United States, et al. v. Nexstar Media Group, Inc., et al.: Proposed Final Judgment and Competitive Impact Statement

 
CONTENT
Federal Register, Volume 84 Issue 158 (Thursday, August 15, 2019)
[Federal Register Volume 84, Number 158 (Thursday, August 15, 2019)]
[Notices]
[Pages 41738-41757]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-17522]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States, et al. v. Nexstar Media Group, 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, et al. v. Nexstar Media Group, Inc., et al., Civil
Action No. 1:19-cv-2295. On July 31, 2019, the United States, along
with the offices of three states Attorneys General, filed a Complaint
alleging that Nexstar Media Group, Inc.'s (``Nexstar'') proposed
acquisition of Tribune Media Company (``Tribune'') 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 Nexstar to
divest certain broadcast television stations in Davenport, Iowa-Rock
Island-Moline, Illinois; Des Moines-Ames, Iowa; Ft. Smith-Fayetteville-
Springdale-Rogers, Arkansas; Grand Rapids-Kalamazoo-Battle Creek,
Michigan; Harrisburg-Lancaster-Lebanon-York, Pennsylvania; Hartford-New
Haven, Connecticut; Huntsville-Decatur-Florence, Alabama; Indianapolis,
Indiana; Memphis, Tennessee; Norfolk-Portsmouth-Newport News, Virginia;
Richmond-Petersburg, Virginia; Salt Lake City, Utah; and Wilkes-Barre-
Scranton, Pennsylvania.
    Copies of the Complaint, proposed Final Judgment, and Competitive
Impact Statement are available for inspection on the Antitrust
Division's website at http://www.justice.gov/atr and at the Office of
the Clerk of the United States District Court for the District of
Columbia. Copies of these materials may be obtained from the Antitrust
Division upon request and payment of the copying fee set by Department
of Justice regulations.
    Public comment is invited within 60 days of the date of this
notice. Such comments, including the name of the submitter, and
responses thereto, will be posted on the Antitrust Division's website,
filed with the Court, and, under certain circumstances, published in
the Federal Register. Comments should be directed to Owen Kendler,
Chief, Media Entertainment and Professional Services Section, Antitrust
Division, Department of Justice, 450 Fifth Street NW, Suite 4000,
Washington, DC 20530 (telephone: 202-305-8376).
Amy R. Fitzpatrick,
Counsel to the Director of Civil Enforcement.
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
    UNITED STATES OF AMERICA, 450 Fifth Street NW, Washington, DC
20530; STATE OF ILLINOIS, 100 West Randolph Street, Chicago, IL
60601; COMMONWEALTH OF PENNSYLVANIA, 14\th\ Floor, Strawberry
Square, Harrisburg, PA 17120; and, COMMONWEALTH OF VIRGINIA, 202
North 9th Street, Richmond, VA 23219, Plaintiffs, v. NEXSTAR MEDIA
GROUP, INC., 545 E. John Carpenter Freeway, Suite 700, Irving, TX
75062; and TRIBUNE MEDIA COMPANY, 515 North State Street, Chicago,
IL 60654, Defendants.
Civil Action No. 1:19-cv-2295 (DLF)
COMPLAINT
    The United States of America, acting under the direction of the
Attorney General of the United States, and the State of Illinois and
the Commonwealths of Pennsylvania and Virginia (``Plaintiff States''),
bring this civil action against Nexstar Media Group, Inc. (``Nexstar'')
and Tribune Media Company (``Tribune'') to enjoin Nexstar's proposed
merger with Tribune. The Plaintiffs allege as follows:
I. NATURE OF THE ACTION
    1. Pursuant to an Agreement and Plan of Merger dated November 30,
2018, Nexstar plans to acquire Tribune for approximately $6.4 billion.
    2. The proposed merger would combine two of the largest independent
local television station owners in the United States and would combine
many popular local television stations that compete against each other
in several markets, likely resulting in significant harm to
competition.
    3. In twelve Designated Market Areas (``DMAs''), Nexstar and
Tribune each own at least one broadcast television station that is an
affiliate of one of the
[[Page 41739]]
``Big 4'' television networks: NBC, CBS, ABC, or FOX. These twelve
DMAs, collectively referred to in this Complaint as the ``Big 4 Overlap
DMAs,'' are: (i) Davenport, Iowa-Rock Island-Moline, Illinois; (ii) Des
Moines-Ames, Iowa; (iii) Ft. Smith-Fayetteville-Springdale-Rogers,
Arkansas; (iv) Grand Rapids-Kalamazoo-Battle Creek, Michigan; (v)
Harrisburg-Lancaster-Lebanon-York, Pennsylvania; (vi) Hartford-New
Haven, Connecticut; (vii) Huntsville-Decatur-Florence, Alabama; (viii)
Memphis, Tennessee; (ix) Norfolk-Portsmouth-Newport News, Virginia; (x)
Richmond-Petersburg, Virginia; (xi) Salt Lake City, Utah; and (xii)
Wilkes-Barre-Scranton, Pennsylvania.
    4. Additionally, in the Indianapolis, Indiana DMA (``Indianapolis
DMA''), Tribune owns two Big 4 stations and Nexstar owns the CW and
MyNetworkTV affiliates. Nexstar's CW station has a higher than usual
market share for a CW affiliate because of its strong local news
programming; until 2014, the station had been the CBS affiliate in the
Indianapolis DMA. The Big 4 Overlap DMAs and the Indianapolis DMA
together are referred to in this Complaint as ``Overlap DMAs.''
    5. In each Big 4 Overlap DMA, the proposed merger would eliminate
competition between Nexstar and Tribune in the licensing of Big 4
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 merger would substantially lessen competition in the sale
of broadcast television spot advertising to advertisers interested in
reaching viewers in the DMA.
    6. By eliminating a major competitor, the merger would likely give
Nexstar 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 merger would likely allow Nexstar to
charge local businesses and other advertisers higher prices to reach
audiences in the Overlap DMAs.
    7. As a result, the proposed merger of Nexstar and Tribune likely
would substantially lessen competition in the markets for licensing Big
4 television retransmission consent in each of the Big 4 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. Sec.  18.
II. THE DEFENDANTS
    8. Nexstar is a Delaware corporation with its headquarters in
Irving, Texas. Nexstar owns 171 television stations in 100 DMAs, of
which 136 stations are Big 4 affiliates. In 2018, Nexstar reported
revenues of $2.8 billion.
    9. Tribune is a Delaware corporation with its headquarters in
Chicago, Illinois. Tribune owns 44 television stations in 33 DMAs, of
which 27 stations are Big 4 affiliates. In 2018, Tribune earned
revenues of more than $2.0 billion.
III. JURISDICTION AND VENUE
    10. The United States brings this action under Section 15 of the
Clayton Act, 15 U.S.C. Sec.  25, as amended, to prevent and restrain
Defendants from violating Section 7 of the Clayton Act, 15 U.S.C. Sec.
18.
    11. The Plaintiff States bring this action under Section 16 of the
Clayton Act, 15 U.S.C. Sec.  26, to prevent and restrain Defendants
from violating Section 7 of the Clayton Act, 15 U.S.C. Sec.  18. The
Plaintiff States, by and through their respective Attorneys General,
bring this action as parens patriae on behalf of and to protect the
health and welfare of their citizens and the general economy in each of
their states.
    12. The Court has subject matter jurisdiction over this action
pursuant to Section 15 of the Clayton Act, 15 U.S.C. Sec.  25, and 28
U.S.C. Sec. Sec.  1331, 1337(a), and 1345.
    13. Defendants license Big 4 television retransmission consent to
MVPDs, and 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.
    14. Nexstar and Tribune have consented to venue and personal
jurisdiction in this judicial district. Both companies transact
business in this district. Venue is therefore proper in this district
under Section 12 of the Clayton Act, 15 U.S.C. Sec.  22, and under 28
U.S.C. Sec.  1391(b)(1) and (c).
IV. BIG 4 TELEVISION RETRANSMISSION CONSENT MARKETS
A. Background
    15. MVPDs, such as Comcast, DirecTV, and Charter, typically pay the
owner of each local Big 4 broadcast station in a given DMA a per-
subscriber fee for the right to retransmit the station's content to the
MVPD's 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 Nexstar or Tribune, 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.''
    16. 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
    17. Big 4 broadcast content has special appeal to television
viewers in comparison to the content that is available through other
broadcast stations and cable channels. Big 4 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 4
stations to be close substitutes for one another.
    18. Because of Big 4 stations' popular national content and valued
local coverage, MVPDs regard Big 4 programming as highly desirable for
inclusion in the packages they offer subscribers.
    19. Non-Big 4 broadcast stations are typically not close
substitutes for viewers of Big 4 stations. Stations that are affiliates
of networks other than the Big 4, such as the CW Network, MyNetworkTV,
or Telemundo, typically feature niche programming without local news or
sports--or, in the case of Telemundo, aimed at a Spanish-speaking
audience. Stations that are unaffiliated with any network are similarly
unlikely to carry programming with broad popular appeal.
    20. If an MVPD suffers a blackout of a Big 4 station in a given
DMA, many of the MVPD's subscribers in that DMA are likely to turn to
other Big 4 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 4 broadcast
[[Page 41740]]
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.
    21. Due to the limited programming typically offered by non-Big 4
stations, viewers are much less likely to switch to a non-Big 4 station
than to switch to other Big 4 stations in the event of a blackout of a
Big 4 station. Accordingly, competition from non-Big 4 stations does
not typically impose a significant competitive constraint on the
retransmission consent fees charged by the owners of Big 4 stations.
    22. For the same reasons, subscribers--and therefore MVPDs--
generally do not view cable network programming as a close substitute
for Big 4 network content. This is primarily because cable channels
offer different content. For example, cable channels generally do not
offer local news, which provides a valuable connection to the local
community that is important to viewers of Big 4 stations.
    23. Because viewers do not regard non-Big 4 broadcast stations or
cable networks as close substitutes for the programming they receive
from Big 4 stations, these other sources of programming are not
sufficient to discipline an increase in the fees charged for Big 4
television retransmission consent. Accordingly, a hypothetical
monopolist of Big 4 television stations would likely increase the
retransmission consent fees it charges to MVPDs for those stations by
at least a small but significant amount.
    24. The licensing of Big 4 television retransmission consent
therefore constitutes a relevant product market and line of commerce
under Section 7 of the Clayton Act, 15 U.S.C. Sec.  18.
2. Geographic Markets
    25. A DMA is a geographic unit for which A.C. Nielsen Company--a
firm that surveys television viewers--furnishes broadcast television
stations, MVPDs, cable and satellite television 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.
    26. In the event of a blackout of a Big 4 network station, FCC
rules generally prohibit an MVPD from importing the same network's
content from another DMA. Thus, Big 4 viewers in one DMA cannot switch
to Big 4 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 4 television retransmission
consent within the meaning of Section 7 of the Clayton Act, 15 U.S.C.
