The Department of Justice announced it will require Gannett, Belo and Sander Media to spin off Belo’s KMOV-TV St. Louis (CBS), in order to proceed with Gannett’s buy of Belo, and Sander’s related acquisition of six Belo TV stations that Gannett cannot hold under FCC rules. The department said that, without the required divestiture, Gannett would have gained a dominant position in broadcast television spot advertising in the St. Louis DMA, resulting in higher prices for advertisers.
In addition to acquiring the six stations from Belo, Sander will enter into several agreements with Gannett in order to both finance purchasing and operating the stations. KMOV-TV is one of the six stations Sander would acquire from Belo and would be subject to agreements between Sander and Gannett. These agreements, however, do not include any joint negotiation of retransmission rights in St. Louis. The Gannett-Belo acquisition is valued at $2.2 billion.
The DOJ’s Antitrust Division filed a civil antitrust lawsuit 12/16 in the U.S. District Court for the District of Columbia to block the proposed acquisition and related agreements between Gannett and Sander, including an option for Gannett to assign or acquire the Belo stations sold to Sander, a financing guarantee and a long-term SSA. At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the competitive concerns alleged in the lawsuit.
“Gannett’s KSDK TV and Belo’s KMOV TV compete head-to-head in the sale of broadcast television spot advertising in the St. Louis area, and this rivalry constrains advertising rates,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The full divestiture required by the department will ensure that KMOV-TV will remain a vigorous competitor in St. Louis.”
Said DOJ in a statement: “Even though the two stations would maintain separate sales forces, the various agreements between Gannett and Sander, KMOV TV’s new owner, would align the incentives of the two stations. To remedy this harm, the proposed settlement requires Gannett, Belo and Sander to divest all assets primarily used in the operation of KMOV TV to an independent purchaser to be approved by [the FCC and DOJ]. That purchaser will not be permitted to have any agreements with Gannett concerning KMOV-TV that could limit competition with Gannett’s KSDK-TV St. Louis (NBC), including options to acquire or assign, financing agreements, SSAs or JSAs.
