[Federal Register Volume 61, Number 246 (Friday, December 20, 1996)]
[Notices]
[Pages 67345-67347]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-32339]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Jacor Communications, Inc. et al.; Comments 
Relating to Proposed Modified Final Judgment and Response of United 
States to Comments

    Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 
Sec. 16(c)-(h), the United States published below the comments received 
on the proposed Modified Final Judgment in United States of America v. 
Jacor Communication, Inc. et al., Civil Action C-1-96-757, filed in the 
United States District Court for the Southern District of Ohio, 
together with the Response of the United States to the comments.
    Copies of the comments and Response are available for inspection 
and copying in Room 215 of the U.S. Department of Justice, Antitrust 
Division, 325 7th Street, N.W., Washington, D.C. 20530 (telephone: 
(202) 514-2481), and at the Office of the Clerk of the United States 
District Court for the Southern District of Ohio. Copies of these 
materials may be obtained upon request and payment of a copying fee.
Constance K. Robinson,
Director of Operations.

Comments Relating to Proposed Modified Final Judgment and Response 
of United States to Comments

    Pursuant to Section 2(b) of the Antitrust Procedures and Penalties 
Act, 15 U.S.C. Sec. (b)-(h) (``APPA''), the United States of America 
hereby files the public comments it has received relating to the 
proposed Modified Final Judgment in this civil antitrust proceeding, 
and herein responds to the public comments.

I. Background

    This action was commenced on August 5, 1996, when the United States 
filed a civil antitrust Complaint under Section 15 of the Clayton Act, 
as amended, 15 U.S.C. Sec. 25, alleging that the proposed acquisition 
of Citicasters, Inc. (``Citicasters'') by Jacor Communication, Inc. 
(``Jacor'') would violate Section 7 of the Clayton Act, 15 U.S.C. 
Sec. 18. The complaint alleges that the combination of these companies 
would substantially lessen competition in the sale of radio advertising 
time in Cincinnati, Ohio and the surrounding areas. Also on August 5, 
the United States filed a proposed Final Judgment that would allow the 
acquisition to proceed provided that Jacor divest the assets of 
Cincinnati radio station WKRQ-FM. At the same time, the government 
filed a Competitive Impact Statement explaining the basis for the 
Complaint and the provisions of the proposed Final Judgment.
    On September 16, 1996, the United States filed a Modified Final 
Judgment with the Court superseding the original Final Judgment. The 
Modified Final Judgment clarified the obligation of Jacor under Section 
IX of the Judgment to file notice with the Department of Justice for 
certain types of transactions. At the same time, the United States 
filed a stipulation in which the parties consented to the entry of the 
Modified Final Judgment after completion of the

[[Page 67346]]

procedures required by the APPA. The United States published notice of 
the Modified Final Judgment in the Federal Register on September 27, 
1996 and in appropriate newspapers beginning on September 22, 1996.

II. Compliance with the APPA

    The APPA requires a 60-day period for the submission of public 
comments on the proposed Modified Final Judgment, 15 U.S.C. Sec. 16(b). 
In this case, the 60-day comment period began on September 27, 1996 and 
terminated on November 26, 1996. During this period, the United States 
received comments from two interested parties. Sabre Communications, 
Inc. and John J. Oezer, a Cincinnati resident.\1\ The United States 
responds herein to these comments. Upon publication in the Federal 
Register of these comments and of this Response of the United States to 
these comments pursuant to 15 U.S.C. Sec. 16(d) of the APPA, the 
procedures required by the APPA prior to entry of the proposed Modified 
Final Judgment will be completed. The United States will then certify 
that the requirements of the Tunney Act have been satisfied and move 
for entry of the proposed Modified Final Judgment.\2\
---------------------------------------------------------------------------

    \1\ These comments are attached as Exhibits A & B.
    \2\ Until these events have taken place, and the United States 
has certified that the requirements of the Tunney Act have been met, 
the Court should not rule on entry of the proposed Modified Final 
Judgment.
---------------------------------------------------------------------------