Sec.  18.
C. Likely Anticompetitive Effects
    27. 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.
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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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    28. The chart below summarizes Defendants' approximate Big 4
television retransmission consent market shares, based on revenue, and
the effect of the transaction on the HHI in each Big 4 Overlap DMA.\2\
---------------------------------------------------------------------------
    \2\ In this chart and the one below, sums that do not agree
precisely reflect rounding.

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                                                           Nexstar share   Tribune share   Merged share                     Post-merger
                    Big 4 overlap DMA                           (%)             (%)             (%)       Pre-merger HHI        HHI        HHI increase
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Wilkes Barre, PA........................................            54.0            24.7            78.7            3981            6645            2664
Ft. Smith, AR...........................................            63.4            15.0            78.4            4708            6613            1906
Norfolk, VA.............................................            56.0            21.1            77.1            4104            6465            2361
Grand Rapids, MI........................................            43.4            16.3            59.7            2974            4391            1417
Hartford, CT............................................            33.5            25.4            58.9            2636            4338            1702
Memphis, TN.............................................            38.4            17.6            56.1            2762            4118            1356
Davenport, IA...........................................            36.8            14.9            51.6            2744            3838            1094
Des Moines, IA..........................................            34.5            13.9            48.4            2798            3756             958
Huntsville, AL..........................................            32.5            16.6            49.1            2630            3710            1080
Salt Lake City, UT......................................            32.1            15.5            47.5            2691            3683             992
Harrisburg, PA..........................................            25.3            22.1            47.4            2553            3670            1117
Richmond, VA............................................            28.0            16.9            44.9            2672            3617             945
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    29. As indicated by the preceding chart, the post-merger HHI in
each Big 4 Overlap DMA is well above 2,500, and the HHI increase in
each Big 4 Overlap DMA far exceeds the 200-point threshold. Thus, the
proposed merger presumptively violates Section 7 of the Clayton Act in
each Big 4 Overlap DMA.
    30. The proposed merger would enable Nexstar to black out more Big
4 stations simultaneously in each of the Big 4 Overlap DMAs than either
Nexstar or Tribune could black out independently today, likely leading
to increased retransmission consent fees charged to such MVPDs.
    31. 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.
    32. For these reasons, the proposed merger of Nexstar and Tribune
likely would substantially lessen competition
[[Page 41741]]
in the licensing of Big 4 television retransmission consent in each of
the Big 4 Overlap DMAs, in violation of Section 7 of the Clayton Act,
15 U.S.C. Sec.  18.
V. BROADCAST TELEVISION SPOT ADVERTISING MARKETS
A. Background
    33. Broadcast television stations, including both Big 4 broadcast
stations and non-Big 4 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 stations or their representatives.
    34. Nexstar and Tribune compete with one another to sell broadcast
television spot advertising in each of the Overlap DMAs.
B. Relevant Markets
1. Product Market
    35. Broadcast television spot advertising, including spot
advertising on both Big 4 and non-Big 4 broadcast stations, constitutes
a relevant product market and line of commerce under Section 7 of the
Clayton Act, 15 U.S.C. Sec.  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 Local Broadcast Television Spot Advertising
    36. Typically, an advertiser purchases broadcast television
advertising spots as one component of an advertising strategy that may
also include cable spots, newspaper advertisements, billboards, radio
spots, digital advertisements, email advertisements, and direct mail.
    37. Different components of an advertising strategy generally
target different audiences and serve distinct purposes. Advertisers
that advertise on broadcast 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, making them potential complements
to broadcast television advertising, but not close substitutes. For
example, ads associated with online search results target individual
consumers or respond to specific keyword searches, whereas broadcast
television advertising reaches a broad audience throughout a DMA.
    38. 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 effects of the merger in the Overlap DMAs.
ii. Cable Television Spot Advertising
    39. MVPDs sell spot advertising to be shown during breaks in cable
network programming. For viewers, these advertisements are similar to
broadcast ads. That, however, does not mean that cable television spot
advertising should be included in the product market. For the following
reasons, cable television spot advertising is at this time a relatively
ineffective substitute for broadcast television spot advertising for
most advertisers.
    40. 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 channels 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.
    41. Second, households that have access to cable networks are
divided among multiple MVPDs within a DMA. In some DMAs, MVPDs sell
some spot advertising through consortia called ``interconnects.''
Sometimes these interconnects include all of the largest MVPDs in a
DMA, approaching but not matching broadcast stations' reach. But in
other, especially smaller DMAs, the interconnect only contains a subset
of MVPDs, which reduces the reach of the interconnect's advertisements.
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.
    42. 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 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 advertisements cannot offer a sufficient volume of ratings points,
or broad enough household penetration, to provide a viable alternative
to broadcast television spot advertising at this time. Because of these
limitations, MVPDs and interconnects would be unable to expand output
or increase sales sufficiently to defeat a small but significant
increase in the prices charged for broadcast television spot
advertising in a given DMA.
iii. Digital Advertising
    43. Digital advertising is 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, but are still not close substitutes for
broadcast television spot advertising for the reasons stated below.
    44. First, digital advertisements typically reach a different
audience than broadcast television spot advertising. Whereas
advertisers use broadcast television spots to reach a large
[[Page 41742]]
percentage of households in a 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 smaller geographic target, such as a
city or a zip code, or to narrow demographic subsets of a population.
    45. Second, inventory of ad-supported, high-quality, long-form
video on the internet is limited. Advertisers see value to advertising
on video that is watched by the audience they seek to target. High-
quality, long-form video is the most similar content to broadcast
television programming available on the internet. The most popular
high-quality, long-form video available on the internet is provided
through ad-free subscription services (like Netflix or Amazon Prime),
over-the-top MVPDs that sell cable television spot advertisements (like
Sling and YouTube TV), or sold directly by the networks on their own
network sites. The remaining inventory of digital advertisements
attached to high-quality, long-form video on the internet, which is
primarily sold by digital advertising platforms, is small today.
Because of these limitations, digital video advertising would be unable
to expand output or increase sales sufficiently to defeat a small but
significant increase in the prices charged for broadcast television
spot advertising in a given DMA.
iv. Other Forms of Advertising
    46. 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 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.
    47. For all of these reasons, advertisers likely would not respond
to a small but significant non-transitory increase in the price of
broadcast television spot advertising by switching to other forms of
advertising--such as cable, digital, print, radio, or billboard
advertising--in sufficiently large numbers to make the price increase
unprofitable.
v. Broadcasters' Negotiations with Advertisers and Internal Analyses
    48. While cable spot or digital advertising may constrain broadcast
television spot advertising prices in the future, it does not do so
today. On a cost-per-point basis (cost to reach one percent of a
relevant target population), over the last few years broadcast
television spot advertising prices have generally remained steady or
increased. If cable spot or digital advertising was a close and robust
competitor to broadcast television spot advertising, then, all else
being equal, competition from cable spot or digital advertising would
place downward pressure on broadcast television spot advertising
pricing. But they have not had this effect.
    49. The differentiation between broadcast television spot
advertising and cable spot and digital advertising bears out in
negotiations between broadcasters and advertisers. Advertisers usually
will put an advertising buy out to bid to many or all broadcast
stations in a DMA, and will not include MVPDs or digital advertisers in
that same bid. In negotiations with broadcast stations, advertisers
regularly discuss offered prices and opportunities from other broadcast
stations in the same DMA to try to bargain down price, but they rarely
discuss price offers or opportunities from MVPDs or digital advertisers
in those negotiations. When a broadcaster salesperson internally
analyzes the station's performance on any particular buy, the
salesperson typically looks at the percentage of the buy that was
allocated to each broadcast station, adding up to 100% of the buy. The
salesperson typically does not consider any allocation of an
advertiser's spending on cable or digital advertising. Likewise, if an
advertiser reports to a broadcaster salesperson the percentage of a buy
that the broadcaster received, the advertiser typically reports the
broadcaster's percentage of the amount awarded to all broadcast
stations in the DMA, but does not include any amount spent on cable or
digital advertising.
    50. Internally, broadcasters make most of their competitor
comparisons against other broadcasters in the same DMA, not against
MVPDs in that DMA or digital advertisers. When reporting to their
station managers and corporate headquarters, broadcast station sales
executives regularly report on their performance vis-[agrave]-vis other
broadcast stations in the DMA; they rarely report on their performance
against cable or digital platforms. When looking for new business,
broadcast stations use third-party services to identify advertisers
advertising on other broadcast stations, but do not subscribe to
similar services for cable or digital advertising. Similarly, the
national sales representation firms regularly report to broadcast
stations about competition from representatives for other broadcasters
in the same DMA, but rarely report on competition from representatives
for cable or digital platforms. Many broadcasters use a third-party
data analysis service to help set their spot advertising rate cards;
that service uses market share estimates from other broadcasters as
input data to generate the rate cards, but does not use market share
estimates from cable or digital advertising platforms.
2. Geographic Markets
    51. 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 would likely
implement at least a small but significant non-transitory price
increase.
    52. 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. Sec.  18.
C. Likely Anticompetitive Effects
    53. The chart below summarizes Defendants' approximate market
shares and the result of the transaction on the HHIs in the sale of
broadcast television spot advertising in each of the Overlap DMAs.
[[Page 41743]]
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                                                           Nexstar share   Tribune share   Merged share                     Post-merger
                       Overlap DMA                              (%)             (%)             (%)       Pre-merger HHI        HHI        HHI increase
--------------------------------------------------------------------------------------------------------------------------------------------------------
Wilkes Barre, PA........................................            35.8            47.6            83.4            3749            7161            3412
Norfolk, VA.............................................            44.0            31.4            75.4            3277            6038            2761
Ft. Smith, AR...........................................            29.1            41.3            70.3            3361            5761            2400
Davenport, IA...........................................            27.0            27.1            54.2            3568            5035            1467
Grand Rapids, MI........................................            36.0            19.0            55.0            2700            4065            1365
Des Moines, IA..........................................            11.2            34.6            45.8            3235            4009             774
Richmond, VA............................................            20.9            29.9            50.8            2733            3981            1248
Huntsville, AL..........................................            13.9            33.0            46.9            2786            3704             918
Memphis, TN.............................................            14.5            33.3            47.9            2558            3527             969
Harrisburg, PA..........................................            21.8            20.8            42.5            2524            3427             903
Indianapolis, IN........................................            13.1            31.0            44.2            2577            3393             815
Hartford, CT............................................            22.7            20.6            43.3            2306            3240             934
Salt Lake City, UT......................................            16.0            24.1            40.0            2329            3098             769
--------------------------------------------------------------------------------------------------------------------------------------------------------
    54. Defendants' large market shares reflect the fact that, in each
Overlap DMA, Nexstar and Tribune each own one or more significant
broadcast 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.
