[Federal Register: February 28, 2008 (Volume 73, Number 40)]
[Notices]
[Page 10808-10824]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28fe08-99]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. Bain Capital, LLC, Thomas H. Lee Partners, L.P.,
and Clear Channel Communications, Inc.; Proposed Final Judgement and
Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment,
Hold Separate Stipulation and Order, and Competitive Impact Statement
have been filed with the United States District Court for the District
of Columbia in United States of America v. Bain Capital, LLC, Civil
Action No. 1:08-cv-00245. On February 13, 2008, the United States filed
a Complaint alleging that the proposed acquisition by Bain Capital, LLC
and Thomas H. Lee Partners, L.P. of a controlling interest in Clear
Channel Communications, Inc. would violate section 7 of the Clayton
Act, 15 U.S.C. 18. The proposed Final Judgment, filed the same time as
the Complaint, requires Clear Channel to divest radio stations in
Cincinnati, Ohio; Houston, Texas; Las Vegas, Nevada; and San Francisco,
California, along with certain related assets.
Copies of the Complaint, proposed Final Judgment and Competitive
Impact Statement are available for inspection at the Department of
Justice, Antitrust Division, Antitrust Documents Group, 325 7th Street,
NW., Room 215, Washington, DC 20530 (telephone: 202-514-2481, on the
Department of Justice's Web site (http://www.usdoj.gov/atr), and at the
Office of the Clerk of the United States District Court for the
District of Columbia. Copies of these materials may be obtained from
the Antitrust Division upon request and payment of the coping fee set
by Department of Justice regulations.
Public comment is invited within 60 days of the date of this
notice. Such comments, and responses thereto, will be published in the
Federal Register and filed with the Court. Comments should be directed
to John Read, Chief, Litigation III section, Antitrust Division,
Department of Justice, Washington, DC 20530 (telephone: 202-307-0462).
Patricia A. Brink,
Deputy Director of Operations.
United States District Court for the District of Columbia
United States of America, Department of Justice, Antitrust
Division, 325 7th Street, NW., Suite 300, Washington, DC 20530,
Plaintiff, v. Bain Capital, LLC, 111 Huntington Ave., Boston, MA
02199, and Thomas H. Lee Partners, L.P., 100 Federal St. 35th Fl.,
Boston, MA 02110, and Clear Channel Communications, Inc., 200 E.
Basse Rd., San Antonio, TX 78209, Defendants.
Civil Action No.: 1:08-cv-00245
Filed: Feb. 13, 2008
Assigned to: Robertson, James
Assign. Date: 2/13/2008
Description: Antitrust
Complaint
The United States of America, acting under the direction of the
Attorney General of the United States, brings this civil action to
enjoin the proposed acquisition of Clear Channel Communications Inc.
(``Clear Channel'') by a private equity group of investors led by Bain
Capital, LLC (``Bain'') and Thomas H. Lee Partners, L.P. (``THL''), and
to obtain other relief as appropriate. Plaintiff United States alleges
as follows:
I. Nature of the Action
1. Bain and THL, two of the world's leading private investment
firms, are planning to acquire, each through various affiliated funds,
substantial ownership interests in Clear Channel, the largest operator
of radio stations in the United States (the ``transaction''). The
anticipated value of the transaction is $28 billion.
2. After the transaction, Bain and THL each would control at least
35 percent of the voting interests in Clear Channel and each would
designate four members to the 12 member Clear Channel Board of
Directors. Together, Bain and THL would control at least 70 percent of
the voting interests of Clear Channel and designate two-thirds of the
members of its Board of Directors. Further, Bain and THL, either
directly or indirectly through management teams they install, typically
manage and operate the assets in which they invest.
3. Bain and THL, through affiliated funds and co-investment
vehicles, have substantial ownership interests in Cumulus Media
Partners LLC (``CMP''), another large nationwide operator of radio
stations. Bain and THL each control 25 percent of the voting interests
of CMP and designate two members to its eight member Board of
Directors. Together, Bain and THL control 50 percent of the voting
interests of CMP and designate one-half of the members of its Board of
Directors. CMP operates radio stations that compete head-to-head with
Clear Channel radio stations in Cincinnati, Ohio and Houston/Galveston,
Texas (``Houston'').
4. After the transaction, Bain and THL would have governance rights
in Clear Channel and CMP sufficient to enable Bain and THL,
individually or together, to control or influence the companies'
competitive decisions to produce an anticompetitive outcome in markets
where both Clear Channel and CMS are significant competitors.
Accordingly, Bain's and THL's acquisitions of substantial partial
ownership interests in Clear Channel would substantially lessen
competition between Clear Channel and CMP in the sale of radio
advertising in Cincinnati and Houston in violation of Section 7 of the
Clayton Act, as amended, 15 U.S.C. 18.
