[Federal Register Volume 61, Number 32 (Thursday, February 15, 1996)]
[Notices]
[Pages 6032-6038]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-3398]



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DEPARTMENT OF JUSTICE
Antitrust Division


United States of America v. Texas Television, Inc., Gulf Coast 
Broadcasting Company, and K-Six Television Inc., Proposed Final 
Judgment and Competitive Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. section 16(b) through (h), that a proposed 
Final Judgment, Stipulations, and a Competitive Impact Statement have 
been filed with the United States District Court for the Southern 
District of Texas, Corpus Christi Division in United States of America 
v. Texas Television, Inc., Gulf Coast Broadcasting Company, and K-Six 
Television Inc., Civil Action No. C-96-64.
    The complaint in the case alleges that the three defendants, which 
respectively operate the ABC, NBC and CBS affiliates in Corpus Christi, 
engaged in a combination and conspiracy to increase the price of 
retransmission consent rights being sold to local cable operators, in 
violation of Section 1 of the Sherman Act, 15 U.S.C. Sec. 1. 
Retransmission consent rights, granted by a television broadcast 
station, permit a cable operator to carry that station on its cable 
system.
    The proposed Final Judgment agreed to by the defendants prohibits 
them for a period of ten years from engaging in the type of combination 
of conspiracy alleged in the Complaint. Specifically, each defendant is 
enjoined from entering into any agreement with any broadcaster not 
affiliated with it that relates to retransmission consent or 
retransmission consent negotiations. The defendants are also prohibited 
from communicating to any non-affiliated broadcaster any information 
relating to retransmission consent or retransmission consent 
negotiations, or from communicating certain types of information that 
relate to any actual or proposed transaction with any cable operator or 
other multichannel video programming distributor.
    Public comment on the proposed Final Judgment is invited within the 
statutory 60-day comment period. Such comments and responses thereto 
will be published in the Federal Register and filed with the Court. 
Comments should be directed to Donald J. Russell, Chief; 
Telecommunications Task Force; United States Department of Justice; 
Antitrust Division, 555 4th Street N.W., Room 

[[Page 6033]]
8100; Washington, D.C. 20001 (telephone: (202) 514-5621).
Rebecca P. Dick,
Deputy Director of Operations, Antitrust Division.

United States District Court, Southern District of Texas, Corpus 
Christi Division

    In the matter of: United States of America, Plaintiff, v. Texas 
Television, Inc., Gulf Coast Broadcasting Company, and K-Six 
Television, Inc., Defendants. Civil Action No. C-96-64.

Stipulation

    It is stipulated by and between the undersigned parties, by their 
respective attorneys, that:
    1. The parties to this Stipulation consent that a Final Judgment in 
the form attached may be filed and entered by the Court, upon any 
party's or the Court's own motion, at any time after compliance with 
the requirements of the Antitrust Procedures and Penalties Act (15 
U.S.C. Sec. 16), without further notice to any party or other 
proceedings, provided that Plaintiff has not withdrawn its consent, 
which it may do at any time before entry of the proposed Final Judgment 
by serving notice on the Defendant and by filing that notice with the 
Court.
    2. If Plaintiff withdraws its consent or the proposed Final 
Judgment is not entered pursuant to this Stipulation, this Stipulation 
shall be of no effect whatever and its making shall be without 
prejudice to any party in this or any other proceedings.

    Dated:

    For the Plaintiff:
Anne K. Bingaman,
Assistant Attorney General.
Rebecca P. Dick,
Deputy Director of Operations.
Donald J. Russell,
Chief, Telecommunications Task Force.
Frank G. LaMancusa,
Andrew S. Cowan,
Attorneys, U.S. Department of Justice, Antitrust Division, 555 4th 
Street N.W., Suite 8100, Washington, D.C. 20001, (202) 514-5621

    For the Defendant:
Jorge C. Rangel,
Federal I.D. No. 5698, State Bar No. 16543500, P.O. Box 880, 719 S. 
Shoreline Blvd., Ste. 500, Corpus Christi, Texas 78403-0880, (515) 883-
8555, (512) 883-9187 (Facsimile)

    Attorney in Charge for K-Six Television, Inc.