    55. In addition to substantially increasing the concentration
levels in each Overlap DMA, the proposed merger would combine Nexstar's
and Tribune's broadcast television stations, which are close
substitutes and generally vigorous 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--``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.
    56. If Nexstar acquires Tribune'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.
    57. For these reasons, the proposed merger 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. Sec.  18.
VI. ABSENCE OF COUNTERVAILING FACTORS
    58. Entry of a new broadcast station into an Overlap DMA would not
be timely, likely, or sufficient to prevent or remedy the proposed
merger's likely anticompetitive effects in the relevant markets. 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.
    59. Defendants cannot demonstrate merger-specific, verifiable
efficiencies sufficient to offset the proposed merger's likely
anticompetitive effects.
VII. VIOLATIONS ALLEGED
    60. The proposed merger of Nexstar and Tribune likely would
substantially lessen competition in interstate trade and commerce, in
violation of Section 7 of the Clayton Act, 15 U.S.C. Sec.  18. The
merger likely would have the following effects, among others:
    a. competition in the licensing of Big 4 television retransmission
consent in each of the Big 4 Overlap DMAs likely would be substantially
lessened;
    b. competition between Nexstar and Tribune in the licensing of Big
4 television retransmission consent in each of the Big 4 Overlap DMAs
would be eliminated;
    c. the fees charged to MVPDs for the licensing of retransmission
consent in each of the Big 4 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 Nexstar and Tribune 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
    61. The Plaintiffs request that:
    a. the Court adjudge the proposed merger to violate Section 7 of
the Clayton Act, 15 U.S.C. Sec.  18;
    b. the Court enjoin and restrain Defendants from carrying out the
merger, or entering into any other agreement, understanding, or plan by
which Nexstar would merge with, acquire, or be acquired by Tribune, or
Nexstar and Tribune would combine any of their respective Big 4
stations in the Big 4 Overlap DMAs or their stations in the
Indianapolis DMA;
    c. the Court award Plaintiffs the costs of this action; and
    d. the Court award such other relief to Plaintiffs as the Court may
deem just and proper.
Dated: July 31, 2019
Respectfully submitted,
FOR PLAINTIFF UNITED STATES OF AMERICA
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MAKAN DELRAHIM (D.C. Bar  457795)
Assistant Attorney General for Antitrust
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ANDREW C. FINCH
Principal Deputy Assistant Attorney General
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PATRICIA A. BRINK
Director of Civil Enforcement
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OWEN M. KENDLER
[[Page 41744]]
Chief, Media, Entertainment & Professional Services Section
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YVETTE TARLOV (D.C. Bar  442452)
Assistant Chief, Media, Entertainment & Professional Services
Section
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LEE F. BERGER (D.C. Bar  482435)
LAUREN G.S. RIKER
GARRETT LISKEY
United States Department of Justice, Antitrust Division, Media,
Entertainment & Professional Services Section, 450 Fifth Street,
N.W., Suite 4000, Washington, DC 20530, Telephone: (202) 598-2698,
Facsimile: (202) 514-7308
FOR PLAINTIFF STATE OF ILLINOIS
KWAME RAOUL
Attorney General
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Elizabeth L. Maxeiner
Assistant Attorney General, Antitrust Bureau, Office of the Illinois
Attorney General, 100 West Randolph street, Chicago, Illinois 60601,
Phone: 312-814-5470, Facsimile: 312-814-4209, E-mail:
[email protected]
FOR THE COMMONWEALTH OF PENNSYLVANIA
JOSH SHAPIRO
Attorney General
JAMES A. DONAHUE, III
Executive Deputy Attorney General
Public Protection Division
TRACY W. WERTZ
Chief Deputy Attorney General
Antitrust Section
JOSEPH S. BETSKO
PA ID 82620
Senior Deputy Attorney General
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JENNIFER A. THOMSON
PA ID 89360
Senior Deputy Attorney General
Antitrust Section, Office of the Attorney General, 14th Floor,
Strawberry Square, Harrisburg, PA 17120, Telephone: (717) 787-4530,
Fax: (717) 787-1190, E-mail: [email protected]
FOR PLAINTIFF COMMONWEALTH OF VIRGINIA
MARK R. HERRING
Attorney General
CYNTHIA E. HUDSON
Chief Deputy Attorney General
SAMUEL T. TOWELL
Deputy Attorney General
Civil Division
RICHARD S. SCHWEIKER, JR.
Senior Assistant Attorney General and Chief
Consumer Protection Section
-----------------------------------------------------------------------
SARAH OXENHAM ALLEN
VA Bar 33217
Senior Assistant Attorney General and Unit Manager
TYLER T. HENRY
VA Bar 87621
Assistant Attorney General
Antitrust Unit, Office of the Attorney General, 202 North 9th
Street, Richmond, VA 23219, Telephone: (804) 786-6657, Fax: (804)
786-0122, E-mail: [email protected]
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
    UNITED STATES OF AMERICA, STATE OF ILLINOIS, COMMONWEALTH OF
PENNSYLVANIA, and COMMONWEALTH OF VIRGINIA, Plaintiffs, v. NEXSTAR
MEDIA GROUP, INC. and TRIBUNE MEDIA COMPANY, Defendants.
Civil Action No. 1:19-cv-2295 (DLF)
PROPOSED FINAL JUDGMENT
    WHEREAS, Plaintiffs, United States of America and the State of
Illinois and the Commonwealths of Pennsylvania and Virginia
(collectively, the ``Plaintiff States''), filed their Complaint on July
31, 2019, and Defendant Nexstar Media Group, Inc., and Defendant
Tribune Media Company, by their respective attorneys, have consented to
the entry of this Final Judgment without trial or adjudication of any
issue of fact or law and without this Final Judgment constituting any
evidence against or admission by any party regarding any issue of fact
or law;
    AND WHEREAS, Defendants agree to be bound by the provisions of this
Final Judgment pending its approval by the Court;
    AND WHEREAS, the essence of this Final Judgment is the prompt and
certain divestiture of certain rights or assets by Defendants to assure
that competition is not substantially lessened;
    AND WHEREAS, Defendants agree to make certain divestitures for the
purpose of remedying the loss of competition alleged in the Complaint;
    AND WHEREAS, Defendants have represented to Plaintiffs that the
divestitures required below can and will be made and that Defendants
will not later raise any claim of hardship or difficulty as grounds for
asking the Court to modify any of the divestiture provisions contained
below;
    NOW THEREFORE, before any testimony is taken, without trial or
adjudication of any issue of fact or law, and upon consent of the
parties, it is ORDERED, ADJUDGED, AND DECREED:
I. JURISDICTION
    This Court has jurisdiction over the subject matter 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. Sec.  18.
II. DEFINITIONS
    As used in this Final Judgment:
    A. ``Acquirer'' means Scripps, TEGNA, Circle City Broadcasting, or
any other entity or entities to which Defendants divest any of the
Divestiture Assets.
    B. ``Circle City Broadcasting'' means Circle City Broadcasting I,
Inc., a Delaware corporation headquartered in Indianapolis, Indiana,
its successors and assigns, and its subsidiaries, divisions, groups,
affiliates, partnerships, and joint ventures, and their directors,
members, officers, managers, agents, and employees.
    C. ``Cooperative Agreement'' means (1) joint sales agreements,
joint operating agreements, local marketing agreements, news share
agreements, or shared services agreements, or (2) any agreement through
which a person exercises control over any broadcast television station
not owned by the person.
    D. ``Defendants'' means Nexstar and Tribune.
    E. ``Divestiture Assets'' means the Divestiture Stations and all
assets, tangible or intangible, necessary for the operation of the
Divestiture Stations as viable, ongoing commercial broadcast television
stations, including, but not limited to, all real property (owned or
leased), all broadcast equipment, office equipment, office furniture,
fixtures, materials, supplies, and other tangible property relating to
the Divestiture Stations; all licenses, permits, and authorizations
issued by, and applications submitted to, the FCC and other government
agencies relating to the Divestiture Stations; all contracts (including
programming contracts and rights), agreements, network affiliation
agreements, leases, and commitments and understandings of Defendants
relating to the Divestiture Stations; all trademarks, service marks,
trade names, copyrights, patents, slogans, programming materials, and
promotional materials relating to the Divestiture Stations; all
customer lists, contracts, accounts, and credit records related to the
Divestiture Stations; all logs and other records maintained by
Defendants in connection with the Divestiture Stations; and the content
and affiliation of each digital subchannel of the Divestiture Stations.
    F. ``Divestiture Stations'' means KCWI-TV, KFSM-TV, KSTU, WATN-TV,
WCCT-TV, WGNT, WISH-TV, WLMT, WNDY-TV, WNEP-TV, WOI-DT, WPMT, WQAD-TV,
WTIC-TV, WTKR, WTVR-TV, WXMI, and WZDX.
    G. ``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 2018 (4th edition).
[[Page 41745]]
    H. ``FCC'' means the Federal Communications Commission.
    I. ``KCWI-TV'' means the CW-affiliated broadcast television station
bearing that call sign located in the Des Moines-Ames, Iowa, DMA, owned
by Defendant Nexstar.
    J. ``KFSM-TV'' means the CBS-affiliated broadcast television
station bearing that call sign located in the Ft. Smith-Fayetteville-
Springdale-Rogers, Arkansas, DMA, owned by Defendant Tribune.
    K. ``KSTU'' means the FOX-affiliated broadcast television station
bearing that call sign located in the Salt Lake City, Utah, DMA, owned
by Defendant Tribune.
    L. ``Nexstar'' means defendant Nexstar Media Group, Inc., a
Delaware corporation headquartered in Irving, Texas, its successors and
assigns, and its subsidiaries, divisions, groups, affiliates,
partnerships, and joint ventures, and their directors, officers,
managers, agents, and employees.
    M. ``Scripps'' means the E.W. Scripps Company, an Ohio corporation
headquartered in Cincinnati, Ohio, its successors and assigns, and its
subsidiaries, divisions, groups, affiliates, partnerships, and joint
ventures, and their directors, officers, managers, agents, and
employees.
    N. ``TEGNA'' means TEGNA Inc., a Delaware corporation headquartered
in McLean, Virginia, its successors and assigns, and its subsidiaries,
divisions, groups, affiliates, partnerships, and joint ventures, and
their directors, officers, managers, agents, and employees.
    O. ``Tribune'' means defendant Tribune Media Company, a Delaware
corporation headquartered in Chicago, Illinois, its successors and
assigns, and its subsidiaries, divisions, groups, affiliates,
partnerships, and joint ventures, and their directors, officers,
managers, agents, and employees.
    P. ``WATN-TV'' means the ABC-affiliated broadcast television
station bearing that call sign located in the Memphis, Tennessee, DMA,
owned by Defendant Nexstar.
    Q. ``WCCT-TV'' means the CW-affiliated broadcast television station
bearing that call sign located in the Hartford-New Haven, Connecticut,
DMA, owned by Defendant Tribune.