5. THL, through affiliated funds and co-investment vehicles,
currently olds a 20 percent equity interest and a 14 percent voting
interest in Univision Communications, Inc. (``Univision''), a large
nationwide operator of radio stations that broadcast primarily in
Spanish-language format. THL designates three members to Univision's 17
member Board of Directors. Univision operates radio stations that
compete head-to-head with Clear Channel's Spanish-language radio
stations in Houston; Las Vegas, Nevada; and San Francisco, California.
6. After the transaction, THL would have governance rights in Clear
Channel and Univision sufficient to influence the companies'
competitive decisions to produce an anticompetitive outcome in markets
where both Clear Channel and Univision are significant competitors.
Accordingly, THL's acquisition of a substantial partial ownership
interest in Clear Channel would substantially lessen competition in the
sale of Spanish-language radio advertising in Houston, Las Vegas, and
San Francisco in violation of Section 7 of the Clayton Act, as amended,
15 U.S.C. 18.
II. Jurisdiction and Venue
7. Plaintiff United States brings this action under section 15 of
the Clayton Act, as amended, 15 U.S.C. 25, to prevent and restrain
defendants from violating section 7 of the Clayton Act, as amended, 15
U.S.C. 18.
8. Bain and THL, through CMP and Univision, and Clear Channel sell
radio advertising to local and national advertisers, a commercial
activity that substantially affects and is in the flow of interstate
commerce. This court has jurisdiction over the subject matter of this
action pursuant to sections 15 and 16 of the Clayton Act, 15 U.S.C. 25,
26, and 28 U.S.C. 1331, 1337.
9. Bain, THL, and Clear Channel transact business within the
District of Columbia. Venue is therefore proper in this Court pursuant
to 15 U.S.C. 22 and 28 U.S.C. 1391.
[[Page 10809]]
III. Defendants and Other Relevant Entities
10. Clear Channel is a diversified media company incorporated in
Texas and headquartered in San Antonio, Texas. Clear Channel owns
various media outlets including radio stations, domestic and
international outdoor advertising assets, television stations, and a
media representation firm. Radio broadcasting is Clear Channel's
largest business segment, representing over 50 percent of Clear
Channel's total revenue. As of February 5, 2008, Clear Channel owned
833 radio stations in the United States, 508 of which were located
within the top 100 markets as ranked by Arbitron, an international
media marketing and research firm, including stations in Cincinnati,
Houston, Las Vegas, and San Francisco.
11. Bain is a Delaware limited liability company headquartered in
Boston, Massachusetts. Bain is one of the world's leading private
investment firms with over $40 billion in assets under management.
12. THL is a Delaware limited partnership headquartered in Boston,
Massachusetts and also is one of the world's leading private investment
firms. THL currently manages approximately $12 billion of committed
capital.
13. Bain and THL raise pools of capital from private investors,
controlling and managing that capital through private equity funds and
co-investment vehicles that invest in discrete opportunities, such as
venture capital, public equity, and leveraged debt assets.
14. CMP is a limited liability company formed in 2005 that is owned
by Bain, THL, Cumulus Broadcasting Inc., the Blackstone Group, and
their affiliates. As of February 5, 2008, CMP owned 34 radio stations
in various markets, including Cincinnati and Houston.
15. Univision is headquartered in New York City and is the largest
broadcaster of Spanish-language television programming in the United
States. Univision also owns 70 radio stations that broadcast in Spanish
language in various markets, including Houston, Las Vegas, and San
Francisco. Univision is owned and operated by five private equity
firms: THL, Haim Saban, TPG Capital, Providence Equity, Madison
Dearborn, and their affiliates.
IV. The Proposed Acquisition
16. Clear Channel, Bain, and THL have agreed that funds and co-
investment vehicles under the direction of Bain (collectively ``Bain CC
Affiliates'') and funds and co-investment vehicles under the direction
of THL (collectively ``THL CC Affiliates'') will purchase a controlling
interest in Clear Channel. Under their proposal, Bain and THL each will
acquire at least a 35 percent voting and economic interest in Clear
Channel, with the remaining interest of up to 30 percent staying in the
hands of those current Clear Channel investors and option-holders who
elect to retain an equity interest in Clear Channel rather than to
receive cash for their shares and/or stock options. Under the purchase
arrangement, Bain and THL, through Bain CC Affiliates and THL CC
Affiliates, each will also acquire the right to designate four
directors of the 12 member Clear Channel Board of Directors. If the
transaction is consummated, Bain and THL together will control at least
70 percent of the voting interests of Clear Channel and designated two-
thirds of the members of the Board of Directors.
V. Relevant Markets
A. Relevant Product Markets
17. Radio Advertising. Radio stations employ various formats for
their programming, such as Adult Contemporary, Sports, or Rock. A
station's format can be important in determining the size and
characteristics of its listening audience. Companies that operate radio
stations, like Clear Channel, CMP, and Univision, sell advertising time
to local and national advertisers in each geographic market where they
operate those stations. Advertising rates charged by a radio station
are based primarily on the station's ability to attract listening
audiences having certain demographic characteristics in the market area
that advertisers want to reach, as well as on the number of stations
and the relative demand for radio in the market.
