[Federal Register Volume 63, Number 71 (Tuesday, April 14, 1998)]
[Notices]
[Pages 18214-18225]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-9800]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States of America v. Hicks, Muse, Tate & Furst 
Incorporated and Capstar Broadcasting Partners, Inc. and SFX 
Broadcasting, Inc.; Proposed Final Judgment and Competitive Impact 
Statement

    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 Order, and Competitive Impact Statement have been filed 
with the United States District Court for the Eastern District of New 
York in United States v. Hicks, Muse, Tate & Furst Incorporated and 
Capstar Broadcasting Partners, Inc. and SFX Broadcasting, Inc. Civil 
Action No. 98-2422. 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).
    Plaintiff filed a civil antitrust Complaint on March 31, 1998, 
alleging that the proposed acquisition of SFX Broadcasting, Inc. 
(``SFX'') by Capstar Broadcasting Partners, Inc. (``Capstar'') would 
violate Section 7 of the Clayton Act, 15 U.S.C. 18. The Complaint 
alleges that Capstar or its related entity Chancellor Media 
Corporation, (``Chancellor''), and SFX own and operate numerous radio 
stations throughout the United States, and the proposed transaction 
would give defendants or Chancellor a significant share of the radio 
advertising market in Greenville, SC, Houston, TX, Jackson, MS, 
Pittsburgh, PA and Suffolk County, NY. As a result, the combination of 
these radio stations would lessen competition substantially in the sale 
of radio advertising time in the Greenville, Houston, Jackson, 
Pittsburgh and Suffolk areas.
    The prayer for relief seeks: (a) An adjudication that Capstar's 
proposed acquisition described in the complaint would violate Section 7 
of the Clayton Act; (b) preliminary and permanent injunctive relief 
preventing the consummation of the proposed transaction; (c) an award 
to the United States of the costs of this action; and (d) such other 
relief as is proper.
    Shortly before this suit was filed, a proposed settlement was 
reached that permits Capstar to complete its transactions with SFX, yet 
preserves competition in the markets in which the transactions would 
raise significant competitive concerns. A Stipulation and Order and a 
proposed Final Judgment embodying the settlement were filed at the same 
time the Complaint was filed.
    Unless the plaintiff grants a time extension, the proposed Final 
Judgment orders Capstar to divest either within six months after the 
filing of the complaint or within five (5) business days after notice 
of entry of the Final Judgment, whichever is later, radio stations 
WESC-FM, WESC-AM, WJMZ-FM, WTPT-FM in Greenville, SC, KKPN-FM in 
Houston, TX, WJDX-FM in Jackson, MS and WTAE-AM in Pittsburgh, PA. The 
proposed Final Judgment also orders Capstar to divest either within 
three months after the filing of the Complaint or within five (5) 
business days after notice of entry of the Final Judgment, whichever is 
later, radio stations WBLI-FM, WBAB-FM, WGBB-AM and WHFM-FM in Suffolk, 
NY. If Capstar does not divest the stations described above within the 
divestiture period, the Court shall, upon plaintiff's application, 
appoint a trustee to sell the assets. The proposed Final Judgment also 
requires Capstar to ensure that, until the divestiture mandated by the 
Final Judgment has been accomplished, WESC-FM, WESC-AM, WJMZ-FM, WTPT-
FM, KKPN-FM, WJDX-FM, WTAE-AM, WBLI-FM, WBAB-FM, WGBB-AM and WHFM-FM 
will be operated independently as a viable, ongoing business, and kept 
separate and apart from defendants' other radio stations located in 
those areas. Further, the proposed Final Judgment requires defendants 
to give plaintiff prior notice regarding future radio station 
acquisitions or certain agreements pertaining to the sale of radio 
advertising time in the Greenville-Spartanburg, SC, Houston, TX, 
Jackson, MS, Pittsburgh, PA and Suffolk County, NY areas.
    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,

[[Page 18215]]

N.W., Suite 4000, Washington, D.C. 20530 (telephone: (202) 307-0001). 
Copies of the Complaint, Stipulation and Order, proposed Final Judgment 
and Competitive Impact Statement are available for inspection 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 
Eastern District of New York, United States Courthouse, 2 Uniondale 
Avenue, Uniondale, New York 11553.
    Copies of any of these materials may be obtained upon request and 
payment of a copying fee.
Constance K. Robinson,
Director of Operations & Merger Enforcement, Antitrust Division.

United States District Court for the Eastern District of New York

    United States of America, Plaintiff, v. Hicks, Muse, Tate & 
Furst Incorporated, and Capstar Broadcasting Partners, Inc., and SFX 
Broadcasting, Inc., Defendants. Hon. J. Seybert/M. Orenstein. Civil 
Action No. CV 98 2422.

Stipulation and Order

    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 Eastern District of 
New York.
    (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. Sec. 16), and without further notice to any party or other 
proceedings, provided that plaintiff has not withdrawn its consent, 
which it may do at any time before the entry of the proposed Final 
Judgment by serving notice thereof on defendants and by filing that 
notice with the Court.
    (3) Defendants shall abide by and comply with the provisions of the 
proposed Final Judgment pending entry of the Final Judgment by the 
Court, or until expiration of time for all appeals of any Court ruling 
declining entry of the proposed Final Judgment, and shall, from the 
date of the signing of this Stipulation by the parties, 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.
    (4) Defendant Capstar agrees that the transactions contemplated by 
Letter Agreement dated February 20, 1998, between Chancellor and 
Capstar, when consummated, will require Capstar to obtain from 
Chancellor a commitment to be bound to the provisions of the Final 
Judgment pursuant to Section III(B).
    (5) 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 the defendants and any 
prospective Acquirer, as defined in the Final Judgment. In this 
circumstance, plaintiff 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) Defendants have entered into 
one or more definitive agreements to divest the Greenville Assets, the 
Houston Assets, the Jackson Assets, the Pittsburgh Assets, and the SFX 
Long Island Assets, as defined in the Final Judgment, and such 
agreements and the Acquirer or Acquirers have been approved by 
plaintiff; (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) Defendants have demonstrated that neither they nor the prospective 
Acquirer or Acquirers are responsible for any such delay.
    (6) This Stipulation shall apply with equal force and effect to any 
amended proposed Final Judgment agreed upon in writing by the parties 
and submitted to the Court.
    (7) In the event plaintiff withdraws its consent, as provided in 
paragraph 2 above, or in the event the proposed Final Judgment is not 
entered pursuant to this Stipulation, the time has expired for all 
appeals of any Court ruling declining entry of the proposed Final 
Judgment, and the Court has not otherwise ordered continued compliance 
with the terms and provisions of the proposed Final Judgment, then the 
parties are released from all further obligations under this 
Stipulation, and the making of this Stipulation shall be without 
prejudice to any party in this or any other proceeding.
    (8) Defendants represent that the divestitures ordered in the 
proposed Final Judgment can and will be made, and that defendants will 
later raise no claim of hardship or difficulty as grounds for asking 
the Court to modify any of the divestiture provisions contained 
therein.

    Dated: March 31, 1998.

For Plaintiff United States of America

Asuncion Cummings (AC-1850),
U.S. Department of Justice, Antitrust Division, Merger Task Force, 1401 
H Street, N.W., Suite 4000, Washington, D.C. 20005.