    R. ``WGNT'' means the CW-affiliated broadcast television station
bearing that call sign located in the Norfolk-Portsmouth-Newport News,
Virginia, DMA, owned by Dreamcatcher Broadcasting LLC, regarding which
Tribune will exercise its option to acquire from Dreamcatcher
Broadcasting LLC.
    S. ``WISH-TV'' means the CW-affiliated broadcast television station
bearing that call sign located in the Indianapolis, Indiana, DMA, owned
by Defendant Nexstar.
    T. ``WLMT'' means the CW-affiliated broadcast television station
bearing that call sign located in the Memphis, Tennessee, DMA, owned by
Defendant Nexstar.
    U. ``WNDY-TV'' means the MyNetworkTV-affiliated broadcast
television station bearing that call sign located in the Indianapolis,
Indiana, DMA, owned by Defendant Nexstar.
    V. ``WNEP-TV'' means the ABC-affiliated broadcast television
station bearing that call sign located in the Wilkes Barre-Scranton,
Pennsylvania, DMA, owned by Dreamcatcher Broadcasting LLC, regarding
which Tribune will exercise its option to acquire from Dreamcatcher
Broadcasting LLC.
    W. ``WOI-DT'' means the ABC-affiliated broadcast television station
bearing that call sign located in the Des Moines-Ames, Iowa, DMA, owned
by Defendant Nexstar.
    X. ``WPMT'' means the FOX-affiliated broadcast television station
bearing that call sign located in the Harrisburg-Lancaster-Lebanon-
York, Pennsylvania, DMA, owned by Defendant Tribune.
    Y. ``WQAD-TV'' means the ABC-affiliated broadcast television
station bearing that call sign located in the Davenport, Iowa-Rock
Island-Moline, Illinois, DMA, owned by Defendant Tribune.
    Z. ``WTIC-TV'' means the FOX-affiliated broadcast television
station bearing that call sign located in the Hartford-New Haven,
Connecticut, DMA, owned by Defendant Tribune.
    AA. ``WTKR'' means the CBS-affiliated broadcast television station
bearing that call sign located in the Norfolk-Portsmouth-Newport News,
Virginia, DMA, owned by Dreamcatcher Broadcasting LLC, regarding which
Tribune will exercise its option to acquire from Dreamcatcher
Broadcasting LLC.
    BB. ``WTVR-TV'' means the CBS-affiliated broadcast television
station bearing that call sign located in the Richmond-Petersburg,
Virginia, DMA, owned by Defendant Tribune.
    CC. ``WXMI'' means the FOX-affiliated broadcast television station
bearing that call sign located in the Grand Rapids-Kalamazoo-Battle
Creek, Michigan, DMA, owned by Defendant Tribune.
    DD. ``WZDX'' means the FOX-affiliated broadcast television station
bearing that call sign located in the Huntsville-Decatur-Florence,
Alabama, DMA, owned by Defendant Nexstar.
III. APPLICABILITY
    A. This Final Judgment applies to Defendants and all other persons
in active concert or participation with any of them who receive actual
notice of this Final Judgment by personal service or otherwise.
    B. If, prior to complying with Sections IV and V of this Final
Judgment, Defendants sell or otherwise dispose of all or substantially
all of their assets or of lesser business units that include the
Divestiture Assets, they shall require the purchaser to be bound by the
provisions of this Final Judgment. Defendants need not obtain such an
agreement from the Acquirers.
IV. DIVESTITURES
    A. Defendants are ordered and directed, within thirty 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 Acquirers acceptable to the United States,
in its sole discretion. The United States, in its sole discretion, may
agree to one or more extensions of this time period not to exceed
ninety calendar days in total, and shall notify the Court in such
circumstances.
    B. With respect to divestiture of the Divestiture Assets by
Defendants, or by the Divestiture Trustee appointed pursuant to Section
V of this Final Judgment, if applications have been filed with the FCC
within the period permitted for divestiture seeking approval to assign
or transfer licenses to the Acquirer(s) of the Divestiture Assets, but
an order or other dispositive action by the FCC on such applications
has not been issued before the end of the period permitted for
divestiture, the period shall be extended with respect to divestiture
of the Divestiture Assets for which no FCC order has issued until five
days after such order is issued. Defendants agree to use their best
efforts to divest the Divestiture Assets and to obtain all necessary
FCC approvals as expeditiously as possible. This Final Judgment does
not limit the FCC's exercise of its regulatory powers and process with
respect to the Divestiture Assets. Authorization by the FCC to conduct
the divestiture of a Divestiture Asset in a particular manner will not
modify any of the requirements of this Final Judgment.
    C. In the event that Defendants are attempting to divest the WISH-
TV or WNDY-TV Divestiture Assets to an Acquirer other than Circle City
Broadcasting; the KSTU, WGNT, WTKR,
[[Page 41746]]
WTVR-TV, or WXMI Divestiture Assets to an Acquirer other than Scripps;
or the KFSM-TV, KCWI-TV, WATN-TV, WCCT-TV, WLMT, WOI-DT, WNEP-TV, WPMT,
WQAD, WTIC-TV or WZDX Divestiture Assets to an Acquirer other than
TEGNA:
    (1) Defendants promptly shall make known, by usual and customary
means, the availability of the Divestiture Assets;
    (2) Defendants shall inform any person making an inquiry regarding
a possible purchase of the relevant Divestiture Assets that they are
being divested pursuant to this Final Judgment and provide that person
with a copy of this Final Judgment;
    (3) Defendants shall offer to furnish to all prospective Acquirers,
subject to customary confidentiality assurances, all information and
documents relating to the relevant Divestiture Assets customarily
provided in a due diligence process except such information or
documents subject to the attorney-client privilege or work-product
doctrine; and
    (4) Defendants shall make available such information to the United
States at the same time that such information is made available to any
other person.
    D. Defendants shall provide each Acquirer and the United States
information relating to the personnel involved in the operation and
management of the relevant Divestiture Assets to enable the Acquirer to
make offers of employment. Defendants will not interfere with any
negotiations by any Acquirer to employ or contract with any Defendant
employee whose primary responsibility relates to the operation or
management of the relevant Divestiture Assets.
    E. Defendants shall permit the prospective Acquirers of the
Divestiture Assets to have reasonable access to personnel and to make
inspections of the physical facilities of the Divestiture Assets;
access to any and all environmental, zoning, and other permit documents
and information; and access to any and all financial, operational, or
other documents and information customarily provided as part of a due
diligence process.
    F. Defendants shall warrant to the Acquirers that each asset will
be operational on the date of sale.
    G. Defendants shall not take any action that will impede in any way
the permitting, operation, or divestiture of the Divestiture Assets.
    H. At the option of the respective Acquirer, Defendants shall enter
into a transition services agreement with each Acquirer for a period of
up to six months to facilitate the continuous operations of the
relevant Divestiture Assets until the Acquirer can provide such
capabilities independently. The terms and conditions of any contractual
arrangement intended to satisfy this provision must be reasonably
related to market conditions for the services provided, and shall be
subject to the approval of the United States, in its sole discretion.
The United States in its sole discretion may approve one or more
extensions of this agreement for a total of up to an additional six
months, or, with respect to transition services provided by (1)
Defendants to an Acquirer for Tribune's proprietary software; or (2) an
Acquirer to Defendants for master control hub operating services and
distribution services, for a total of up to an additional eighteen
months.
    I. Defendants shall warrant to the Acquirers (1) that there are no
material defects in the environmental, zoning, or other permits
pertaining to the operation of the Divestiture Assets, and (2) that,
following the sale of the Divestiture Assets, Defendants will not
undertake, directly or indirectly, any challenges to the environmental,
zoning, or other permits relating to the operation of the Divestiture
Assets.
    J. Unless the United States otherwise consents in writing, the
divestitures pursuant to Section IV, or by the Divestiture Trustee
appointed pursuant to Section V of this Final Judgment, shall include
the entire Divestiture Assets and shall be accomplished in such a way
as to satisfy the United States, in its sole discretion, after
consultation with the Plaintiff States, that the Divestiture Assets can
and will be used by each Acquirer as part of a viable, ongoing
commercial television broadcasting business. Divestiture of the
Divestiture Assets may be made to one or more Acquirers, provided that
in each instance it is demonstrated to the sole satisfaction of the
United States, after consultation with the Plaintiff States, that the
Divestiture Assets will remain viable, and the divestiture of such
assets will remedy the competitive harm alleged in the Complaint. If
any of the terms of an agreement between any Defendants and any
Acquirer to effectuate the divestitures required by the Final Judgment
varies from the terms of this Final Judgment then, to the extent that
Defendants cannot fully comply with both terms, this Final Judgment
shall determine Defendants' obligations. The divestitures, whether made
pursuant to Section IV or Section V of this Final Judgment:
    (1) shall be made to Acquirers that, in the United States' sole
judgment, after consultation with the Plaintiff States, have the intent
and capability (including the necessary managerial, operational,
technical, and financial capability) to compete effectively in the
commercial television broadcasting business; and
    (2) shall be accomplished so as to satisfy the United States, in
its sole discretion, after consultation with the Plaintiff States, that
none of the terms of any agreement between any Acquirer and Defendants
give Defendants the ability unreasonably to raise the costs of the
Acquirer, to lower the efficiency of the Acquirer, or otherwise to
interfere in the ability of the Acquirer to compete effectively.
V. APPOINTMENT OF DIVESTITURE TRUSTEE
    A. If Defendants have not divested the Divestiture Assets within
the time period specified in Paragraph IV(A) and Paragraph IV(B),
Defendants shall notify the United States and a Plaintiff State, if any
subject Divestiture Asset is located in that Plaintiff State, of that
fact in writing, specifically identifying the Divestiture Assets that
have not been divested. Upon application of the United States, the
Court shall appoint a Divestiture Trustee selected by the United States
and approved by the Court to effect the divestiture of the Divestiture
Assets that have not yet been divested.
    B. After the appointment of a Divestiture Trustee becomes
effective, only the Divestiture Trustee shall have the right to sell
the relevant Divestiture Assets. The Divestiture Trustee shall have the
power and authority to accomplish the divestiture to an Acquirer
acceptable to the United States, in its sole discretion, after
consultation with the Plaintiff States, at such price and on such terms
as are then obtainable upon reasonable effort by the Divestiture
Trustee, subject to the provisions of this Final Judgment, and shall
have such other powers as this Court deems appropriate. Subject to
Paragraph V(D) of this Final Judgment, the Divestiture Trustee may hire
at the cost and expense of Defendants any agents or consultants,
including, but not limited to, investment bankers, attorneys, and
accountants, who shall be solely accountable to the Divestiture
Trustee, reasonably necessary in the Divestiture Trustee's judgment to
assist in the divestiture. Any such agents or consultants shall serve
on such terms and conditions as the United States approves, including
confidentiality requirements and conflict of interest certifications.
