust Division website. Further details will appear in CCH Trade Regulation Reporter.

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