18. Many local and national advertisers purchase radio advertising
time because they consider it preferable to advertising in other media
to meet their specific needs. They may consider radio advertising time
to be more cost-effective than other media to reach their target
audiences. They may also consider radio advertising to be more
efficient than other media to reach their target audiences.
Additionally, radio stations render certain services or promotional
opportunities to advertisers that the advertisers cannot exploit as
effectively using other media. For these reasons, many local and
national advertisers who purchase radio advertising time view radio as
a necessary advertising medium, sometimes as a complement to other
media. A substantial number of advertisers with strong radio
preferences would not turn to other media if faced with a small but
significant increase in the price of advertising time on radio
stations.
19. Radio stations generally can identify advertisers with strong
radio preferences. Radio stations also negotiate prices individually
with advertisers; consequently, radio stations can charge different
advertisers different prices. Because of this ability to price
discriminate among customers, radio stations may charge higher prices
to the substantial number of advertisers that view radio as
particularly effective for their needs, while maintaining lower prices
for other advertisers.
20. In the event of a price increase in radio advertising time,
some local and national advertisers may switch some of their
advertising to other media rather than absorb a price increase in radio
advertising time. However, the existence of such advertisers would not
prevent radio stations from profitably raising their prices by a small
but significant amount for a substantial number of advertisers that
would not switch.
21. Accordingly, the provision of advertising time on radio
stations is a line of commerce and a relevant product market within the
meaning of section 7 of the Clayton Act.
22. Spanish-language Radio Advertising. In markets with a large
Hispanic population, many local and national advertisers also consider
Spanish-language radio to be particularly effective or necessary to
reach their desired customers, particularly consumers who listen
predominantly or exclusively to Spanish-language radio. A substantial
number of these advertisers consider Spanish-language radio, either
alone or as complement to other media, to be the most effective way to
reach their target audience, and do not consider other media, including
non-Spanish-language radio, to be a reasonable substitute. These
advertisers would not turn to other media, including radio that is not
broadcast in Spanish, if faced with a small but significant increase in
the price of advertising time on Spanish-language radio.
23. Accordingly, the provision of advertising time on Spanish-
language radio stations to these advertisers is a line of commerce and
a relevant product market within the meaning of section 7 of the
Clayton Act.
B. Relevant Geographic Markets
24. Local and national advertisers buy radio advertising time on
Clear Channel,
[[Page 10810]]
CMP, and Univision radio stations within areas defined by an Arbitron
Metro Survey Area (``MSA''). An MSA is the geographic unit that is
widely accepted by radio stations, advertisers, and advertising
agencies as the standard geographic market to use in evaluating radio
audience size and composition.
25. Local and National advertising that is placed on radio stations
in an MSA is aimed at reaching listening audiences in that MSA. Radio
stations in other MSAs do not provide effective access to these
audiences. If there were a small but significant price increase within
an MSA, an insufficient number of advertisers would switch their
advertising time purchases to radio stations outside the MSA to make
the price increase unprofitable.
26. In the Houston and Cincinnati MSAs, Clear Channel and CMP
stations compete against each other and against other stations in the
provision of radio advertising time to advertisers, regardless of the
language broadcast over the station. If there were a small but
significant increase in radio advertising prices within the Houston or
Cincinnati MSA, an insufficient number of advertisers seeking to reach
listeners in the Houston or Cincinnati MSA would switch their
advertising time purchases to radio stations outside that MSA to make
the price increase unprofitable. Accordingly, the Houston and
Cincinnati MSAs (the ``Overlap Markets'') are each relevant geographic
markets within the meaning of section 7 of the Clayton Act.
27. In the Houston, Las Vegas, and San Francisco MSAs, Clear
Channel and Univision compete against each other in the provision of
Spanish-language radio advertising time to advertisers. If there were a
small but significant increase in Spanish-language radio advertising
prices in the Houston, Las Vegas, or San Francisco MSAs, an
insufficient number of advertisers seeking to reach listeners in the
any of those MSAs would switch their Spanish-language advertising
purchases to radio stations outside that MSA to make the price increase
unprofitable. Accordingly, the Houston, Las Vegas, and San Francisco
MSAs (the ``Spanish-language Overlap Markets'') are each relevant
geographic markets within the meaning of section 7 of the Clayton Act.
VI. Harm to Competition
A. Competition in the Relevant Geographic Markets
1. Radio Advertising in the Overlap Markets
28. Advertisers who use radio to reach their target audience select
radio stations on which to advertise based upon a number of factors
including, among others, the size of the station's audience and the
characteristics of its audience. Many advertisers seek to reach a large
percentage of their target audience by selecting those stations whose
listening audience is highly correlated to their target audience.
29. Clear Channel and CMP vigorously compete for listeners and
closely monitor each other's competitive position in the Cincinnati and
Houston MSAs. Their stations are similarly formatted and programmed
with an eye toward attracting listeners from each other.