    C. Defendants shall not object to a sale by the Divestiture Trustee
on any ground other than the Divestiture Trustee's malfeasance. Any
such
[[Page 41747]]
objections by Defendants must be conveyed in writing to the United
States and the Divestiture Trustee within ten calendar days after the
Divestiture Trustee has provided the notice required under Section VI.
    D. The Divestiture Trustee shall serve at the cost and expense of
Defendants pursuant to a written agreement, on such terms and
conditions as the United States approves, including confidentiality
requirements and conflict of interest certifications. The Divestiture
Trustee shall account for all monies derived from the sale of the
relevant Divestiture Assets and all costs and expenses so incurred.
After approval by the Court of the Divestiture Trustee's accounting,
including fees for its services yet unpaid and those of any agents and
consultants retained by the Divestiture Trustee, all remaining money
shall be paid to Defendants and the trust shall then be terminated. The
compensation of the Divestiture Trustee and any agents and consultants
retained by the Divestiture Trustee shall be reasonable in light of the
value of the Divestiture Assets subject to sale by the Divestiture
Trustee and based on a fee arrangement providing the Divestiture
Trustee with incentives based on the price and terms of the divestiture
and the speed with which it is accomplished, but the timeliness of the
divestiture is paramount. If the Divestiture Trustee and Defendants are
unable to reach agreement on the Divestiture Trustee's or any agent's
or consultant's compensation or other terms and conditions of
engagement within fourteen calendar days of the appointment of the
Divestiture Trustee, agent, or consultant, the United States may, in
its sole discretion, take appropriate action, including making a
recommendation to the Court. The Divestiture Trustee shall, within
three business days of hiring any other agents or consultants, provide
written notice of such hiring and the rate of compensation to
Defendants and the United States.
    E. Defendants shall use their best efforts to assist the
Divestiture Trustee in accomplishing the required divestitures. The
Divestiture Trustee and any agents or consultants retained by the
Divestiture Trustee shall have full and complete access to the
personnel, books, records, and facilities of the business to be
divested, and Defendants shall provide or develop financial and other
information relevant to such business as the Divestiture Trustee may
reasonably request, subject to reasonable protection for trade secrets;
other confidential research, development, or commercial information; or
any applicable privileges. Defendants shall take no action to interfere
with or to impede the Divestiture Trustee's accomplishment of the
divestiture.
    F. After its appointment, the Divestiture Trustee shall file
monthly reports with the United States and the Plaintiff States setting
forth the Divestiture Trustee's efforts to accomplish the relevant
divestitures ordered under this Final Judgment. Such reports shall
include the name, address, and telephone number of each person who,
during the preceding month, made an offer to acquire, expressed an
interest in acquiring, entered into negotiations to acquire, or was
contacted or made an inquiry about acquiring, any interest in the
Divestiture Assets, and shall describe in detail each contact with any
such person. The Divestiture Trustee shall maintain full records of all
efforts made to divest the relevant Divestiture Assets.
    G. If the Divestiture Trustee has not accomplished the divestitures
ordered under this Final Judgment within six months after its
appointment, the Divestiture Trustee shall promptly file with the Court
a report setting forth (1) the Divestiture Trustee's efforts to
accomplish the required divestitures, (2) the reasons, in the
Divestiture Trustee's judgment, why the required divestitures have not
been accomplished, and (3) the Divestiture Trustee's recommendations.
To the extent such report contains information that the Divestiture
Trustee deems confidential, such reports shall not be filed on the
public docket of the Court. The Divestiture Trustee shall at the same
time furnish such report to the United States, which shall have the
right to make additional recommendations consistent with the purpose of
the trust. The Court thereafter shall enter such orders as it shall
deem appropriate to carry out the purpose of this Final Judgment, which
may, if necessary, include extending the trust and the term of the
Divestiture Trustee's appointment by a period requested by the United
States.
    H. If the United States determines that the Divestiture Trustee has
ceased to act or failed to act 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 business days following execution of a definitive
divestiture agreement, Defendants or the Divestiture Trustee, whichever
is then responsible for effecting the divestitures required herein,
shall notify the United States and the Plaintiff States of any proposed
divestiture required by Section IV or Section V of this Final Judgment.
If the Divestiture Trustee is responsible, it shall similarly notify
Defendants. The notice shall set forth the details of the proposed
divestiture and list the name, address, and telephone number of each
person not previously identified who tendered an offer for, or
expressed an interest in or desire to acquire, any ownership interest
in the relevant Divestiture Assets, together with full details of the
same.
    B. Within fifteen calendar days of receipt by the United States of
such notice, the United States, in its sole discretion, after
consultation with the Plaintiff States, may request from Defendants,
the proposed Acquirer, any other third party, or the Divestiture
Trustee, if applicable, additional information concerning the proposed
divestiture, the proposed Acquirer, and any other potential Acquirers.
Defendants and the Divestiture Trustee shall furnish any additional
information requested within fifteen calendar days of the receipt of
the request, unless the parties shall otherwise agree.
    C. Within thirty calendar days after receipt of the notice or
within twenty calendar days after the United States has been provided
the additional information requested from Defendants, the proposed
Acquirer, any third party, and the Divestiture Trustee, whichever is
later, the United States shall provide written notice to Defendants and
the Divestiture Trustee, if there is one, stating whether or not, in
its sole discretion, after consultation with the Plaintiff States, it
objects to the Acquirer or any aspect of the proposed divestiture. If
the United States provides written notice that it does not object, the
divestiture may be consummated, subject only to Defendants' limited
right to object to the sale under Paragraph V(C) of this Final
Judgment. Absent written notice that the United States does not object
to the proposed Acquirer, or upon objection by the United States, a
divestiture proposed under Section IV or Section V shall not be
consummated. Upon objection by Defendants under Paragraph V(C), a
divestiture proposed under Section V shall not be consummated unless
approved by the Court.
VII. FINANCING
    Defendants shall not finance all or any part of any purchase made
pursuant to Section IV or Section V of this Final Judgment.
[[Page 41748]]
VIII. HOLD SEPARATE
    Until the divestitures required by this Final Judgment have been
accomplished, Defendants shall take all steps necessary to comply with
the Hold Separate Stipulation and Order entered by this Court.
Defendants shall take no action that would jeopardize the divestitures
ordered by this Court.
IX. AFFIDAVITS
    A. Within twenty calendar days of the filing of the Complaint in
this matter, and every thirty calendar days thereafter until the
divestitures have been completed under Section IV and Section V of this
Final Judgment, Defendants shall deliver to the United States and the
Plaintiff States an affidavit, signed by each Defendant's Chief
Financial Officer and General Counsel, which shall describe the fact
and manner of Defendants' compliance with Section IV and Section V of
this Final Judgment. Each such affidavit shall include the name,
address, and telephone number of each person who, during the preceding
thirty calendar days, made an offer to acquire, expressed an interest
in acquiring, entered into negotiations to acquire, or was contacted or
made an inquiry about acquiring, any interest in the Divestiture
Assets, and shall describe in detail each contact with any such person
during that period. Each such affidavit shall also include a
description of the efforts Defendants have taken to solicit buyers for
and complete the sale of the Divestiture Assets, including efforts to
secure FCC or other regulatory approvals, and to provide required
information to prospective Acquirers, including the limitations, if
any, on such information. Assuming the information set forth in the
affidavit is true and complete, any objection by the United States to
information provided by Defendants, including limitations on
information, shall be made within fourteen calendar days of receipt of
such affidavit.
    B. Within twenty calendar days after the filing of the Complaint in
this matter, Defendants shall deliver to the United States an affidavit
that describes in reasonable detail all actions Defendants have taken
and all steps Defendants have implemented on an ongoing basis to comply
with Section VIII of this Final Judgment. Defendants shall deliver to
the United States an affidavit describing any changes to the efforts
and actions outlined in Defendants' earlier affidavits filed pursuant
to this Paragraph IX(B) within fifteen calendar days after the change
is implemented.
    C. Defendants shall keep all records of all efforts made to
preserve and divest the Divestiture Assets until one year after such
divestitures have been completed.
X. COMPLIANCE INSPECTION
    A. For the purposes of determining or securing compliance with this
Final Judgment, or of any related orders such as any Hold Separate
Stipulation and Order, or of determining whether the Final Judgment
should be modified or vacated, and subject to any legally recognized
privilege, from time to time authorized representatives of the United
States, including agents retained by the United States, shall, upon
written request of an authorized representative of the Assistant
Attorney General in charge of the Antitrust Division, and on reasonable
notice to Defendants, be permitted:
    (1) access during Defendants' office hours to inspect and copy, or
at the option of the United States, to require Defendants to provide
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, regarding such matters. The interviews shall be subject to the
reasonable convenience of the interviewee and without restraint or
interference by Defendants.
    B. Upon the written request of an authorized representative of the
Assistant Attorney General in charge of the Antitrust Division,
Defendants shall submit written reports or responses to written
interrogatories, under oath if requested, relating to any of the
matters contained in this Final Judgment as may be requested.
    C. No information or documents obtained by the means provided in
this Section shall be divulged by the United States to any person other
than an authorized representative of the executive branch of the United
States, except in the course of legal proceedings to which the United
States is a party (including grand jury proceedings), or for the
purpose of securing compliance with this Final Judgment, or as
otherwise required by law.
    D. If at the time that Defendants furnish information or documents
to the United States, Defendants represent and identify in writing the
material in any such information or documents to which a claim of
protection may be asserted under Rule 26(c)(1)(G) of the Federal Rules
of Civil Procedure, and Defendants mark each pertinent page of such
material, ``Subject to claim of protection under Rule 26(c)(1)(G) of
the Federal Rules of Civil Procedure,'' then the United States shall
give Defendants ten calendar days' notice prior to divulging such
material in any legal proceeding (other than a grand jury proceeding).
XI. NO REACQUISITION AND LIMITATIONS ON COLLABORATIONS
    A. During the term of this Final Judgment, Defendants may not (1)
reacquire any part of the Divestiture Assets, unless approved by the
United States in its sole discretion; (2) acquire any option to
reacquire any part of the Divestiture Assets or to assign the
Divestiture Assets to any other person; (3) enter into any Cooperative
Agreement, (except as provided in this Paragraph XI(A) or in Paragraph
XI(B)), or conduct other business negotiations jointly with any
Acquirer with respect to the Divestiture Assets divested to such
Acquirer; or (4) provide financing or guarantees of financing with
respect to the Divestiture Assets. The Cooperative Agreement
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.
    B. Paragraph XI(A) shall not prevent Defendants from 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.
XII. 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.
[[Page 41749]]
XIII. 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 Final Judgment 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. This Final Judgment should be interpreted to give full effect to
the procompetitive purposes of the antitrust laws and to restore all
competition the United States alleged 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 any 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 as may be appropriate. In connection with
any 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 any other costs,
including experts' fees, incurred in connection with that enforcement
effort, including in the investigation of the potential violation.