III. Response to Public Comments

    The United States has reviewed the comments received and believes 
that neither one addresses the issue of whether entry of the proposed 
Modified Final Judgment is in the public interest. We, however, 
summarize the comments below and briefly respond to the issues raised.
    Sabre Communications, Inc. in its comments contends that no radio 
station owner could exercise market power because radio competes with 
other forms of advertising, and because only 7% of overall advertising 
dollars are spent on radio. As the United States discusses at length in 
Section II of the Competitive Impact Statement, radio is a separate 
market for antitrust purposes because it possesses unique qualities 
compared to other advertising media. Many Cincinnati advertisers would 
consequently continue to purchase radio advertising even in the fact of 
a 5 to 10% price increase, evidence that a radio station owner could 
successfully raise advertising rates if it possessed market power. 
Sabre also suggested that the position taken by the United States in 
this case contradicted Congress' intent in enacting the 
Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56, 111 
(1996), which eased previous FCC limits on common ownership of radio 
stations. Sabre, however, ignores Section 601(b)(1) of the Act which 
explicitly provides that ``nothing in the Act * * * shall be construed 
to modify, impair, or supersede the applicability of any of the 
antitrust laws.'' 110 Stat. at 141 (1996). Thus, Congress intended 
radio station mergers to still be subject to challenge under the 
antitrust law.
    In his comment, John J. Oezer of Cincinnati urges the United States 
not to permit the Jacor/Citicasters merger because it would result in 
monopolistic control over the content of programming and advertising in 
the Cincinnati area. The United States has, however, evaluated the 
impacts of the Jacor/Citicasters merger and has challenged it under the 
antitrust laws. The issue before the Court is whether the Modified 
Final Judgment that requires the divesture of WKRQ-FM is adequate to 
remedy the violations contained in the complaint. Mr. Oezer's comments 
do not address the adequacy of the proposed relief, but raise issues 
about other types of media, such as TV and newspapers, that are not 
presently before the Court.

IV. Standard of Review

    Pursuant to 15 U.S.C. 16(e), the proposed Modified Final Judgment 
cannot be entered unless the Court determines that it is in the public 
interest. The focus of this determination is whether the relief 
provided by the proposed Modified Final Judgment is adequate to remedy 
the antitrust violations alleged in the Complaint. United States v. 
Bechtel Corp., 648 F.2d 660, 665-66 (9th Cir.), cert denied, 454 U.S. 
1083 (1981), quoted with approval in United States v. Microsoft Corp., 
56 F.3d 1448, 1457-58, see also 56 F.3d at 1459-60 (D.C. Cir. 1995). In 
the recent Microsoft decision by the United States Court of Appeals for 
the District of Columbia Circuit, which reversed the district court's 
refusal to enter an antitrust consent decree proposed by the United 
States, the court of appeals held that the provision in Section 
16(e)(1) of the Tunney Act allowing the district court to consider 
``any other considerations bearing upon the adequacy of such 
judgment,'' does not authorize extensive inquiry into the conduct of 
the case. 56 F.3d at 1458-60. The court of appeals concluded that 
``Congress did not mean for a district judge to construct his own 
hypothetical case and then evaluate the decree against that case.'' Id. 
To the contrary, ``[t]he court's authority to review the decree depends 
entirely on the government's exercising its prosecutorial discretion by 
bringing a case in the first place,'' and so the district court ``is 
only authorized to review the decree itself,'' not other matters that 
the government might have but did not pursue. Id.
    Under the public interest standard, the Court's role is limited to 
determining whether the proposed decree is within the ``zone of 
settlements'' consistent with the public interest, not whether the 
settlement diverges from the Court's view of what would best serve the 
public interest. United States v. Western Electric Co., 993 F. 2d 1572, 
1576 (quoting United States v. Western Electric Co., 900 F.2d 283, 307 
(D.C. Cir. 1990)); United States v. Microsoft Corp., 56 F.3d at 1460. 
Moreover, the Court should give a request for entry of a proposed 
decree even more deference than a request by a party to an existing 
decree for approval of a modification, for in dealing with an initial 
settlement the Court is unlikely to have substantial familiarity with 
the market involved. United States v. Microsoft Corp., 56 F.3d at 1460-
61.