30. Clear Channel and CMP stations in Houston and Cincinnati also
currently compete vigorously for radio advertisers who seek to reach
the specific demographic groups listening to their stations. For many
local and national advertisers buying radio advertising time in the
Houston and Cincinnati markets, Clear Channel and CMP stations are each
other's next best substitutes. During individualized rate negotiations,
the substantial number of advertisers who desire to reach these
listeners can benefit from this competition by ``playing off'' Clear
Channel and CMP stations against each other to reach better terms.
31. Radio station ownership in Houston and Cincinnati is highly
concentrated, with Clear Channel and CMP's combined listener share
exceeding 34 percent in Houston and 59 percent in Cincinnati.
Additionally, Clear Channel and CMP's combined advertising revenue
share exceeds 37 percent in Houston and 65 percent in Cincinnati.
32. Using a measure of market concentration called the Herfindahl-
Hirschman Index (`HHI''), explained in Appendix A annexed hereto,
concentration in these markets would increase significantly as a result
of the acquisition, with post-acquisition HHIs of approximately 2,100
in Houston and approximately 4,700 in Cincinnati, well above the 1,800
threshold at which the Department normally considers a market to be
highly concentrated.
2. Spanish-Language Radio Advertising Overlap Markets
33. Clear Channel and Univision are currently vigorous competitors
and closely monitor each other's competitive position for Spanish-
language listeners in the Houston, Las Vegas, and San Francisco MSAs,
each of which has a large Hispanic population. Their stations in these
markets are similarly formatted and programmed with an eye toward
attracting Spanish-language listeners from each other.
34. Clear Channel and Univision stations also currently compete
vigorously for radio advertisers who seek to reach Spanish-language
listeners. For many local and national advertisers buying Spanish-
language radio advertising time in the Houston, Las Vegas, and San
Francisco Spanish-language Overlap Markets, Clear Channel and Univision
stations are each other's next best substitutes. During individualized
rate negotiations, the substantial number of advertisers who desire to
reach these listeners can benefit from this competition by ``playing
off'' Clear Channel and Univision stations against each other to reach
better terms.
35. Spanish-language radio station ownership in Houston, Las Vegas,
and San Francisco is highly concentrated. Clear Channel and Univision's
combined Spanish-language listener share exceeds 75 percent in Houston,
73 percent in Las Vegas, and 70 percent in San Francisco. Additionally,
Clear Channel and Univision's combined Spanish-language advertising
revenue share exceeds 79 percent in Houston, 78 percent in Las Vegas,
and 63 percent in San Francisco.
36. Using the Herfindahl-Hirschman Index, concentration in these
markets would increase significantly as a result of the acquisition,
with post-acquisition HHIs exceeding 6,500 in all three markets, well
above the 1,800 threshold at which the Department normally considers a
market to be highly concentrated.
B. This Acquisition Would Substantially Lessen Competition
1. Radio Advertising in Houston and Cincinnati
37. Clear Channel is one of only a few radio companies competing
with CMP in the sale of radio advertising in Houston and Cincinnati,
and within those markets, the two companies are each other's next best
substitutes for advertisers seeking to reach several key demographic
groups. Bain and THL together possess the ability to control CMP; they
hold 50 percent of the voting and equity interests and have the right
to choose half of the members of its Board of Directors. CMP's Board of
Directors cannot make decisions without the agreement of either Bain or
THL, which also have access to CMP's non-public, competitively
sensitive information and its officers and employees. These ownership
interests and associated rights give each of Bain and THL, as well as
Bain and THL acting together, influence over, if not outright control
of, CMP's management decisions.
[[Page 10811]]
38. Upon consummation of their proposed acquisition of interests in
Clear Channel, defendants Bain and THL together would also control
Clear Channel. Together, they would own at least 70 percent of the
equity and voting interests of Clear Channel and have the right to
select eight of Clear Channel's 12 directors. In addition, Bain and THL
would have access to Clear Channel's non-public, competitively
sensitive information and to the company's officers and employees.
After the acquisition, each of Bain and THL, as well as Bain and THL
acting together, would have influence over, if not outright control of,
Clear Channel's management decisions.
39. Bain or THL, or Bain and THL acting together, would have the
incentive and ability to use their ownership, control and influence,
and access to information as to both Clear Channel and CMP to reduce
competition between the companies in markets where they are significant
competitors, resulting in an increase in prices for a significant
number of advertisers. The Houston and Cincinnati radio markets are
highly concentrated, and these advertisers will find it difficult or
impossible to ``buy around'' Clear Channel and CMP, i.e., to
effectively reach their targeted audience without using Clear Channel
or CMP radio stations. Thus, Bain and THL's proposed acquisitions of
ownership interests in Clear Channel, if consummated, would
substantially reduce competition for radio advertising in the Houston
and Cincinnati markets.