    D. For a period of four years following the expiration of the Final
Judgment, if the United States has evidence that a Defendant violated
this Final Judgment before it expired, the United States may file an
action against that Defendant in this Court requesting that the Court
order (1) Defendant to comply with the terms of this Final Judgment for
an additional term of at least four years following the filing of the
enforcement action under this Section, (2) any appropriate contempt
remedies, (3) any additional relief needed to ensure the Defendant
complies with the terms of the Final Judgment, and (4) fees or expenses
as called for in Paragraph XIII(C).
XIV. EXPIRATION OF FINAL JUDGMENT
    Unless the Court grants an extension, this Final Judgment shall
expire ten years from the date of its entry, except that after five
years from the date of its entry, this Final Judgment may be terminated
upon notice by the United States, after consultation with the Plaintiff
States, to the Court and Defendants that the divestitures have been
completed and that the continuation of the Final Judgment no longer is
necessary or in the public interest.
XV. 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 Sec.  16, including making copies available to
the public of this Final Judgment, the Competitive Impact Statement,
any comments thereon, and the United States' responses to comments.
Based upon the record before the Court, which includes the Competitive
Impact Statement and any comments and responses to comments filed with
the Court, entry of this Final Judgment is in the public interest.
Date:------------------------------------------------------------------
Court approval subject to procedures of Antitrust Procedures and
Penalties Act, 15 U.S.C. Sec.  16
-----------------------------------------------------------------------
United States District Judge
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
    UNITED STATES OF AMERICA, STATE OF ILLINOIS, COMMONWEALTH OF
PENNSYLVANIA, and COMMONWEALTH OF VIRGINIA, Plaintiffs, v. NEXSTAR
MEDIA GROUP, INC. and TRIBUNE MEDIA COMPANY, Defendants.
Civil Action No. 1:19-cv-2295 (DLF)
COMPETITIVE IMPACT STATEMENT
    The United States of America, under Section 2(b) of the Antitrust
Procedures and Penalties Act (``APPA'' or ``Tunney Act''), 15 U.S.C.
Sec.  16(b)-(h), files this Competitive Impact Statement relating to
the proposed Final Judgment submitted for entry in this civil antitrust
proceeding.
I. NATURE AND PURPOSE OF THE PROCEEDING
    On November 30, 2018, Defendant Nexstar Media Group, Inc.
(``Nexstar'') agreed to acquire Tribune Media Company (``Tribune,'' and
together with Nexstar, ``Defendants'') for approximately $6.4 billion.
The United States filed a civil antitrust Complaint on July 31, 2019,
seeking to enjoin the proposed merger. The Complaint alleges that the
likely effect of this merger would be to substantially lessen
competition in violation of Section 7 of the Clayton Act, 15 U.S.C.
Sec.  18, in thirteen Designated Market Areas (``DMAs'' \3\): (1)
Twelve DMAs in which Defendants license the television programming of
NBC, CBS, ABC, and FOX (collectively, ``Big 4'') 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
(collectively referred to in this Competitive Impact Statement as the
``Big 4 Overlap DMAs''), and (2) those twelve DMAs plus the
Indianapolis, Indiana DMA in which Defendants sell broadcast television
spot advertising (collectively referred to in this Competitive Impact
Statement as the ``Overlap DMAs'').
---------------------------------------------------------------------------
    \3\ A DMA is a geographic unit for which A.C. Nielsen Company--a
firm that surveys television viewers--furnishes broadcast television
stations, MVPDs, cable and satellite television 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.
---------------------------------------------------------------------------
    At the same time the Complaint was filed, the United States filed a
Hold Separate Stipulation and Order (``Hold Separate'') and proposed
Final Judgment, which are designed to eliminate the anticompetitive
effects of the acquisition. Under the proposed Final Judgment, which is
explained more fully below, Defendants are required to divest the
following broadcast television stations (the ``Divestiture Stations'')
to acquirers acceptable to the United States in its sole discretion:
(i) WQAD-TV, located in the Davenport, Iowa-Rock Island-Moline,
Illinois, DMA; (ii) WOI-DT and KCWI-TV, located in the Des Moines-Ames,
Iowa, DMA; (iii) KFSM-TV, located in the Ft. Smith-Fayetteville-
Springdale-Rogers, Arkansas, DMA; (iv) WXMI, located in the Grand
Rapids-Kalamazoo-Battle Creek, Michigan, DMA; (v) WPMT, located in the
Harrisburg-Lancaster-Lebanon-York, Pennsylvania, DMA; (vi) WTIC-TV and
WCCT-TV, located in the Hartford-New Haven, Connecticut, DMA; (vii)
WZDX,
[[Page 41750]]
located in the Huntsville-Decatur-Florence, Alabama, DMA; (viii) WNDY-
TV and WISH-TV, located in the Indianapolis, Indiana, DMA; (ix) WATN-TV
and WLMT, located in the Memphis, Tennessee, DMA; (x) WTKR and WGNT,
located in the Norfolk-Portsmouth-Newport News, Virginia, DMA; (xi)
WTVR-TV, located in the Richmond-Petersburg, Virginia, DMA; (xii) KSTU,
located in the Salt Lake City, Utah, DMA; and (xiii) WNEP-TV, located
in the Wilkes-Barre-Scranton, Pennsylvania, DMA. Under the terms of the
Hold Separate, Defendants will take certain steps to ensure that the
Divestiture Stations are operated as competitively independent,
economically viable, and ongoing business concerns, which will remain
independent and uninfluenced by the non-owner Defendant, and that
competition is maintained during the pendency of the required
divestitures.
    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.
II. DESCRIPTION OF EVENTS GIVING RISE TO THE ALLEGED VIOLATION
A. The Defendants and the Proposed Transaction
    Nexstar is a Delaware corporation with its headquarters in Irving,
Texas. Nexstar owns 171 television stations in 100 DMAs, of which 136
stations are Big 4 affiliates. In 2018, Nexstar reported revenues of
$2.8 billion.
    Tribune is a Delaware corporation with its headquarters in Chicago,
Illinois. Tribune owns 44 television stations in 33 DMAs, of which 27
stations are Big 4 affiliates. In 2018, Tribune earned revenues of more
than $2.0 billion.
B. Big 4 Television Retransmission Consent
1. Background
    MVPDs, such as Comcast, DirecTV, and Charter, typically pay the
owner of each local Big 4 broadcast station in a given DMA a per-
subscriber fee for the right to retransmit the station's content to the
MVPD's 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 Nexstar or Tribune, 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.''
    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.
2. Relevant Markets
    Big 4 broadcast content has special appeal to televisioan viewers
in comparison to the content that is available through other broadcast
stations and cable channels. Big 4 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 4
stations to be close substitutes for one another. Because of Big 4
stations' popular national content and valued local coverage, MVPDs
regard Big 4 programming as highly desirable for inclusion in the
packages they offer subscribers. Non-Big 4 broadcast stations are
typically not close substitutes for viewers of Big 4 stations. Stations
that are affiliates of networks other than the Big 4, such as the CW
Network, MyNetworkTV, or Telemundo, typically feature niche programming
without local news or sports--or, in the case of Telemundo, 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 4 station in a given DMA,
many of the MVPD's subscribers in that DMA are likely to turn to other
Big 4 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 4 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
4 stations, viewers are much less likely to switch to a non-Big 4
station than to switch to other Big 4 stations in the event of a
blackout of a Big 4 station. Accordingly, competition from non-Big 4
stations does not typically impose a significant competitive constraint
on the retransmission consent fees charged by the owners of Big 4
stations. For the same reasons, subscribers--and therefore MVPDs--
generally do not view cable network programming as a close substitute
for Big 4 network content. This is primarily because cable channels
offer different content. For example, cable channels generally do not
offer local news, which provides a valuable connection to the local
community that is important to viewers of Big 4 stations.
    Because viewers do not regard non-Big 4 broadcast stations or cable
networks as close substitutes for the programming they receive from Big
4 stations, these other sources of programming are not sufficient to
discipline an increase in the fees charged for Big 4 television
retransmission consent. Accordingly, a small but significant increase
in the retransmission consent fees of Big 4 affiliates would not cause
enough MVPDs to forego carrying the content of the Big 4 stations to
make such an increase unprofitable for the Big 4 stations.
    The relevant geographic markets for the licensing of Big 4
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 4 television
retransmission consent in the following twelve DMAs: (i) Davenport,
Iowa-Rock Island-Moline, Illinois; (ii) Des Moines-Ames, Iowa; (iii)
Ft. Smith-Fayetteville-Springdale-Rogers, Arkansas; (iv) Grand Rapids-
Kalamazoo-Battle Creek, Michigan; (v) Harrisburg-Lancaster-Lebanon-
York, Pennsylvania; (vi) Hartford-New Haven, Connecticut; (vii)
Huntsville-Decatur-Florence, Alabama; (viii) Memphis, Tennessee; (ix)
Norfolk-Portsmouth-Newport News, Virginia; (x) Richmond-Petersburg,
Virginia; (xi) Salt Lake City, Utah; and (xii) Wilkes Barre-Scranton,
Pennsylvania (collectively, ``the Big 4 Overlap DMAs'').
    In the event of a blackout of a Big 4 network station, FCC rules
generally prohibit an MVPD from importing the same network's content
from another DMA. Thus, Big 4 viewers in one DMA cannot switch to Big 4
programming in another DMA in the face of a blackout.
[[Page 41751]]
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 Big 4 Overlap DMAs, Nexstar and Tribune each own at
least one Big 4 affiliate broadcast television station. By combining
the Defendants' Big 4 stations, the proposed merger would increase the
Defendants' market shares in the licensing of Big 4 television
retransmission consent in each Big 4 Overlap DMA, and would increase
the market concentration in that business in each Big 4 Overlap DMA.
The chart below summarizes the Defendants' approximate Big 4
retransmission consent market shares, and market concentrations
measured by the widely used Herfindahl-Hirschman Index (``HHI'') \4\,
in each Big 4 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.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Nexstar share   Tribune share   Merged share                     Post-merger
                  Big 4 overlap DMA \5\                         (%)             (%)             (%)       Pre-merger HHI        HHI        HHI increase
--------------------------------------------------------------------------------------------------------------------------------------------------------
Wilkes Barre, PA........................................            54.0            24.7            78.7            3981            6645            2664
Ft. Smith, AR...........................................            63.4            15.0            78.4            4708            6613            1906
Norfolk, VA.............................................            56.0            21.1            77.1            4104            6465            2361
Grand Rapids, MI........................................            43.4            16.3            59.7            2974            4391            1417
Hartford, CT............................................            33.5            25.4            58.9            2636            4338            1702
Memphis, TN.............................................            38.4            17.6            56.1            2762            4118            1356
Davenport, IA...........................................            36.8            14.9            51.6            2744            3838            1094
Des Moines, IA..........................................            34.5            13.9            48.4            2798            3756             958
Huntsville, AL..........................................            32.5            16.6            49.1            2630            3710            1080
Salt Lake City, UT......................................            32.1            15.5            47.5            2691            3683             992
Harrisburg, PA..........................................            25.3            22.1            47.4            2553            3670            1117
Richmond, VA............................................            28.0            16.9            44.9            2672            3617             945
--------------------------------------------------------------------------------------------------------------------------------------------------------
    As indicated by the preceding chart, in each Big 4 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.
