[Federal Register Volume 64, Number 94 (Monday, May 17, 1999)]
[Notices]
[Pages 26776-26782]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-12339]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Citadel Communications Corporation, Triathlon 
Broadcasting Company, and Capstar Broadcasting Corporation

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. Section 16(b) through (h), that a proposed 
Final Judgment, Stipulation and Amended Competitive Impact Statement 
have been filed with the United States District Court for the District 
of the District of Columbia in United States of America v. Citadel 
Communications Corporation, Capstar Broadcasting Corporation and 
Triathlon Broadcasting Company, Civil Action No. 99-CV01043. On April 
30, 1999, the United States filed an Amended Complaint alleging that 
the Joint Sales Agreement (``JSA'') in Colorado Springs, Colorado, and 
Spokane, Washington and Triathlon's acquisition of certain radio 
stations in Spokane, Washington violates Section One of the Sherman 
Act, 15 U.S.C. 1. The proposed Final Judgment, filed the same time as 
the Complaint, requires Citadel and Capstar to terminate the JSA 
pursuant to the Final Judgment and Capstar to divest a particular 
station in Spokane, Washington. Copies of the Amended Complaint, 
proposed Final Judgment and Amended Competitive Impact Statement are 
available for inspection at the Department of Justice in Washington, 
D.C. in Room 200, 325 Seventh Street, N.W., and at the Office of the 
Clerk of the United States District Court for the District of the 
District of Columbia.
    Public comment is invited within 60 days of the date of this 
notice. Such comments, and responses thereto, will be published in the 
Federal Register and filed with the Court. Comments should be directed 
to Craig W. Conrath, Chief, Merger Task Force, Antitrust Division, 
Department of Justice, 1401 H St N.W., Suite 4000, Washington, D.C. 
20530 (telephone: (202) 307-0001).
Rebecca P. Dick,
Director of Civil Non-Merger Enforcement.

Stipulation

    It is stipulated by and between the United States Department of 
Justice Antitrust Division (``Antitrust Division''), Citadel 
Communications Corporation (``Citadel''), and Capstar Broadcasting 
Corporation (``Capstar''), by their respective attorneys, as follows:
    1. This Court has jurisdiction over the subject matter of this 
action and the parties have agreed to waive all objections to personal 
jurisdiction and venue in the United States District Court for the 
District of Columbia.
    2. The parties stipulate that a Final Judgment in the form hereto 
attached may be filed and entered by the Court, upon the motion of any 
party or upon the Court's own motion, at any time after compliance with 
the requirements of the Antitrust Procedures and Penalties Act, 15 
U.S.C. 16, and without further notice to any party or other 
proceedings, provided that 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. Citadel and Capstar have agreed to terminate the Citadel-
Triathlon Joint Sales Agreement (``JSA'') (defined in Section II(e) of 
the Final Judgment) pursuant to the Final Judgment, but subject to 
Paragraph 9 of this stipulation. In addition, the parties have agreed 
to make certain transfers of radio stations. Capstar's transfer of 
KEYF-FM to Citadel in Spokane is part of the agreement memorialized in 
the Final Judgment.
    5. The parties have agreed to take the following actions that the 
United States has agreed not to oppose. In Colorado Springs, Capstar 
has agreed to transfer KSPZ-FM, KVOR-AM, and KTWK-AM to Citadel while 
Citadel has agreed to transfer KKLI-FM to Capstar. In Spokane, Capstar 
has agreed to transfer KEYF-FM and KEYF-AM to Citadel. Also in Spokane, 
Citadel has entered into an agreement with an unrelated third party to 
acquire KNJY-FM. Although the Final Judgment is not contingent upon 
these exchanges and acquisitions, the Antitrust Division has analyzed 
the transactions and has no objection to them.
    6. Citadel and Capstar state that there are no agreements or 
understandings between them that will affect how they will program or 
format the radio stations that they own in Colorado Springs or Spokane.
    7. 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. 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 JSA will be terminated and the 
divestiture of KEYF-FM will be made as ordered, 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.
    9. If Capstar does not acquire Triathlon Broadcasting Company by 
June 2, 1999, the Antitrust Division will

[[Page 26777]]

withdraw the proposed Final Judgment and dismiss Capstar as a defendant 
in this matter.