2. Spanish-language Radio Advertising
40. Clear Channel is one of only a few radio companies competing
with Univision for Spanish-language radio advertising time in Houston,
Las Vegas, and San Francisco, and within those markets, the two
companies are each other's next best substitutes for advertisers
targeting Spanish-language listeners. THL currently has a 20 percent
equity interest and a 14 percent voting interest in Univision, as well
as the right to designate three Univision board members. THL also has
access to Univision's non-public, competitively sensitive information
and its officers and employees. Significant corporate decisions at
Univision require the assent of three of its five owners. THL's
ownership interest and associated rights give it influence over
Univision's management decisions.
41. Upon consummation of the proposed acquisition of Clear Channel,
defendant THL would own at least 35 percent of the equity and voting
interest of Clear Channel, as well as a right to choose four of its 12
directors. In addition, after the acquisition, THL would have access to
Clear Channel's non-public, competitively sensitive information and its
officers and employees. THL's ownership interest and associated rights
would give it influence over Clear Channel's management decisions.
42. THL would have the incentive and ability to use its ownership,
control and influence, and access to information as to both Clear
Channel and Univision to reduce competition between the companies in
markets where they are significant competitors, resulting in an
increase in prices for a significant number of advertisers. The
Houston, Las Vegas, and San Francisco radio markets are highly
concentrated, and these advertisers will find it difficult or
impossible to ``buy around'' Clear Channel and Univision, i.e., to
effectively reach their targeted audience without using Clear Channel
or Univision radio stations. Thus, THL's proposed acquisition of an
ownership interest in Clear Channel, if consummated, would
substantially reduce competition in the Spanish-language Overlap
Markets.
C. Entry Conditions
43. Entry of new radio stations into the relevant geographic
markets would not be timely, likely, or sufficient to mitigate the
competitive harm likely to result from this acquisition. Entry could
occur by obtaining a license for new radio spectrum or by reformatting
an existing station.
44. Acquisition of new radio spectrum is highly unlikely because
spectrum is a scarce and expensive commodity.
45. Reformatting by existing stations in any of the relevant
geographic markets would not be sufficient to mitigate the competitive
harm likely to result from this acquisition. For those stations in
these markets that have large shares in other coveted demographics, a
format shift solely in response to small but significant increases in
price by Clear Channel, CMP, or Univision is not likely because it
would not be profitable. For those radio stations that may have
incentives to change formats in response to small but significant
increases in price by Clear Channel, CMP, and Univision, their shift
would not be sufficient to mitigate the anticompetitive effects
resulting from this acquisition.
VIII. Violation Alleged
46. Each and every allegation in paragraphs 1 through 45 of this
Complaint is here realleged with the same force and effect as though
said paragraphs were here set forth in full.
47. The effect of the proposed acquisition of interests in Clear
Channel by Bain and THL would be to substantially lessen competition in
interstate trade and commerce, in violation of Section 7 of the Clayton
Act.
48. Unless restrained, the transaction would likely have the
following effects, among others, in the provision of radio advertising
and Spanish-language radio advertising in the relevant geographic
markets:
a. competition in the sale and provision of advertising on radio
stations in the relevant markets would be substantially lessened or
eliminated; and
b. the prices for advertising on radio stations in the relevant
markets would likely increase, and the quality of services would likely
decline.
IX. Requested Relief
49. The plaintiff requests:
a. That Bain's and THL's proposed acquisitions of interests in
Clear Channel be adjudged to violate Section 7 of the Clayton Act;
b. That the defendants and all persons acting on their behalf be
permanently enjoined and restrained from consummating the proposed
acquisitions or from entering into or carrying out any agreement,
understanding, or plan, the effect of which is to bring radio stations
in the relevant markets under common ownership or control;
c. That the United States be awarded the costs of this action; and
d. That the United States be granted such other and further relief
as the Court may deem just and proper.
Dated: February 13, 2008.
Respectfully submitted,
For Plaintiff United States:
Thomas O. Barnett (D.C. Bar No. 426840),
Assistant Attorney General
David L. Meyer,
Deputy Assistant Attorney General
Patricia A. Brink,
Deputy Director of Operations
John R. Read,
Chief, Litigation III Section,
Nina B. Hale,
Assistant Chief, Litigation III Section
Christopher M. Ries,
Daniel McCuaig (D.C. Bar No. 478199),
Attorneys for the United States, Litigation III Section, Antitrust
Division, United States Department of Justice, 325 7th Street, NW.,
Suite 300, Washington, DC 20530
[[Page 10812]]
Certificate of Service
I hereby certify that on February 13, 2008, I caused a copy of the
foregoing Complaint, proposed Final Judgment, Competitive Impact
Statement, Hold Separate Stipulation and Order, and Explanation of
Consent Decree Procedures to be served on the defendants in this matter
in the manner set forth below:
By electronic mail and hand delivery:
Counsel for Defendants Bain Capital, LLC and Thomas H. Lee Partners,
L.P.,
James M. ``Mit'' Spears,
Ropes & Gray LLP,
700 12th Street, NW., Suite 900, Washington, DC 20005-3948,
Telephone: (202) 508-4681, Facsimile: (202) 383-8320, E-mail:
mit.spears@ropesgray.com.
