[Federal Register Volume 84, Number 106 (Monday, June 3, 2019)]
[Notices]
[Pages 25573-25577]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-11489]



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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Gray Television, Inc., et al.; Response to 
Public Comment

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h), that one comment was received 
concerning the proposed Final Judgment in this case, and that comment 
together with the Response of Plaintiff United States to Public Comment 
on the Proposed Final Judgment have been filed with the United States 
District Court for the District of Columbia in United States of America 
v. Gray Television, Inc., et al., Civil Action No. 1:18-cv-02951-CRC. 
Copies of the comment and the United States' response are available for 
inspection on the Antitrust Division's website at https://www.justice.gov/atr and at the Office of the Clerk of the United States 
District Court for the District of Columbia. Copies of these materials 
may be obtained from the Antitrust Division upon request and payment of 
the copying fee set by Department of Justice regulations.

Patricia A. Brink,
Director of Civil Enforcement.

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

    United States of America, Plaintiff, v. Gray Television, Inc., 
and Raycom Media, Inc., Defendants.

Case No. 1:18-cv-02951-CRC

RESPONSE OF PLAINTIFF UNITED STATES TO PUBLIC COMMENT ON THE PROPOSED 
FINAL JUDGMENT

    As required by the Antitrust Procedures and Penalties Act (the 
``APPA'' or ``Tunney Act''), 15 U.S.C. Sec.  16(b)-(h), the United 
States hereby responds to the one public comment received by the United 
States about the proposed Final Judgment in this case. After careful 
consideration of the submitted comment, the United States continues to 
believe that the proposed remedy, as described in the proposed Final 
Judgment, will address the harm alleged in the Complaint and is 
therefore in the public interest. The United States will move the Court 
for entry of the proposed Final Judgment after the public comment and 
this response have been published in the Federal Register pursuant to 
15 U.S.C. Sec.  16(d).

I. PROCEDURAL HISTORY

    On June 23, 2018, Gray Television, Inc. (``Gray'') and Raycom 
Media, Inc. (``Raycom'') entered into an Agreement and Plan of Merger 
pursuant to which Gray would acquire Raycom for approximately $3.6 
billion. On December 14, 2018, the United States filed a civil 
antitrust Complaint seeking to enjoin Gray and Raycom (collectively, 
``Defendants'') from carrying out the merger. The Complaint alleges 
that the merger would substantially lessen competition in the markets 
for the licensing of ``Big 4'' television retransmission consent and 
the sale of broadcast television spot advertising in each of nine 
Designated Market Areas (``DMAs'') in which Gray and Raycom each owned 
an affiliate of a ``Big 4'' television network (i.e., an NBC, CBS, ABC, 
or FOX affiliate). These nine DMAs (the ``Overlap DMAs'') are: (i) 
Waco-Temple-Bryan, Texas; (ii) Tallahassee, Florida-Thomasville, 
Georgia; (iii) Toledo, Ohio; (iv) Odessa-Midland, Texas; (v) Knoxville, 
Tennessee; (vi) Augusta, Georgia; (vii) Panama City, Florida; (viii) 
Dothan, Alabama; and (ix) Albany, Georgia.
    Simultaneously with the filing of the Complaint, the United States 
filed a proposed Final Judgment and a Hold Separate Stipulation and 
Order (``Hold Separate'') signed by Plaintiff and Defendants consenting 
to entry of the proposed Final Judgment after compliance with the 
requirements of the Tunney Act, 15 U.S.C. Sec.  16(b)-(h). Pursuant to 
those requirements, the United States filed a Competitive Impact 
Statement (``CIS'') on December 14, 2018, describing the transaction 
and the proposed Final Judgment. 15 U.S.C. Sec.  16(b). The United 
States published the Complaint, proposed Final Judgment, and CIS in the 
Federal Register on February 1, 2019, see 84 Fed. Reg. 1,216 (2019), 
and caused summaries of the proposed Final Judgment and CIS, together 
with directions for the submission of written comments related to the 
proposed Final Judgment, to be published in The Washington Post for 
seven days, from February 4, 2019, through February 10, 2019,\1\ see 15 
U.S.C. Sec.  16(c). The 60-day public comment period required by the 
Tunney Act, 15 U.S.C. Sec.  16(b)-(d), ended on April 5, 2019. The 
United States received one comment, which is described below in Section 
IV, concerning the allegations in the Complaint (Exhibit 1).
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    \1\ Though not expressly required to do so by the Tunney Act, 
the United States also caused these summaries of the proposed Final 
Judgment and CIS, and directions for submission of written comments, 
to be published for seven days over a period of two weeks in 11 
other newspapers that are widely read in the Overlap DMAs: The 
Albany Herald, The Augusta Chronicle, the Dothan Eagle, the Waco 
Tribune-Herald, The Knoxville News-Sentinel, the Midland Reporter-
Telegram, The Odessa American, The News Herald (published in Panama 
City, Florida), the Tallahassee Democrat, The Blade (published in 
Toledo, Ohio), and The Valdosta Daily Times. The last date of 
publication of the materials in any of these newspapers was February 
19, 2019.
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II. THE COMPLAINT, THE HOLD SEPARATE, AND THE PROPOSED FINAL JUDGMENT