For Defendants Capstar Broadcasting Partners, Inc., and Hicks, Muse, 
Tate & Furst, Incorporated

Neil Imus (NI-3536),
Vinson & Elkins, L.L.P., 1455 Pennsylvania Avenue, N.W., Washington, 
D.C. 20004.

For Defendant SFX Broadcasting, Inc.

David A. Clanton (DC-2683),
Baker & McKenzie, 815 Connecticut Avenue, N.W., Washington, D.C. 20006-
4078.

    SO ORDERED

    Dated, ____________________, New York, 1998.

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United States District Judge

Certificate of Service

    I hereby certify that, on this 31st day of March, 1998, I caused to 
be served by hand delivery a copy of the foregoing proposed Final 
Judgment and Stipulation and Order upon the following:

David A. Clanton, Baker & McKenzie, 815 Connecticut Avenue, N.W., 
Washington, D.C. 20006-4078
Neil Imus, Vinson & Elkins, 1455 Pennsylvania Avenue, N.W., Washington, 
D.C. 20004
Asuncion Cummings

United States District Court for the Eastern District of New York

    United States of America, Plaintiff v. Hicks, Muse, Tate & Furst 
Incorporated, and Capstar Broadcasting Partners, Inc., and SFX 
Broadcasting, Inc., Defendants. Hon. J. Seybert/M. Orenstein. Civil 
Action No. CV 98 2422.

Final Judgment

    Whereas, plaintiff, the United States of America, filed its 
Complaint in this action on March 31, 1998, and plaintiff 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 the 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;

[[Page 18216]]

    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, plaintiff requires defendants to make certain 
divestitures for the purpose of remedying the loss of competition 
alleged in the Complaint;
    And whereas, defendants have represented to plaintiff that the 
divestitures 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 provisions contained 
below;
    Now, therefore, before the taking of any testimony, and without 
trial or adjudication of any issue of fact or law herein, and upon 
consent of the parties hereto, it is hereby ordered, adjudged, and 
decreed as follows:

I. Jurisdiction

    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 Hicks, Muse, Tate & 
Furst Incorporated (Hicks Muse), Capstar Broadcasting Partners, Inc. 
(Capstar), and SFX Broadcasting, Inc. (SFX), as hereinafter defined, 
under Section 7 of the Clayton Act, as amended (15 U.S.C. Sec. 18).

II. Definitions

    As used in this Final Judgment:
    A. ``Capstar'' means defendant Capstar Broadcasting Partners, Inc., 
a Delaware corporation with its headquarters in Austin, Texas, and 
includes its predecessors, successors and assigns, divisions, 
subsidiaries, companies, groups, partnerships and joint ventures that 
Capstar controls, directly or indirectly, and their directors, 
officers, managers, agents and representatives, and their respective 
successors and assigns.
    B. ``Chancellor'' means Chancellor Media Corporation (successor in 
interest to Chancellor Media Company, Inc.), a Delaware corporation 
with its headquarters in Irving, Texas, and includes its predecessors, 
successors and assigns, divisions, subsidiaries, companies, groups, 
partnerships and joint ventures that Chancellor controls, directly or 
indirectly, and their directors, officers, managers, agents and 
representatives, and their respective successors and assigns.
    C. ``SFX'' means defendant SFX Broadcasting, Inc., a Delaware 
corporation with its headquarters in New York, New York, and includes 
its predecessors, successors and assigns, divisions, subsidiaries, 
companies, groups, partnerships and joint ventures that SFX controls, 
directly or indirectly, and their directors, officers, managers, agents 
and representatives, and their respective successors and assigns.
    D. ``Hicks Muse'' means Hicks, Muse, Tate & Furst Incorporated, an 
investment firm headquartered in Dallas, Texas, its domestic and 
foreign parents, predecessors, divisions, subsidiaries, partnerships 
and joint ventures that Hicks Muse controls, directly or indirectly, 
and all directors, officers, employees, agents and representatives of 
the foregoing.
    E. ``Greenville Assets'' means all of the assets, tangible or 
intangible, used respectively in the operation of the WESC 92.5 FM 
radio station in Greenville, South Carolina; the WESC 660 AM radio 
station in Greenville, South Carolina; the WJMZ 107.3 FM radio station 
in Anderson, South Carolina; and the WTPT 93.3 FM radio station in 
Forest City, North Carolina; including but not limited to: all real 
property (owned or leased) used in the operation of each station; all 
broadcast equipment, personal property, inventory, office furniture, 
fixed assets and fixtures, materials, supplies and other tangible 
property or improvements used in the operation of each station; all 
licenses, permits and authorizations and applications therefor issued 
by the Federal Communications Commission (``FCC'') and other 
governmental agencies relating to that station; all contracts, 
agreements, leases and commitments of defendants pertaining to that 
station and its operations; all trademarks, service marks, trade names, 
copyrights, patents, slogans, programming materials and promotional 
materials relating to that station; and all logs and other records 
maintained by defendants or that station in connection with its 
business.
    F. ``Houston Assets'' means all of the assets, tangible or 
intangible, used in the operation of the KKPN 102.9 FM radio station in 
Houston, Texas, including but not limited to: all real property (owned 
or leased) used in the operation of that station; all broadcast 
equipment, personal property, inventory, office furniture, fixed assets 
and fixtures, materials, supplies and other tangible property or 
improvements used in the operation of that station; all licenses, 
permits and authorizations and applications therefor issued by the FCC 
and other governmental agencies relating to that station; all 
contracts, agreements, leases and commitments of defendants pertaining 
to that station and its operations; all trademarks, service marks, 
trade names, copyrights, patents, slogans, programming materials and 
promotional materials relating to that station; and all logs and other 
records maintained by defendants or that station in connection with its 
business.
    G. ``Jackson Assets'' means all of the assets, tangible or 
intangible, used in the operation of the WJDX 96.3 FM radio station in 
Jackson, Mississippi, including but not limited to: All real property 
(owned or leased) used in the operation of that station; all broadcast 
equipment, personal property, inventory, office furniture, fixed assets 
and fixtures, materials, supplies and other tangible property or 
improvements used in the operation of that station; all licenses, 
permits and authorizations and applications therefor issued by the FCC 
and other governmental agencies relating to that station; all 
contracts, agreements, leases and commitments of defendants pertaining 
to that station and its operations; all trademarks, service marks, 
trade names, copyrights, patents, slogans, programming materials and 
promotional materials relating to that station; and all logs and other 
records maintained by defendants or that station in connection with its 
business.
    H. ``Pittsburgh Assets'' means all of the assets, tangible or 
intangible, used in the operation of the WTAE 1250 AM radio station in 
Pittsburgh, Pennsylvania, including but not limited to: All real 
property (owned or leased) used in the operation of that station; all 
broadcast equipment, personal property, inventory, office furniture, 
fixed assets and fixtures, materials, supplies and other tangible 
property or improvements used in the operation of that station; all 
licenses, permits and authorizations and applications therefor issued 
by the FCC and other governmental agencies relating to that station; 
all contracts, agreements, leases and commitments of defendants 
pertaining to that station and its operations; all trademarks, service 
marks, trade names, copyrights, patents, slogans, programming materials 
and promotional materials relating to that station; and all logs and 
other records maintained by defendants or that station in connection 
with its business.
    I. ``The SFX Long Island Assets'' means all of the assets, tangible 
or intangible, used in the operation of the SBLI 106.1 FM radio station 
in Patchogue, Long Island, New York; the WBAB 102.3 FM radio station in 
Babylon, Long Island, New York; the WHFM 95.3 FM radio station in 
Southampton, Long Island, New York; and the WGBB 1240 AM radio station 
in Freeport, New York; including but not limited to: all real property 
(owned or leased) used in the operation of each station; all broadcast 
equipment,