Counsel for Defendant Clear Channel Communications, Inc.,
Phillip A. Proger,
Jones Day,
51 Louisiana Avenue, NW., Washington, DC 20001-2113, Telephone:
(202) 879-4668, Facsimile: (202) 626-1700, E-mail:
paproger@jonesday.com.
Daniel McCuaig (D.C. Bar No. 478199),
United States Department of Justice, Antitrust Division, Litigation
III Section, 325 Seventh Street, NW., Suite 300, Washington, DC
20530, Telephone: (202) 307-0520, Facsimile: (202) 514-7308, E-mail:
daniel.mccuaig@usdoj.gov.
Appendix A Definition of HHI
The term ``HHI'' means the Herfindahl-Hirschman Index, a commonly
accepted measure of market concentration. The HHI is calculated by
squaring the market share of each firm competing in the market and then
summing the resulting numbers. For example, for a market consisting of
four firms with shares of 30, 30, 20, and 20 percent, the HHI is 2,600
(30 \2\ + 30 \2\ + 20 \2\ + 20 \2\ = 2,600). The HHI takes into account
the relative size and distribution of the firms in a market. It
approaches zero when a market is occupied by a large number of firms of
relatively equal size and reaches its maximum of 10,000 when a market
is controlled by a single firm. The HHI increases both as the number of
firms in the market decreases and as the disparity in size between
those firms increases.
Markets in which the HHI is between 1000 and 1800 are considered to
be moderately concentrated, and markets in which the HHI is in excess
of 1800 points are considered to be highly concentrated. Transactions
that increase the HHI by more than 100 points in highly concentrated
markets presumptively raise significant antitrust concerns under the
Department of Justice and Federal Trade Commission 1992 Horizontal
Merger Guidelines.
United States District Court for the District of Columbia
United States Of America, Department of Justice, Antitrust
Division 325 7th Street, NW., Suite 300 Washington, DC 20530,
Plaintiff, v. Bain Capital, LLC 111 Huntington Ave., Boston, MA
02199, and Thomas H. Lee Partners L.P., 100 Federal St. 35th Fl.
Boston, Massachusetts 02110, and Clear Channel Communications, Inc.
200 E. Basse Rd., San Antonio, TX 78209, Defendants.
Civil Action No.: 1 :08-cv-00245
Filed: Feb. 13, 2008
Assigned to: Robertson, James
Assign. Date: 2/13/2008
Description: Antitrust
Final Judgment
Whereas, plaintiff, United States of America, filed its Complaint
on February 13, 1998, the United States and Defendants Bain Capital,
LLC (``Bain''), Thomas H. Lee Partners, L.P. (``THL''), and Clear
Channel, by their respective attorneys, have consulted to entry of this
Final judgment without trial or adjudication of any issue of fact or
law, and without this Final Judgment constituting any evidence against
or admission by any party regarding any issue of fact or law;
And whereas, defendants agree to be bound by the provisions of this
Final Judgment pending its approval by the Court;
And whereas, the essence of this Final Judgment is the prompt and
certain divestiture of certain rights or assets by defendants to assure
that competition is not substantially lessened;
And whereas, the United States requires defendants to make certain
divestitures for the purpose of remedying the loss of competition
alleged in the Complaint;
And whereas, defendants have represented to the United States that
the divestitures required below can and will be made and that
defendants will later raise no claim of hardship or difficulty as
grounds for asking the Court to modify any of the divestiture
provisions contained below;
Now therefore, before any testimony is taken, without trial or
adjudication of any issue of fact or law, and upon consent of the
parties, it is ordered, adjudged and decreed:
I. Jurisdiction
This Court has jurisdiction over the subject matter of and each of
the parties to this action. The Complaint states a claim upon which
relief may be granted against defendants under Section 7 of the Clayton
Act, as amended, 15. U.S.C. 18.
II. Definitions
As used in this Final Judgment:
A. ``Bain'' means Bain Capital, LLC, a Delaware limited liability
company headquartered in Boston, Massachusetts, its directors,
officers, partners, managers, employees, agents, representatives,
successors, and assigns; and its joint ventures, subsidiaries,
partnerships, divisions, groups, affiliates, investment funds, hedge
funds, and certain other private equity investment vehicles controlled
or managed by Bain Capital Partners, LLC, and the respective directors,
officers, general partners, managers, employees, agents,
representatives, successors, and assigns of each.
B. ``THL'' means Thomas H. Lee Partners, L.P., a Delaware limited
partnership headquartered in Boston, Massachusetts, its directors,
officers, partners, managers, employees, agents, representatives,
successors, and assigns; and its joint ventures, subsidiaries,
partnerships, divisions, groups, affiliates, investment funds, hedge
funds, and certain other private equity investment vehicles controlled
or managed by Thomas H. Lee Partners, L.P., and the respective
directors, officers, general partners, managers, employees, agents,
representatives, successors, and assigns of each.