    The Complaint alleged that Gray's acquisition of Raycom would 
substantially lessen competition in the licensing of Big 4 television 
retransmission consent and in the sale of broadcast television spot 
advertising in the Overlap DMAs. The proposed Final Judgment remedies 
this concern by requiring the Defendants to divest the Big 4 stations 
owned by either Gray or Raycom in each Overlap DMA. Without the 
proposed remedy, Gray's acquisition of Raycom would have resulted in 
the combined company owning an additional Big 4 station in each Overlap 
DMA.
    Big 4 stations usually are the stations in each DMA ranked highest 
in terms of audience share and ratings, largely because of unique 
offerings such as local news, sports, and highly ranked primetime 
programs. Due to these features, multichannel video programming 
distributors (``MVPDs''), such as cable and satellite television 
providers, regard Big 4 broadcast stations as highly desirable for 
inclusion in the packages they offer subscribers. Viewers typically 
consider Big 4 stations to be close substitutes for one another. If an 
MVPD suffers a blackout of a Big 4 station in a given DMA, many of the 
MVPD's subscribers are likely to turn to other Big 4 stations in the 
DMA to watch similar content. The combination of Gray's and Raycom's 
Big 4 stations would have increased the combined company's bargaining 
leverage against MVPDs in the Overlap DMAs, likely leading to increased 
``retransmission consent'' fees, which generally are passed on to MVPD 
subscribers.
    In addition to licensing retransmission consent, broadcast 
television stations sell advertising ``spots'' during breaks in their 
programming. An advertiser purchases spots from a broadcast station in 
order to reach viewers within the DMA in which the broadcast station is 
located. From an advertiser's perspective, broadcast television spot 
advertising possesses a unique combination of attributes that sets it 
apart from other kinds of advertising. Gray and Raycom compete to sell 
broadcast television advertising in each of the Overlap DMAs. Without 
the divestiture of a Big 4 station in each Overlap DMA,