    Dated: April 7, 1999.

    For Plaintiff United States of America.
Karl D. Knutsen,
United States Department of Justice, Antitrust Division, Merger Task 
Force, 1401 H Street, N.W., Washington, D.C. 20530, (202) 514-0976.

    For Defendant Capstar Broadcasting Corporation.
Neil W. Imus,
Vinson & Elkin L.L.P., 1455 Pennsylvania Avenue, N.W., Washington, D.C. 
20006, (202) 639-6675.

    Dated: April 8, 1999.

    For Defendant Citadel Communications Corporation.
Debra H. Dermody,
Reed, Smith, Shaw, & McClay, 435 Sixth Ave., Pittsburgh, PA 15219, 
(412) 288-3302.

Final Judgment

    Whereas, plaintiff, the United States of America, has filed its 
complaint in this action, and plaintiff and defendants Citadel 
Communications Corporation (``Citadel'') and Capstar Broadcasting 
Corporation (``Capstar'') by their respective attorneys, having 
consented to the entry of this Final Judgment without trial or 
adjudication of any issue of fact or law herein, and without this Final 
Judgment constituting any evidence against or an admission by any party 
with respect to any issue of law or fact herein;
    And whereas, these defendants have agreed to be bound by the 
provisions of this Final Judgment pending its approval by the Court.
    And whereas, the essence of this Final Judgment is the prompt and 
likely termination of the Joint Sales Agreement ``JSA'' in Colorado 
Springs, Colorado and Spokane, Washington, identified below, which will 
help ensure that competition is substantially preserved;
    And whereas, plaintiff requires Citadel and Capstar to terminate 
the JSA for the purpose of restoring competition in the sale of radio 
advertising;
    And whereas, Citadel and Capstar have represented to the plaintiff 
that the JSA can and will be terminated, subject to paragraph 9 of the 
Stipulation, and that Citadel and Capstar will not later raise claims 
of hardship, contractual bar, or difficulty as grounds for asking the 
Court to delay or modify termination of the JSA described 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 defendants and over 
the subject matter of this action, and defendants have agreed to waive 
any objection to personal jurisdiction. The Complaint states a claim 
upon which relief may be granted against the defendants, as hereinafter 
defined, under Section 1 of the Sherman Act, 15 U.S.C. 1.

II. Definitions

    As used in this Final Judgment:
    A. ``Capstar'' means defendant Capstar Broadcasting Corporation, a 
Delaware corporation with its headquarters in Austin, Texas, and its 
successors, assigns, subsidiaries, divisions, groups, affiliates, 
partnerships and joint ventures, and directors, officers, managers, 
agents, and employees, including but not limited to Hicks, Muse, Tate, 
& Furst Incorporated (``Hicks-Muse''), a Delaware corporation with its 
headquarters in Dallas, Texas.
    B. ``Citadel'' means defendant Citadel Communications Corporation, 
a Nevada corporation with its headquarters in Las Vegas, Nevada, and 
its successors, assigns, subsidiaries, divisions, groups, affiliates, 
partnerships and joint ventures, and directors, officers, managers, 
agents, and employees.
    C. ``Defendants'' means Citadel and Capstar.
    D. ``Antitrust Division'' means the Antitrust Division of the 
United States Department of Justice.
    E. ``JSA'' means the Joint Sales Agreement entered on or around 
December 15, 1995 among Citadel and Pourtales Radio Partnership (to 
which Triathlon is successor), providing for the sale of radio 
advertising time in Colorado Springs, Colorado and Spokane, Washington.
    F. ``Radio Assets'' means all of the assets, tangible or 
intangible, used in the operation of the following radio stations that 
sell advertising time in Colorado Springs, Colorado, and Spokane, 
Washington, including all real property (owned or leased) used in the 
operation of these stations, all broadcast equipment, office equipment, 
office furniture, fixtures, materials, supplies, and other tangible 
property used in the operation of these stations; all licenses, 
permits, authorizations, and applications therefor issued by the 
Federal Communications Commission and other government agencies related 
to these stations; all contracts, agreements, leases and commitments of 
defendants relating to their operation; all trademarks, service marks, 
trade names, copyrights, patents, slogans; programming materials, and 
promotional materials relating to these stations; and all logs and 
other records maintained by the operator or owner in connection with 
its business:
    (1) In Colorado Springs, KSPZ-FM, KKFM-FM, KKMG-FM, KVUU-FM, KKLI-
FM, KVOR-AM, and KTWK-AM; and
    (2) In Spokane, KAEP-FM, KDRK-FM, KEYF-FM, KNFR-FM, KISC-FM, KKZK-
FM, KGA-AM, KEYF-AM, KAQQ-AM, KJRB-AM, and KUDY-AM.
    (G) ``Triathlon'' means Triathlon Broadcasting Company, a Delaware 
corporation with its headquarters in San Diego, California, named as a 
defendant in this action.

