[Federal Register Volume 61, Number 217 (Thursday, November 7, 1996)]
[Notices]
[Pages 57701-57712]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-28617]


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DEPARTMENT OF JUSTICE
Antitrust Division


Proposed Final Judgment and Competitive Impact Statement; United 
States of America v. American Radio Systems Corporation, The Lincoln 
Group, L.P. and Great Lakes Wireless Talking Machine LLC

    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

[[Page 57702]]

been filed with the United States District Court for the District of 
Columbia in United States  v. American Radio Systems Corporation, The 
Lincoln Group, L.P. and Great Lakes Wireless Talking Machine LLC, Civ. 
Action No. 96-2459. The proposed Final Judgment is subject to approval 
by the Court after the expiration of the statutory 60-day public 
comment period and compliance with the Antitrust Procedures and 
Penalties Act. 15 U.S.C. 16(b)-(h).
    The United States filed a civil antitrust Complaint on October 24, 
1996, alleging that the proposed acquisition of assets of The Lincoln 
Group, L.P. (``Lincoln'') by American Radio Systems Corporation 
(``ARS'') would violate Section 7 of the Clayton Act, 15 U.S.C. 18, and 
that the Joint Sales Agreement (``JSA'') between ARS and Great Lakes 
Wireless Talking Machine LLC (``Great Lakes'') violates Section 1 of 
the Sherman Act, 15 U.S.C. 1. The Complaint alleges that ARS and 
Lincoln own and operate three and four radio stations respectively in 
the Rochester, New York area. In addition, ARS has a JSA with a radio 
station owned by Great Lakes (WNVE-FM), allowing ARS post-merger to 
control the sale of advertising time on an eighth station as well. This 
acquisition would allow ARS to control advertising time on six of the 
top eight radio stations in the Rochester area. As a result, the 
combination of these companies would substantially lessen competition 
in the sale of radio advertising time in Rochester, New York and the 
surrounding area.
    Moreover, the Complaint alleges that, beginning at least as early 
as October 1, 1995 and continuing to this day, ARS and Great Lakes 
entered into a contract, the purpose of which is the elimination of all 
pricing competition between two rival radio stations, to the detriment 
of purchasers of radio advertising time in the Rochester area. As such, 
it constitutes an illegal contract in restraint of interstate trade and 
commerce.
    The proposed Final Judgment orders ARS to divest WHAM-AM and WVOR-
FM, both currently owned by Lincoln, and WCMF-AM, currently owned by 
ARS. Unless the United States grants a time extension, ARS must divest 
these radio stations either within six months after the filing of the 
Final Judgment, or within five (5) business days after notice of entry 
of the Final Judgment, whichever is later. If ARS does not divest WHAM-
AM, WVOR-FM and WCMF-AM within the divestiture period, the Court may 
appoint a trustee to sell the assets. The proposed Final Judgment also 
requires ARS to ensure that, until the divestiture mandated by the 
Final Judgment has been accomplished, all of Lincoln's present stations 
(including WHAM-AM and WVOR-FM) will be operated independently as 
viable, ongoing businesses, and kept separate and apart from ARS' other 
Rochester radio stations. Further, the proposed Final Judgment requires 
ARS to give the United States prior notice as to certain future radio 
station acquisitions in Rochester.
    In addition, the Final Judgment requires ARS and Great Lakes to 
terminate the JSA that allows ARS to sell radio advertising time for 
WNVE within five (5) business days after receiving notice of entry of 
the Final Judgment, and to cease and desist from entering into any 
future joint sales agreements between them in the Rochester, New York 
Metro Survey Area. ARS and Great Lakes also must terminate their 
``Option Agreement'' dated September 28, 1995, between them, within 
five (5) business days after receiving notice of the entry of the Final 
Judgment, unless ARS has first assigned this agreement to any entity or 
entities acquiring WHAM-AM, WVOR-FM or WCMF-AM. Furthermore, the 
proposed Final Judgment requires ARS and Great Lakes to give the United 
States prior notice before entering any future agreements that would 
grant ARS or Great Lakes the right to sell advertising time or to 
establish advertising prices for non-ARS radio stations in Rochester.
    A Competitive Impact Statement filed by the United States describes 
the Complaint, the proposed Final Judgment, and remedies available to 
private litigants.
    Public comment is invited within the statutory 60-day comment 
period. Such comments, and the responses thereto, will be published in 
the Federal Register and filed with the Court. Written comments should 
be directed to Craig W. Conrath, Chief, Merger Task Force, Antitrust 
Division, 1401 H Street, NW, Suite 4000, Washington, D.C. 20530 
(telephone: 202-307-0001). Copies of the Complaint, Stipulation, 
proposed Final Judgment and Competitive Impact Statement are available 
for inspection in Room 215 of the Antitrust Division, Department of 
Justice, 325 7th St., NW, Washington, D.C. 20530 (telephone: 202-514-
2481), and at the office of the Clerk of the United States District 
Court for the District of Columbia, Third Street and Constitution 
Avenue, NW, Washington, D.C. 20001.
    Copies of any of these materials may be obtained upon request and 
payment of a copying fee.
Constance K. Robinson,
Director of Operations, Antitrust Division.

Stipulation

    It is stipulated by and between the undersigned parties, by their 
respective attorneys, as follows:
    (1) The Court has jurisdiction over the subject matter of this 
action and over each of the parties hereto, and venue of this action is 
proper in the United States District Court for the District of 
Columbia.
    (2) The parties stipulate that a Final Judgment in the form hereto 
attached may be filed and entered by the Court, upon the motion of any 
party or upon the Court's own motion, at any time after compliance with 
the requirements of the Antitrust Procedures and Penalties Act (15 
U.S.C. 16), and without further notice to any party or other 
proceedings, provided that the United States of America (hereinafter 
``United States'') has not withdrawn its consent, which it may do at 
any time before the entry of the proposed Final Judgment by serving 
notice thereof on the parties and by filing that notice with the Court.
    (3) The defendants shall abide by and comply with the provisions of 
the proposed Final Judgment pending entry of the Final Judgment, and 
shall, from the date of the signing of this Stipulation, comply with 
all the terms and provisions of the proposed Final Judgment as though 
the same were in full force and effect as an order of the Court.

[[Page 57703]]

    (4) The parties recognize that there could be a delay in obtaining 
approval by or a ruling of a government agency related to the 
divestitures required by Section IV of the Final Judgment, 
notwithstanding the good faith efforts of American Radio Systems 
Corporation (``ARS'') and any prospective Acquirer. In this 
circumstance, the United States will, in the exercise of its sole 
discretion, acting in good faith, give special consideration to 
forebearing from applying for the appointment of a trustee pursuant to 
Section V of the Final Judgment, or from pursuing legal remedies 
available to it as a result of such delay, provided that: (i) ARS has 
entered into one or more definitive agreements to divest the Lincoln 
Assets and WCMF-AM Assets, and such agreements and the Acquirer or 
Acquirers have been approved by the United States; (ii) All papers 
necessary to secure any governmental approvals and/or rulings to 
effectuate such divestitures (including but not limited to FCC, SEC and 
IRS approvals or rulings) have been filed with the appropriate agency; 
(iii) Receipt of such approvals are the only closing conditions that 
have not been satisfied or waived; and (iv) ARS has demonstrated that 
neither it nor the prospective Acquirer or Acquirers are responsible 
for any such delay.
    (5) In the event the United States withdraws its consent, as 
provided in paragraph 2 above, or if the proposed Final Judgment is not 
entered pursuant to this Stipulation, this Stipulation shall be of no 
effect whatever, and the making of this Stipulation shall be without 
prejudice to any party in this or any other proceeding.
    (6) The defendants represent that the divestitures and contract 
terminations ordered in the proposed Final Judgment can and will be 
made, and that the defendants will later raise no claims of hardship or 
difficulty as grounds for asking the Court to modify any of the 
divestiture or termination provisions contained therein.