---------------------------------------------------------------------------
    \5\ In this chart and the one below, sums that do not agree
precisely reflect rounding.
---------------------------------------------------------------------------
    The proposed merger would enable Nexstar to black out more Big 4
stations simultaneously in each of the Big 4 Overlap DMAs than either
Nexstar or Tribune could black out independently today, likely leading
to increased retransmission consent fees to any MVPD whose footprint
includes any of the Big 4 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. Broadcast Television Spot Advertising
1. Background
    Broadcast television stations, including both Big 4 broadcast
stations and non-Big 4 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 stations or their representatives. Nexstar and Tribune
compete with one another to sell broadcast television spot advertising
in each DMA in which both Defendants have stations.
2. Relevant Markets
    Broadcast television spot advertising, including spot advertising
on both Big 4 and non-Big 4 broadcast stations, constitutes a relevant
product market and line of commerce under Section 7 of the Clayton Act.
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 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 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, making them potential complements to broadcast
television advertising, but not close substitutes. For example, ads
associated with online search results target individual consumers or
respond to specific keyword searches, whereas broadcast television
advertising reaches a broad audience throughout a DMA. 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 effects of the merger in the Overlap DMAs.
[[Page 41752]]
    MVPDs sell spot advertising to be shown during breaks in cable
network programming. For viewers, these advertisements are similar to
broadcast ads. That, however, does not mean that cable television spot
advertising should be included in the product market. For the following
reasons, cable television spot advertising is at this time a relatively
ineffective 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 channels 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 some DMAs, MVPDs sell some spot advertising through consortia
called ``interconnects.'' Sometimes these interconnects include all of
the largest MVPDs in a DMA, approaching but not matching broadcast
stations' reach. But in other, especially smaller DMAs, the
interconnect only contains a subset of MVPDs, which reduces the reach
of the interconnect's advertisements. 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. 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 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 advertisements cannot offer a sufficient volume of ratings points,
or broad enough household penetration, to provide a viable alternative
to broadcast television spot advertising, at this time. Because of
these limitations, MVPDs and interconnects would be unable to expand
output or increase sales sufficiently to defeat a small but significant
increase in the prices charged for broadcast television spot
advertising in a given DMA.
    Digital advertising is 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, but are still not close substitutes for
broadcast television spot advertising for the reasons stated below.
First, digital advertisements typically reach a different audience than
broadcast television spot advertising. Whereas advertisers use
broadcast television spots to reach a large percentage of households in
a 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 smaller geographic target, such as a city or a zip
code, or to narrow demographic subsets of a population. Second,
inventory of ad-supported, high-quality, long-form video on the
internet is limited. Advertisers see value to advertising on video that
is watched by the audience they seek to target. High-quality, long-form
video is the most similar content to broadcast television programming
available on the internet. The most popular high-quality, long-form
video available on the internet is provided through ad-free
subscription services (like Netflix or Amazon Prime), over-the-top
MVPDs that sell cable television spot advertisements (like Sling and
YouTube TV), or sold directly by the networks on their own network
sites. The remaining inventory of digital advertisements attached to
high-quality, long-form video on the internet, which is primarily sold
by digital advertising platforms, is small today. Because of these
limitations, digital video advertising would be unable to expand output
or increase sales sufficiently to defeat a small but significant
increase in the prices charged for broadcast television spot
advertising in a given DMA.
    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 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. For all of these reasons, advertisers likely
would not respond to a small but significant non-transitory increase in
the price of broadcast television spot advertising by switching to
other forms of advertising--such as cable, digital, print, radio, or
billboard advertising--in sufficiently large numbers to make the price
increase unprofitable.
    While cable spot or digital advertising may constrain broadcast
television spot advertising prices in the future, it does not do so
today. On a cost-per-point basis (cost to reach one percent of a
relevant target population), over the last few years broadcast
television spot advertising prices have generally remained steady or
increased. If cable spot or digital advertising was a close and robust
competitor to broadcast television spot advertising, then, all else
being equal, this competition from cable spot or digital advertising
would place downward pressure on broadcast television spot advertising
pricing. But they have not had this effect.
    The differentiation between broadcast television spot advertising
and cable spot and digital advertising bears out in negotiations
between broadcasters and advertisers. Advertisers usually will put an
advertising buy out to bid to many or all broadcast stations in a DMA,
and will not include MVPDs or digital advertisers in that same bid. In
negotiations with broadcast stations, advertisers regularly discuss
offered prices and opportunities from other broadcast stations in the
same DMA to try to bargain down price, but they rarely discuss price
offers or opportunities from MVPDs or digital advertisers in those
negotiations. When a broadcaster salesperson internally analyzes the
station's performance on any particular buy, the salesperson
[[Page 41753]]
typically looks at the percentage of the buy that was allocated to each
broadcast station, adding up to 100% of the buy. The salesperson
typically does not consider any allocation of an advertiser's spending
on cable or digital advertising. Likewise, if an advertiser reports to
a broadcaster salesperson the percentage of a buy that the broadcaster
received, the advertiser typically reports the broadcaster's percentage
of the amount awarded to all broadcast stations in the DMA, but does
not include any amount spent on cable or digital advertising.
    Internally, broadcasters make most of their competitor comparisons
against other broadcasters in the same DMA, not against MVPDs in that
DMA or digital advertisers. When reporting to their station managers
and corporate headquarters, broadcast station sales executives
regularly report on their performance vis-[agrave]-vis other broadcast
stations in the DMA; they rarely report on their performance against
cable or digital platforms. When looking for new business, broadcast
stations use third-party services to identify advertisers advertising
on those other broadcast stations, but do not subscribe to similar
services for cable or digital advertising. Similarly, the national
sales representation firms regularly report to broadcast stations about
competition from representatives for other broadcasters in the same
DMA, but rarely report on competition from representatives for cable or
digital platforms. Many broadcasters use a third-party data analysis
service to help set their spot advertising rate cards; that service
uses market share estimates from other broadcasters as input data to
generate the rate cards, but does not use market share estimates from
cable or digital advertising platforms.
    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 spot
advertising in the following thirteen DMAs: (i) Davenport, Iowa-Rock
Island-Moline, Illinois; (ii) Des Moines-Ames, Iowa; (iii) Ft. Smith-
Fayetteville-Springdale-Rogers, Arkansas; (iv) Grand Rapids-Kalamazoo-
Battle Creek, Michigan; (v) Harrisburg-Lancaster-Lebanon-York,
Pennsylvania; (vi) Hartford-New Haven, Connecticut; (vii) Huntsville-
Decatur-Florence, Alabama; (viii) Indianapolis, Indiana; (ix) Memphis,
Tennessee; (x) Norfolk-Portsmouth-Newport News, Virginia; (xi)
Richmond-Petersburg, Virginia; (xii) Salt Lake City, Utah; and (xiii)
Wilkes-Barre-Scranton, Pennsylvania (collectively, ``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 advertisers to switch to stations outside the DMA to make such an
increase unprofitable for the stations.
3. Anticompetitive Effects
    The chart below summarizes Defendants' approximate market shares
and the result of the transaction on the HHIs in the sale of broadcast
television spot advertising in each of the Overlap DMAs.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Nexstar share   Tribune share   Merged share                     Post-merger
                       Overlap DMA                              (%)             (%)             (%)       Pre-merger HHI        HHI        HHI increase
--------------------------------------------------------------------------------------------------------------------------------------------------------
Wilkes Barre, PA........................................            35.8            47.6            83.4            3749            7161            3412
Norfolk, VA.............................................            44.0            31.4            75.4            3277            6038            2761
Ft. Smith, AR...........................................            29.1            41.3            70.3            3361            5761            2400
Davenport, IA...........................................            27.0            27.1            54.2            3568            5035            1467
Grand Rapids, MI........................................            36.0            19.0            55.0            2700            4065            1365
Des Moines, IA..........................................            11.2            34.6            45.8            3235            4009             774
Richmond, VA............................................            20.9            29.9            50.8            2733            3981            1248
Huntsville, AL..........................................            13.9            33.0            46.9            2786            3704             918
Memphis, TN.............................................            14.5            33.3            47.9            2558            3527             969
Harrisburg, PA..........................................            21.8            20.8            42.5            2524            3427             903
Indianapolis, IN........................................            13.1            31.0            44.2            2577            3393             815
Hartford, CT............................................            22.7            20.6            43.3            2306            3240             934
Salt Lake City, UT......................................            16.0            24.1            40.0            2329            3098             769
--------------------------------------------------------------------------------------------------------------------------------------------------------
Defendants' large market shares reflect the fact that, in each Overlap
DMA, Nexstar and Tribune each own one or more significant broadcast
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. In addition to substantially increasing the concentration levels
in each Overlap DMA, the proposed merger would combine Nexstar's and
Tribune's broadcast television stations, which are close substitutes
and generally vigorous 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--``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 Nexstar acquires Tribune'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.
[[Page 41754]]
D. Entry
    Entry of a new broadcast station into an Overlap DMA would not be
timely, likely, or sufficient to prevent or remedy the proposed
merger's likely anticompetitive effects in the relevant markets. 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.
III. EXPLANATION OF THE PROPOSED FINAL JUDGMENT
    The divestitures required by the proposed Final Judgment will
remedy the loss of competition alleged in the Complaint by maintaining
the Divestiture Stations as independent and economically viable
competitors. The proposed Final Judgment requires Nexstar, within
thirty days after the entry of the Hold Separate by the Court, to
divest the station or stations owned by either Nexstar or Tribune in
each of the Overlap DMAs, as shown in the following chart:
----------------------------------------------------------------------------------------------------------------
                                                               Primary
                                                           affiliations of       Current owner of divestiture
           Overlap DMA             Divestiture stations      divestiture                   stations
                                                               stations
----------------------------------------------------------------------------------------------------------------
Wilkes Barre, PA.................  WNEP-TV.............  ABC................  Tribune. \6\
Norfolk, VA......................  WTKR and WGNT.......  CBS/CW.............  Tribune. \7\
Ft. Smith, AR....................  KFSM-TV.............  CBS................  Tribune.
Davenport, IA....................  WQAD-TV.............  ABC................  Tribune.
Grand Rapids, MI.................  WXMI................  FOX................  Tribune.