III. Applicability

    A. The provisions of this Final Judgment apply to the defendants, 
their successors and assigns, their subsidiaries, 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. The defendants shall require, as a condition of the sale or 
other disposition of any of the Radio Assets, that the acquirer or 
acquirers agree to be bound by the provisions of this Final Judgment.

IV. Termination of JSA and Divestment of KEYF-FM

    A. Citadel and Capstar are hereby ordered and directed in 
accordance with the terms of this Final Judgment to terminate the JSA 
as quickly as possible, but no later than June 2, 1999.
    B. Capstar is also ordered to divest KEYF-FM in Spokane as quickly 
as possible, but no later than June 2, 1999.
    C. The Antitrust Division, in its sole discretion, may extend the 
time period for termination for two (2) additional thirty (30) day 
periods of time, not to exceed sixty (60) calendar days in total.
    D. Citadel and Capstar shall not acquire any other radio stations 
that sell radio advertising time in either Colorado Springs or Spokane 
except under the procedures stated in Section V. Further, Citadel and 
Capstar shall not enter into any JSA or any cooperative selling 
arrangement with any other operator of radio stations serving listeners 
in either Colorado Springs or Spokane except under the procedures and 
conditions stated in Section V.
    E. Citadel shall not confer with operators of other radio stations 
that sell advertising time in Colorado Springs or Spokane regarding the 
price of radio advertising time--including any discounts for 
advertisers or classes of

[[Page 26778]]

advertisers or the availability of added value such as free or bonus 
spots, remote broadcasts, or other promotions.

V. Notice

    Capstar and Citadel shall provide advance notification to the 
Antitrust Division when they directly or indirectly acquire any assets 
of or any interest (including any financial, security, loan, equity or 
management interest) in any radio station that sells advertising time 
in Colorado Springs, Colorado, or Spokane, Washington, or enter into 
any JSA or any cooperative selling arrangement with any other operator 
of radio stations serving listeners in either city. This obligation to 
provide notice is met under this section when a transaction is 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''),
    Notification under this section shall be provided to the Antitrust 
Division 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 about the sales of radio advertising time in Colorado 
Springs and Spokane. Notification shall be provided at least thirty 
(30) days prior to the acquisition of any such interest, 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 Antitrust Division 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. 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.
    Citadel shall not enter into any JSA or any other cooperative 
selling arrangement with any other operator of radio stations that 
sells or helps to sell radio advertising time in either Colorado 
Springs or Spokane without advance written approval from the Antitrust 
Division.

VI. Preservation of Assets

    Unitl the termination of the JSA required by Section IV has been 
accomplished, Citadel shall take all steps necessary to maintain and 
operate the Radio Assets as active and viable entities to the extent it 
is able under the JSA; maintain the management, staffing, sales and 
marketing of the Radio Assets; and maintain the Radio Assets in 
operable condition at current capacity configurations. Citadel and 
Capstar agree that they may hire each other's employees and that they 
will not enforce any non-complete provisions in the employment 
contracts of any sales employee of any radio station they own in 
Colorado Springs.

VII. Financing

    Citadel and Capstar shall not finance for each other all or any 
part of any transaction related to this Final Judgment.

