Delrahim signals broadcaster have a point about relevant market

Department of Justice antitrust chief Makan Delrahim says that Justice will be holding a two-day workshop on the impact of online advertising on the local broadcast TV market, and whether it should adjust its merger reviews given the argument that the edge is now competing for the local car dealer ads and should be considered part of the relevant competitive market.

That came in a Q&A at the State of the Net conference in Washington with Variety Washington correspondent chief Ted Johnson.

Related: Nexstar Settles DOJ Ad Investigation

Justice has been considering the issue in relation to a couple of recent merger reviews, Delrahim pointed out, specifically the aborted Sinclair-Tribune merger, and the follow-up Nexstar-Tribune merger.

Justice also struck settlements with a number of broadcasters stemming from ad-related info exchanges, an investigation that grew out of those reviews.

Delrahim signaled that DOJ is interested in learning more about what factors it should consider when looking at the local TV ad marketplace and the impact of online advertising.

He also said that in some ways Google is not so different from broadcasters, which raises the possibility of including them both in the same competitive market, something broadcasters have long argued is the case. The more competitors in a market, the less Justice needs to worry about anticompetitive effects of mergers.

Delrahim said that when DOJ does broadcast antitrust analysis they look at spot ad rates, but that ultimately the viewer--"the eyeballs"--is part of the product since the service is free, just as it is with Google. "So, you try to make better [broadcast] programming to attract more users by which you can charge higher advertising rates. In some ways Google isn't too different from that. You try to pass on a product, but ultimately that consumer isn't the customer of that product. It is the advertisers who buy on that platform."

He said broadcasters during those merger reviews have raised important issues about competing with Google and others for those local car dealer advertising dollars and how that market has changed and how that should be factored into merger analysis. Those are issues DOJ will gather string on in the two-day workshop.

Delrahim echoed his "big is not necessarily bad" line of reasoning when it came to big tech mergers and what some have argued was the growth of tech "behemoths under the nose" of DOJ.

He was asked about concerns over Facebook's ownership, and integration, of Instagram. He said that perhaps Justice should look back at some of the mergers it allowed, but that another thing to consider is whether Instagram would have become what it is without the investment and support of Facebook, or YouTube without Google, so there are pro-competitive outcomes as well. 

He said a company may have grown because it built a better product, so the key is whether there is a market force that constrains that power to increase prices.

That said, he said he could envision a set of facts where Justice would move to force a divestiture from one of those behemoths, but it would depend on the individual facts.

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