[[Page 18217]]

personal property, inventory, office furniture, fixed assets and 
fixtures, materials, supplies and other tangible property or 
improvements used in the operation of each station; all licenses, 
permits, authorizations, and applications therefor issued by the FCC 
and other governmental agencies related to each station; all contracts, 
agreements, leases and commitments of defendants pertaining to each 
station and its operations; all trademarks, service marks, trade names, 
copyrights, patents, slogans, programming materials and promotional 
materials relating to each station; and all logs and other records 
maintained by defendants or each station in connection with its 
business.
    J. ``Greenville Area'' means the Greenville-Spartanburg, South 
Carolina area, as identified by the Spring 1997 Arbitron Radio Market 
Report for Greenville-Spartanburg.
    K. ``Houston Area'' means the Houston, Texas area, as identified by 
the Spring 1997 Arbitron Radio Market Report for Houston, Texas.
    L. ``Jackson Area'' means the Jackson, Mississippi area, as 
identified by the Spring 1997 Arbitron Radio Market Report for Jackson, 
Mississippi.
    M. ``Pittsburgh Area'' means the Pittsburgh, Pennsylvania area, as 
identified by the Spring 1997 Arbitron Radio Market Report for 
Pittsburgh, Pennsylvania.
    N. ``Suffolk Area'' means the Nassau-Suffolk area, as identified by 
the Spring 1997 Arbitron Radio Market Report for Nassau and Suffolk 
Counties in New York.
    O. ``Hicks Muse Radio Station'' means any radio station owned, 
operated, or controlled by Chancellor, Capstar, SFX or Hicks Muse and 
licensed to a community in the Greenville, Houston, Jackson or 
Pittsburgh areas, or broadcasting from a transmitter site located in 
Nassau-Suffolk Area.
    P. ``Non-Hicks Muse Radio Station'' means any radio station that is 
licensed to a community in the Greenville, Houston, Jackson or 
Pittsburgh Areas, or broadcasting from a transmitter site located in 
the Nassau-Suffolk Area, and is not a Hicks Muse Radio Station.
    Q. ``Acquirer'' means the entity or entities to whom defendants 
divest the Greenville Assets, the Houston Assets, the Jackson Assets, 
the Pittsburgh Assets, or the SFX Long Island Assets under this Final 
Judgment.
    R. ``LMA'' means the Local Marketing Agreement that Chancellor and 
SFX entered into on or about July 1, 1996, as part of their July 1, 
1996 asset exchange agreement whereby SFX agreed to exchange its four 
Long Island-based radio stations for Chancellor's two Jacksonville, 
Florida radio stations and an additional $11 million.

III. Applicability

    A. The provisions of this Final Judgment apply to each of the 
defendants, their successors and assigns, subsidiaries, their 
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. Defendants shall require, as a condition of the sale or other 
disposition of all or substantially all of the assets used in their 
business of owning and operating radio stations in the Greenville area, 
the Houston area, the Jackson area, the Pittsburgh area or the Nassau-
Suffolk area, that the respective acquiring party of parties agree to 
be bound, as a successor or assign, by the provisions of this Final 
Judgment, provided, however, that defendants need not obtain such an 
agreement from an Acquirer.
    C. The term ``sale or other disposition'' used in paragraph (B) of 
this Section shall include in whole or in part, without limitation, any 
agreement (such as Local Marketing Agreement or Joint Sales Agreement) 
pursuant to which another entity has the right to operate, program or 
sell advertising time on a radio station in the relevant Area.

IV. Divestitures

    A. Hicks Muse and Capstar are hereby ordered and directed, in 
accordance with the terms of this Final Judgment, within six (6) months 
after the filing of the complaint in this action, or within five (5) 
business days after notice of entry of this final judgment, whichever 
is later, to divest the Greenville Assets, the Houston Assets, the 
Jackson Assets, and the Pittsburgh Assets to one or more Acquirers 
acceptable to plaintiff in its sole discretion.
    B. Hicks Muse and Capstar are hereby ordered and directed, in 
accordance with the terms of this Final Judgment, within three (3) 
months after the filing of the complaint in this action, or within five 
(5) business days after notice of entry of this final judgment, 
whichever is later, to divest the SFX Long Island Assets to one or more 
Acquirers acceptable to plaintiff in its sole discretion.
    C. Defendants shall use their best efforts to divest the Greenville 
Assets, the Houston Assets, the Jackson Assets, the Pittsburgh Assets, 
and the SFX Long Island Assets, and to obtain all regulatory approvals 
necessary for such divestitures, as expeditiously as possible. 
Plaintiff, 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.
    D. In accomplishing the divestitures ordered by this Final 
Judgment, defendants promptly shall make known, by usual and customary 
means, the availability for sale of the Greenville Assets, the Houston 
Assets, the Jackson Assets, the Pittsburgh Assets, and the SFX Long 
Island Assets. Defendants shall inform any person making an inquiry 
regarding a possible purchase that the sale is being made pursuant to 
this Final Judgment and provide such person with a copy of the Final 
Judgment. Defendants shall also offer to furnish to all prospective 
purchasers, subject to customary confidentiality assurances, all 
information regarding the Greenville Assets, the Houston Assets, the 
Jackson Assets, the Pittsburgh Assets, and the SFX Long Island Assets 
customarily provided in a due diligence process, except such 
information subject to attorney-client privilege or attorney work-
product privilege. Defendants shall make available such information to 
plaintiff at the same time that such information is made available to 
any other person.
    E. Defendants shall permit prospective purchasers of the Greenville 
Assets, the Houston Assets, the Jackson Assets, the Pittsburgh Assets, 
and the SFX Long Island 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.
    F. Unless plaintiff otherwise consents in writing, the divestitures 
pursuant to Section IV of this Final Judgment, or by the trustee 
appointed pursuant to Section V, shall include all the Greenville 
Assets, Houston Assets, Jackson Assets, Pittsburgh Assets, and SFX Long 
Island Assets, and shall be accomplished in such a way as to satisfy 
plaintiff, in its sole discretion, that the Greenville Assets, the 
Houston Assets, the Jackson Assets, the Pittsburgh Assets, and the SFX 
Long Island Assets can and will be used by an Acquirer or Acquirers as 
viable, ongoing commercial radio businesses. The divestitures, whether 
pursuant to Sections IV or V of this Final Judgment, shall be made (I) 
to an Acquirer or Acquirers that in plaintiff's sole discretion, has or 
have the capability and intent of competing effectively, and has or 
have the managerial, operational and financial capability to compete 
effectively as

[[Page 18218]]

radio station operators in the Greenville, Houston, Jackson, Pittsburgh 
or Nassau-Suffolk Areas, as the case may be, and intends in good faith 
to continue the operations of the radio station as were in effect in 
the period immediately prior to the filing of the complaint in this 
action (unless any significant change in the operations planned by the 
acquirer is accepted by the plaintiff in its sole discretion); and (ii) 
pursuant to agreements the terms of which shall not, in the sole 
judgment of plaintiff, interfere with or otherwise diminish the ability 
of the purchaser(s) to compete effectively against defendants.
    G. Defendants shall not interfere with any efforts by any Acquirer 
or Acquirers to employ the general manager or any other person working 
at any of the Greenville, Houston, Jackson, Pittsburgh, or SFX Long 
Island Assets.