United States District Court, Southern District of Texas, Corpus 
Christi Division

    In the matter of: United States of America, Plaintiff, v. Texas 
Television, Inc., Gulf Coast Broadcasting Company, and K-Six 
Television, Inc., Defendants. Civil Action No. C-96-64.

Stipulation

    It is stipulated by and between the undersigned parties, by their 
respective attorneys, that:
    1. The parties to this Stipulation consent that a Final Judgment in 
the form attached may be filed and entered by the Court, upon any 
party's or the Court's own motion, at any time after compliance with 
the requirements of the Antitrust Procedures and Penalties Act (15 
U.S.C. Sec. 16), without further notice to any party or other 
proceedings, provided that Plaintiff has not withdrawn its consent, 
which it may do at any time before entry of the proposed Final Judgment 
by serving notice on the Defendant and by filing that notice with the 
Court.
    2. If Plaintiff withdraws its consent or the proposed Final 
Judgment is not entered pursuant to this Stipulation, this Stipulation 
shall be of no effect whatever and its making shall be without 
prejudice to any party in this or any other proceedings.

    Dated:

    For the Plaintiff:
Anne K. Bingaman,
Assistant Attorney General.
Rebecca P. Dick,
Deputy Director of Operations.
Donald J. Russell,
Chief, Telecommunications Task Force.
Frank G. LaMancusa,
Andrew S. Cowan,
Attorneys, U.S. Department of Justice, Antitrust Division, 555 4th 
Street N.W., Ste. 8100, Washington, D.C. 20001, (202) 514-5621

    For the Defendant:
Bruce L. James,
State Bar No. 10538000, Federal ID No. 1378, Kleberg & Head, P.C., 112 
E. Pecan, Ste. 220, San Antonio, TX 78205, (210) 225-3247, (210) 212-
8952 (Facsimile)

    Attorney in Charge for Texas Television

United States District Court Southern District of Texas Corpus Christi 
Division

    In the matter of: United States of America, Plaintiff vs. Texas 
Television, Inc., Gulf Coast Broadcasting Company, and K-Six 
Television, Inc., Defendants. C.A. No. C-96-64.

Stipulation

    It is stipulated by and between the undersigned parties, by their 
respective attorneys, that:
    1. The parties to this Stipulation consent that a Final Judgment in 
the form attached may be filed and entered by the Court, upon any 
party's or the Court's own motion, at any time after compliance with 
the requirements of the Antitrust Procedures and Penalties Act (15 
U.S.C. Sec. 16), without further notice to any party or other 
proceedings, provided that Plaintiff has not withdrawn its consent, 
which it may do at any time before entry of the proposed Final Judgment 
by serving notice on the Defendant and by filing that notice with the 
Court.
    2. If Plaintiff withdraws its consent or the proposed Final 
Judgment is not entered pursuant to this Stipulation, this Stipulation 
shall be of no effect whatever and its making shall be without 
prejudice to any party in this or any other proceedings.

    Dated:

    For the Plaintiff:
Anne K. Bingaman,
Assistant Attorney General.
Rebecca P. Dick,
Deputy Director of Operations.
Donald J. Russell,
Chief, Telecommunications Task Force.
Frank G. Lamancusa,
Andrew S. Cowan,
Attorneys, U.S. Department of Justice, Antitrust Division, 555 4th 
Street N.W., Suite 8100, Washington, D.C. 2001, (202) 514-5621

    For the Defendant:
Matthews & Branscomb,
A Professional Corporation, 802 N. Caranacahua, Suite 1900, Corpus 
Christi, Texas 78470-0700, (512) 888-9261, (512) 888-8504 (FAX)

Douglas Mann,
TSB #12921500, Federal I.D. No. 1154

    Attorney in Charge for Gulf Coast Broadcasting Company.

United States District Court, Southern District of Texas, Corpus 
Christi Division

    In the matter of United States of America, Plaintiff, v. Texas 
Television, Inc., Gulf Coast Broadcasting Company, and K-Six 
Television, Inc., Defendants. Civil Action No.: C-96-64; Judge Janis 
G. Jack.