    Dated: October 24, 1996.

    For Plaintiff United States of America:
Craig W. Conrath,
U.S. Department of Justice, Antitrust Division, Merger Task Force, 1401 
H Street, N.W., Suite 4000, Washington, D.C. 20005, (202) 307-5779.

    For Defendant American Radio Systems Corporation:
James R. Loftis, III, Collier Shannon Rill & Scott, PLLC, 3050 K 
Street, N.W., Suite 400, Washington, DC 20007, (202) 342-8480.

    For Plaintiff State of New York:
Dennis C. Vacco,
Attorney General of the State of New York.
John H. Carley,
Deputy Attorney General, Public Advocacy.
Stephen D. Houck,
Assistant Attorney General, Chief, Antitrust Bureau.

    By:
Stephen D. Houck.

Richard L. Schwartz,
Deputy Chief, Antitrust Bureau.
George R. Mesires,
Assistant Attorney General, 120 Broadway, Suite 2601, New York, New 
York 10271, (202) 416-8275.

    For Defendant the Lincoln Group, L.P.:
Jason L. Shrinsky,
Kaye Scholer Fierman Hays & Handler, LLP, 901 15th Street, N.W., Suite 
1100, Washington, DC 20005.

    For Defendant, Great Lakes Wireless Talking Machine LLC:
Stephen P. Morris,
Morris & Morris, 30 Corporate Woods, Suite 120, Rochester, NY 14623, 
(716) 292-5750.

Certificate of Service

    I, Dando B. Cellini, hereby certify that on October 24, 1996, I 
caused a copy of the foregoing Complaint, Motion for Entry of 
Stipulation and Order, Stipulation, form of Order, United States' 
Explanation of Consent Decree Procedures and Competitive Impact 
Statement filed this day in United States and State of New York v. 
American Radio Systems, et. al to be served on all parties by having a 
copy mailed, first class, postage prepaid, to:

    Plaintiff State of New York:
George R. Mesires,
Assistant Attorney General, State of New York, 120 Broadway, Suite 
2601, New York, New York 10271.

    Defendant the Lincoln Group, L.P.:
Jason L. Shrinsky,
Kaye Scholer Fierman Hays & Handler, LLP, 901 15th Street, NW., Suite 
1100, Washington, DC 20005.

    Defendant American Radio Systems Corporation:
James R. Loftis, III,
Collier Shannon Rill & Scott, PLLC, 3050 K Street, N.W., Suite 400, 
Washington, DC 20007, (202) 342-8480.

    Defendant Great Lakes Wireless Talking Machine LLC:
Stephen P. Morris,
Morris & Morris, 30 Corporate Woods, Suite 120, Rochester, NY 14623, 
(716) 292-5750.

Dando B. Cellini

    Dated: October 24, 1996.

Final Judgment

Case Number: 1:96CV02459
Judge: Norma Holloway Johnson
Deck Type: Antitrust
Date Stamp: 10/24/96
No. ______.

    Whereas, plaintiffs, the United States of America (hereinafter 
``United States'') and the State of New York (hereinafter ``New 
York''), having filed their Complaint herein on October 24, 1996, and 
defendants, by their respective attorneys, having consented to the 
entry of this Final Judgment without trial or adjudication of any issue 
of fact or law herein, and without this Final Judgment constituting any 
evidence against or an admission by any party with respect to any issue 
of law or fact herein;
    And whereas, defendants have agreed to be bound by the provisions 
of this Final Judgment pending its approval by the Court;
    And whereas, the purpose of this Final Judgment is prompt and 
certain divestiture of certain assets to assure that competition is not 
substantially lessened;
    And whereas, plaintiffs require defendants to make certain 
divestitures and contract terminations for the purpose of remedying the 
loss of competition alleged in the Complaint;
    And whereas, defendants have represented to plaintiffs that the 
divestitures and contract terminations ordered herein can and will be 
made and that defendants will later raise no claims of hardship or 
difficulty as grounds for asking the Court to modify any of the 
divestiture or termination provisions contained below;
    Now, therefore, before the taking of any testimony, and without 
trial or

[[Page 57704]]

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

    This Court has jurisdiction over each of the parties hereto and 
over the subject matter of this action. The Complaint states a claim 
upon which relief may be granted against defendants ARS and Lincoln, as 
hereinafter defined, under Section 7 of the Clayton Act, as amended (15 
U.S.C. 18), and against defendants ARS and Great Lakes, as hereinafter 
defined, under Section 1 of the Sherman Act, as amended (15 U.S.C. 1).

II. Definitions

    As used in this Final Judgment:
    A. ``ARS'' means defendant American Radio Systems Corporation, a 
Delaware corporation with its headquarters in Boston, MA, and includes 
its successors and assigns, its subsidiaries, and directors, officers, 
managers, agents, and employees acting for or on behalf of ARS.
    B. ``Lincoln'' means defendant The Lincoln Group, L.P., a New York 
limited partnership with its headquarters in Syracuse, NY, and includes 
its successors and assigns, its subsidiaries, and directors, officers, 
managers, agents, and employees acting for or on behalf of Lincoln.
    C. ``Great Lakes'' means defendant Great Lakes Wireless Talking 
Machine LLC, a New York limited liability company with its headquarters 
in East Rochester, New York, and includes its successors and assigns, 
its subsidiaries, and directors, officers, managers, agents and 
employees acting for or on behalf of Great Lakes.
    D. ``Lincoln Assets'' means all of the assets, tangible or 
intangible, used in the operation of the WHAM-AM and WVOR-FM radio 
stations in Rochester, New York, including but not limited to: All real 
property (owned and leased) used in the operation of these two 
stations; all broadcast equipment, personal property, inventory, office 
furniture, fixed assets and fixtures, materials, supplies and other 
tangible property used in the operation of these two stations; all 
licenses, permits and authorizations and applications therefor issued 
by the Federal Communications Commission (``FCC'') and other 
governmental agencies relating to these two stations; all contracts, 
agreements, leases, and commitments of Lincoln pertaining to these two 
stations and their operations; all trademarks, service marks, trade 
names, copyrights, patents, slogans, programming materials and 
promotional materials relating to these two stations; and all logs and 
other records maintained by Lincoln or these two stations in connection 
with each station's business.
    E. ``WCMF-AM Assets'' means all of the following assets: all real 
property (owned and leased) used solely in the operation of radio 
station WCMF-AM; all broadcast equipment used solely in the operation 
of radio station WCMF-AM; and all licenses, permits, and authorizations 
and applications therefor issued by the Federal Communications 
Commission (``FCC'') and other governmental agencies relating to radio 
station WCMF-AM.
    F. ``ARS Rochester Radio Stations'' means the following radio 
stations: WCMF-FM, WRMM-FM, WPXY-FM, and WHTK-AM.
    G. ``Non-ARS Radio Station'' means any radio station licensed to a 
community in the Rochester Area that is not an ARS Rochester Radio 
Station.
    H. ``Rochester Area'' means the Rochester, New York Metro Survey 
Area as identified by The Arbitron Radio Market Report for Rochester 
(Summer 1996), and includes the following six counties: Monroe, Wayne, 
Ontario, Livingston, Genesee and Orleans.
    I. The ``WNVE Joint Sales Agreement'' means the agreement between 
ARS and Great Lakes dated September 28, 1995, entitled ``Joint Sales 
Agreement.
    J. The ``WNVE Option Agreement'' means the agreement between ARS 
and Great Lakes dated September 28, 1995, entitled ``Option 
Agreement.''
    K. ``WNVE'' means WNVE-FM, a radio station owned by Great Lakes and 
located in South Bristol, New York.
    L. The ``Asset Purchase Agreement'' means the agreement between ARS 
and Lincoln dated February 23, 1996, entitled ``Asset Purchase 
Agreement.''
    M. ``Acquirer'' means the entity or entities to whom ARS divests 
the Lincoln Assets and/or the WCMF-AM Assets under this Final Judgment.