VIII. Compliance Inspection

    For purposes of determining or securing compliance with the Final 
Judgment or determining whether the Final Judgment should be modified 
or terminated and subject to any legally recognized privilege, from 
time to time:
    A. Duly authorized representatives of the plaintiff, upon the 
written request of the Assistant Attorney General in charge of the 
Antitrust Division, and on reasonable notice to the defendants made to 
their principal offices, shall be permitted:

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

    B. Upon the written request of the Assistant Attorney General in 
charge of the Antitrust Division, made to the defendants' principal 
offices, the defendants shall submit written reports, under oath if 
requested, with respect to any matter contained in the Final Judgment.
    C. No information or documents obtained by the means provided in 
Section VIII of this Final Judgment shall be divulged by a 
representative of the 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 the plaintiff is a 
party (including grand jury proceedings), or for the purpose of 
securing compliance with this Final Judgment, or as otherwise required 
by law.
    D. If at the time information or documents are furnished by the 
defendants to the plaintiff, the defendants represent and identify 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 the defendants mark 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 the plaintiff to the defendants prior to 
divulging such material in any legal proceeding (other than a grand 
jury proceeding) to which the defendants are not a party.

IX. 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.

X. Termination

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

XI. Public Interest

    Entry of this Final judgment is in the public interest.

    Dated ________
----------------------------------------------------------------------
United States District Judge

Plaintiffs Explanation of Consent Decree Procedures

    Plaintiff, the United States of America, submits this short 
memorandum summarizing the procedures regarding the Court's entry of 
the proposed Final Judgment. The Judgment would settle this case 
pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 
16(b)-(h) (the ``APPA''), which applies to civil

[[Page 26779]]

antitrust cases brought and settled by the United States.
    1. Today, plaintiff has filed a Complaint, a proposed Final 
Judgment, and a Stipulation by which the parties have agreed to the 
Court's entry of the proposed Final Judgment following compliance with 
the APPA, and a Motion to Enter the Stipulation and Order. The 
defendants have agreed not to consummate their transaction until the 
Court signs the Stipulation and Order. The Court's entry of the 
Stipulation will enable it immediately to govern the parties's behavior 
relating to the transaction, until such time as the Final Judgment is 
entered pursuant to the APPA.
    2. Plaintiff is also filing a Competitive Impact Statement relating 
to the proposed Judgment [15 U.S.C. 16(b)].
    3. The APPA requires that plaintiff publish the proposed Final 
Judgment and Competitive Impact Statement in the Federal Register and 
in certain newspapers at least 60 days prior to entry of the Final 
Judgment. The notice will inform members of the public that they may 
submit comments about the Final Judgment to the United States 
Department of Justice, Antitrust Division [15 U.S.C. 16(b)-(c)].
    4. During the sixty-day period, plaintiff will consider, and at the 
close of that period respond to, any comments received, and it will 
publish the comments and responses in the Federal Register.
    5. After the expiration of the sixty-day period, plaintiff will 
file with the Court the comments, the government's responses, and a 
Motion for Entry of the Final Judgment (unless the United States has 
decided to withdraw its consent to entry of the Final Judgment, as 
permitted by Paragraph 2 of the Stipulation) [see 15 U.S.C. 16(d)].
    6. At that time, pursuant to the APPA, 15 U.S.C. 16(e)-(f), the 
Court may enter the Final Judgment without a hearing, if it finds that 
the Final Judgment is in the public interest.

    Dated: April 28, 1999.

    Respectfully submitted.
Karl D. Knutsen,
Attorney, United States Department of Justice, Antitrust Division, 
Merger Task Force, 1401 H St., NW, Suite 4000, Washington, DC 20530, 
(202) 514-0976.

Certificate of Service

    I, Karl D. Knutsen, of the Antitrust Division of the United States 
Department of Justice, do hereby certify that true copies of the 
foregoing Complaint, Final Judgment, Stipulation, Competition Impact 
Statement, and Plaintiff's Explanation of Consent Decree Procedures 
were served this 28th day of April, 1999, by hand and Fedex, to the 
following:

Debra H. Dermody, Reed, Smith, Shaw, & McClay, 435 Sixth Avenue, 
Pittsburgh, PA 15219, Counsel for Citadel Communications Corporation, 
By Fedex.
David J. Laing, Baker & McKenzie, 815 Connecticut Avenue, N.W., 
Washington, D.C. 20006, Counsel for Triathlon Broadcasting Company, By 
hand.
Neil W. Imus, Vinson & Elkins L.L.P., 1455 Pennsylvania Avenue, N.W., 
Washington, D.C. 20006, Counsel for Capstar Broadcasting Corporation, 
By hand.
Karl D. Knutsen