Final Judgment

    Whereas Plaintiff, United States of America, filed it complaint on 
February 6, 1996 and Plaintiff and Defendants, Texas Television, Inc., 
Gulf Coast Broadcasting Company, and K-Six Television, Inc., have 
consented to the entry of this Final Judgment without 

[[Page 6034]]
trial or adjudication of any issue of fact or law, and without this 
Final Judgment constituting any evidence against or an admission by any 
party with respect to any such issue;
    And whereas Defendants have agreed to be bound by the provisions of 
this Final Judgment pending its approval by the Court;
    Now, therefore, before the taking of any testimony and without 
trail or adjudication of any issue of fact or law herein, and upon 
consent of the parties hereto, it is hereby,
    Ordered, adjudged and decreed as follows:

I. Jurisdiction and Venue

    The Court has jurisdiction of the subject matter of this action and 
of each of the parties consenting to this Final Judgment. The complaint 
states a claim upon which relief may be granted against Defendants 
under Section 1 of the Sherman Act, 15 U.S.C. Sec. 1.

II. Definitions

    As used in this Final Judgment:
    A. ``Affiliated'' means under common ownership or control.
    B. ``Multichannel video programming distributor'' means a cable 
operator, a multichannel multipoint distribution service or any other 
person that sells multiple channels of video programming to subscribers 
or customers.
    C. ``Retransmission consent'' means any authorization given by a 
television broadcast station to a multichannel video programming 
distributor to distribute that station's signal.
    D. ``Retransmission consent negotiation'' means any communication 
between a television broadcast station and a multichannel video 
programming distributor relating to the compensation or consideration 
to be given by the distributor in exchange for retransmission consent.
    E. ``Television broadcaster'' means:
    1. each Defendant and each of its officers, directors, agents, 
employees, subsidiaries, successors and assigns;
    2. each person that operates any television broadcast station; and
    3. each person that possess an equity interest of at least five 
percent (5%) in any television broadcast station.
    F. ``Television broadcast station'' means any broadcast station, as 
defined in 47 U.S.C. Sec. 153(dd), that broadcasts television signals.

III. Applicability

    This Final Judgment applies to each Defendant and to each of their 
officers, directors, agents, employees, subsidiaries, successors and 
assigns, and to all other persons in active concert or participation 
with any of them which shall have received actual notice of this Final 
Judgment by personal service or otherwise.

IV Prohibited Conduct

    A. Each Defendant is hereby enjoined and restrained from directly 
or indirectly entering into, adhering to, maintaining, soliciting or 
knowingly performing any act in furtherance of any contract, agreement, 
understanding or plan with any television broadcaster not affiliated 
with that Defendant relating to retransmission consent or 
retransmission consent negotiations.
    B. Each Defendant is further enjoined and restrained from directly 
or indirectly communicating to any television broadcaster not 
affiliated with that Defendant:
    1. Any information relating to retransmission consent or 
retransmission consent negotiations, including, but not limited to, the 
negotiating strategy of any television broadcaster, or the type or 
value of any consideration sought by any television broadcaster; or
    2. Any information relating to the negotiating strategy of any 
television broadcaster, or to the type or value of any consideration 
sought by any television broadcaster relating to any actual or proposed 
transaction with any multichannel video programming distributor.
    C. Nothing contained in Section IV.B of this Final Judgment shall 
prohibit any Defendant, in response to any question to it from any news 
organization related to retransmission consent or to any actual or 
proposed transaction with any multichannel video programming 
distributor, from providing to that news organization a response that 
does not disclose that Defendant's negotiating strategy, the content or 
progress of negotiations, any plan related to retransmission consent, 
or the type of value of any consideration being sought.

V. Notification Provisions

    Each Defendant is ordered and directed:
    A. To send a written notice, in the form attached as Appendix A to 
this Final Judgment, and a copy of this Final Judgment, within sixty 
(60) days of the entry of this Final Judgment, to each multichannel 
video programming distributor that distributes the television signal of 
any of Defendant's television broadcast stations transmitting in Corpus 
Christi;
    B. To send a written notice, in the form attached as Appendix A to 
this Final Judgment, and a copy of this Final Judgment, to each 
multichannel video programming distributor, that contacts the Defendant 
within ten (10) years of entry of this Final Judgment to request 
retransmission consent for the television signal of any of Defendant's 
television broadcast stations transmitting in Corpus Christi, and which 
was not given such notice pursuant to Section V.A. Such notice shall be 
sent within seven (7) days after such multichannel video programming 
distributor first contacts the Defendant about carrying the Defendant's 
signal.

