Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS—D.D.C.: Nexstar, Communications Corp. to divest CBS, Fox affiliate to enable acquisition, (Mar 3, 2015)

By Greg Hammond, J.D.

Nexstar Broadcasting Group, Inc. and Communications Corp. of America have agreed to divest their interests in WEBB-TV, a CBS and Fox affiliate in Evansville, Indiana, as a condition for Nexstar to continue with its proposed acquisition of Communications Corp. Pursuant to the parties’ agreement, the federal district court in Washington, D.C. entered final judgment, requiring the divestment in order to prevent Nexstar from owning or controlling three of four major broadcast networks affiliated in the Evansville area (U.S. v. Nexstar Broadcasting Group, Inc., February 27, 2015, Jackson, K.).

The Department of Justice Antitrust Division filed its complaint against Nexstar Broadcasting Group, Inc.; Mission Broadcasting, Inc.; Communications Corp. of America; and Silver Point Capital Fund, L.P. on November 26, 2014, alleging that Nexstar’s $270 million proposed acquisition of Communications Corp. would allow Nexstar to control advertising sales for three out of four major broadcast network affiliates—including ABC, CBS, Fox, and CW—in Evansville. Unless blocked, the Department of Justice asserted that the transaction would “lead to higher prices for broadcast television spot advertising,” in violation of Section 7 of the Clayton Act.

According to the final judgment, the defendants are required to divest WEBB-TV within 90 calendar days after the filing date of the complaint. If they are unable to divest the television station, or if the United States decides that the proposed acquirer, Bayou City Broadcasting Evansville, Inc., is unable to complete the purchase, upon application of the United States, the court will appoint a trustee to cause divestiture. The defendants cannot finance any part of the purchase and may not reacquire any part of the station, acquire any option to reacquire any part of the station, enter into any local marketing agreement, joint sales agreement, other cooperative selling arrangement, or shared services agreement, or conduct other business negotiations jointly with the acquirer with respect to the station.

“This divestiture maintains the status quo in Evansville, Indiana, and avoids a loss of competition for local broadcast television spot advertising,” stated Antitrust Division Assistant Attorney General William J. Baer, when the complaint was filed. “By ensuring that Nexstar does not come to control three of four major network affiliations, consumers will benefit as these stations continue to compete to attract viewers and advertisers.”

The case number is 14-cv-2007 (KBJ).

Attorneys: Matthew C. Hammond, U.S. Department of Justice. Marimichael O. Skubel (Kirkland & Ellis LLP) and Jacqueline L. Grise (Cooley, LLP) for Nexstar Broadcasting Group, Inc., Communications Corp. of America, Inc., and Silver Point Capital Fund, L.P. John B. Wyss (Wiley Rein LLP) for Mission Broadcasting, Inc. Marimichael O. Skubel (Kirkland & Ellis LLP) for Nexstar Broadcasting Group, Inc. John B. Wyss (Wiley Rein LLP) for Communications Corp. of America. Matthew C. Hammond, U.S. Department of Justice Antitrust Division.

Companies: Nexstar Broadcasting Group, Inc.; Mission Broadcasting, Inc.; Communications Corp. of America; Silver Point Capital Fund, L.P.

Cases: AcquisitionsMergers Antitrust DistrictofColumbiaNews