Amended 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 Amended 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 an amended civil antitrust Complaint on April 
30, 1999 (``Complaint'') alleging that Citadel Communication 
Corporation's (``Citadel'') ``Joint Sale Agreement'' (``JSA'') with 
Triathlon Broadcasting (``Triathlon'') violates Section One of the 
Sherman Act, 15 U.S.C. 1. The Complaint alleges that the JSA between 
Citadel and Triathlon is anticompetitive in the Colorado Springs, 
Colorado, and Spokane, Washington, radio advertising markets. The 
Complaint also alleges that Triathlon's acquisition of additional radio 
stations in Spokane is anticompetitive.
    The Complaint alleges that in Colorado Springs, Citadel's KKFM-FM, 
and KKMG-FM competed against Triathlon's KSPZ-FM, KVUU-FM, KTWK-AM, and 
KVOR-AM prior to the JSA, and that since the creation of the JSA, 
Citadel has acquired KKLI-FM. The complaint further alleges that since 
Citadel and Triathlon instituted the JSA in Colorado Springs, Citadel 
now sets the prices for radio advertising for both its and Triathlon's 
stations. In addition, the complaint alleges that Citadel approached 
its remaining competitors in Colorado Springs and suggested that they 
could all make more money if they were to eliminate a discount to 
certain advertisers, thus indicating its intent and willingness to 
collude and avoid price competition.
    The complaint alleges that in Spokane, Citadel's KAEP-FM, KDRK-FM, 
KJRB-AM, and KGA-AM competed against Triathlon's KKZX-FM, KEYF-FM, 
KEYF-AM, and KUDY-AM prior to the JSA. The complaint further alleges 
that since Citadel and Triathlon instituted the JSA in Spokane, Citadel 
now sets the prices for radio advertising for both its and these 
Triathlon stations. In addition, the complaint alleges that Triathlon 
later acquired KNFR-FM, KISC-FM, and KAQQ-AM in Spokane, and has a 
reduced incentive to compete against the JSA because it receives a 
share of the profits from the JSA.
    Finally, the complaint alleges that Capstar Broadcasting 
Corporation (``Capstar'') has announced its agreement to acquire 
Triathlon, including its stations in Colorado Springs and Spokane. 
After it acquires Triathlon, Capstar would become a party to the JSA, 
if the JSA were still in existence.
    The prayer for relief seeks: (a) adjudication that Citadel's JSA 
with Triathlon in Colorado Springs violates Section One of the Sherman 
Act, 15 U.S.C. 1; (b) adjudication that Citadel's JSA with Triathlon 
and Triathlon's acquisition of non-JSA stations in Spokane violate 
Section One of the Sherman Act, 15 U.S.C. 1; (c) entry of an injunction 
terminating the JSA in both Colorado Springs and Spokane and requiring 
Capstar to divest KEF-FM in Spokane; (d) entry of an injunction 
preventing Citadel from discussing the price of radio advertising time 
with competitors in Colorado Springs and Spokane; and (e) such other 
relief as is proper.
    The United States has reached a proposed settlement with Citadel 
and Capstar which is memorialized in the proposed Final Judgment filed 
with the Court. Under the terms of the proposed Final Judgment, Citadel 
and Capstar will terminate the JSA and Capstar will divest KEYF-FM.
    The plaintiff and defendants Citadel and Capstar have stipulated 
that the proposed Final Judgment may be entered after compliance with 
the APPA and that they can fulfill their obligations under the Final 
Judgment. 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 Final Judgment and to punish 
violations thereof.

II. The Alleged Violation

A. The Defendants

    Citadel is a Nevada corporation with its headquarters in Las Vegas, 
Nevada.

[[Page 26780]]

According to industry estimates, it owns 107 radio stations in 20 U.S. 
markets. Triathlon is a Delaware Corporation with its headquarters in 
San Diego, California. According to industry estimates, it currently 
owns 31 radio stations in six U.S. markets. Capstar has announced its 
agreement to acquire Triathlon.
    Capstar is a Delaware corporation with its headquarters in Austin, 
Texas. It is associated with Hicks, Muse, Tate, & Furst Incorporated 
(``Hicks-Muse''), a Delaware corporation with its headquarters in 
Irving, Texas. According to industry estimates, Capstar owns 
approximately 309 radio stations in 76 U.S. markets. Chancellor Media 
Company, a company with which Capstar shares some directors and owners, 
has announced its intention to acquire Capstar.