VI. Compliance Program

    Each Defendant is ordered to establish and maintain an antitrust 
compliance program which shall include designating, within 30 days of 
entry of this Final Judgment, an Antitrust Compliance Officer with 
responsibility for implementing the antitrust compliance program and 
achieving full compliance with this Final Judgment. The Antitrust 
Compliance with this Final Judgment. The Antitrust Compliance Officer 
shall, on a continuing basis, be responsible for the following:
    A. Furnishing a copy of this Final Judgment within thirty (30) days 
of entry of the Final Judgment to each of that Defendant's officers and 
directors and each of its employees, salespersons, sales 
representatives, or agents whose duties relate to retransmission 
consent for any of Defendant's television broadcast stations 
transmitting in Corpus Christi;
    B. Distributing in a timely manner a copy of this Final Judgment to 
each person who succeeds to a position described in Section VI.A.; and
    C. Obtaining from each person designated in Sections VI.A. or B. a 
signed certification that he or she has read, understands and agrees to 
abide by the terms of this Final Judgment and is not aware of any 
violation of the Final Judgment that has not already been reported to 
the Antitrust Compliance Officer and understands that failure to comply 
with this Final Judgment may result in conviction for criminal contempt 
of court.

VII. Certification

    A. Within 75 days of the entry of this Final Judgment, Defendant 
shall certify to Plaintiff whether the Defendant has designated an 
Antitrust Compliance Officer and has distributed the Final Judgment in 
accordance with Section VI.A. above.
    B. For ten years after the entry of this Final Judgment, on or 
before its anniversary date, the Defendant shall file with the 
Plaintiff an annual 

[[Page 6035]]
statement as to the fact and manner of its compliance with the 
provisions of Sections V and VI.
    C. If Defendant's Antitrust Compliance Officer learns of any 
possible violation of any of the terms and conditions contained in this 
Final Judgment, Defendant shall forthwith take appropriate action to 
terminate or modify the activity so as to comply with this Final 
Judgment. Any such action shall be reported by Defendant in the 
respective annual statement required by paragraph VII.B. above.

VIII. Plaintiff Access

    A. For the purpose of determining or securing compliance with this 
Final Judgment, and for no other purpose, duly authorized 
representatives of Plaintiff shall, upon written request of the 
Attorney General or the Assistant Attorney General in charge of the 
Antitrust Division, and on reasonable notice to a Defendant, be 
permitted, subject to any legally recognized privilege:
    1. Access during that Defendant's office hours to inspect and copy 
all records and documents in the possession or under the control of 
that Defendant, which may have counsel present, relating to any matters 
contained in this Final Judgment; and
    2. To interview that Defendant's officers, employees and agents, 
who may have counsel present, regarding any such matters. The 
interviews shall be subject to the Defendant's reasonable convenience.
    B. Upon the written request of the Attorney General or the 
Assistant Attorney General in charge of the Antitrust Division to any 
Defendant at its principal office, that Defendant shall submit such 
written reports, under oath if requested, with respect to any of the 
matters contained in this Final Judgment as may be requested, subject 
to legally recognized privilege.
    C. No information or documents obtained by the means provided in 
this Section VIII shall be divulged by any representative of the 
Department of Justice to any person other than a duly authorized 
representative of the Executive Branch of the United States, except in 
the course of legal proceedings to which the United States is a party, 
or for the purpose of securing compliance with this Final Judgment, or 
as otherwise required by law.
    D. If at the time information or documents are furnished by a 
Defendant to Plaintiff, that Defendant represents and identifies in 
writing the material in any such information or documents to which a 
claim of protection may be asserted under Rule 26(c)(7) of the Federal 
Rules of Civil Procedure, and that Defendant marks each pertinent page 
of such material, ``Subject to claim of protection under Rule 26(c)(7) 
of the Federal Rules of Civil Procedure,'' then ten (10) days' notice 
shall be given by Plaintiff to that Defendant prior to divulging such 
material in any legal proceeding (other than a grand jury proceeding), 
so that Defendant shall have an opportunity to apply to this Court for 
protection pursuant to Rule 26(c)(7) of the Federal Rules of Civil 
Procedure.

IX. Duration of Final Judgment

    This final judgment will expire on the tenth anniversary of its 
date of entry.