III. Applicability

    A. The provisions of this Final Judgment apply to each of the 
defendants, their successors and assigns, their subsidiaries, 
affiliates, directors, officers, managers, agents and employees, and 
all other persons in active concert or participation with any of them 
who shall have received actual notice of this Final Judgment by 
personal service or otherwise.
    B. Each defendant shall require, as a condition of the sale or 
other disposition of all or substantially all of the assets used in its 
business of owning and operating its portfolio of radio stations in the 
Rochester Area, that the acquiring party or parties agree to be bound 
by the provisions of this Final Judgment; provided, however, defendants 
need not obtain such an agreement from an Acquirer, as defined herein, 
or from any future purchaser of WNVE.

IV. Divestiture of Lincoln Assets and WCMF-AM

    A. ARS is hereby ordered and directed, in accordance with the terms 
of this Final Judgment, within six (6) months after the filing of this 
Final Judgment, or within five (5) business days after notice of entry 
of this final judgment, whichever is later, to divest the Lincoln 
Assets and WCMF-AM Assets to an Acquirer acceptable to the United 
States, in its sole discretion, after consulting with New York. Unless 
the United States otherwise consents in writing, the divestitures 
pursuant to Section IV of this Final Judgment or by the trustee 
appointed pursuant to Section V, shall be accomplished in such a way as 
to satisfy the United States, in its sole discretion after consulting 
with New York, that the Lincoln Assets and WCMF-AM Assets can and will 
be used by an Acquirer as viable, ongoing commercial radio businesses. 
The divestitures, whether pursuant to Section IV or V of this Final 
Judgment, shall be made (i) to an Acquirer that, in the sole judgment 
of the United States after consulting with New York, has the capability 
and intent of competing effectively, and has the managerial, 
operational and financial capability to compete effectively as a radio 
station operator in the Rochester Area; and (ii) pursuant to an 
agreement the terms of which shall not, in the sole judgment of the 
United States after consulting with New York interfere with the ability 
of the purchaser to compete effectively.
    B. ARS agrees to use its best efforts to divest the Lincoln Assets 
and WCMF-AM Assets, and to obtain all regulatory approvals necessary 
for such divestitures, as expeditiously as possible. The United States, 
in its sole discretion, may extend the time period for the divestitures 
for two (2) additional thirty (30)-day periods of time, not to exceed 
sixty (60) calendar days in total.
    C. In accomplishing the divestitures ordered by this Final 
Judgment, ARS promptly shall make known, by usual and customary means, 
the availability of the Lincoln Assets and, unless relieved of this 
obligation by compliance with paragraph E of this Section, the WCMF-AM 
Assets. ARS shall inform any person making a bona fide inquiry 
regarding a possible purchase that the

[[Page 57705]]

sale is being made pursuant to this Final Judgment and provide such 
person with a copy of the Final Judgment. ARS shall make known to any 
person making an inquiry regarding a possible purchase of the Lincoln 
Assets or WCMF-AM Assets that the assets described in Section II (D) 
and (E) are being offered for sale. ARS and Lincoln shall also offer to 
furnish to all bona fide prospective purchasers, subject to customary 
confidentiality assurances, all information regarding the Lincoln 
Assets and, unless relieved of this obligation by compliance with 
paragraph E of this Section, WCMF-AM Assets customarily provided in a 
due diligence process, except such information that is subject to 
attorney-client privilege or attorney work-product privilege. ARS shall 
make available such information to plaintiffs at the same time that 
such information is made available to any other person.
    D. ARS and Lincoln shall permit bona fide prospective purchasers of 
the Lincoln Assets and, unless relieved of this obligation by 
compliance with paragraph E of this Section, WCMF-AM Assets, to have 
access to personnel and to make such inspection of the assets, and any 
and all financial, operational or other documents and information 
customarily provided as part of a due diligence process.
    E. ARS may fully comply with those portions of Section IV and V 
that pertain to the divestiture of the WCMF-AM Assets by entering, 
within forty (40) days of the filing of this Final Judgment, into a 
binding agreement to divest the WCMF-AM Assets to an Acquirer approved 
by the United States, in its sole judgment after consulting with New 
York.

V. Appointment of Trustee

    A. In the event that ARS has not divested the Lincoln Assets and 
WCMF-AM Assets within the time periods specified in Section IV above, 
the Court shall appoint, on application of the United States, a trustee 
selected by the United States to effect the divestiture of the assets.
    B. After the trustee's appointment has become effective, only the 
trustee shall have the right to sell the Lincoln Assets and WCMF-AM 
Assets. The trustee shall have the power and authority to accomplish 
the divestiture at the best price then obtainable upon a reasonable 
effort by the trustee, subject to the provisions of Section V and VIII 
of this Final Judgment and consistent with FCC regulations, and shall 
have other powers as the Court shall deem appropriate. Subject to 
Section V(C) of this Final Judgment, the trustee shall have the power 
and authority to hire at the cost and expense of ARS any investment 
bankers, attorneys or other agents reasonably necessary in the judgment 
of the trustee to assist in the divestiture, and such professionals or 
agents shall be solely accountable to the trustee. The trustee shall 
have the power and authority to accomplish the divestiture at the 
earliest possible time to a purchaser acceptable to the United States, 
in its sole judgment after consulting with New York, and shall have 
such other powers as this Court shall deem appropriate. ARS shall not 
object to the sale of the Lincoln Assets and WCMF-AM Assets by the 
trustee on any grounds other than the trustee's malfeasance. Any such 
objection by ARS must be conveyed in writing to plaintiffs and the 
trustee no later than fifteen (15) calendar days after the trustee has 
provided the notice required under Section VIII of this Final Judgment.
    C. The trustee shall serve at the cost and expense of ARS, on such 
terms and conditions as the Court may prescribe, and shall account for 
all monies derived from the sale of the assets sold by the trustee and 
all costs and expenses so incurred. After approval by the Court of the 
trustee's accounting, including fees for its services and those of any 
professionals and agents retained by the trustee, all remaining monies 
shall be paid to ARS and the trustee's services shall then be 
terminated. The compensation of such trustee and of any professionals 
and agents retained by the trustee shall be reasonable in light of the 
value of the divestiture and based on a fee arrangement providing the 
trustee with an incentive based on the price and terms of the 
divestiture and the speed with which it is accomplished.
    D. ARS shall take no action to interfere with or impede the 
trustee's accomplishment of the divestiture of the Lincoln Assets and 
WCMF-AM Assets, and shall use its best efforts to assist the trustee in 
accomplishing the required divestiture, including best efforts to 
effect all necessary regulatory approvals. Subject to a customary 
confidentiality agreement, the trustee shall have full and complete 
access to the personnel, books, records, and facilities related to the 
Lincoln Assets and WCMF-AM Assets, and ARS shall develop such financial 
or other information as may be necessary to the divestiture of the 
Lincoln Assets and WCMF-AM Assets. ARS shall permit prospective 
purchasers of the Lincoln Assets and WCMF-AM Assets to have access to 
personnel and to make such inspection of physical facilities and any 
and all financial, operational or other documents and information as 
may be relevant to the divestiture required by this Final Judgment.
    E. After its appointment becomes effective, the trustee shall file 
monthly reports with ARS, the plaintiffs and the Court, setting forth 
the trustee's efforts to accomplish divestiture of the Lincoln Assets 
and WCMF-AM Assets as contemplated under this Final Judgment; provided, 
however, that to the extent such reports contain information that the 
trustee deems confidential, such reports shall not be filed in the 
public docket of the Court. 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 Lincoln Assets and WCMF-AM 
Assets, and shall describe in detail each contact with any such person 
during that period. The trustee shall maintain full records of all 
efforts made to divest these operations.
    F. Within six (6) months after its appointment has become 
effective, if the trustee has not accomplished the divestiture required 
by Section IV of this Final Judgment, the trustee shall promptly file 
with the Court a report setting forth (1) the trustee's efforts to 
accomplish the required divestiture, (2) the reasons, in the trustee's 
judgment, why the required divestiture has not been accomplished, and 
(3) the trustee's recommendations; provided, however, that to the 
extent such reports contain information that the trustee deems 
confidential, such reports shall not be filed in the public docket of 
the Court. The trustee shall at the same time furnish such reports to 
ARS, the United States and New York, who shall each have the right to 
be heard and to make additional recommendations. The Court shall 
thereafter enter such orders as it shall deem appropriate to accomplish 
the purpose of this Final Judgment, which shall, if necessary, include 
extending the term of the trustee's appointment.

