Antitrust Law Daily Wrap Up, ANTITRUST—D.D.C.: Entry of proposed settlement in Gannett acquisition deferred to allow public comment, (Apr 25, 2014)

By Edward L. Puzzo, J.D.

Entry of a final judgment approving the acquisition of television broadcasting company Belo Corporation by Gannett Co. has been denied without prejudice by the federal district court for the District of Columbia (U.S. v. Gannett Co., Inc., April 24, 2014, Walton, R.). Before entry of the final judgment can be considered, the court will require publication of the proposed settlement in a newspaper serving the St. Louis market.

Background. In June 2013, Gannett proposed a $2.2 billion acquisition of Belo Corporation. To comply with FCC ownership rules, Gannett agreed to sell six Belo television stations in five designated market areas (DMAs), including KMOV-TV, the CBS affiliate in the St. Louis, to Sander Media LLC. Gannett owns and operates KSDK-TV, the NBC affiliate in the St. Louis DMA.

In December 2013, the Department of Justice filed a complaint to block the proposed acquisition. The DOJ alleged that the agreements transferring ownership of six stations from Gannett to Sander gave Gannett significant influence over Sander’s conduct in operating the stations and diminished Gannett’s and Sander’s incentives to compete vigorously with each other in sales of broadcast television advertising in St. Louis. The transaction allegedly would have resulted in Gannett owning one of the top three commercial broadcast television stations in St. Louis and having significant influence over a second top three station serving the same area.

The DOJ's proposed judgment would resolve competition concerns by requiring Gannett to divest its option on KMOV-TV to an acquirer selected by the defendants and approved by the United States and by requiring Sander to divest its interests in the station and the assets used to operate KMOV-TV.

Additional notice required. The court explained that the U.S. had met the threshold notice requirements: publishing the proposed final judgment and a Competitive Impact Statement in the Federal Register, publishing summaries of both for a prescribed period of time in a newspaper in the jurisdiction in which the case was filed—in this case, the District of Columbia—and a 60-day comment period following publication. Despite technical compliance with the notice requirements, the court ruled that additional public notice was required in order to grant the public the opportunity to scrutinize and comment upon the proposed settlement.

Given that the St. Louis DMA was the area most affected by the transaction, and that region fell within the jurisdiction of the federal district court for the Eastern District of Missouri, the court ruled that additional notice of the proposed settlement would be required within that district, and any other district likely to be significantly affected by the transaction, before entry of a final judgment would be permitted. The court therefore ordered that summaries of the proposed final judgment and the Competitive Impact Statement be published for seven days within a two-week period in a newspaper of general circulation within the Eastern District of Missouri and any other district likely to be significantly affected by the transaction. Pending this publication, the court denied without prejudice the U.S.' motion to enter final judgment.

The case is Civil Action No. 1:13-cv-01984-RBW.

Attorneys: Anupama Sawkar, U.S. Department Of Justice, for USA. Gordon Laurence Lang (Nixon Peabody LLP) and Michael P.A. Cohen (Paul Hastings, LLP) for Gannett Co, Inc.

Companies: Gannett Co., Inc.; Belo Corp.; Sander Media LLC

Cases: Antitrust AntitrustDivisionNews DistrictofColumbiaNews MissouriNews