X. Construction, Enforcement, Modification and Compliance

    Jurisdiction is retained by the Court for the purpose of enabling 
any of the parties to this Final Judgment to apply to this Court at any 
time for such further orders or directions as may be necessary or 
appropriate for the construction or carrying out of this Final 
Judgment, for the modification of any of its provisions, for its 
enforcement or compliance, and for the punishment of any violation of 
its provisions.

XI. Public Interest

    Entry of this Final Judgment is in the public interest.

Dated:-----------------------------------------------------------------

----------------------------------------------------------------------
United States District Judge

Appendix A

    Dear Distributor: In February 1996, the Antitrust Division of 
the United States Department of Justice filed a civil suit that 
alleged that KIII, KRIS and KZTV violated the antitrust laws of the 
United States by conspiring with the intent and effect of raising 
the price of retransmission consent rights in the Corpus Christi 
region. Our station denies these allegations. Without admitting any 
violation of the law and without being subject to any monetary 
penalties, our station has agreed to the entry of civil Final 
Judgment that prohibits us from engaging in certain practices for a 
period of ten (10) years.
    I have enclosed a copy of the Final Judgment for your 
information. Retransmission consent was authorized by Congress in 
the Cable Television Consumer Protection and Competition Act of 
1992. Under the terms of the enclosed Final Judgment, our station 
may not enter into any agreement or understanding with any other 
television broadcast station relating to retransmission consent or 
retransmission consent negotiations. The Final Judgment also forbids 
our station from communicating certain related information to any 
other station.
    If you learn that our station or its agents have violated the 
terms of the Final Judgment at any time after the its effective 
date, you should provide this information to our station in writing.
    Should you have any questions concerning this letter, please 
feel free to contact me.

        Sincerely,

[General Manager of Station]

United States District Court, Southern District of Texas, Corpus 
Christi Division

    In the matter of: United States of America, Plaintiff, v. Texas 
Television, Inc., Gulf Coast Broadcasting Company, and K-Six 
Television, Inc., Defendants. Civil Action No.: C-96-64, Judge Janis 
G. Jack.

Competitive Impact Statement

    The United States of America, pursuant to section 2 of the 
Antitrust Procedures and Penalties Act (``APPA''), 15 U.S.C. 
Sec. 16(b), submits this Competitive Impact Statement in connection 
with the proposed Final Judgment submitted for entry in this civil 
antitrust proceeding.

I. Nature and Purpose of the Proceeding

    On February 6, 1996, the United States filed a civil antitrust 
complaint under Section 4 of the Sherman Act, as amended, 15 U.S.C. 
Sec. 4, alleging that the Defendants, Texas Television, Inc., Gulf 
Coast Broadcasting Company, and K-Six Television, Inc., engaged in a 
combination and conspiracy, in violation of Section 1 of the Sherman 
Act, 15 U.S.C. Sec. 1, to increase the price of retransmission rights 
to cable operators in Corpus Christi, Texas and surrounding areas. The 
complaint alleges that, in furtherance of this conspiracy, each 
Defendant from at least June of 1993 through December 1993:
    a. agreed not to enter into a retransmission consent agreement with 
any cable company until that company had reached agreements with all 
three Defendants;
    b. agreed not to accept a retransmission consent agreement with any 
cable company if that agreement gave that Defendant a competitive 
advantage over the other two Defendants; and
    c. in order to carry out these agreements, exchanged information 
with each other on the progress being made and the terms being 
considered in each Defendant's retransmission consent negotiations.
    The effect of this combination and conspiracy was to increase the 
price of retransmission consent and to restrain competition among the 
defendants in the sale of retransmission rights. The complaint alleges 
that the combination and conspiracy is illegal, and accordingly 
requests that this Court 

[[Page 6036]]
prohibit Defendants from continuing or renewing such activity.
    The United States and Defendants have stipulated that the proposed 
Final Judgment may be entered after compliance with the APPA, unless 
the United States withdraws its consent. The Court's entry of the 
proposed Final Judgment will terminate the action, except that the 
Court will retain jurisdiction over the matter for possible further 
proceedings to construe, modify or enforce the Judgment, or to punish 
violations of any of its provisions.