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

    Prior to December, 1995, the Citadel and Triathlon radio stations 
in Colorado Springs and Spokane competed against each other within 
their respective cities. On or about December 15, 1995, however, 
Citadel and Triathlon's predecessor corporation entered into a Joint 
Sales Agreement (``JSA''). Under the terms of the JSA, Citadel sets 
prices and sells advertising time on the radio stations subject to the 
JSA in both Colorado Springs and Spokane. Citadel also collects 
payments from advertisers, makes a monthly report to Triathlon, deducts 
expenses, and divides the profits between the parties. Citadel and 
Triathlon have operated under the JSA since December, 1995. Later, 
Triathlon acquired another group of radio stations in Spokane.

C. Anticompetitive Consequences of the JSA

1. The Sale of Radio Advertising Time in Colorado Springs, Colorado, 
and Spokane, Washington, Are The Appropriate Markets in Which To 
Analyze This Antitrust Action
    The Complaint alleges that the provision of advertising time on 
radio stations serving Colorado Springs, Colorado, and Spokane, 
Washington, constitutes a line of commerce and sections of the country, 
or relevant markets, for antitrust purposes. Radio stations, by their 
programming, seek to attract listeners. The radio stations then sell 
advertising time to advertisers who want to reach those listeners. 
Radio's unique characteristics as an inexpensive drive-time and 
workplace news and entertainment companion has given it distinct and 
special qualities. Retailers, in an effort to reach potential 
customers, use a mix of electronic and print media to deliver their 
advertising messages. In so doing, they have learned that certain media 
are more cost-effective than others in meeting certain of their 
advertising goals and that radio can serve several such goals.
    When radio 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. 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. They view 
radio as giving them unique and cost-effective access to certain 
audiences. They recognize that because radio is portable, people can 
listen to it anywhere--especially in places and situations where other 
media are not present, such as in the office and car. In addition, they 
know that radio formats are designed to attract listeners in specific 
demographic groups. As a consequence of the foregoing factors, the 
closest substitute to advertising on one radio station, for many 
advertisers, is advertising on other radio stations.
    In addition to accomplishing these goals more efficiently than 
other media, radio advertising is the relevant market in which to 
evaluate the JSA because a hypothetical monopolist of radio stations 
could profitably raise prices. Although some local and national 
advertisers may switch some of their advertising to other media rather 
than absorb a price increase in the cost of radio advertising time, the 
existence of such advertisers would not prevent all radio stations in 
the Colorado Springs and Spokane markets from profitably raising their 
prices a small but significant amount. At a minimum, stations could 
profitably raise prices to those advertisers who view radio as a 
necessary advertising medium for them, or as a necessary advertising 
complement to other media. Radio stations negotiate prices individually 
with advertisers; consequently, radio stations can charge different 
advertisers different prices. Radio stations generally can identify 
advertisers with strong radio preferences. Because of this ability to 
price discriminate among customers, radio stations may charge higher 
prices to advertisers that view radio as particularly effective for 
their needs, while maintaining lower prices for other advertisers.
2. Harm to Competition
    a. The concentration of radio stations in Colorado Springs and 
Spokane substantially harms competition. The Complaint alleges that 
Citadel's JSA with Triathlon in Colorado Springs and Spokane along with 
Triathlon's subsequent acquisition of additional stations in Spokane 
harms competition. Prior to the JSA, an advertiser buying radio 
advertising time could select a combination of Citadel, Triathlon, and 
independent stations that would allow it to exclude either the 
Triathlon or Citadel stations--thus giving both Citadel and Triathlon 
an incentive to negotiate with the advertiser. After the JSA, however, 
the Citadel and Triathlon stations subject to the JSA no longer compete 
with each other. Because the JSA represents a large percentage of the 
radio advertising available in those geographic markets, many 
advertisers in those markets cannot meet their listener goals without 
using the JSA stations. Realizing that these advertisers cannot buy 
around its JSA, Citadel can raise prices to many advertisers.
    b. Advertisers could not turn to other Colorado Springs or Spokane 
radio stations to prevent Citadel from imposing an anticompetitive 
price increase. If Citadel and Triathlon raised prices to advertisers 
in Colorado Springs or Spokane, other radio stations in Colorado 
Springs and Spokane would not and could not profitably offer additional 
advertising inventory or change their formats to provide access to 
different audiences, thus mitigating the effect of the price increase. 
Stations are constrained in their ability to play additional 
commercials by the tendency of listeners to avoid stations that play 
too much advertising and the insistence of advertisers on 
``separation'' from similar advertisers. Thus, even if advertisers 
trying to avoid a price increase wanted to run additional commercials 
on non-Citadel and non-Triathlon stations, the alternative stations 
would likely be unable to accommodate them. Moreover, even assuming 
that such a station could accommodate an increase in advertisers, it 
would perceive the increase in demand for its product and would have an 
incentive to raise its prices as well. Finally, successful stations are 
reluctant to change formats because of the risk and costs involved in a 
format change and unsuccessful stations may not be able to gain a large 
enough audience to undermine a supra-competitive price increase. In 
addition, an advertiser wishing to reach a broad audience cannot simply 
run more commercials on fewer stations, because the advertiser will not 
reach a broad enough audience without a range of stations.
    In both the Colorado Springs and Spokane radio advertising markets, 
new