VI. Termination of Joint Sales Agreement and Option to Purchase

    ARS and Great Lakes are hereby ordered and directed, within five 
(5) business days after notice of entry of this Final Judgment, to 
terminate the WNVE Joint Sales Agreement, and to cease and desist from 
entering into any joint sales agreements between them in the Rochester 
Area. ARS and Great Lakes are further ordered and directed, within five 
(5) business days after notice

[[Page 57706]]

of entry of this Final Judgment, to terminate the WNVE Option 
Agreement, unless said Option Agreement has theretofore been assigned 
by ARS to an Acquirer approved in advance by the United States, in its 
sole judgment after consulting with New York.

VII. Preservation of Assets/Hold Separate

    Until the divestiture of the Lincoln Assets required by Section IV 
of the Final Judgment has been accomplished.
    A. ARS and Lincoln shall continue to take all steps necessary to 
ensure that WHAM-AM, WPXY-FM, WVOR-FM and WHTK-AM, until divested 
pursuant to Section IV, are maintained as separate, independent, 
ongoing, economically viable and active competitors to ARS and that, 
except as necessary to comply with Section IV and paragraphs B and C of 
this Section of the Final Judgment, the management of said stations, 
including the performance of decision-making functions regarding 
marketing and pricing, will be kept separate and apart from, and not 
influenced by, ARS.
    B. ARS and Lincoln shall use all reasonable efforts to maintain and 
increase sales of advertising time by WHAM-AM, WPXY-FM, WVOR-FM and 
WKTK-AM, until divested pursuant to Section IV, and shall maintain at 
1995 or previously approved levels for 1996, whichever are higher, 
promotional advertising, sales, marketing and merchandising support for 
such radio stations.
    C. ARS and Lincoln shall take all steps necessary to ensure that 
the assets used by Lincoln in the operation of WHAM-AM, WPXY-FM, WVOR-
FM and WHTK-AM are fully maintained until divested pursuant to Section 
IV. Lincoln's sales and marketing employees shall not be transferred or 
reassigned to any non-Lincoln ARS station, except for transfer bids 
initiated by employees pursuant to ARS' regular, established job 
posting policy, provided that ARS gives plaintiffs and Acquirer ten 
(10) days' notice of such transfer.
    D. Neither ARS not Lincoln shall, except as part of a divestiture 
approved by the United States after consulting with New York or in 
connection with the consummation of the Asset Purchase Agreement, sell 
any Lincoln Assets.
    E. ARS and Lincoln shall take no action that would jeopardize the 
sale of the Lincoln Assets.
    F. ARS and Lincoln shall appoint a person or persons to oversee the 
assets to be held separate and who will be responsible for ARS' and 
Lincoln's compliance with Section VII of this Final Judgment.

VIII. Notification

    Within two (2) business days following execution of a binding 
agreement to divest, including all contemplated ancillary agreements 
(e.g., financing), to effect, in whole or in part, any proposed 
divestiture pursuant to Section IV or V of this Final Judgment, ARS or 
the trustee, whichever is then responsible for effecting the 
divestiture, shall notify plaintiffs of the proposed divestiture. If 
the trustee is responsible, it shall similarly notify ARS. The notice 
shall set forth the details of the proposed transaction and list the 
name, address and telephone number of each person not previously 
identified who offered to, or expressed an interest in or a desire to, 
acquire any ownership interest in the Lincoln Assets or the WCMF-AM 
Assets, together with full details of same. Within fifteen (15) 
calendar days of receipt by plaintiffs of such notice, plaintiffs may 
request from ARS, the proposed purchaser or purchasers, any other third 
party, or the trustee, if applicable, additional information concerning 
the proposed divestiture, the proposed purchaser, and any other 
potential purchaser. ARS and the trustee shall furnish any additional 
information requested within fifteen (15) calendar days of the receipt 
of the request. Within thirty (30) calendar days after receipt of the 
notice or within twenty (20) calendar days after plaintiffs have been 
provided the additional information, whichever is later, the United 
States after consulting with New York shall provide written notice to 
ARS and the trustee, if there is one, stating whether or not it objects 
to the proposed divestiture. If the United States fails to object 
within the period specified, or if the United States provides written 
notice to ARS and the trustee, if there is one, that it does not 
object, then the divestiture may be consummated, subject only to ARS' 
limited right to object to the sale under Section V (B) of this Final 
Judgment. A divestiture proposed under Section IV shall not be 
consummated if the United States objects to the identity of the 
proposed purchaser or purchasers. Upon objection by the United States, 
or by ARS under the proviso in Section V (B), a divestiture proposed 
under Section V shall not be consummated unless approved by the Court.

IX. Financing

    ARS is ordered and directed not to finance all or any part of any 
purchase by an Acquirer made pursuant to Sections IV or V of this Final 
Judgment without the prior written consent of the United States.

X. Affidavits

    A. Within twenty (20) calendar days of the filing of this Final 
Judgment and every thirty (30) calendar days thereafter until the 
divestiture has been completed, whether pursuant to Section IV or 
Section V of this Final Judgment, ARS shall deliver to plaintiffs an 
affidavit as to the fact and manner of ARS' compliance with Section IV 
or V of this Final Judgment. Each such affidavit shall include, inter 
alia, the name, address and telephone number of each person who, at any 
time after the period covered by the last such report, was contacted by 
ARS, or their representatives, made an offer to acquire, expressed an 
interest in acquiring, entered into negotiations to acquire, or made an 
inquiry about acquiring, any interest in the Lincoln Assets or the 
WCMF-AM 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 that ARS has taken to solicit a buyer for 
the Lincoln Assets and the WCMF-AM Assets.
    B. Within twenty (20) calendar days following the entry of this 
Final Judgment, ARS and Great Lakes shall deliver to plaintiffs an 
affidavit as to the fact and manner of their compliance with Section VI 
of this Final Judgment.
    C. Within twenty (20) calendar days of the filing of this Final 
Judgment, ARS shall deliver to plaintiffs an affidavit which describes 
in reasonable detail all actions ARS has taken and all steps ARS has 
implemented on an on-going basis to preserve WHAM-AM, WPXY-FM, WVOR-FM 
and WHTK-AM pursuant to Section VII of this Final Judgment. ARS shall 
deliver to plaintiffs an affidavit describing any changes to the 
efforts and actions outlined in its earlier affidavit(s) filed pursuant 
to this Section within fifteen (15) calendar days after such change is 
implemented.
    D. ARS shall preserve all records of all efforts made to preserve 
WHAM-AM, WPXY-FM, WVOR-FM and WHTK-AM and to divest the Lincoln Assets 
and the WCMF-AM Assets.