II. Description of Practices Giving Rise to the Alleged Violation of 
the Antitrust Laws

    Defendants are three television broadcast stations conducting 
business in Corpus Christi, Texas and the surrounding areas. Texas 
Television, Inc. owns and operates KIII-TV (Channel 3), the ABC 
affiliate. Gulf Coast Broadcasting Company owns and operates KRIS-TV 
(Channel 6), the NBC affiliate. K-Six Television, Inc., a subsidiary of 
Corpus Christi Broadcasting Company, Inc., owns and operates KZTV-TV 
(Channel 10), the CBS affiliate. The complaint alleges that these three 
local broadcasters colluded in order to raise the price of 
retransmission rights being sold to local cable companies in the Corpus 
Christi broadcast television market.
    Retransmission rights allow a cable operator to carry a local 
television station on its cable network. Before the enactment of the 
1992 Cable Act, cable companies could carry a local broadcast station 
on its cable system, without obtaining authorization from the station. 
In contrast, under the Act, see 47 U.S.C. Sec. 325(b)(1), cable 
companies are forbidden from carrying the signal of a local television 
station without that broadcaster's express permission. If a station 
elects to pursue ``retransmission consent'' under the Act, a cable 
operator may carry the station's signal only after mutually agreeable 
terms are negotiated. The Act established October 5, 1993, as the last 
day that cable operators could carry a station's signal without its 
retransmission consent, effectively setting that date as the deadline 
for concluding retransmission consent agreements. As the Act requires 
retransmission consent to be renegotiated every three years, such 
negotiations will recur in the fall of 1996.
    In the months leading up to October 1993, the cable and broadcast 
companies in Corpus Christi announced their initial negotiating 
positions. Each of the cable companies stated that they would not pay 
cash for signals that their subscribers could receive for free over the 
air, a position that had been taken by other cable companies 
nationwide. Each of the three Corpus Christi broadcasters announced 
that they expected to be paid cash for use of their signals, much as 
cable operators pay for cable channels such as HBO or ESPN. 
Negotiations between the broadcasters and the individual cable 
companies were unproductive. At the time of the October 5 deadline, no 
retransmission consent deals had been concluded between any of the 
three Corpus Christi broadcast stations and any of the major local 
cable operators: Tele-Communications, Inc. (``TCI'') (in the city of 
Corpus Christi), Crown Media (in Kingsville, Texas), and Falcon Cable 
Media and Post-Newsweek Cable, Inc. (each serving various small 
outlying communities). As required by law, the cable companies dropped 
the broadcasters' signals on October 5 just before midnight. The 
signals were still available over the air from the broadcasters 
themselves.
    Intermittent negotiations with TCI continued through October and 
November 1993, accompanied by an extensive public relations battle by 
both sides, in part a reaction to a barrage of cable subscriber 
complaints to the cable companies and the broadcasters. The stations 
swapped commercials that advocated their side of the dispute, spots 
that when aired on a given station featured the insignias of all three 
stations, a clear message of broadcaster solidarity. Negotiations with 
the other cable companies essentially ceased pending the resolution of 
the TCI dispute. Except for Falcon Cable, which obtained several 
extensions from the broadcasters, the stations' signals remained off 
the cable systems until final deals were signed, starting with TCI in 
mid-November.
    In response to the position taken by each cable company, the three 
Corpus Christi broadcasters restrained competition among themselves by 
entering into an agreements that established a coordinated negotiating 
strategy. Through these agreements, the broadcasters intended to 
maximize the concessions they could each obtain from each cable 
company, and to ensure that any concession obtained through this 
strategy would not favor one broadcaster over the others. First, as the 
broadcasters stated repeatedly to cable negotiators and to the public, 
all three agreed not to return to a given cable system until all three 
broadcasters had concluded retransmission agreements with that cable 
operator. This allowed the broadcasters to eliminate any advantage a 
cable company could gain by being able to play one broadcaster off 
another. The broadcasters recognized that the first station to return 
to a cable system placed the other two at a competitive disadvantage, 
since these stations would lose advertising revenue through reaching 
fewer viewers until their signals were restored to cable. The last 
stations would therefore be forced to sign on less favorable terms with 
the cable company than the first. By agreeing not to sign with a cable 
company until the other broadcasters had reached agreements with the 
same cable company, the broadcasters eliminated such competition among 
themselves. The ``holdout agreement'' had no purpose other than to 
guarantee that the three stations collectively obtained better 
retransmission consent deals. As one of the broadcasters announced 
publicly during the standoff, ``until we are all convinced that we can 
get the best deal that we can get, then we're not going to be on 
cable.''
    The broadcasters also told cable negotiators that they had agreed 
to reject any deal that would grant any Corpus Christi station a 
competitive advantage over the other two. This secondary agreement 
supported the holdout agreement by eliminating the possibility that the 
last station to sight might acquire especially favorable terms from the 
cable company, since it could effectively withhold the signals of all 
three stations until it had reached a deal.
    Pursuant to their agreement, the broadcasters in fact refused to 
return their signals to each individual cable system until all three 
broadcasters had concluded deals with that cable operator. At the 
insistence of the broadcasters, all three signals were restored to each 
cable system at approximately the same time. In several instances, this 
meant that broadcasters which had already reached an understanding with 
a cable company waited days to sign the agreement, in order to give the 
other stations time to finish their negotiations. The broadcasters' 
desire to return to cable simultaneously required them to keep each 
other informed as to the progress and content of their negotiations. 
The broadcasters therefore made frequent telephone calls to each other. 
At times, a broadcaster told cable negotiators that he would have to 
check with the other stations before taking a certain action, for 
example, approving a deal point or an extension. On at least one 
occasion, representatives of two of the stations met in a Corpus 
Christi restaurant to talk and exchange written information.
    The broadcasters' collusion succeeded in extracting more favorable 
terms from 