[[Page 26781]]

entry is unlikely as a response to a supra-competitive price increase 
from the JSA. In addition, it is unlikely that stations in adjacent 
communities could boost their power so as to enter the Colorado Springs 
or Spokane markets without interfering with other stations and thus 
violating Federal Communications Commission regulations.

III. Explanation of the Proposed Final Judgment

    The proposed Final Judgment would preserve competition in the sale 
of radio advertising time in both Colorado Springs and Spokane. It 
requires Citadel and Capstar \1\ to terminate their JSA as soon as 
possible, but no later than June 2, 1999. Plaintiff, at its sole 
discretion, may extend the time period for the parties to comply with 
the terms of the Final Judgment for two additional 30-day periods. In 
addition, the proposed Final Judgment requires Capstar to divest KEYF-
FM in Spokane. Defendants have also expressed their desire to exchange 
certain other stations among themselves and plaintiff has stipulated 
that it will not contest any or all of their proposed exchanges. See 
Stipulation and Order, Paras. 4 & 5. The Final Judgment provides that 
neither defendant, nor their successors, can acquire any other radio 
station in either Colorado Springs or Spokane without giving the 
Antitrust Division of the Department of Justice prior notice. 
Furthermore, the Final Judgment places conditions on the parties if 
they wish to enter any subsequent JSA in either Colorado Springs or 
Spokane. Capstar (never a party to the JSA) may not enter into a JSA in 
those cities without notifying that Antitrust Division; Citadel may not 
enter a JSA in those cities without permission from the Antitrust 
Division. Despite their clear competitive significance. JSAs may not 
all be reportable to the Department under the Hart-Scott-Rodino 
Antitrust Improvements Act of 1976, as amended, 15 U.S.C. 18a (the 
``HSR Act''). Thus, this provision in the proposed Final Judgment 
ensures that the Department will receive notice of and be able to act, 
if appropriate, to stop any agreements that might have anticompetitive 
effects in these radio advertising markets. Finally, the proposed Final 
Judgment prevents Citadel from discussing radio advertising prices and 
discounts with other radio stations in both Colorado Springs and 
Spokane. Nothing in this proposed Final Judgment limits the plaintiff's 
ability to investigate or bring actions, where appropriate, challenging 
other past or future activities of defendants in Colorado Springs, 
Spokane, or any other markets, including their entry into a JSA or any 
other agreements related to the sale of advertising time except those 
specifically identified in the Complaint.
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    \1\ Although this action names Triathlon as a defendant, the 
Department expects that Triathlon will be acquired by Capstar soon 
and will be acquired by Capstar soon and will then cease to have a 
separate legal existence. Hence, relief against it is unnecessary. 
When Triathlon's separate existence is terminated, the Department 
will move to dismiss it as a defendant. This will occur before the 
Department moves for entry of the proposed Final Judgment at the 
conclusion of the Tunney Act review process.
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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 conducted 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 
attorneys' fees. Entry of the proposed Final Judgment will neither 
impair nor assist the bringing of any private antitrust damage action.