C. ``Clear Channel'' means Clear Channel Communications, Inc., a
Texas corporation headquartered in San Antonio, Texas, its directors,
officers, managers, agents and employees, its successors and assigns,
and its subsidiaries, divisions, groups, affiliates, partnerships and
joint ventures, and their directors, officers, managers, agents and
employees.
D. ``Univision'' means Univision Communications, Inc., a Delaware
corporation headquartered in Los Angeles, California, its directors,
officers, managers, agents and employees, its successors and assigns,
and its subsidiaries, divisions, groups, affiliates, partnerships, and
joint ventures, and their directors, officers, managers, agents, and
employees.
E. ``BMP-Univision Holdings'' means Broadcasting Media Partners,
Inc., a Delaware corporation headquartered in New York that holds all
of Univision's outstanding shares, its directors, officers, managers,
agents and employees, its successors and assigns, and its subsidiaries,
divisions, groups, affiliates, partnerships, and joint ventures, and
their directors, officers, managers, agents, and employees.
F. ``CMP Susquehanna'' means CMP Susquehanna Holdings, Corp., a
Delaware corporation headquartered in Atlanta that is owned by Cumulus
Media Partners, its directors, officers, managers, agents and
employees, its
[[Page 10813]]
successors and assigns, and its subsidiaries, divisions, groups,
affiliates, partnerships, and joint ventures, and their directors,
officers, managers, agents, and employees.
G. ``Cumulus Media Partners'' means Cumulus Media Partners, LLC, a
Delaware limited liability company headquartered in Atlanta, its
directors, officers, managers, agents and employees, its successors and
assigns, and its subsidiaries, divisions, groups, affiliates,
partnerships, and joint ventures, and their directors, officers,
managers, agents, and employees.
H. ``MSA'' means Metro Survey Area. A Metro Survey Area is a
geographical area in which Arbitron, a radio industry survey company,
collects listener data to aid radio stations, advertisers, and
advertising agencies in evaluating radio audience size and composition.
I. ``Cincinnati'' means the Cincinnati, Ohio MSA.
J. ``Houston'' means the Houston/Galveston, Texas MSA.
K. ``Las Vegas'' means the Las Vegas, Nevada MSA.
L. ``San Francisco'' means the San Francisco, California MSA.
M. ``WLW'' means the radio station WLW-AM located in Cincinnati
owned by defendant Clear Channel.
N. ``WKFS'' means the radio station WKFS-FM located in Cincinnati
owned by defendant Clear Channel.
O. ``WOFX'' means the radio station WOFX-FM located in Cincinnati
owned by defendant Clear Channel.
P. ``WNNF'' means the radio station WNNF located in Cincinnati
owned by defendant Clear Channel.
Q. ``KLOL'' means the radio station KLOL-FM located in Houston
owned by defendant Clear Channel.
R. ``KHMX'' means the radio station KHMX-FM located in Houston
owned by defendant Clear Channel.
S. ``KTBZ'' means the radio station KTBZ-FM located in Houston
owned by defendant Clear Channel.
T. ``KWID'' means the radio station KWID-FM located in Las Vegas
owned by defendant Clear Channel.
U. ``KSJO'' means the radio station KSJO-FM located in San
Francisco owned by defendant Clear Channel.
V. ``Cincinnati Assets'' means either (1) WLW and WKFS or, at the
discretion of the defendants, (2) WOFX and WNNF.
W. ``Houston Assets'' means either (1) KHMX or, at the discretion
of the defendants, (2) KTBZ.
X. ``Houston Spanish-language Assets'' means KLOL.
Y. ``Las Vegas Spanish-language Assets'' means KWID.
Z. ``San Francisco Spanish-language Assets'' means KSJO.
AA. ``Clear Channel Assets'' means collectively, the Cincinnati
Assets and the Houston Assets.
AB. ``Clear Channel Spanish-language Assets'' means, collectively,
the Houston Spanish-language Assets, Las Vegas Spanish-language Assets,
and San Francisco Spanish-language Assets.