Des Moines, IA...................  WOI-DT and KCWI-TV..  ABC/CW.............  Nexstar.
Richmond, VA.....................  WTVR-TV.............  CBS................  Tribune.
Huntsville, AL...................  WZDX................  FOX................  Nexstar.
Memphis, TN......................  WATN-TV and WLMT....  ABC/CW.............  Nexstar.
Harrisburg, PA...................  WPMT................  FOX................  Tribune.
Indianapolis, IN.................  WNDY-TV and WISH-TV.  MyNetworkTV/CW.....  Nexstar.
Hartford, CT.....................  WTIC-TV and WCCT-TV.  FOX/CW.............  Tribune.
Salt Lake City, UT...............  KSTU................  FOX................  Tribune.
----------------------------------------------------------------------------------------------------------------
    The Divestiture Stations must be divested in such a way as to
satisfy the United States in its sole discretion that the Divestiture
Stations can and will be operated by each purchaser as part of a
viable, ongoing commercial television broadcasting business with the
intent and capability to compete effectively in the applicable DMA in
(1) the licensing of Big 4 network content to MVPDs for distribution to
their subscribers (except as to the Indianapolis DMA), and (2) the sale
of broadcast television spot advertising to advertisers interested in
reaching viewers in the DMA. The United States has determined that the
following companies are acceptable purchasers of Divestiture Stations:
Circle City Broadcasting I, Inc.; The E.W. Scripps Company; and TEGNA
Inc. (respectively, together with their subsidiaries and affiliated
entities and individuals, ``Circle City,'' ``Scripps,'' and ``TEGNA'').
The following table sets out the proposed purchaser for each
Divestiture Station.
---------------------------------------------------------------------------
    \6\ WNEP-TV is currently owned by Dreamcatcher Broadcasting LLC;
however, Tribune will exercise its option to acquire the station
prior to the divestiture.
    \7\ WTKR and WGNT are currently owned by Dreamcatcher
Broadcasting LLC; however, Tribune will exercise its option to
acquire the stations prior to the divestiture.
------------------------------------------------------------------------
                                                            Proposed
          Overlap DMA            Divestiture stations       purchaser
------------------------------------------------------------------------
Wilkes Barre, PA..............  WNEP-TV...............  TEGNA.
Norfolk, VA...................  WTKR and WGNT.........  Scripps.
Ft. Smith, AR.................  KFSM-TV...............  TEGNA.
Davenport, IA.................  WQAD-TV...............  TEGNA.
Grand Rapids, MI..............  WXMI..................  Scripps.
Des Moines, IA................  WOI-DT and KCWI-TV....  TEGNA.
Richmond, VA..................  WTVR-TV...............  Scripps.
Huntsville, AL................  WZDX..................  TEGNA.
Memphis, TN...................  WATN-TV and WLMT......  TEGNA.
Harrisburg, PA................  WPMT..................  TEGNA.
Indianapolis, IN..............  WNDY-TV and WISH-TV...  Circle City.
Hartford, CT..................  WTIC-TV and WCCT-TV...  TEGNA.
Salt Lake City, UT............  KSTU..................  Scripps.
------------------------------------------------------------------------
    Defendants must take all reasonable steps necessary to accomplish
the divestiture quickly and must cooperate with the purchasers.
    To facilitate the immediate and continuous operations of the
relevant Divestiture Stations until the acquirer can provide such
capabilities independently, Paragraph IV(H) of the proposed Final
Judgment requires Defendants, at each acquirer's option, to enter into
a transition services agreement. After an initial period of six months,
a transition services agreement may be extended by an additional six
months, subject to the United States' sole discretion, with exceptions
regarding Tribune proprietary software and master control and hubbing
services and distribution services, which can be extended for up to an
additional eighteen months, subject to the United States' sole
discretion.
[[Page 41755]]
    If Defendants do not accomplish the divestiture within the period
prescribed in the proposed Final Judgment, 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 will
pay all costs and expenses of the trustee. The divestiture trustee's
commission will 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 will provide monthly reports
to the United States and the Plaintiff States setting forth his or her
efforts to accomplish the divestiture. At the end of six months, if the
divestiture has not been accomplished, the divestiture trustee and the
United States will make recommendations to the Court, which will enter
such orders as appropriate, in order to carry out the purpose of the
trust, including by extending the trust or the term of the divestiture
trustee's appointment.
    The proposed Final Judgment also contains provisions designed to
promote compliance and make the enforcement of the Final Judgment as
effective as possible. Paragraph XIII(A) provides that the United
States retains and reserves all rights to enforce the provisions of the
proposed Final Judgment, including its rights 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 obligations with the
standard of proof that applies to the underlying offense that the
compliance commitments address.
    Paragraph XIII(B) provides additional clarification regarding the
interpretation of the provisions of the proposed Final Judgment. The
proposed Final Judgment was drafted to restore all competition that the
Complaint 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 this 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 XIII(C) of the proposed Final Judgment provides that if
the Court finds in an enforcement proceeding that Defendants have
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 proposed Final Judgment, Paragraph XIII(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, that Defendants will reimburse the United States for
attorneys' fees, experts' fees, and other costs incurred in connection
with any enforcement effort, including the investigation of the
potential violation.
    Paragraph XIII(D) states that the United States may file an action
against a Defendant for violating the Final Judgment for up to four
years after the Final Judgment has expired or been terminated. This
provision is meant to address circumstances such as when evidence that
a violation of the Final Judgment occurred during the term of the Final
Judgment is not discovered until after the Final Judgment has expired
or been terminated or when there is not sufficient time for the United
States to complete an investigation of an alleged violation until after
the Final Judgment has expired or been terminated. This provision,
therefore, makes clear that, for four years after the Final Judgment
has expired or been terminated, the United States may still challenge a
violation that occurred during the term of the Final Judgment.
    Finally, Section XIV 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, after
consultation with the Plaintiff States, to the Court and Defendants
that the divestiture has been completed and that the continuation of
the Final Judgment is no longer necessary or in the public interest.
IV. REMEDIES AVAILABLE TO POTENTIAL PRIVATE LITIGANTS
    Section 4 of the Clayton Act, 15 U.S.C. Sec.  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. Sec.
16(a), the proposed Final Judgment has no prima facie effect in any
subsequent private lawsuit that may be brought against Defendants.
V. PROCEDURES AVAILABLE FOR MODIFICATION OF THE PROPOSED FINAL JUDGMENT
    The United States and Defendants have stipulated that the proposed
Final Judgment may be entered by the Court after compliance with the
provisions of the APPA, provided that the United States has not
withdrawn its consent. The APPA conditions entry upon the Court's
determination that the proposed Final Judgment is in the public
interest.
    The APPA provides a period of at least 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 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, comments will be posted on the
U.S. Department of Justice, Antitrust Division's internet website and,
under certain circumstances, published in the Federal Register.
    Written comments should be submitted to: Owen M. Kendler, Chief,
Media, Entertainment, & Professional Services Section, Antitrust
Division, United States Department of Justice, 450 Fifth Street, NW,
Suite 4000, Washington, DC 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.
[[Page 41756]]
VI. 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 Nexstar's acquisition of Tribune. The
United States is satisfied, however, that the divestiture of assets
described in the proposed Final Judgment will preserve competition for
(1) the provision of the licensing of Big 4 network content to MVPDs
for distribution to their subscribers in each of the Big 4 Overlap
DMAs, and (2) the sale of broadcast television spot advertising to
advertisers interested in reaching viewers in each of 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 of the Complaint.
VII. STANDARD OF REVIEW UNDER THE APPA FOR THE PROPOSED FINAL JUDGMENT
    The Clayton Act, as amended by the APPA, requires that proposed
consent judgments in antitrust cases brought by the United States be
subject to a 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. Sec.  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. Sec.  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 consent judgment is limited and only inquires
``into whether the government's determination that the proposed
remedies will cure the antitrust violations alleged in the complaint
was reasonable, and whether the mechanism to enforce the final judgment
are clear and manageable'').
    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 ``engage in an
unrestricted evaluation of what relief would best serve the public.''
United States v. BNS, Inc., 858 F.2d 456, 462 (9th Cir. 1988) (quoting
United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see
also Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152
F. Supp. 2d 37, 40 (D.D.C. 2001); InBev, 2009 U.S. Dist. LEXIS 84787,
at *3. 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. The court's role
in protecting the public interest is one of insuring that the
government has not breached its duty to the public in consenting to the
decree. The court is required to determine not whether a particular
decree is the one that will best serve society, but whether the
settlement is ``within the reaches of the public interest.'' More
elaborate requirements might undermine the effectiveness of antitrust
enforcement by consent decree.
Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\8\
---------------------------------------------------------------------------
    \8\ See also BNS, 858 F.2d at 464 (holding that the court's
``ultimate authority under the [APPA] is limited to approving or
disapproving the consent decree''); United States v. Gillette Co.,
406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the
court is constrained to ``look at the overall picture not
hypercritically, nor with a microscope, but with an artist's
reducing glass'').
---------------------------------------------------------------------------
    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 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 United States v. Western Elec. Co., 900 F.2d 283, 309 (D.C.
Cir. 1990)).
    Moreover, the Court's role under the APPA is limited to reviewing
the remedy in relationship to the violations that the United States has
alleged in its complaint, and does not authorize the Court to
``construct [its] own hypothetical case and then evaluate the decree
against that case.'' Microsoft, 56 F.3d at 1459; see also U.S. Airways,
38 F. Supp. 3d at 75 (noting that the court must simply determine
whether there is a factual foundation for the government's decisions
such that its conclusions regarding the proposed settlements are
reasonable); InBev, 2009 U.S. Dist. LEXIS 84787, at *20 (``the `public
interest' is not to be measured by comparing the violations alleged in
the complaint against those the court believes could have, or even
should have, been alleged''). Because the ``court's authority to review
the decree depends entirely on the government's exercising its
prosecutorial discretion by bringing a case in the first place,'' it
follows that ``the court is only
[[Page 41757]]
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 consent judgments
proposed by the United States in antitrust enforcement, Pub. L. 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. Sec.  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 nacted 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 ts 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 United
States v. Enova Corp., 107 F. Supp. 2d 10, 17 (D.D.C. 2000).
VIII. DETERMINATIVE DOCUMENTS
    There are no determinative materials or documents within the
meaning of the APPA that were considered by the United States in
formulating the proposed Final Judgment.
Dated: August 1, 2019
Respectfully submitted,
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Lee F. Berger (D.C. Bar  482435) *
Trial Attorney, Media, Entertainment, and Professional Services
Section, Antitrust Division, United States Department of Justice,
450 Fifth Street, NW, Suite 4000, Washington, DC 20530, Phone: 202-
598-2698, Email: [email protected]
* Attorney of Record
[FR Doc. 2019-17522 Filed 8-14-19; 8:45 am]
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