V. Procedures Available for 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 termination 
of the JSA and other relief contained in the proposed Final Judgment 
will preserve viable competition in the sale of radio advertising time 
in the Colorado Springs and Spokane radio advertising markets. Thus, 
the proposed Final Judgment achieves all of 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(e). As the United States Court of Appeals for the District 
of Columbia 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 Corp., 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

[[Page 26782]]

extended proceedings which might have the effect of vitiating the 
benefits of prompt and less costly settlement through the consent 
decree process.'' \2\ Rather,

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

United States v. Mid-America Dairymen, Inc., 1977-1 Trade Cas. para. 
61,508, at 71,980 (W.D. Mo. 1977).
    Accordingly, with respect to the adequacy of the relief secured by 
the decree, a court may not ``engage in an unrestricted evaluation of 
what relief would best serve the public.'' United States v. BNS, Inc., 
858 F.2d 456, 462 (9th Cir. 1988) (citing United States v. Bechtel 
Corp., 648 F.2d 660, 666 (9th Cir.)); see also Microsoft, 56 F.3d at 
1460-62. Rather,

the balancing of competing social and political interests affected 
by a proposed antitrust consent decree must be left, in the first 
instance, to the discretion of the Attorney General. The court's 
role in protecting the public interest is one of insuring that the 
government has not breached its duty to the public in consenting to 
the decree. The court is required to determine not whether a 
particular decree is the one that will best serve society, but 
whether the settlement is ``within the reaches of the public 
interest.'' More elaborate requirements might undermine the 
effectiveness of antitrust enforcement by consent decree.\3\
---------------------------------------------------------------------------

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

The proposed Final Judgment, therefore, need not be certain to 
eliminate every anticompetitive effect of a particular practice. Court 
approval of a final judgment requires a more flexible and less strict 
standard 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.' '' \14\
---------------------------------------------------------------------------

    \4\ United States v. American Tel. and Tel. Co., 552 F. Supp. 
131, 151 (D.D.C. 1982), aff'd. sub nom. Maryland v. United States, 
460 U.S. 1001 (1983) (quoting Gillette Co., 406 F. Supp. at 716 
(citations omitted)); United States v. Alcan Aluminum, Ltd., 605 F. 
Supp. 619, 622 (W.D. Ky. 1985). Washington, D.C. 20530
---------------------------------------------------------------------------

    In this case, the proposed Final Judgment meets the appropriate 
standard. The Final Judgment dissolves the JSA. In addition, Capstar's 
divestiture of KEYF-FM in Spokane will cure the anticompetitive effects 
of Triathlon's prior acquisitions there. The exchanges of stations 
anticipated by defendants Citadel and Capstar leave both surviving 
parties with radio advertising market shares of approximately 40% or 
less in both Colorado Springs and Spokane.

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.
Karl D. Knutsen,
Attorney, Colorado Bar Reg. No. 23997, Merger Task Force, U.S. 
Department of Justice, Antitrust Division, 1401 H Street, N.W., 
Washington, D.C. 20530, (202) 514-0976.

Certificate of Service

    I, Karl D. Knutsen, of the Antitrust Division of the United States 
Department of Justice, do hereby certify that true copies of the 
foregoing Amended Complaint and amended Competitive Impact Statement 
were served this 26th day of April, 1999, by United States mail, to the 
following:

Debra H. Dermody, Reed, Smith, Shaw, & McClay, 435 Sixth Ave., 
Pittsburgh, PA 15219, Counsel for Citadel Communications Corporation
David J. Laing, Baker & McKenzie, 815 Connecticut, Washington, D.C. 
20006, Counsel for Triathlon Broadcasting Company
Neil W. Imus, Vinson & Elkins, 1455 Pennsylvania Avenue, N.W., 
Washington, D.C. 20006, Counsel for Capstar Broadcasting Corporation
Karl D. Knutsen

[FR Doc. 99-12339 Filed 5-14-99; 8:45 am]
BILLING CODE 4410-11-M