    Absent a showing of corrupt failure of the government to 
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). The Court may reject the agreement 
of the parties as to how the public interest is best served only if it 
has ``exceptional confidence that adverse antitrust consequences will 
result * * *'' United States v. Western Electric Co., 993 F.2d at 1577 
(D.C. Cir.), cert. denied, 114 S. Ct. 487 (1993), quoted with approval 
in United States v. Microsoft Corp., 56 F.3d at 1460.

V. Conclusion

    After careful consideration of the comments, the United States 
continues to believe that, for the reasons stated herein and in the 
Competitive Impact Statement, the proposed Modified Final Judgment is 
adequate to remedy the antitrust violations alleged in the Complaint. 
There has been no showing that the proposed settlement constitutes an 
abuse of the United States' discretion or that it is not within the 
zone of settlements consistent with the public interest. Therefore, the 
Court should

[[Page 67347]]

find entry of the proposed Modified Final Judgment to be in the public 
interest, after the United States has completed the procedures mandated 
by the Tunney Act and moved for entry of judgment.

    Dated: December 5, 1996.

      Respectfully submitted,
Andrew S. Cowan,
Attorney, Telecommunications Task Force, U.S. Department of Justice, 
Antitrust Division, 555 4th Street, N.W., Room 8104, Washington, D.C. 
20001, (202) 514-5621.
Edmund A. Sargus, Jr.,
United States Attorney.
Jan M. Holtzman,
Ohio Bar #0017949, Assistant United States Attorney, Rm. 220, Potter 
Stewart Federal Courthouse, 5th & Walnut Streets, Cincinnati, Ohio 
45202, (513) 684-3711.

Certificate of Service

    I hereby certify that on this date I have caused to be served by 
first class mail, postage prepaid, or by hand, if so indicated, a copy 
of the foregoing Response to Public Comment upon the following person, 
counsel for defendants in the matter of United States of America v. 
Jacor Communications, Inc., and Citicasters, Inc.

Phillip A. Proger, Esquire, Jones, Day, Reavis & Pogue, 1450 G Street, 
NW, Washington, D.C. 20005-2088, Counsel for Defendant, Jacor 
Communications, Inc.--BY HAND

    Dated: December 5, 1996.
      Respectfully submitted,
Andrew S. Cowan,
Attorney, Telecommunications Task Force, U.S. Department of Justice, 
Antitrust Division, 555 4th Street, N.W., Room 8104, Washington, D.C. 
20001, (202) 514-5621.

Sabre Communications Inc.

August 15, 1996.
Mr. Donald J. Russell,
Chief, Telecommunications Task Force, Antitrust Division, U.S 
Department of Justice, Room 8104, 555 Fourth Street, NW, Washington, 
DC 20001.