V. Appointment of Trustee

    A. In the event that defendants have not divested the Greenville 
Assets, the Houston Assets, the Jackson Assets, the Pittsburgh Assets, 
or the SFX Long Island Assets within the time specified in Section IV 
of this Final Judgment, the Court shall appoint, on application of the 
United States, a trustee selected by plaintiff to effect the 
divestiture of the Greenville Assets, the Houston Assets, the Jackson 
Assets, the Pittsburgh Assets, or the SFX Long Island Assets.
    B. After the appointment of a trustee becomes effective, only the 
trustee shall have the right to sell the Greenville Assets, the Houston 
Assets, the Jackson Assets, the Pittsburgh Assets, or the SFX Long 
Island Assets described in Section II of this Final Judgment. 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 Sections IV and VI of this 
Final Judgment, and shall have such 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 defendants any investment bankers, attorneys, or other 
agents reasonably necessary in the judgment of the trustee to assist in 
the divestiture, and such professionals and agents shall be accountable 
solely 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 plaintiff, and shall have such other powers 
as this Court shall deem appropriate. Defendants shall not object to a 
sale by the trustee on any grounds other than the trustee's 
malfeasance. Any such objections by defendants must be conveyed in 
writing to plaintiff and the trustee within ten (10) calendar days 
after the trustee has provided the notice required under Section VII of 
this Final Judgment.
    C. The trustee shall serve at the cost and expense of defendants, 
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 money shall be paid to defendants and the trust 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 divested assets 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. Defendants shall use their best efforts to assist the trustee in 
accomplishing the required divestiture, including best efforts to 
effect all necessary regulatory approvals. The trustee and any 
consultants, accountants, attorneys, and other persons retained by the 
trustee shall have full and complete access to the personnel, books, 
records, and facilities of the assets to be divested, and defendants 
shall develop financial or other information relevant to the assets to 
be divested customarily provided in a due diligence process as the 
trustee may reasonably request, subject to customary confidentiality 
assurances. Defendants shall permit prospective acquirers of the assets 
to have reasonable access to personnel and to make such inspection of 
physical facilities and any and all financial, operational or other 
documents and other information as may be relevant to the divestiture 
required by this Final Judgment.
    E. After its appointment, the trustee shall file monthly reports 
with the parties and the Court setting forth the trustee's efforts to 
accomplish the divestiture ordered 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 assets to be divested, 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 the assets to be divested.
    F. If the trustee has not accomplished such divestiture within six 
(6) months after its appointment, the trustee thereupon shall file 
promptly with the Court a report setting forth (1) the trustee's 
efforts to accomplish the required divestitures, (2) the reasons, in 
the trustee's judgment why the required divestitures have 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 
report to the parties, who shall each have the right to be heard and to 
make additional recommendations consistent with the purpose of the 
trust. The Court shall enter thereafter such orders as it shall deem 
appropriate in order to carry out the purpose of the trust which may, 
if necessary, include extending the trust and the term of the trustee's 
appointment by a period requested by plaintiff.

VI. Preservation of Assets

    Until the divestitures of the Greenville Assets, the Houston 
Assets, the Jackson Assets, the Pittsburgh Assets and the SFX Long 
Island Assets, as required by Section IV of the Final Judgment, have 
been accomplished:
    A. Prior to the consummation of Capstar's acquisition of SFX, 
defendants shall maintain the independence of their respective radio 
station operations in the Areas, and following the consummation of 
Capstar's acquisition of SFX, defendants shall take all steps necessary 
to operate the Greenville Assets, the Houston Assets, the Jackson 
Assets, and the Pittsburgh Assets as separate, independent, ongoing, 
economically viable and active competitors to defendants' other 
stations in the Greenville, Houston, Jackson, or Pittsburgh Areas, 
respectively, and shall take all steps necessary to insure 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 Assets, including 
the performance of decision-making functions regarding marketing and 
pricing, will be kept separate and apart from, and not influenced by, 
defendants.

[[Page 18219]]

    B. Defendants shall use all reasonable efforts to maintain and 
increase sales of advertising time by the Greenville, Houston, Jackson, 
and Pittsburgh Assets, and shall maintain at 1997 or previously 
approved levels for 1998, whichever are higher, promotional 
advertising, sales, marketing and merchandising support for said 
stations.
    C. Defendants shall take all steps necessary to ensure that the 
assets used in the operation of the Greenville, Houston, Jackson, and 
Pittsburgh Assets, are fully maintained. Sales and marketing employees 
shall not be transferred or reassigned to any other station, except for 
transfer bids initiated by employees pursuant to defendants' regular, 
established job posting policies, provided that defendants give 
plaintiff and Acquirer ten (10) days' notice of any such transfer.
    D. Defendants shall use their best efforts, consistent with their 
rights and obligations under the LMA, to cause the SFX Long Island 
Assets to be operated in a manner consistent with the obligations in 
paragraphs B and C of this Section; provided, however, that, in the 
event the LMA is terminated, paragraphs A, B and C of this Section 
shall apply fully to the operation of the SFX Long Island Assets by or 
on behalf of defendants.
    E. Defendants shall not, except as part of a divestiture approved 
by plaintiff, in its sole discretion, or a transfer to a trust approved 
by the FCC, also approved by plaintiff, in its sole discretion, sell 
any Greenville Assets, Houston Assets, Jackson Assets, Pittsburgh 
Assets or SFX Long Island Assets.
    F. Defendants shall take no action that would jeopardize the sale 
of the Greenville Assets, the Houston Assets, the Jackson Assets, the 
Pittsburgh Assets, or the SFX Long Island Assets.
    G. Defendants shall appoint a person or persons to oversee the 
Assets to be held separate and who will be responsible for defendants' 
compliance with Section VI of this Final Judgment.

VII. Notification

    Within two (2) business days following execution of a definitive 
agreement, contingent upon compliance with the terms of this Final 
Judgment, to effect, in whole or in part, any proposed divestitures 
pursuant to Section IV or V of this Final Judgment, defendants or the 
trustee, whichever is then responsible for effecting the divestitures, 
shall notify plaintiff of the proposed divestitures. If the trustee is 
responsible, it shall similarly notify defendants. 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 Greenville Assets, the Houston Assets, the 
Jackson Assets, the Pittsburgh Assets, or the SFX Long Island Assets, 
as the case may be, together with full details of same. Within fifteen 
(15) calendar days of receipt by plaintiff of such notice, plaintiff 
may request from defendants, the proposed purchaser or purchasers, or 
any other third party, additional information concerning the proposed 
divestitures and the proposed purchaser. Defendants and the trustee 
shall furnish any additional information from them within fifteen (15) 
calendar days of the receipt of the request, unless the parties shall 
otherwise agree. Within thirty (30) calendar days after receipt of the 
notice or within twenty (20) calendar days after plaintiff has been 
provided the additional information requested from defendants, the 
proposed purchaser or purchasers, and any third party, whichever is 
later, plaintiff shall provide written notice to defendants and the 
trustee, if there is one, stating whether or not it objects to the 
proposed divestiture. If plaintiff provides written notice to 
defendants and the trustee that it does not object, then the 
divestiture may be consummated, subject only to defendants' limited 
right to object to the sale under Section V(B) of this Final Judgment. 
Absent written notice that plaintiff does not object to the proposed 
purchaser or upon objection by the plaintiff, a divestiture proposed 
under Sections IV or V may not be consummated. Upon objection by 
defendants under the provision in Section V(B), a divestiture proposed 
under Section V shall not be consummated unless approved by the Court.