XI. Notice

    A. Unless such transaction is otherwise subject to the reporting 
and waiting period requirements of the Hart-Scott-Rodino Antitrust 
Improvements Act of 1976, as amended, 15 U.S.C. 18a (the ``HSR Act''), 
ARS, without providing advance notification to the plaintiffs, shall 
not directly or indirectly acquire any assets of or any interest, 
including any financial, security, loan, equity or management interest, 
in any

[[Page 57707]]

Non-ARS Radio Station; provided, however, that, where not inconsistent 
with the HSR Act, ARS need not provide notice under this provision for 
an acquisition of any one, but not more than one, of any Class A 
Licensed FM radio station in the Rochester Area other than WDKX, 103.9 
FM, and WMAX, 106.7 FM, or their successors.
    B. ARS and Great Lakes, without providing advance notification to 
the plaintiffs, shall not directly or indirectly enter into any 
agreement or understanding that would allow ARS or Great Lakes to 
market or sell advertising time or to establish advertising prices for 
any Non-ARS Radio Station.
    C. Notification described in (A) and (B) above shall be provided to 
the plaintiffs in the same format as, and per the instructions relating 
to, the Notification and Report Form set forth in the Appendix to Part 
803 of Title 16 of the Code of Federal Regulations as amended, except 
that, in the case of ARS, the information requested in Items 5-9 of the 
instructions must be provided only with respect to ARS Rochester Radio 
Stations. Notification shall be provided at least thirty (30) days 
prior to acquiring any such interest or entering any such agreement 
covered in (A) or (B) above, and shall include, beyond what may be 
required by the applicable instructions, the names of the principal 
representatives of the parties to the agreement who negotiated the 
agreement, and any management or strategic plans discussing the 
proposed transaction. If within the 30-day period after notification, 
representatives of the plaintiffs make a written request for additional 
information, ARS or Great Lakes shall not consummate the proposed 
transaction or agreement until twenty (20) days after submitting all 
such additional information, Early termination of the waiting periods 
in this paragraph may be requested and, where appropriate, granted in 
the same manner as is applicable under the requirements and provisions 
of the HSR Act and rules promulgated thereunder.
    D. This Section shall be broadly construed and any ambiguity or 
uncertainty regarding the filing of notice under this Section shall be 
resolved in favor of filing notice.

XII. Compliance Inspection

    For the purpose of determining or securing compliance with the 
Final Judgment and subject to any legally recognized privilege, from 
time to time:
    A. Duly authorized representatives of the plaintiffs, including 
consultants and other persons retained by the plaintiffs, shall, upon 
written request of the United States Attorney General, or of the 
Assistant Attorney General in charge of the Antitrust Division, or of 
the New York Attorney General, and on reasonable notice to defendants 
made to their principal offices, permitted:

    (1) Access during office hours of defendants to inspect and copy 
all books, ledgers, accounts, correspondence, memoranda and other 
records and documents in the possession or under the control of 
defendants, who may have counsel present, relating to any matters 
contained in this Final Judgment; and
    (2) Subject to the reasonable convenience of defendants and 
without restraint or interference from them, to interview directors, 
officers, employees and agents of defendants, who may have counsel 
present, regarding any such matters.

    B. Upon the written request of the United States Attorney General, 
or of the Assistant Attorney General in charge of the Antitrust 
Division, or of the New York Attorney General, made to defendants' 
principal offices, defendants 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.
    C. No information or documents obtained by the means provided in 
this Section XII shall be divulged by any representative of the United 
States or New York to any person other than a duly authorized 
representative of the Executive Branch of the United States or the 
State of New York, except in the course of legal proceedings to which 
either plaintiff 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 information or documents are furnished by any 
defendant to plaintiffs, and such 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 such 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) calendar days' 
notice shall be given by plaintiffs to such defendant prior to 
divulging such material in any legal proceeding (other than a grand 
jury proceeding) to which such defendant is not a party.

XIII. Retention of Jurisdiction

    Jurisdiction is retained by this Court at any time for such further 
orders and directions as may be necessary or appropriate for the 
construction, implementation or modification of any provisions of this 
Final Judgment, for the enforcement of compliance herewith, and for the 
punishment of any violation hereof.

XIV. Termination

    Unless this Court grants an extension, this Final Judgment will 
expire upon the tenth anniversary of the date of its entry.

XV. Public Interest

    Entry of this Final Judgment is in the public interest.

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

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

Competitive Impact Statement

    The United States, pursuant to Section 2(b) of the Antitrust 
Procedures and Penalties Act (``APPA''), 15 U.S.C. 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

    The plaintiffs filed a civil antitrust Complaint on October 24, 
1996, alleging that the proposed acquisition of The Lincoln Group, L.P. 
(``Lincoln'') by American Radio Systems Corporation (``ARS'') would 
violate Section 7 of the Clayton Act, 15 U.S.C. 18, and that the Joint 
Sales Agreement (``JSA'') between ARS and Great Lakes Wireless Talking 
Machine LLC (``Great Lakes'') violates Section 1 of the Sherman Act, 15 
U.S.C. 1. The Compliant alleges that ARS and Lincoln own and operate 
three and four radio stations respectively in the Rochester, New York 
area. In addition, ARS has a JSA with a radio station owned by Great 
Lakes (WNVE-FM), allowing ARS post-merger to control the sale of 
advertising time on an eighth station as well. This acquisition would 
allow ARS to control advertising time on six of the top eight radio 
stations in the Rochester area. As a result, the combination of these 
companies would substantially lessen competition in the sale of radio 
advertising time in Rochester, New York and the surrounding area.
    Moreover, the Complaint alleges that, beginning at least as early 
as October 1, 1995 and continuing to this day, ARS and Great Lakes 
entered into a contract, the purpose of which is the elimination of all 
pricing competition between two rival radio stations, to the detriment 
of purchasers of radio advertising time in the Rochester area. As such, 
it constitutes an illegal contract in restraint of interstate trade and 
commerce.

[[Page 57708]]

    The prayer for relief seeks: (a) Adjudication that ARS's proposed 
acquisition of Lincoln would violate Section 7 of the Clayton Act; (b) 
adjudication that ARS' JSA with Great Lakes is a violation of Section 1 
of the Sherman Act; (c) preliminary and permanent injunctive relief 
preventing the consummation of the proposed acquisition and enjoining 
the continuation of the JSA; (d) an award to the United States of the 
costs of this action; and (e) such other relief as is proper.
    Shortly before this suit was filed, a proposed settlement was 
reached that permits ARS to complete its acquisition of Lincoln, yet 
preserves competition in the market for which the transaction would 
raise significant competitive concerns. A Stipulation and proposed 
Final Judgment embodying the settlement were filed at the same time the 
Complaint was filed.
    The proposed Final Judgment orders ARS to divest WHAM-AM and WVOR-
FM, both currently owned by Lincoln, and WCMF-AM, currently owned by 
ARS. Unless the United States grants a time extension, ARS must divest 
these radio stations either within six months after the filing of the 
Final Judgment, or within five (5) business days after notice of entry 
of the Final Judgment, whichever is later. If ARS does not divest WCMF-
AM and the Lincoln Assets within the divestiture period, the Court may 
appoint a trustee to sell the assets. The proposed Final Judgment also 
requires ARS to ensure that, until the divestiture mandated by the 
Final Judgment has been accomplished, all of Lincoln's present stations 
(including WHAM-AM and WVOR-FM) will be operated independently as 
viable, ongoing businesses, and kept separate and apart from ARS' other 
Rochester radio stations. Further, the proposed Final Judgment requires 
ARS to give the United States prior notice as to certain future radio 
station acquisitions in Rochester.
    In addition, the Final Judgment requires ARS and Great Lakes to 
terminate the JSA that allows ARS to sell radio advertising time for 
WNVE within five (5) business days after receiving notice of entry of 
the Final Judgment, and to cease and desist from entering into any 
future joint sales agreements between them in the Rochester, New York 
Metro Survey Area. ARS and Great Lakes also must terminate their 
``Option Agreement'' dated September 28, 1995, between them, within 
five (5) business days after receiving notice of the entry of the Final 
Judgment, unless ARS has first assigned this agreement to any entity or 
entities acquiring either the Lincoln Assets or WCMF-AM. Furthermore, 
the proposed Final Judgment requires ARS and Great Lakes to give the 
United States prior notice before entering any future agreements that 
would grant ARS or Great Lakes the right to sell advertising time or to 
establish advertising prices for non-ARS radio stations in Rochester.
    The plaintiffs and the defendants have stipulated that the proposed 
Final Judgment may be entered after compliance with the APPA. Entry of 
the proposed Final Judgment would terminate this action, except that 
the Court would retain jurisdiction to construe, modify, or enforce the 
provisions of the proposed Final Judgment and to punish violations 
thereof.

