The FCC must still complete its public interest review of the merger, which goes beyond antitrust issues.
Specifically, Justice filed a civil antitrust suit against the deal in the U.S. District Court for the District of Columbia Wednesday (July 31) , but at the same time filed the settlement that, if accepted by the court and they almost always are, would resolve the suit bcause Justice says the spin-offs remedy the competitive harms--higher retrans and spot prices--that are alleged in the complaint.
The broadcasters have agreed to divest TV stations in 13 markets to get that approval, which was based in part on the assertion that without those, the combined company "would likely charge cable and satellite companies higher retransmission consent fees to carry the combined company’s broadcast stations, resulting in higher monthly cable and satellite bills for millions of Americans," as well as higher spot prices in the divestiture markets.
Justice has been looking at spot prices in TV advertising, including settling with Nexstar and other broadcast groups over their sharing of competitively sensitive information. That investigation stemmed from its review of Sinclair's effort to buy the Tribune stations.
Justice has concluded for the purposes of this and other mergers in the space that cable and digital are not sufficient competitors to be included in the relevant product market, meaning it is focused on the impact of deals on the TV spot market irrespective of the other outlets, which it says are not sufficient substitutes.
Nexstar and Tribune had already told the FCC it would be spinning off stations in most of those markets anyway, but in Indianapolis it had asked to be allowed to retain Tribune's existing pair of top four stations. That ask is now moot.
“Without the required divestitures, Nexstar’s merger with Tribune threatens significant competitive harm to cable and satellite TV subscribers and small businesses,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division. “I am pleased, however, that we have been able to reach a resolution of the Division’s concerns, thanks in part to the parties’ commitment to engage in good faith settlement talks from the outset of our investigation.”
That was in contrast to the government's view that Sinclair had been recalcitrant in negotiations over that broadcaster's aborted attempt to purchase the Tribune stations
The settlement also resolves challenges by the attorney's general of Illinois, Pennsylvania and Virginia.
The markets are Davenport, Iowa; Des Moines, Iowa; Ft. Smith, Arkansas; Grand Rapids, Michigan; Harrisburg, Pennsylvania; Hartford, Connecticut; Huntsville, Alabama; Indianapolis, Indiana; Memphis, Tennessee; Norfolk, Virginia; Richmond, Virginia; Salt Lake City, Utah; and Wilkes-Barre, Pennsylvania.
Nexstar will have to sell either one of its stations, or one of Tribune's, in each of those markets.
"Nexstar now becomes the nation's largest broadcast group," said Adonis Hoffman, chairman of Business in the Public Interest, which consults broadcaster and others. "In addition to the reward comes great responsibility to lead on the major challenges affecting the broadcast industry. The expectations have been raised both on Wall Street and on Capitol Hill where issues such as STELAR, retransmission, diversity and media ownership are still in play."
Broadcasting & Cable Newsletter
The smarter way to stay on top of broadcasting and cable industry. Sign up below
Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.