[[Page 6037]]
the cable companies than they would have otherwise obtained, even 
though the broadcasters failed to achieve their goal of direct cash 
payments. Local cable operators also lost revenue from increased 
subscriber cancellations during this period and from purchasing tens of 
thousands of ``A/B'' switches so that their subscribers could more 
conveniently obtain the stations' over the air signals. The amount of 
commerce affected by the conduct is difficult to establish but appears 
to be substantial in light of the lengthy disruption that resulted from 
the concerted action of the broadcasters.

III. Explanation of the Proposed Final Judgment

    The parties have stipulated that the Court may enter the proposed 
Final Judgment at any time after compliance with the APPA. The proposed 
Final Judgment states that it shall not constitute an admission by 
either party with respect to any issue of fact or law.
    The proposed Final Judgment enjoins any continuation or renewal, 
directly or indirectly, of the type of combination or conspiracy 
alleged in the Complaint. Specifically, Section IV.A. enjoins each 
Defendant from entering into any agreement with any broadcaster not 
affiliated with that Defendant that relates to retransmission consent 
or retransmission consent negotiations. Section IV.B. prohibits each 
Defendant from communicating to any non-affiliated broadcaster any 
information relating to retransmission consent or retransmission 
consent negotiations, or communicating certain types of information 
that relate to any actual or proposed transaction with any cable 
operator or other multichannel video programming distributor. Together, 
these provisions guarantee that there will be no recurrence of illegal 
activity by these broadcasters, whether with respect to retransmission 
consent or to any other transactions with cable companies or other 
multichannel video programming distributors that may occur in the 
future. Section IV.C. preserves the right of each Defendant to respond 
to news inquiries about retransmission consent negotiations, so long as 
the response does not reveal information about that Defendant's 
negotiating strategy, the content or progress of negotiations, its 
plans related to retransmission consent, or the type or value of 
consideration being sought for retransmission consent.
    The Supreme Court has long recognized that certain types of 
concerted refusals to deal or group boycotts are per se violations of 
the Sherman Act, even when they fall short of outright price-fixing. 
Northwest Wholesale Stationers, Inc. v. Pacific Stationery & Printing 
Co., 472 U.S. 284, 290 (1985). The agreements between the broadcasters 
fell into this category because they had the purpose and effect of 
raising the price of retransmission rights in the Corpus Christi area. 
Moreover, the Supreme Court has held that an agreement between rival 
companies that restrains competition between them is illegal when it 
lacks, as did the agreements among these broadcasters, any pro-
competitive justification. See Federal Trade Commission v. Indiana 
Federation of Dentists, 476 U.S. 447, 459 (1986). Although the 1992 
Cable Act gave broadcasters the right to seek compensation for 
retransmission of their television signals, the antitrust laws require 
that such rights be exercised individually and independently by 
broadcasters. When competitors in a market coordinate their 
negotiations so as to strengthen their negotiating positions against 
third parties and so obtain better deals, as did these Defendants, 
their conduct violates the Sherman Act.
    Section V. of the proposed final judgment is designed to ensure 
that persons affected by Defendants' illegal conduct receive notice of 
the restrictions placed on Defendant's future conduct by the Final 
Judgment. Thus, paragraph V.A. and V.B. require each Defendant to send 
a designated notice to each cable, wireless or satellite television 
operator that currently distributes that Defendant's signal, and to all 
other such operators that may in the future request retransmission 
consent from that Defendant.
    Sections VI. and VII. require each Defendant to set up an antitrust 