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advertisers would have fewer broadcast television alternatives, likely 
resulting in increased prices for broadcast television spot 
advertising.
    On August 22, 2018, the Defendants provided the United States with 
executed asset purchase agreements under which the Defendants proposed 
to divest the following Big 4 stations:
    (a) Raycom-owned KXXV and KRHD-CD, the ABC affiliates in the Waco-
Temple-Bryan, Texas, DMA, and WTXL-TV, the ABC affiliate in the 
Tallahassee, Florida-Thomasville, Georgia, DMA to the E.W. Scripps 
Company or its subsidiaries (collectively ``Scripps'');
    (b) Raycom-owned WTOL, the CBS affiliate in the Toledo, Ohio, DMA, 
and KWES-TV, the NBC affiliate in the Odessa-Midland, Texas, DMA to 
TEGNA Inc. or its subsidiaries (collectively ``TEGNA'');
    (c) Raycom-owned WTNZ, the FOX affiliate in the Knoxville, 
Tennessee, DMA, WFXG, the FOX affiliate in the Augusta, Georgia, DMA, 
WPGX, the FOX affiliate in the Panama City, Florida, DMA, and WDFX-TV, 
the FOX affiliate in the Dothan, Alabama, DMA to Greensboro TV, LLC, a 
company controlled by Jim Lockwood (``Lockwood''); and
    (d) Gray-owned WSWG, the CBS affiliate in the Albany, Georgia, DMA 
to Marquee Broadcasting Georgia, Inc. (``Marquee'').
    The United States investigated the sufficiency of the proposed 
divestitures for addressing competitive concerns with the proposed 
merger by reviewing documents and information from the proposed 
divestiture buyers and interviewing their executives. After this 
review, the United States concluded that the divestiture of the assets 
to each proposed purchaser would not cause competitive harm; each 
purchaser has an incentive to use the divestiture assets to compete in 
the relevant markets; and each purchaser has sufficient acumen, 
experience, and financial capability to compete effectively in the 
market over the long term. Each of the approved buyers has financial 
capability and experience running multiple broadcast television 
stations, including Big 4 affiliates. Moreover, each buyer has the 
experience and sophistication necessary to manage the assets its 
purchasing, plans to use the assets to compete in the markets in which 
they are located, and has no other entanglements suggesting the 
divestitures would result in any competitive harm. Accordingly, the 
Division concluded that the divestiture of broadcast stations and 
related assets to Scripps, TEGNA, Lockwood, and Marquee, resolved the 
competitive concerns set forth in the Complaint. On January 2, 2019 
Gray consummated its acquisition of Raycom.
    The Hold Separate and the proposed Final Judgment were filed with 
the court on December 14, 2018. Under the proposed Final Judgment, the 
Defendants are required to divest the television stations set forth in 
the proposed asset purchase agreements and all assets necessary for 
their operation as viable, ongoing commercial broadcast television 
stations.\2\ The proposed Final Judgment requires that these assets be 
divested to one or more acquirers acceptable to the United States, in 
its sole discretion. On December 31, 2018, and January 2, 2019, Gray 
sold the divestiture assets set forth in the proposed Final Judgment to 
Scripps, TEGNA, Lockwood, and Marquee, as approved by the United 
States. On January 2, 2019, Gray consummated its acquisition of Raycom.
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    \2\ The proposed Final Judgment contemplates that Gray would not 
be required to divest certain excluded assets, namely, the Telemundo 
and CW affiliations and programming streams in the Odessa-Midland, 
Texas, DMA; the Telemundo affiliation and programming stream in the 
Waco-Temple-Bryan, Texas, DMA; and the CW affiliation and 
programming stream in the Albany, Georgia, DMA. The United States 
has concluded that Gray's retention of these programming streams 
would not have a material effect on the adequacy of the proposed 
remedy.
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    Under the Hold Separate, the United States 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.

III. STANDARD OF JUDICIAL REVIEW

    The Clayton Act, as amended by the APPA, requires that proposed 
consent judgments in antitrust cases brought by the United States be 
subject to a public comment period of at least 60 days, after which the 
court shall determine whether entry of the proposed Final Judgment ``is 
in the public interest.'' 15 U.S.C. Sec.  16(e)(1). In making that 
determination, the court, in accordance with the statute as amended in 
2004, is required to consider:
    (A) the competitive impact of such judgment, including termination 
of alleged violations, provisions for enforcement and modification, 
duration of relief sought, anticipated effects of alternative remedies 
actually considered, whether its terms are ambiguous, and any other 
competitive considerations bearing upon the adequacy of such judgment 
that the court deems necessary to a determination of whether the 
consent judgment is in the public interest; and
    (B) the impact of entry of such judgment upon competition in the 
relevant market or markets, 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. Sec.  16(e)(1)(A) & (B). In considering these statutory 
factors, the court's inquiry is necessarily a limited one as the 
government is entitled to ``broad discretion to settle with the 
defendant within the reaches of the public interest.'' United States v. 
Microsoft Corp., 56 F.3d 1448, 1461 (D.C. Cir. 1995); see generally 
United States v. SBC Commc'ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007) 
(assessing public-interest standard under the Tunney Act); United 
States v. U.S. Airways Group, Inc., 38 F. Supp. 3d 69, 75 (D.D.C. 2014) 
(explaining that the ``court's inquiry is limited'' in Tunney Act 
settlements); United States v. InBev N.V./S.A., No. 08-1965 (JR), 2009 
U.S. Dist. LEXIS 84787, at *3 (D.D.C. Aug. 11, 2009) (noting that the 
court's review of a consent judgment is limited and only inquires 
``into whether the government's determination that the proposed 
remedies will cure the antitrust violations alleged in the complaint 
was reasonable, and whether the mechanisms to enforce the final 
judgment are clear and manageable'').
    As the U.S. Court of Appeals for the District of Columbia Circuit 
has held, under the APPA a court considers, among other things, the 
relationship between the remedy secured and the specific allegations in 
the government's complaint, whether the decree is sufficiently clear, 
whether its enforcement mechanisms are sufficient, and whether the 
decree may positively harm third parties. See Microsoft, 56 F. 3d at 
1458-62. 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) (quoting United States v. Bechtel Corp., 
648 F.2d 660, 666 (9th Cir. 1981)); see also Microsoft, 56 F.3d at 
1460-62; United States v. Alcoa, Inc., 152 F. Supp. 2d 37, 40 (D.D.C. 
2001); InBev, 2009 U.S. Dist. LEXIS 84787, at *3. Instead:

[t]he balancing of competing social and political interests affected by 
a proposed antitrust consent decree must be left, in

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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.

Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\3\
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    \3\ See also BNS, 858 F.2d at 464 (holding that the court's 
``ultimate authority under the [APPA] is limited to approving or 
disapproving the consent decree''); United States v. Gillette Co., 
406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the 
court is constrained to ``look at the overall picture not 
hypercritically, nor with a microscope, but with an artist's 
reducing glass'').
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    In determining whether a proposed settlement is in the public 
interest, a district court ``must accord deference to the government's 
predictions about the efficacy of its remedies, and may not require 
that the remedies perfectly match the alleged violations.'' SBC 
Commc'ns, 489 F. Supp. 2d at 17; see also U.S. Airways, 38 F. Supp. 3d 
at 74-75 (noting that a court should not reject the proposed remedies 
because it believes others are preferable and that room must be made 
for the government to grant concessions in the negotiation process for 
settlements); Microsoft, 56 F.3d at 1461 (noting the need for courts to 
be ``deferential to the government's predictions as to the effect of 
the proposed remedies''); United States v. Archer- Daniels-Midland Co., 
272 F. Supp. 2d 1, 6 (D.D.C. 2003) (noting that the court should grant 
``due respect to the government's prediction as to the effect of 
proposed remedies, its perception of the market structure, and its 
views of the nature of the case''). The ultimate question is 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.''' Microsoft, 56 F.3d at 1461 (quoting United States v. 
Western Elec. Co., 900 F.2d 283, 309 (D.C. Cir. 1990)). To meet this 
standard, the United States ``need only provide a factual basis for 
concluding that the settlements are reasonably adequate remedies for 
the alleged harms.'' SBC Commc'ns, 489 F. Supp. 2d at 17.
    Moreover, the court's role under the APPA is limited to reviewing 
the remedy in relationship to the violations that the United States has 
alleged in its complaint, and does not authorize the court to 
``construct [its] own hypothetical case and then evaluate the decree 
against that case.'' Microsoft, 56 F.3d at 1459; see also U.S. Airways, 
38 F. Supp. 3d at 75 (noting that the court must simply determine 
whether there is a factual foundation for the government's decisions 
such that its conclusions regarding the proposed settlements are 
reasonable); InBev, 2009 U.S. Dist. LEXIS 84787, at *20 (``the `public 
interest' is not to be measured by comparing the violations alleged in 
the complaint against those the court believes could have, or even 
should have, been alleged''). Because the ``court's authority to review 
the decree depends entirely on the government's exercising its 
prosecutorial discretion by bringing a case in the first place,'' it 
follows that ``the court is only authorized to review the decree 
itself,'' and not to ``effectively redraft the complaint'' to inquire 
into other matters that the United States did not pursue. Microsoft, 56 
F.3d at 1459-60. As a court in this district confirmed in SBC 
Communications, courts ``cannot look beyond the complaint in making the 
public interest determination unless the complaint is drafted so 
narrowly as to make a mockery of judicial power.'' SBC Commc'ns, 489 F. 
Supp. 2d at 15.
    In its 2004 amendments to the APPA,\4\ Congress made clear its 
intent to preserve the practical benefits of utilizing consent decrees 
in antitrust enforcement, adding the unambiguous instruction that 
``[n]othing in this section shall be construed to require the court to 
conduct an evidentiary hearing or to require the court to permit anyone 
to intervene.'' 15 U.S.C. Sec.  16(e)(2); see also U.S. Airways, 38 F. 
Supp. 3d at 76 (indicating that a court is not required to hold an 
evidentiary hearing or to permit intervenors as part of its review 
under the Tunney Act). This language explicitly wrote into the statute 
what Congress intended when it first enacted the Tunney Act in 1974. As 
Senator Tunney explained: ``[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.'' 119 Cong. Rec. 24,598 (1973) (statement 
of Sen. Tunney). Rather, the procedure for the public-interest 
determination is left to the discretion of the court, with the 
recognition that the court's ``scope of review remains sharply 
proscribed by precedent and the nature of Tunney Act proceedings.'' SBC 
Commc'ns, 489 F. Supp. 2d at 11. A court can make its public-interest 
determination based on the competitive impact statement and response to 
public comments alone. U.S. Airways, 38 F. Supp. 3d at 76; see also 
United States v. Enova Corp., 107 F. Supp. 2d 10, 17 (D.D.C. 2000) 
(noting that the ``Tunney Act expressly allows the court to make its 
public interest determination on the basis of the competitive impact 
statement and response to comments alone''); S. Rep. No. 93-298 93d 
Cong., 1st Sess., at 6 (1973) (``Where the public interest can be 
meaningfully evaluated simply on the basis of briefs and oral 
arguments, that is the approach that should be utilized.'').
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    \4\ The 2004 amendments substituted ``shall'' for ``may'' in 
directing relevant factors for a court to consider and amended the 
list of factors to focus on competitive considerations and to 
address potentially ambiguous judgment terms. Compare 15 U.S.C. 
Sec.  16(e) (2004), with 15 U.S.C. Sec.  16(e)(1) (2006); see also 
SBC Commc'ns, 489 F. Supp. 2d at 11 (concluding that the 2004 
amendments ``effected minimal changes'' to Tunney Act review).
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IV. SUMMARY OF PUBLIC COMMENT AND THE UNITED STATES' RESPONSE