II. The Alleged Violations

A. The Defendants
    Defendant ARS is a Delaware corporation with its headquarters in 
Boston, Massachusetts. It currently owns and operates 62 radio stations 
in 14 metropolitan areas in the United States. In 1995, ARS reported 
total net revenues of approximately $97 million. ARS owns three radio 
stations in Rochester, and sells advertising for one other radio 
station (WNVE) under a JSA.
    Lincoln is a New York limited partnership headquartered in 
Syracuse, New York. Lincoln owns four radio stations in Rochester and 
two in Salem, Ohio. Great Lakes is a New York limited partnership 
headquartered in East Rochester, New York. It owns one radio station in 
Rochester, WNVE-FM
B. Description of the Events Giving Rise to the Alleged Violations
    On February 23, 1996, ARS agreed to purchase Lincoln for 
approximately $30.5 million. As a result of the proposed transaction; 
ARS would own or have the right to sell advertising for six of the top 
eight radio stations in Rochester.
    ARS and Great Lakes formerly competed for the business of local and 
national companies seeking to advertise in the Rochester area. This 
competition ended after ARS and Great Lakes entered into a JSA on 
September 28, 1995, giving ARS exclusive control over the sale of 
advertising on Great Lakes' radio station, WNVE-FM. The JSA eliminated 
rivalry between direct competitors, to the detriment of radio 
advertisers, without realizing any procompetitive benefits.
    The proposed acquisition between ARS and Lincoln and the JSA 
between ARS and Great Lakes precipitated the Government's suit.
C. Anticompetitive Consequences of the Proposed Merger
    1. Sale of Radio Advertising Time in Rochester. The Complaint 
alleges that the provision of advertising time on radio stations 
serving the Rochester, New York Metro Survey Area (``MSA'') constitutes 
a line of commerce and section of the country, or relevant market, for 
antitrust purposes. The Rochester MSA is the geographical unit for 
which Arbitron furnishes radio stations, advertisers, and advertising 
agencies in Rochester with data to aid in evaluating radio audience 
size and composition. The Rochester MSA includes six counties: Monroe; 
Wayne; Ontario; Livingston; Genesee and Orleans. Local and national 
advertising that is placed on radio stations within the Rochester MSA 
is aimed at reaching listening audiences in the Rochester MSA, and 
radio stations outside of the Rochester MSA do not provide effective 
access to this audience. Thus, advertisers would not buy enough 
advertising time from radio stations located outside of the Rochester 
MSA to defeat a small but significant nontransitory increase in radio 
advertising prices within the Rochester MSA.
    Radio advertising time is sold by radio stations directly or 
through their national representatives. Radio stations generate almost 
all of their revenues from the sale of advertising time to local and 
national advertisers.
    Many local and national advertisers purchase radio advertising time 
in Rochester because such advertising is preferable to advertising in 
other media for their specific needs. For such advertisers, radio time: 
may be less expensive and more cost-efficient than other media at 
reaching the advertiser's target audience (individuals most likely to 
purchase the advertiser's products or services); may reach certain 
target audiences that cannot be reached as effectively through other 
media; or may offer promotional opportunities to advertisers that they 
cannot exploit as effectively using other media. For these reasons, 
many local and national advertisers in Rochester who purchase radio 
advertising time view radio either as a necessary advertising medium 
for them, or as a necessary advertising complement to other media.
    Although some local and national advertisers may switch some of 
their advertising to other media rather than absorb a price increase in 
radio advertising time in Rochester, the existence of such advertisers 
would not prevent radio stations from profitably raising their prices a 
small but

[[Page 57709]]

significant amount to those advertisers who have strong preferences for 
using radio over other media for some or all of their advertising 
campaigns. Radio stations, which negotiate prices individually with 
advertisers, can identify those advertisers with strong radio 
preferences. Consequently, radio stations can charge different 
advertisers different rates. Because of this ability to price 
discriminate between different customers, radio stations may charge 
higher prices to advertisers that view radio as particularly effective 
for their needs, while maintaining lower prices for other advertisers.
    2. Harm to Competition. The Complaint alleges that ARS' proposed 
acquisition of Lincoln would lessen competition substantially in the 
provision of radio advertising time in the Rochester MSA. The proposed 
acquisition would create further market concentration in an already 
highly concentrated market, and ARS would control a substantial share 
of the advertising revenues in the market. ARS presently controls 
approximately 34% of all radio advertising revenues in Rochester 
(including its JSA with Great Lakes), and its market share would rise 
to approximately 64% after the proposed merger. According to the 
Herfindahl-Hirschman Index (``HHI''), a widely-used measure of market 
concentration defined and explained in Exhibit A hereto, the pre-merger 
HHI in this market is 2704, which would rise to 4744 after the merger, 
with a change of 2040. This substantial increase in concentration will 
reduce competition and lead to higher prices and reduced services.
    Advertisers select radio stations to reach a large percentage of 
their target audience based upon a number of factors, including, inter 
alia, the size of the station's audience and the characteristics of its 
audience. Many advertisers seek to reach a large percentage of their 
target audience by selecting those stations whose audience best 
correlates to their target audience. If a number of stations 
efficiently reach that target audience, advertisers benefit from the 
competition among such stations to offer better prices or services. 
Today, several ARS and Lincoln stations compete head-to-head to reach 
the same audiences and, for many local and national advertisers buying 
time in Rochester, they are close substitutes for each other based on 
their specific audience characteristics.
    During price negotiations between advertisers and radio stations, 
advertisers will provide the stations with information about their 
advertising needs, including their target audience and the desired 
frequency and timing of ads. Radio stations thus have the ability to 
charge advertisers differing prices after assessing the number and 
attractiveness of alternative radio stations that can meet a particular 
advertiser's specific target audience needs.
    After the merger, advertisers attempting to reach certain audiences 
who now mostly listen to ARS and Lincoln stations would face less 
desirable choices if they buy time solely from firms other than the 
merged entities in order to reach these audiences. Because advertisers 
seeking to reach these audiences would have inferior alternatives to 
the merged entity as a result of the merger, the acquisition would give 
ARS the ability to raise its rates and reduce the quality of its 
service.
    The Department also considered how the proposed merger would 
concentrate Rochester's strongest radio signals into the hands of a 
single entity. After the merger, ARS would own four of the seven Class 
B FM license radio stations in the Rochester area, and would have 
controlled advertising on a fifth Class B FM license radio station 
through its JSA with Great Lakes. ARS would also own the area's only 
clear channel AM station. The merger would therefore have given ARS 
control over advertising on six of Rochester's eight most powerful 
radio signals.
    If ARS raised prices or lowered services to those advertisers who 
buy ARS and Lincoln stations because of their strength in delivering 
access to certain specific audiences, non-ARS radio stations in 
Rochester would not be induced to change their formats to attract a 
greater share of the same listeners and to serve better those 
advertisers seeking to reach such listeners. Successful radio stations 
are unlikely to undertake a format change solely in response to small 
but significant increases in price being charged to advertisers by a 
multi-station firm such as ARS, because they would likely have to give 
up their existing audiences. Less successful stations that change 
format may still not attract enough listeners to provide a suitable 
alternative to the merged entity.
    New entry into the Rochester radio advertising market is highly 
unlikely in response to a price increase by the merged parties. No 
unallocated radio broadcast frequencies exist in Rochester. Also, 
stations located in adjacent communities cannot boost their power so as 
to enter the Rochester market without interfering with other stations 
on the same or similar frequencies, a violation of Federal 
Communications Commission (``FCC'') regulations.
    For these reasons, the Department concludes that the merger as 
proposed would substantially lessen competition in the sale of radio 
advertising time in the Rochester MSA, eliminate actual competition 
between ARS and Lincoln, and result in increased rates for radio 
advertising time in the Rochester MSA, all in violation of Section 7 of 
the Clayton Act.
D. The JSA is an Illegal Restraint of Trade
    The complaint alleges that the JSA between ARS and Great Lakes 
violates Section 1 of the Sherman Act. Before entering into the JSA, 
Great Lakes station WNVE-FM competed with ARS Station WCMF-FM for 
advertisers. Advertisers regularly played one of these stations off 
against the other to obtain better rates and increased services. In the 
fall of 1995, ARS and Great Lakes entered into a JSA pursuant to which 
ARS exclusively prices and sells all radio advertising time on WNVE-FM. 
In return, ARS pays Great Lakes a monthly lump sun.
    The JSA gives ARS complete control over the sale of the inventory 
of its direct competitor. In so doing, the JSA eliminates one of the 
most important forms of competition between two firms in an open 
market: independent pricing. The agreement thus gives rise to the 
inference that it will have anticompetitive effects.
    This is the first JSA assessed by the Department. The FCC, though 
not purporting to address antitrust issues, have suggested that, at 
least in certain circumstances (without addressing the circumstances 
present here), some JSAs may be beneficial. Accordingly, the Department 
considered whether the JSA possessed any redeeming procompetitive 
virtues. However, the creators of this JSA have not offered any 
plausible procompetitive justifications for the JSA, and our 
examination revealed none.
    Based on our investigation, we found that this JSA did not improve 
either the operations of the radio stations or the quality of their 
products. The JSA did not integrate the management or operations of the 
two stations. Nor did the JSA create any procompetitive benefits for 
advertisers. Indeed, the Department uncovered evidence that the JSA was 
created for the simple purpose of ending price competition between the 
two stations. As one key participant explicitly acknowledged, the JSA 
was entered into because the two stations ``were fighting needlessly 
over the advertising dollar.''