VIII. Financing

    Defendants are 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 plaintiff.

IX. Affidavits

    A. Within twenty (20) calendar days of the filing of this Final 
Judgment and every thirty (30) calendar days thereafter until the 
divestitures have been completed whether pursuant to Section IV or 
Section V of this Final Judgment, defendants shall deliver to plaintiff 
an affidavit as to the fact and manner of their 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, made an 
offer to acquire, expressed an interest in acquiring, entering into 
negotiations to acquire, or was contacted or made an inquiry about 
acquiring, any interest in the Greenville Assets, the Houston Assets, 
the Jackson Assets, the Pittsburgh Assets, and the SFX Long Island 
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 defendants have taken to solicit a 
buyer or buyers for the Greenville Assets, the Houston Assets, the 
Jackson Assets, the Pittsburgh Assets, or the SFX Long Island Assets, 
as the case may be.
    B. Within twenty (20) calendar days of the filing of the complaint 
in this action, defendants shall deliver to plaintiff an affidavit 
which describes in reasonable detail all actions defendants have taken 
and all steps defendants have implemented on an on-going basis to 
preserve Greenville, Houston, Jackson, and Pittsburgh Assets, and the 
SFX Long Island Assets, pursuant to Section VI of this Final Judgment. 
Defendants shall deliver to plaintiff an affidavit describing any 
changes to the efforts and actions outlined in their earlier 
affidavit(s) filed pursuant to this Section within fifteen (15) 
calendar days after such change is implemented.
    C. Defendants shall preserve all records of efforts made to 
preserve the assets to be divested and effect the divestitures.

X. 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''), 
defendants, without providing advance notification to the plaintiff, 
shall not directly or indirectly acquire any assets of or any interest, 
including any financial, security, loan, equity or management interest, 
in any Non-Hicks Muse Radio Station, or would transfer the power to 
market or sell advertising time or to establish advertising prices for 
Hicks Muse Radio Stations in an Area to any other owner or operator of 
Non-Hicks Muse Radio Station.
    B. Defendants, without providing advance notification to the 
plaintiff, shall not directly or indirectly enter into any agreement or 
understanding (including a Local Marketing Agreement (``LMA'') or Joint 
Sales Agreement (``JSA'')), that would allow defendants to market or 
sell advertising time or to

[[Page 18220]]

establish advertising prices for any Non-Hicks Muse Radio Station.
    C. The notification obligations required by paragraphs (A), (B), or 
(E) of this Section X shall not apply to defendants with respect to an 
Area at such time as there are no Hicks Muse Radio stations in that 
Area, provided that the provisions of Section III have been complied 
with.
    D. Notification described in Section X (A) and (B) or (E) shall be 
provided to the United States Department of Justice 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 the information requested 
in Items 5-9 of the instructions must be provided only with respect to 
radio stations owned or operated by defendants in the Area or Areas in 
which the notifiable transaction takes place. Notification shall be 
provided at least thirty (30) days prior to acquiring any such interest 
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 Department make a written request for additional 
information, defendants 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.
    E. Hicks Muse shall notify plaintiff in writing (or arrange for 
Chancellor to provide such notification) ten (10) days prior to (I) 
consummation of any direct or indirect acquisition of a Non-Hicks Muse 
Radio Station by Chancellor, or (ii) entry into force of any agreement 
or understanding (including an LMA or JSA), that would allow Chancellor 
to market or sell advertising time or to establish advertising prices 
for any Non-Hicks Muse Radio Station.
    F. 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.

XI. 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 United States Department 
of Justice, including consultants and other persons retained by the 
plaintiff, upon written request of the Attorney General, or of the 
Assistant Attorney General in charge of the Antitrust Division, and on 
reasonable notice to defendant made to their principal offices, shall 
be 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 the matters 
contained in this Final Judgment; and
    (2) Subject to the reasonable convenience of defendants and without 
restraint or interference from them, to interview, either informally or 
on the record, directors, officers, employees and agents of defendants, 
who may have counsel present, regarding any such matters.
    B. Upon the written request of the Attorney General, or of the 
Assistant Attorney General in charge of the Antitrust Division, made to 
defendants' principal offices, defendants shall submit such written 
reports, under oath if requested, with respect to any of the matters 
contained in the Final Judgment as may be requested.
    C. No information or documents obtained by the means provided in 
Section IX or this Section XI shall be divulged by any representative 
of plaintiff to any person other than a duly authorized representative 
of the Executive Branch of the United States, except in the course of 
legal proceedings to which plaintiff is a party (including grand jury 
proceedings), or for the purpose of securing complinance with this 
Final Judgment, or as otherwise required by law.
    D. If at the time information or documents are furnished by either 
defendant to plaintiff, 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 plaintiff 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.

XII. Retention of Jurisdiction

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

XIII. Termination

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

XIV. Public Interest

    Entry of this Final Judgment is in the public interest.

    Dated: ____________________ 1998.

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

United States District Court for the Eastern District of New York

    United States of America, Plaintiff, v. Hicks, Muse, Tate & 
Furst Incorporated, and Capstar Broadcasting Partners, Inc., and SFX 
Broadcasting Partners, Inc., Defendants. Hon. J. Seybert/M. 
Orenstein. Civil Action No. CV 98 2422.

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 plaintiff filed a civil antitrust Complaint on March 31, 1998, 
alleging that a proposed acquisition of SFX Broadcasting, Inc. 
(``SFX'') by Capstar Broadcasting Partners, Inc. (``Capstar'') \1\ 
would violate Section 7 of the Clayton Act, 15 U.S.C. 18. The complaint 
alleges that Capstar, or its related entity, Chancellor Media 
Corporation (``Chancellor''), and SFX own and operate several radio 
stations throughout the United States, and that the transaction will 
combine radio

[[Page 18221]]

station assets such that defendants would control stations that have 
approximately 74 percent of the radio advertising revenue in 
Greenville-Spartanburg (``Greenville''), SC, 41 percent in Houston, TX, 
49 percent in Jackson, MS, 45 percent in Pittsburgh, PA, and 65 percent 
in Suffolk County, NY.\2\ This acquisition would give defendants the 
majority of the most competitively significant radio signals in the 
Greenville, Houston, Jackson, Pittsburgh and Suffolk markets, and a 
significant share of radio advertising in these markets. As a result, 
this acquisition would substantially lessen competition in the sale of 
radio advertising time in the Greenville, Houston, Jackson, Pittsburgh 
and Suffolk markets.
---------------------------------------------------------------------------