    During the public comment period, the United States received only 
one comment concerning the proposed Final Judgment in this litigation. 
That comment, attached as Exhibit 1, is a letter from a self-described 
``television viewer'' in Dothan, Alabama, one of the Overlap DMAs. The 
comment takes issue with Gray acquiring additional Big 4 stations in 
Dothan. As required by the APPA, the comment, and the United States' 
response, will be published in the Federal Register.
    The United States believes that nothing in this comment warrants a 
change to the proposed Final Judgment or supports an inference that the 
proposed Final Judgment is not in the public interest. While the 
proposed merger would, absent the remedy, have put more Big 4 affiliate 
stations under Gray's control, the proposed Final Judgment avoids this 
result. In Dothan, Alabama, where Gray owns the CBS and NBC affiliates, 
the merger would have resulted in Gray also owning the FOX affiliate, 
WDFX-TV. As noted above, however, WDFX-TV was one of the stations sold 
to Lockwood on January 2, 2019. Therefore, consistent with the concerns 
expressed by the commenter, the proposed Final Judgment prevents Gray 
from increasing its control over television affiliates in Dotham.

CONCLUSION

    After reviewing the public comment, the United States continues to 
believe that the proposed Final Judgment, as drafted, provides an 
effective and appropriate remedy for the antitrust violations alleged 
in the Complaint, and is therefore in the public interest. The

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United States will move that this Court enter the proposed Final 
Judgment after the comment and this response are published in the 
Federal Register.

Dated: May 20, 2019

Respectfully submitted,

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Gregg I. Malawer,

United States Department of Justice, Antitrust Division, 450 Fifth 
Street NW, Suite 4000, Washington, DC 20530, Tel: 202-616-5943, 
[email protected].

Counsel for the United States.
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[FR Doc. 2019-11489 Filed 5-31-19; 8:45 am]
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