[[Page 57710]]

    Given the JSA's inherently suspect nature and conspicuous lack of 
procompetitive virtues, the JSA is an unreasonable restraint that 
violates Section 1 of the Sherman Act. See Federal Trade Comm'n v. 
Indian Federation of Dentists, 476 U.S. 447, 459 (1986).\1\ Moreover, 
though not necessary to the conclusion that this JSA is anticompetitve, 
our investigation uncovered evidence that, following the creation of 
the JSA, advertising prices increased despite a decline in 
listenership.
---------------------------------------------------------------------------

    \1\ The Department recognizes that JSAs may differ both in their 
terms and in their potential for realizing procompetitive 
efficiencies.
---------------------------------------------------------------------------

III. Explanation of the Proposed Final Judgment

    The proposed Final Judgment would preserve competition in the sale 
of radio advertising time in the Rochester MSA. It requires the 
divestiture of WHAM-AM, WVOR-FM and WCMF-AM. It ends ARS' control of 
WNVE advertising time. This relief will reduce the market share ARS 
would have achieved through the merger from over 60 percent to about 40 
percent of the Rochester radio market. The divestitures will preserve 
choices for advertisers and help ensure that radio advertising rates in 
Rochester do not increase, and that services do not decline.
    Unless the United States grants an extension of time, ARS must 
divest WHAM-AM, WVOR-FM and WCMF-AM either within six months after the 
Final Judgment has been filed or within five (5) business days after 
notice of entry of the Final Judgment, whichever is later. Until the 
divestitures take place, all stations now owned by Lincoln will be 
maintained as independent competitors to the other stations in the 
Rochester MSA, including the ARS stations.
    If ARS fails to divest WHAM-AM, WVOR-FM and WCMF-AM within the time 
periods specified in the Final Judgment, the Court, upon application of 
the United States, shall appoint a trustee nominated by the United 
States to effect these divestitures. If a trustee is appointed, the 
proposed Final Judgment provides that ARS will pay all costs and 
expenses of the trustee and any professionals agent retained by the 
trustee. The compensation paid to the trustee and any persons retained 
by the trustee shall be both reasonable in light of the value of WHAM-
AM, WVOR-FM and WCMF-AM, and based on a fee arrangement providing the 
trustee with an incentive based on the price and terms of the 
divestiture and the speed with which it is accomplished. After 
appointment, the trustee will file monthly reports with ARS, the 
plaintiffs and the Court, setting forth the trustee's efforts to 
accomplish the divestiture ordered under the proposed Final Judgment. 
If the trustee has not accomplished the divestiture within six (6) 
months after its appointment, the trustee shall promptly file with the 
Court a report setting forth (1) the trustee's efforts to accomplish 
the required divestiture, (2) the reasons, in the trustee's judgment, 
why the required divestiture has not been accomplished, and (3) the 
trustee's recommendations. At the same time, the trustee will furnish 
such report to ARS and the plaintiffs, who will each have the right to 
be heard and to make additional recommendations.
    The proposed Final Judgment requires that ARS maintain all stations 
now owned by Lincoln separate and apart from ARS, pending divestiture. 
The Judgment also contains provisions to ensure that these Lincoln 
stations will be preserved, so that the stations after divestiture will 
remain viable, aggressive competitors.
    In addition, the proposed Final Judgment requires ARS and Great 
Lakes to terminate the WNVE Joint Sales Agreement within five (5) 
business days after notice of entry of the Final Judgment, and to cease 
and desist from entering into any future joint sales agreements between 
them in the Rochester area. This prohibition prevents the parties from 
re-entering what the Department has already determined would be an 
illegal contract, and is designed to prevent a recurrence of a 
violation of Section 1 of the Sherman Act, not merely as a way to guard 
against another possible violation of Section 7 of the Clayton Act.
    Moreover, ARS and Great Lakes must terminate the WNVE Option 
Agreement (which gives ARS the right to purchase WNVE) within five (5) 
business days after notice of entry of the Final Judgment, unless the 
option has been assigned to one of the entities that is buying either 
WHAM-FM, WVOR-FM or WCMF-AM. This prohibition prevents further 
increases in concentration by ARS without providing the government with 
adequate notice.
    The proposed Final Judgment also prohibits ARS from entering into 
certain agreements with other Rochester radio stations without 
providing at least thirty (30) days' notice to the Department of 
Justice. Specifically, ARS must notify the Department before acquiring 
any significant interest in another Rochester radio station, except for 
acquisition of one additional Class A-License FM radio station in the 
Rochester MSA other than WDKX-FM or WMAX-FM. Acquisitions beyond this 
would raise competitive concerns but might be too small to be otherwise 
reportable under the Hart-Scott-Rodino (``HSR'') premerger notification 
process.
    Moreover, ARS and Great Lakes may not agree to sell radio 
advertising time for any other Rochester radio station, or have any 
other Rochester radio station sell advertising time for them, without 
providing the United States with notice. This provision ensures that 
the Department will receive advance notice of any acquisition, or 
agreements, through which ARS or Great Lakes would increase the amount 
of advertising time on radio stations that they can sell. In 
particular, this provision requires ARS and Great Lakes to notify the 
Department before they enter into any joint sales agreements 
(``JSAs''), where one station takes over another station's advertising 
time, or enter into any local marketing agreements (``LMAs''), where 
one station takes over another station's broadcasting and advertising 
time, in the Rochester area. Agreements whereby ARS sells advertising 
for or manages other area radio station would effectively increase ARS' 
market share in the Rochester MSA. In analyzing the Rochester radio 
market, the Department treated ARS' present JSA station as if ARS owned 
it outright. Despite their clear competitive significance, JSAs 
probably would not be reportable to the Department under HSR. Thus, 
this provision in the decree ensures that the Department will receive 
notice of and be able to act, if appropriate, to stop any agreements 
that might have anticompetitive effects in the Rochester market.
    The relief in the proposed Final Judgment is intended to remedy the 
competitive effects of the proposed acquisition of Lincoln by ARS, and 
to eliminate a contract between ARS and Great Lakes that constitutes an 
illegal restraint of trade. Nothing in this Final Judgment is intended 
to limit the plaintiffs' ability to investigate or to bring actions, 
where appropriate, challenging other past or future activities of ARS 
or Great Lakes in the Rochester MSA, including their entry into other 
JSAs, LMAs, or other agreements related to the sale of advertising 
time.