compliance program and designate an antitrust compliance officer. Under 
the program, each Defendant is required to furnish a copy of the Final 
Judgment and a less formal written explanation of it to each of its 
officers and directors and to each of its employees, sales 
representatives, or agents whose duties relate to retransmission 
consent for that Defendant's Corpus Christi television station.
    The proposed Final Judgment also provides methods for determining 
and securing each Defendant's compliance with its terms. Section VIII. 
provides that, upon request of the Department of Justice, each 
Defendant shall submit written reports, under oath, with respect to any 
of the matters contained in the Final Judgment. Additionally, the 
Department of Justice is permitted to inspect and copy all books and 
records, and to interview the officers, directors, employees and agents 
of each Defendant.
    Section IX. makes the Final Judgment effective for ten years from 
the date of its entry.
    Section XI. of the proposed Final Judgment states that entry of the 
Final Judgment is in the public interest. The APPA conditions entry of 
the proposed Final Judgment upon a determination by the Court that the 
proposed Final Judgment is in the public interest.
    The Government believes that the proposed Final Judgment is fully 
adequate to prevent the continuation of recurrence of the violation of 
Section 1 of the Sherman Act alleged in the Complaint, and that 
disposition of this proceeding without further litigation is 
appropriate and 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 
attorney fees. Entry of the proposed Final Judgment will neither impair 
nor assist 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 the 
defendant.

V. Procedures Available for Modification of the Proposed Final Judgment

    The United States and the Defendants have stipulated that the 
proposed Final Judgment may be entered by the Court after compliance 
with the provisions of the APPA, provided that the United States has 
not withdrawn its consent.
    The APPA 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. Such comments should be made within 60 days of the date 
of publication of this Competitive Impact Statement in the Federal 
Register. The United States will evaluate the comments, determine 
whether it should withdraw its consent, and respond to the comments. 
The comments and the response of the United States will be filed with 
the Court and published in the Federal Register.
    Written comments should be submitted to: Donald J. Russell, Chief, 

[[Page 6038]]
    Telecommunications Task Force, U.S. Department of Justice, Antitrust 
Division, 555 4th Street N.W., Room 8100, Washington, D.C. 20001.
    Under Section X. of the Proposed Final Judgment, the Court will 
retain jurisdiction over this matter for the purpose of enabling any of 
the parties to apply to the Court for such further orders or directions 
as may be necessary or appropriate for the construction, 
implementation, modification, or enforcement of the Final Judgment, or 
for the punishment of any violations of the Final Judgment.

VI. Alternatives to the Proposed Final Judgment

    The only alternative to the proposed Final Judgment considered by 
the Government was a full trial on the merits and on relief. Such 
litigation would involve substantial cost to the United States and is 
not warranted, because the proposed Final Judgment provides appropriate 
relief against the violations alleged in the Complaint.

VII. Determinative Materials and Documents

    No particular materials or documents were determinative in 
formulating the proposed Final Judgment. Consequently, the Government 
has not attached any such materials or documents to the proposed Final 
Judgment.

    Dated:

    Respectfully submitted,

----------------------------------------------------------------------
Frank G. Lamancusa

----------------------------------------------------------------------
Andrew S. Cowan

Attorneys, U.S. Department of Justice, Antitrust Division, 555 4th 
Street N.W., Room 8100, Washington, D.C. 20001, (202) 514-5621.

[FR Doc. 96-3398 Filed 2-14-96; 8:45 am]
BILLING CODE 4410-01-M