The Justice Department has reached settlements with CBS, Cox, Scripps, Fox and Tegna in its ongoing investigation of the broadcast TV ad market and the exchange of competitively sensitive information.
That agreement settles a suit by Justice, which had alleged the broadcasters, and in the case of Cox its Cox Reps ad rep firms, illegally shared information that harmed the spot ad market.
“The Antitrust Division’s efforts to protect competition in the television broadcast industry continue with today’s settlements that will stop the unlawful exchange of competitively sensitive information among rival broadcasters and their sales rep firms,” said Assistant Attorney General Makan Delrahim who heads up the antitrust division. “Vigorous competition among broadcast stations allows American businesses across the country to obtain competitive advertising rates. The unlawful sharing of information reduced that competition and thereby harmed businesses that rely on competitive rates to best serve their customers.”
Delrahim warned last fall that “agreements between competitors to exchange competitively sensitive information can violate the antitrust laws and lead to a civil enforcement action even if the conduct does not amount to the type of hard-core cartel conduct that the Antitrust Division prosecutes criminally.”
As with the previous settlement, there was no fine imposed.
Justice alleged that all of the broadcasters had agreed to exchange revenue pacing information, and also engaged in the exchange of other forms of non-public sales information in certain metropolitan areas. It alleged that the Cox Rep firms "facilitated and participated in this exchange of pacing information by its broadcast-station clients that operated in the same metropolitan areas."
Pacing compares the ads booked for a specific time period to the previous time period and "indicates how each station is performing versus the rest of the market and provides insight into each station’s remaining spot advertising for the period," Justice said, helping the stations to know when their competitor might raise or lower spot ad prices.
"As a result, the information exchanges harmed the competitive price-setting process in markets for the sale of spot advertisements," Justice said Tuesday.
Justice commended all of the broadcasters for cooperating with the antitrust division to strike the settlement, with a special shout-out to Fox for its aid.
The settlement prevents the broadcasters from sharing that info, and Cox Reps has to erect firewalls in markets where it represents multiple stations. They must also adopt "rigorous" antitrust compliance and reporting regimes--whistleblower protection, compliance officers, newspaper announcements of settlement.
The terms of the settlement conditions are seven years and will apply to the stations even when and if they are sold to new owners, who must acknowledge that they inherit the terms of that settlement.
The investigation is not over, and the broadcasters have agreed to help with that ongoing review, suggesting more group broadcasters could be added to the list.
The investigation stemmed from Justice's review of the ultimately aborted Sinclair-Tribune deal.
DOJ's concerns about Sinclair's control of inventory in markets where it wanted to own two stations was one of the reasons Sinclair restructured its merger agreement, according to a source familiar with the DOJ review of that deal.
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