IV. Remedies Available to Potential Private Litigants

    Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may

[[Page 57711]]

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 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. 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 plaintiffs 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 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 sixty (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 sixty (60) days of the date of publication of this Competitive 
Impact Statement in the Federal Register. The United States will 
evaluate and respond to the comments. All comments will be given due 
consideration by the Department of Justice, which remains free to 
withdraw its consent to the proposed Final Judgment at any time prior 
to entry. 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: Craig W. Conrath, Chief, 
Merger Task Force, Antitrust Division, United States Department of 
Justice, 1401 H Street, N.W.; Suite 4000, Washington, D.C. 20530.
    The proposed Final Judgment provides that the Court retains 
jurisdiction over this action, and that the parties may apply to the 
Court for any order necessary or appropriate for the modification, 
interpretation, or enforcement of the Final Judgment.

VI. Alternatives to the Proposed Final Judgment

    The plaintiffs considered, as an alternative to the proposed Final 
Judgment, a full trial on the merits of their Complaint against 
defendants. The plaintiffs are satisfied, however, that the divestiture 
of the Lincoln Assets, the termination of the JSA between ARS and Great 
Lakes, and other relief contained in the proposed Final Judgment will 
preserve viable competition in the sale of radio advertising time in 
the Rochester MSA. Thus, the proposed Final Judgment would achieve the 
relief the Government 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 Proposed Final Judgment

    The APPA requires that proposed consent judgment in antitrust cases 
brought by the United States be subject to a sixty (60) day comment 
period, after which the court shall determine whether entry of the 
proposed Final Judgment ``is in the public interest.'' In making that 
determination, the court may consider--

    (1) The competitive impact of such judgment, including 
termination of alleged violations, provisions for enforcement and 
modification, duration or relief sought, anticipated effects of 
alternative remedies actually considered, and any other 
considerations bearing upon the adequacy of such judgment;
    (2) the impact of entry of such judgment 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. 16(e). As the United States Court of Appeals for the D.C. 
Circuit recently held, this statute permits a court to consider, among 
other things, the relationship between the remedy secured and the 
specific allegations set forth in the government's complaint, whether 
the decree is sufficiently clear, whether enforcement mechanisms are 
sufficient, and whether the decree may positively harm third parties. 
See United States v. Microsoft, 56 F.3d 1448, 1461-62 (D.C. Cir. 1995).
    In conducting this inquiry, ``[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.'' \2\ Rather,

    \2\ 119 Cong. Rec. 24598 (1973). See United States v. Gillette 
Co., 406 F. Supp. 713, 715 (D. Mass. 1975). A ``public interest'' 
determination can be made properly on the basis of the Competitive 
Impact Statement and Response to Comments filed pursuant to the 
APPA. Although the APPA authorizes the use of additional procedures, 
15 U.S.C. 16(f), those procedures are discretionary. A court need 
not invoke any of them unless it believes that the comments have 
raised significant issues and that further proceedings would aid the 
court in resolving those issues. See H.R. Rep. 93-1463, 93rd Cong. 
2d Sess. 8-9 (1974), reprinted in U.S.C.C.A.N. 6535, 6538.
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[a]bsent a showing of corrupt failure of the government to discharge 
its duty, the Court, in making its public interest discharge its 
duty, the Court, in making its public interest finding, should * * * 
carefully consider the explanations of the government in the 
competitive impact statement and its responses to comments in order 
to determine whether those explanations are reasonable under the 
circumstances.

United States v. Mid-America Dairymen, Inc., 1977-1 Trade Cas. para. 
61,508, at 71,980 (W.D. Mo. 1977).
    Accordingly, with respect to the adequacy of the relief secured by 
the decree, 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), citing United States v. Bechtel 
Corp., 648 F.2d 660, 666 (9th Cir.), cert. denied, 454 U.S. 1083 
(1981); see also Microsoft, 56 F.3d at 1460-62. Precedent requires that

the 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.\3\
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    \3\ Bechtel, 648 F.2d 666 (citations omitted) (emphasis added); 
see BNS, 858 F.2d at 463; United States v. National Broadcasting 
Co., 449 F. Supp. 1127, 1143 (C.D. Cal. 1978); Gillette, 406 F. 
Supp. at 716. See also Microsoft, 56 F.3d at 1461 (whether ``the 
remedies [obtained in the decree are] so inconsonant with the 
allegations charged as to fall outside of the `reaches of the public 
interest' '') (citations omitted).

The proposed Final Judgment, therefore, should not be reviewed under a 
standard of whether its it certain to eliminate every anticompetitive 
effect of a particular practice or whether it mandates certainty of 
free competition in the future. Court approval of a final judgment 
requires a standard more flexible and less strict than the standard 
required for a finding of liability. ``[A] proposed decree must be 
approved even if it fall short of the remedy the court would impose on 
its own, as long as it falls within the range of acceptability or is 
`within the reaches of public inter-
est.' '' \4\
---------------------------------------------------------------------------

    \4\ United States v. American Tel. and Tel Co., 552 F. Supp. 
131, 151 (D.D.C. 1982), aff'd. sub nom. Maryland v. United States, 
460 U.S. 1001 (1983), quoting Gillette Co. 406 F. Supp. at 716 
(citations omitted); United States v. Alcan Aluminum, Ltd., 605 F. 
Supp. 619, 622 (W.D. Ky. 1985).

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[[Page 57712]]

    This is strong and effective relief that should fully address the 
competitive harm posed by the proposed merger and the JSA.

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.

        Respectfully submitted,
Dando B. Cellini,
Merger Task Force, U.S. Department of Justice, Antitrust Division, 1401 
H Street, N.W.; Suite 4000, Washington, D.C. 20530, (202) 307-0001.

    Dated: October 24, 1996.

Exhibit A--Definition of HHI and Calculations for Market

    ``HHI'' means the Herfindahl-Hirschman Index, a commonly accepted 
measure of market concentration. It 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 thirty, thirty, twenty, and twenty percent, the HHI is 
2600 (302 + 302 + 202 + 202 = 2600). The HHI takes 
into account the relative size and distribution of the firms in a 
market and approaches zero when a market consists of a large number of 
firms of relatively equal size. The HHI increases both as the number of 
firms in the market decreases and as the disparity in size between 
those firms increases.
    Markets in which the HHI is between 1000 and 1800 points are 
considered to be moderately concentrated, and those in which the HHI is 
in excess of 1800 points are considered to be concentrated. 
Transactions that increase the HHI by more than 100 points in 
concentrated markets presumptively raise antitrust concerns under the 
Merger Guidelines. See Merger Guidelines Sec. 1.51.

[FR Doc. 96-28617 Filed 11-6-96; 8:45 am]
BILLING CODE 4410-01-M