    \1\ Capstar is wholly owned by Hicks, Muse, Tate & Furst, 
Incorporated (``Hicks Muse''). Hicks Muse is also the largest and 
controlling shareholder of Chancellor Media Corporation.
    \2\ Following the acquisition, defendants and Chancellor would 
own eight radio stations in the Greenville area (6 FMs and 2 AMs), 
nine radio stations in the Houston area (6 FMs and 3 AMs), six radio 
stations in the Jackson area (4 FMs and 2 AMs) seven radio stations 
in the Pittsburgh area (5 FMs and 2 AMs) and six radio stations in 
the Suffolk area (4 FMs and 2 AMs).
---------------------------------------------------------------------------

    The prayer for relief seeks: (a) Adjudication that Capstar's 
proposed acquisition of the radio stations from SFX would violate 
Section 7 of the Clayton Act; (b) preliminary and permanent injunctive 
relief preventing the consummation of the proposed acquisition; (c) an 
award to the United States of the costs of this action; and (d) such 
other relief as is proper.
    Shortly before this suit was filed, a proposed settlement was 
reached that permits Capstar to complete its acquisition of SFX, yet 
preserves competition in the markets 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 Capstar and Hicks Muse to divest 
WESC-FM, WESC-AM, WJMZ-FM and WTPT-FM in Greenville; KKPN-FM in 
Houston; WJDX-FM in Jackson and WTAE-AM in Pittsburgh, WBLI-FM, WBAB-
FM, WHFM and WGBB-AM in Suffolk (the ``divestiture stations''). Unless 
the United States grants an extension of time, Capstar and Hicks Muse 
must divest these radio stations within six months after the filing of 
the Final Judgment (three months in the case of the Suffolk stations). 
If the parties do not divest these stations within the divestiture 
period, the Court shall appoint a trustee to sell the assets. The 
proposed Final Judgment also requires the defendants to ensure that, 
until the divestitures mandated by the Final Judgment have been 
accomplished, the divestiture stations will be operated independently 
as viable, ongoing businesses, and kept separate and apart from the 
other radio stations of Capstar, Chancellor and SFX in the Greenville, 
Houston, Jackson, and Pittsburgh areas.\3\ The proposed Final Judgment 
also requires that the divestitures be made to an acquirer or acquirers 
that have the capability and intent to compete effectively as radio 
station operators in the Greenville, Houston, Jackson, Pittsburgh and 
Suffolk markets.
---------------------------------------------------------------------------

    \3\ In Suffolk County, the Chancellor and SFX stations are 
currently being operated together by Chancellor under a local 
marketing agreement. Under the terms of another proposed Final 
Judgment, the parties have agreed to terminate this agreement on or 
before August 1, 1998, after which time, the parties must operate 
the Chancellor and SFX stations as separate entities, pending the 
divestiture required by this Final Judgment.
---------------------------------------------------------------------------

    The plaintiff 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 Violation

A. The Parties

    Defendant Capstar is a Delaware corporation headquartered in 
Austin, Texas. Capstar currently owns and operates approximately 245 
radio stations in 60 markets in the United States. In 1997, its 
revenues were approximately $190 million. In Greenville, Capstar 
currently owns WJMZ-FM, WTPT-FM, WESC-FM and WESC-AM. In Jackson, 
Capstar owned WJMI-FM, WKXI-FM, WOAD-AM and WKXI-AM, until a recent 
sale made in anticipation of this lawsuit. Capstar is wholly owned by 
Hicks Muse.
    Defendant Hicks Muse is an investment firm headquartered in Dallas, 
Texas. Hicks Muse, through investment funds it controls, owns all the 
stock of Capstar and has a significant ownership interest in 
Chancellor.
    Chancellor is a Delaware corporation headquartered in Irving, 
Texas. In 1997, it was the second largest owner of radio stations in 
the United States and owned 97 radio stations in 22 major U.S. markets, 
including in each of the 12 largest markets. Chancellor revenues in 
1997 were approximately $582.1 million. In Houston, Chancellor owns 
KLDE-FM, KKBQ-FM, KLOL-FM, KTRH-AM and KKBQ-AM. In Pittsburgh, 
Chancellor owns WWSW-FM and WWSW-AM. In Suffolk, Chancellor owns WALK-
FM and WALK-AM. Chancellor is a Hicks Muse-related company. Hicks Muse 
owns a significant portion of Chancellor stock and Hicks Muse 
management and owners influence or control Chancellor competitive 
behavior to such an extent that Chancellor/Capstar ownership of 
otherwise competing radio stations would substantially lessen 
competition.
    Defendant SFX is a Delaware corporation headquartered in New York, 
New York. SFX owns and operates approximately 85 radio stations located 
in 23 markets in the United States. SFX revenues in 1997 were 
approximately $322 million. In Greenville, SFX owns WSSL-FM, WTPT-FM, 
WYMI-FM, WROQ-FM and WGVL-AM. In Houston, SFX owns KKPN-FM, KODA-FM, 
KKRW-FM and KQUE-AM. In Jackson, SFX owns WMSI-FM, WJDX-FM, WSTZ-FM, 
WKTF-FM, WZRX-AM and WJDS-AM. WJDX-FM was recently acquired by SFX, in 
1996. In Pittsburgh, SFX owns WDVE-FM, WVTY-FM, WXDX-FM, WJJJ-FM and 
WTAE-AM. In Suffolk, SFX owns WBAB-FM, WBLI-FM, WHFM-FM and WGBB-AM.

B. Description of the Events Giving Rise to the Alleged Violations

    On or about August 24, 1997, Capstar agreed to purchase SFX for 
approximately $2.1 billion. Capstar or Chancellor and SFX own or 
operate radio broadcast stations in five overlapping markets in which 
there would be a lessening of competition: Greenville, Jackson, 
Houston, Pittsburgh and Suffolk. As a result of this transaction, 
defendants and Chancellor would control stations that have 
approximately 74 percent of radio advertising revenue in Greenville, 41 
percent in Houston, 49 percent in Jackson, 45 percent in Pittsburgh and 
65 percent in Suffolk. Prior to the agreement, the Capstar/Chancellor 
and SFX stations in the Greenville, Houston, Jackson, Pittsburgh and 
Suffolk markets were vigorous competitors of each other. The proposed 
acquisition of SFX by Capstar, and the threatened loss of such 
competition that would be caused thereby, precipitated the Government's 
suit.

C. Anticompetitive Consequences of the Proposed Merger

1. Sale of Radio Advertising Time In Greenville, Houston, Jackson, 
Pittsburgh and Suffolk
    The Complaint alleges that the sale of advertising time on radio 
stations

