DOJ Denies Sinclair's Purchase of WTVR
Sinclair does not see decision as putting kibosh on 'duopoly-lite' combos
By John Eggerton -- Broadcasting & Cable, 8/28/2008 3:51:00 AM
Sinclair Broadcasting says that the Justice Department has denied its purchase of WTVR-TV Richmond, Va.
Technically, DOJ denied Raycom the ability to sell it to Sinclair, but Sinclair's general counsel does not see that decision as a threat to the duopoly-lite combos of station ownership and joint services agreements the sale to Sinclair would have created.
Raycom had been required to sell WTVR in order to purchase three Lincoln Financial Group stations that included WWBT Richmond. It already owned WTVR and both it and WTVR are among the top four in the market. FCC rules prevent one owner from owning two of the top four stations in a market. In order to get the deal approved, Raycom also signed a consent decree with the Justice Department that gave DOJ veto power over the WTVR sale. Raycom also agreed not to challenge that decision in court, according to Sinclair EVP and General Counsel Barry Faber.
In June, Sinclair agreed to pay $85 million for the station. But it also owned one of the top four in the market, WRLH-TV. It agreed to simultaneously sell WRLH-TV there, but would continue to provide sales and nonprogramming services to the station through a so-called joint services agreement (JSA).
Apparently, that was too close to the kind of market concentration DOJ saw in the WTVR/WWBT Raycom combo. DOJ concluded that Raycom's WTVR divestiture was required to "assure continued competition for spot advertising in the Richmond broadcast television market," Justice said Friday in announcing the consent degree had been triggered by its filing of a suit requiring the divestiture.
Sinclair says its deal would not be anticompetitive. "Notwithstanding the action of the Justice Department, Sinclair believes that this proposed transaction would not have violated the anti-trust laws," the company said in a statement.
Although the FCC does not permit a company to operate two of the top four stations in the same market, if a company only owns one of the two stations, and its operating agreement for the other does not include
programming the station above a certain threshold, the resulting JSA does not count as operating a second station in the market.
Faber says the deal to sell WRLH is now off as well. Its sale to Carma Broadcasting had been contingent on the Raycom purchase.
Some in the investment community were concerned that the decision meant that stations could no longer do the kind of duopoly-lite deals that include a JSA, said Faber, but he said he thinks this is a special case.
"I think the answer is that it means you can't do them when someone has given absolute discretion to the Justice Department," Faber said, "which is an unusual thing to do," Faber said, while conceding it may "give a sense" of Justice's view on such transactions, "but I think this is a very unique situation and typically doesn't exist and I think it doesn't really mean you can't do transactions like this, it just means you can't do them when Justice has a unilateral right to say no."
Faber says this is the first time that Sinclair has been turned down by Justice for a duopoly deal. Station sales over a certain value have to get Hart Scott Rodino review by Justice for antitrust vetting. But, ordinarily, Sinclair could go to court if it didn't like the result. "That check and balance keeps DOJ in check," he says.
By contrast, he points out, given Raycom's agreement to the consent decree, Justice has no fear of being overturned by the courts because Raycom has essentially given it the power to make such a unilateral decision without challenge.
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Slightly off-subject here, but I think KPLR would make a better ABC affiliate in St. Louis than the current station (KDNL.)
T Dog - 8/28/2008 8:32:00 PM EDT -
i wish we could lose the sinclair station here in stl.
there is no local news.
network news often loses out to infomercials.
plus they were front and center in the swiftboating during the last election.
jesus zimmerman - 8/28/2008 1:45:00 PM EDT
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