    Dear Mr. Russell: After reading various accounts of the Justice 
Department's investigation re: the Jacor Broadcasting/Citicasters 
acquisition as it applies to the Cincinnati market, I have concluded 
that the Department has made a dreadful decision probably because it 
failed to grasp the essence of the advertising business and arrived 
at faulty conclusions after comparing apples to oranges.
    Obviously the Department is concerned about a monopoly, but in 
this case, monopoly is impossible. Please note that, while it is 
true that the purchase of radio advertising is often decided by 
determining specific demographic groups reached by individual 
stations, it is also fact that radio captures only 7% of all 
advertising dollars (in a typical US market, the local newspaper 
annually generates more revenue from classified ads than that 
revenue generated by all of the radio stations combined). This means 
that 93% of all advertising dollars are spent elsewhere. Advertisers 
have a multitude of choices other than a couple of radio stations, 
among them, newspaper, newspaper inserts, magazines, penny savers, 
specialty publications, TV [also very demographically specific], 
cable [much different from broadcast TV], billboards, direct mail 
[again, very demographically specific], matchbook covers and other 
specialty items, other radio stations, etc. And advertisers use 
those media (not radio), and spend 93% of their dollars doing it. By 
the way, don't tell any of the ``other'' media that they ``. . . 
lack . . . ability to provide efficient targeting.'' Each believes 
that they provide efficiency better than radio or any of the others, 
and they passionately present that case to advertisers every day. 
All in the spirit of true competition!
    Radio a monopoly? Under no circumstances! Even though there are 
over 10,000 commercial radio stations in the United States, the pure 
fact is that if one person owned every one of them, that person 
still could never achieve a monopoly over either the spending of 
advertising dollars or the opportunity for the advertiser to reach 
consumers in any of the various demographic groups. That is unless 
7% of something has suddenly become a monopoly. Anyway, the topic is 
moot because owning all radio stations in any given market is not 
only impractical, it is against the law.
    I would suggest that if the Department is truly interested in 
investigating advertising monopolies it should investigate the 
newspaper business. Almost every market in our country has only one 
newspaper thereby giving every potential newspaper advertiser no 
choice. Where I went to school, we were taught that one was the 
ultimate monopoly and monopoly meant no choice.
    My recommendation is that the Justice Department spend some time 
learning about the advertising business and the fierce competition 
that exists between the media. The result of that effort will be a 
clear understanding that, given radio's tiny piece of the 
advertising pie and the multitude of choices offered to the 
advertiser, monopoly is impossible and that, in this instance, the 
Congress of the United States and the Federal Communications 
Commission have got it right.
  Respectfully,
Paul H. Rothfuss,
President, Sabre Communications, Inc.

Mr. Donald J. Russell,
Chief, Telecommunications Task Force, Antitrust Div., Department of 
Justice, Room 8104, 555 Fourth St N.W., Washington, D.C. 20001.

    Dear Sir:

Re. civil suit no. C-1-97-757.

    We think that you should be made aware that the citizens in 
Cincinnati, Hamilton County, and the Tristate area in southwest Ohio 
are finding it more and more difficult to get unbiased news and 
programming on radio, TV, and newspapers. Of the two daily 
Cincinnati newspapers, one is owned by the other. Jacor 
Communications already owns and puts Mr. Michael's ``flavor'' on 
several local radio stations. Three major TV stations are affiliated 
with networks which are owned by other corporate giants. WLW-TV, ch. 
5 is the local NBC affiliate. NBC is owned by G.E. Co. and we seldom 
hear anything negative about G.E products, especially Jet Aircraft 
engines, even if there is news.
    Advertising in the electronic media is becoming unbearable. In 
the past, programs were separated by a respectable number of 
informative commercials. Today, loud, hectic, demanding commercials 
are separated by brief segments of programs lasting only 3 to 5 
minutes.
    Indepth news lasting more than 90 seconds is available only on 
PBS, and our very own government is trying to abolish PBS!! Please 
don't compound the abusive assault on our radio listening senses by 
allowing Jacor to swallow up Citicasters Inc., thus giving Jacor a 
near monolistic control over program content and advertising in our 
Tristate area, with a population of about 2 million people.
    To illustrate how controlled the local news already is, about 6 
months ago we were active in a local tax issue and our group, which 
had the backing of a large number of petitioners could not get equal 
news coverage on any of the news media unless we paid for it. The 
opposing side, favored by the news media, got free ``news bits'' 
every day, giving the voters one side of the issues of a very 
controversial tax.
    Please deny this monopolistic acquisition an keep healthy 
competition alive.

      Respectfully yours,
John J. Oezer,
PE, 5050 Miami Road, Indian Hill, Cincinnati, Ohio 45243.
[FR Doc. 96-32339 Filed 12-19-96; 8:45 am]
BILLING CODE 4410-01-M