[[Page 18222]]

serving the Greenville, Houston, Jackson, and Pittsburgh Metro Service 
Areas (``MSA'') each constitute a line of commerce and section of the 
country--or relevant market--for antitrust purposes. The Greenville MSA 
includes four counties: Anderson, Greenville, Pickens and Spartanburg. 
The Houston MSA includes eight counties: Brazoria, Chambers, Fort Bend, 
Galveston, Harris, Liberty, Montgomery and Waller. The Jackson MSA 
includes three counties: Hinds, Madison and Rankin. The Pittsburgh MSA 
includes six counties: Allegheny, Beaver, Butler, Fayette, Washington 
and Westmoreland. The relevant market for Suffolk County is Suffolk 
County. Local and national advertising that is placed on radio stations 
within Greenville, Houston, Jackson, Pittsburgh and Suffolk markets is 
aimed at reaching listening audiences in each of these markets, and 
radio stations located outside of Greenville, Houston, Jackson, 
Pittsburgh and Suffolk do not provide effective access to these 
audiences. Thus, if there were a small but significant nontransitory 
increase in radio advertising within one of these markets, advertisers 
would not buy enough advertising time from radio stations located 
outside the Greenville, Houston, Jackson, Pittsburgh and Suffolk 
markets to defeat the increase.
    The defendants' radio stations, like most commercial radio 
stations, generate almost all their revenues from the sale of 
advertising time. In general, radio stations attract listeners, and 
then sell access to those listeners (that is, advertising time) to 
businesses who wish to advertise their products.
    Radio stations price their advertising time in large part on the 
basis of the number of listeners that they reach. Traditionally, this 
is expressed on a cost-per-thousand (CPM) basis. When buying radio 
advertising time, advertisers consider the CPM and the overlap of the 
number and demographic characteristics of a radio station's listeners 
with the advertisers' likely customers. If a station individually or 
number of stations in combination efficiently reach an advertiser's 
likely customers (target audience), the advertiser has a choice in how 
to reach its potential customers. This choice creates competition 
between radio stations and results in lower prices and better services.
    In Greenville, Houston, Jackson, Pittsburgh and Suffolk, the 
defendants' radio stations compete to serve a single distinct 
geographic area. When the Capstar/Chancellor and SFX stations operate 
independently, they are good substitutes for each other. The stations 
compete head-to-head to reach listeners. Many local and regional 
advertisers seeking to reach listeners in Greenville, Houston, Jackson, 
Pittsburgh and Suffolk can reach a target efficiently by purchasing 
time on Capstar and Chancellor or SFX stations or by using a 
combination of Capstar, Chancellor, SFX and other stations in the 
market. However, other stations, either alone or in combination with 
other stations, cannot offer a sufficient number of listeners in 
demographic groups to be an effective substitute for Capstar, 
Chancellor and SFX.
    When the Capstar and SFX stations operate independently, 
advertisers can obtain lower prices by ``playing off'' Capstar-owned or 
Chancellor-owned stations against SFX stations. Advertisers use the 
threat to move their business between the Capstar/Chancellor and the 
SFX stations to get more favorable prices and services at each. 
Advertisers in Greenville, Houston, Jackson, Pittsburgh and Suffolk 
have paid less for advertising as a result of price competition between 
the Capstar/Chancellor and SFX radio stations.
2. Harm to Competition
    The Complaint alleges that Capstar's acquisition of the SFX will 
give defendants the ability to raise price to many advertisers--
especially local and regional advertisers. Price increases made 
possible by the acquisition are likely to be profitable. Radio stations 
see other radio stations as their principal competition. Moreover, for 
many advertisers, other media do not serve as substitutes for radio 
advertising. Radio enjoys unique access to certain audiences. A radio 
is portable; people can listen to radio anywhere especially in places 
and situations where other media are not present, such as in the car. 
In addition, radio formats can target listeners in specific 
demographics. These features make is a more effective means for many 
advertisers to achieve what the advertising industry refers to as 
``frequency.''
    Many advertisers who purchase time on radio stations consider such 
purchases preferable to purchases of other media to meet their specific 
needs. When these advertisers use radio as part of a ``media mix,'' 
they often view the other advertising media (such as television or 
newspapers) as a complement to, and not a substitute for, radio 
advertising.
    Radio stations also provide certain value-added services or 
promotional opportunitites--such as contests, disc jockey endorsements, 
live remote broadcasts and greater flexibility in ad placement--that 
many advertisers significantly value, and which many advertisers cannot 
exploit as effectively using other media.
    For many advertisers, radio advertising is more cost effective than 
other media, like television and newspapers, in reaching their likely 
customers. Many advertisers who use radio as part of a multi-media 
campaign do so because they believe that the radio component enhances 
the effectiveness of their overall advertising campaign. Many 
advertisers, especially local and regional advertisers, would not 
switch their radio advertising purchases to other media if radio prices 
rose a small but significant amount in relation to other media prices.
    Because radio stations in Greenville, Houston, Jackson, Pittsburgh 
and Suffolk would be able to charge higher prices to these customers 
without losing the business of other advertisers, a small but 
significant price increase would be profitable. This is because Capstar 
will be able to raise price selectively without losing a significant 
amount of business. Radio stations know a great deal about how likely 
an advertiser is to turn to an alternative. In the negotiation process, 
for example, radio stations obtain significant information about an 
advertiser's objectives. As a result, radio stations know that some 
advertisers are more likely than others to turn to alternatives. 
Because prices are set through individual negotiation, station can 
charge higher prices to advertisers that are less likely to use 
alternatives, while charging lower prices to those advertisers that 
would more readily switch. Consequently, defendants will be able to 
raise price profitably to the many advertisers that would readily 
switch between Capstar and Chancellor and SFX long before they would 
consider other alternatives.
    Accordingly, the complaint alleges that the relevant product market 
within which to assess the competitive effects of this acquisition is 
the sale of radio advertising time in the Greenville, Houston, Jackson, 
Pittsburgh and Suffolk markets.
    Using a measure of market concentration called the Herfindahl-
Hirschman Index (``HHI''), explained in Appendix A annexed hereto, the 
transaction would substantially increase concentration in the 
Greenville, Houston, Jackson, Pittsburgh and Suffolk radio advertising 
markets.
    a. Greenville. After the proposed transaction, defendants' share of 
the Greenville market will be 74 percent, measured by radio advertising 
revenues. The acquisition would yield a post-merger HHI of 5836, 
representing an increase of 2571. Post-merger,

[[Page 18223]]

defendants will own and operate WSSL-FM and WESC-FM, the only two 
successful country stations in the market. Accordingly, advertisers who 
desire to target country listeners will not be able to buy around 
defendants' stations.
    b. Houston. In Houston, after the acquisition, defendants and 
Chancellor together would have a 41 percent market share, measured by 
radio advertising revenues. The acquisition would yield a postmerger 
HHI of 2330, representing an increase of 765.
    c. Jackson. In Jackson, defendants' share of the market would be 49 
percent, measured by radio advertising revenues. After the acquisition, 
there would be an HHI of 3320; it would have been significantly higher, 
if certain stations had not already been sold by defendant Capstar in 
anticipation of this lawsuit. Furthermore, the prior acquisition of 
WJDX-FM by defendant SFX previously had increased the HHI by 1080. That 
acquisition substantially lessened competition and resulted in a market 
in which defendants would own three out of the four top-rated stations.
    d. Pittsburgh. In Pittsburgh, after the acquisition, defendants and 
Chancellor together would have a 45 percent market share, measured by 
radio advertising revenues. The acquisition would yield a post-merger 
HHI of 3162, representing an increase of 626. The ownership of some 
Pittsburgh stations by Chancellor and others by defendants would 
substantially lessen competition because of the relationship between 
Chancellor and defendants Capstar and Hicks Muse.
    e. Suffolk. In Suffolk, Chancellor and SFX are the number one and 
number two radio companies. After the proposed acquisition, defendants 
and Chancellor together would control over 65 percent of the radio 
advertising market. A previous attempt to combine the Chancellor and 
SFX stations in Suffolk was the subject of an earlier lawsuit, United 
States v. Chancellor Media Co. and SFX Broadcasting, Inc., CV 97-6497. 
A proposed final judgment in that matter also was field today, pursuant 
to which that transaction will be abandoned.
    For the reasons outlined above, the Department of Justice concludes 
that the acquisition of SFX by Capstar would substantially lessen 
competition in the sale of radio advertising time in Greenville, 
Houston, Pittsburgh and Suffolk, and result in increased prices and 
reduced quality of service for radio advertising time in each of these 
overlapping markets, and that the prior acquisition of WJDX in Jackson 
similarly substantially lessened competition, all in violation of 
Section 7 of the Clayton Act.

III. Explanation of the Proposed Final Judgment

    The proposed Final Judgment would preserve competition in the sale 
of radio advertising time in Greenville, Houston, Jackson, Pittsburgh 
and Suffolk. It requires the divestiture of several radio stations in 
the affected markets. This relief-will reduce the market share Capstar 
would have achieved through the acquisition in the overlapping markets. 
The divestitures will preserve choices for advertisers, preserve 
competition among these radio stations, and help ensure that radio 
advertising rates do not increase and that services to do not decline 
in the overlapping markets as a result of the acquisition.
    The diverstitures will ensure that the affected markets will remain 
competitive. First, no firm will dominate the competitively 
significantly radio signals in any market. Second, advertisers will 
have sufficient alternatives to the merged firm in reaching groups of 
radio listeners most affected by the transaction; that is, advertisers 
can reasonably efficiently reach such audiences (``buy around'') 
without using the merged firm. Third, the ownership structure in each 
market is such that it allows for the possibility of at least three 
significant competitors who may compete for advertisers' business.
    Unless the United States grants an extension of time, the parties 
must divest the divestiture stations within six months after the Final 
Judgment has been filed (three months in Suffolk). Until the 
divestitures take place, these stations will be maintained as 
independent competitors to the other stations in Greenville, Houston, 
Jackson, Pittsburgh and Suffolk. If the parties fail to divest any of 
the divestiture stations and their respective Assets within the time 
period specified in the Final Judgment, or extension thereof, the 
Court, upon application of the United States, shall appoint a trustee 
nominated by the United States to effect the required divestiture or 
divestitures. If a trustee is appointed, the proposed Final Judgment 
provides that the defendants will pay all costs and expenses of the 
trustee and any professionals and agents 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 the 
divestitures stations, and shall be based on a fee arrangement 
providing the trustee with an incentive based on the price and terms of 
the divestitures and the speed with which they are accomplished. After 
appointment, the trustee will file monthly reports with the plaintiff, 
the defendants and the Court, setting forth the trustee's efforts to 
accomplish the divestitures ordered under the proposed Final Judgment. 
If the trustee has not accomplished the divestitures within three (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 divestitures, (2) the reasons, in the trustee's judgment, 
why the required divestitures have not been accomplished, and (3) the 
trustee's recommendations. At the same time, the trustee will furnish 
such report to the plaintiff and defendants, who will each have the 
right to be heard and to make additional recommendations consistent 
with the purpose of the trust.
    The proposed Final Judgment requires that defendants maintain each 
of the divestiture stations separate and apart from their other 
stations, pending divestiture of those stations, in the Greenville, 
Houston, Jackson and Pittsburgh areas. The Judgment also contains 
provisions to ensure that these stations will be preserved, so that 
they will remain viable, aggressive competitors after divestiture. The 
defendants, without providing advance notification to the plaintiff, 
may not acquire any assets in any Non-Hicks Muse Radio Stations. Also, 
the defendants may not, without providing advance notice to the 
plaintiff, enter into any agreement (including a Local marketing 
agreement or a Joint Sales Agreement), that would allow defendant to 
market or sell advertising time or to establish adverting prices for 
any Non-Hicks Muse Radio Station.
    The Judgment requires that the defendants or the trustee notify the 
plaintiff of any proposed divestitures, within two (2) days following 
the execution of a definitive agreement. Within fifteen (15) days of 
receipt by plaintiff of notice, the plaintiff may request additional 
information regarding the proposed divestiture and the proposed 
purchaser. The defendants and the trustee must furnish the additional 
information within fifteen (15) days of the receipt of the request. 
Within thirty (30) days after receipt of the notice, or within twenty 
days after plaintiff has been provided the additional information 
requested from the defendants, the proposed purchaser or purchasers, 
and any third party, plaintiff will provide written notice to the 
defendants or the trustee stating whether or not it objects to the 
proposed divestiture. Absent written notice that plaintiff does not 
object to the proposed

[[Page 18224]]

divestiture, a divestiture may not be consummated.
    The relief in the proposed Final Judgment is intended to remedy the 
likely anticompetitive effects of the proposed acquisition of SFX by 
Capstar. Nothing in this Final Judgment is intended to limit the 
plaintiff's ability to investigate or bring actions, where appropriate, 
challenging other past or future activities of defendants in 
Greenville, Houston, Jackson, Pittsburgh and Suffolk or any other 
markets, including their entry into any JSAs. LMAs, or any 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 bring suit in federal court to recover three times 
the damages the person has suffered, as well as costs and reasonable 
attorney's 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 the Modification of the Proposed Final 
Judgment

    The plaintiff 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 its entry. The comments and the response of the United States will 
be filed with the Court and published in the Federal Register.
    Any such 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 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 plaintiff considered, as an alternative to the proposed Final 
Judgment, a full trial on the merits of its complaint against 
defendants. The plaintiff is satisfied, however, that the divestiture 
of the divestiture stations and other relief contained in the proposed 
Final Judgment will preserve viable competition in the sale of radio 
advertising time in Greenville, Houston, Jackson, Pittsburgh and 
Suffolk. 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 judgments 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(a). 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.'' \4\ Rather,
---------------------------------------------------------------------------

    \4\ 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 Comment 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 the U.S.C.C.A.N. 6535, 6538.

[a]bsent a showing of corrupt failure of the government to discharge 
its duty, the Court, in making it 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-American 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 Mircosoft, 56 F.2d 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 undermine the effectiveness 
of antitrust enforcement by consent decree.\5\
---------------------------------------------------------------------------

    \5\ Bectel, 648 F.2d at 666 (citations omitted) (emphasis 
added); see 858 BNS, 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' '') (citation omitted).

The proposed Final Judgment, therefore, should not be reviewed under a

[[Page 18225]]

standard of whether it is 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 falls 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 interest.' '' \6\
---------------------------------------------------------------------------

    \6\ 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).
---------------------------------------------------------------------------

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

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,
Asuncion Cummings (AC-1850),
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 March 31, 1998.

Appendix A--Herfindahl-Hirschman Index Calculations

    ``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 Horizontal Merger Guidelines issued by the U.S. Department of 
Justice and the Federal Trade Commission. See Merger Guidelines 
Sec. 1.51.

Certificate of Service

    I hereby certify that, on this 31st day of March 1998, I caused to 
be served by hand delivery a copy of the foregoing Competitive Impact 
Statement upon the following:

David A. Clanton, Baker & McKenzie, 815 Connecticut Avenue, N.W., 
Washington, D.C. 20006-4078
Neil Imus, Vinson & Elkins, 1455 Pennsylvania Avenue, N.W., Washington, 
D.C. 20004
Asuncion Cummings
[FR Doc. 98-9800 Filed 4-13-98; 8:45 am]
BILLING CODE 4410-11-M