AC. ``Divestiture Assets'' means all of the assets, tangible or
intangible, used in the operations of the Clear Channel Assets and the
Clear Channel Spanish-language Assets, including, but not limited to:
(i) All licenses, permits, authorizations, and applications therefor
issued by the Federal Communications Commission (``FCC'') and other
government agencies related to the Clear Channel Assets and the Clear
Channel Spanish-language Assets; (ii) all contracts (including
programming contracts and rights), agreements, leases, and commitments
and understandings of defendants relating to the operations of the
Clear Channel Assets and the Clear Channel Spanish-language Assets;
(iii) all interest in real property (owned or leased) relating to the
transmitter facilities of the Clear Channel Assets and the Clear
Channel Spanish-language Assets and all items of tangible property used
in the operation of the Clear Channel Assets and the Clear Channel
Spanish-language Assets at such transmitter facilities; (iv) all
interest in the real property lease relating to the studios of the
Clear Channel Assets and the Clear Channel Spanish-language Assets; (v)
all broadcast equipment, office equipment, office furniture, fixtures,
materials, supplies, and other tangible property used in the operation
of the Clear Channel Assets and the Clear Channel Spanish-language
Assets; (vi) all interests in trademarks, service marks, trade names,
copyrights, patents, slogans, programming materials, and promotional
materials relating to the Clear Channel Assets and the Clear Channel
Spanish-language Assets; (vii) all customer lists, accounts, and credit
records relating to the Clear Channel Assets and the Clear Channel
Spanish-language Assets; and (viii) all other records maintained by
defendants in connection with the Clear Channel Assets and the Clear
Channel Spanish-language Assets; however, assets that: (a) Are
principally devoted to the operation of stations other than the Clear
Channel Assets and the Clear Channel Spanish-language Assets or to the
operation of their parent companies, and are not necessary to the
operation of the Clear Channel Assets and the Clear Channel Spanish-
language Assets shall not be included within the Divestiture Assets; or
(b) are part of a shared group of like assets (including, but not
limited to, microphones and office supplies) shall be allocated to
Clear Channel Assets and Clear Channel Spanish-language Assets, and
thus to Divestiture Assets, only in proportion with their use by the
Clear Channel Assets or the Clear Channel Spanish-language Assets.
AD. ``Clear Channel Divestiture Assets'' are the Divestiture Assets
relating to the Clear Channel Assets.
AE. ``Clear Channel Spanish-language Divestiture Assets'' are the
Divestiture Assets relating to the Clear Channel Spanish-language
Assets.
AF. ``Acquirer'' means the entity or entities to whom defendants
divest any Divestiture Assets.
III. Applicability
A. This Final Judgment applies to THL, Bain, and Clear Channel, as
defined above, and all other persons in active concert or participation
with any of them who receive actual notice of this Final Judgment by
personal service or otherwise.
B. If, prior to complying with Sections IV and V of this Final
Judgment, Defendants sell or otherwise dispose of all or substantially
all of their assets or of lesser business units that include the
Divestiture Assets, they shall require the purchaser to be bound by the
provisions of this Final Judgment. Defendants need not obtain such an
agreement from the acquirers of the assets divested pursuant to this
Final Judgment.
IV. Divestitures
A. Defendant Clear Channel is ordered and directed to divest the
Divestiture Assets in a manner consistent with this Final Judgment to
an Acquirer or Acquirers acceptable to the United States in its sole
discretion, within ninety (90) calendar days from the date of the
closing of the transaction that is the subject of the Final Judgment or
five (5) calendar days after notice of the entry of this Final Judgment
by the Court, whichever is later. The United States, in its sole
discretion, may agree to one or more extensions of this time period not
to exceed in total sixty (60) calendar days, and shall notify the Court
in each such circumstance. If, within the period permitted for
divestitures, defendants have filed applications with the FCC seeking
approval to assign or transfer licenses to the Acquirer(s) (previously
approved by the United States, pursuant to the terms of this paragraph)
of the Clear Channel Assets and the Clear Channel Spanish-language
Assets, but an order or other dispositive action by the FCC on such
applications has not been issued before the end of
[[Page 10814]]
the period permitted for divestitures, the period shall be extended
with respect to divestiture of those Clear Channel Assets and Clear
Channel Spanish-language Assets for which FCC final approval has not
been issued until ten (10) calendar days after such approval is
received. Defendant Clear Channel agrees to use its best efforts to
divest the Divestiture Assets, and to obtain all regulatory approvals
necessary for such divestitures, as expeditiously as possible.
B. The Divestiture Assets shall not include the Clear Channel
Assets if, prior to the completion of the divestitures required by this
Final Judgment, both THL and Bain no longer have any have limited
liability company membership or any type of debt, equity governance, or
other beneficial interest in either Cumulus Media Partners or CMP
Susquehanna, and have provided written certification (and supporting
documentation) satisfactory to the United States that they have
divested all such assets.
C. The Divestiture Assets shall not include the Clear Channel
Spanish-language Assets if, prior to the completion of the divestitures
required by this Final Judgment, defendant THL no longer has any shares
of capital stock or any type of debt, equity, governance, or other
beneficial interest in either BMP-Univision Holdings or Univision, and
has provided written certification (and supporting documentation)
satisfactory to the United States that it has divested all such assets.
D. The obligation to divest the San Francisco Spanish-language
Assets shall be suspended if, prior to the completion of the
divestitures required by this Final Judgment, those assets have been
transferred to an FCC-authorized trust, and shall cease if such assets
are sold under the terms of the FCC-authorized trust.
E. In accomplishing the divestitures ordered by this Final
Judgment, defendant Clear Channel promptly shall make known, by usual
and customary means, the availability of the Divestiture Assets.
Defendants shall inform any person making inquiry regarding a possible
purchase of the Divestiture Assets that they are being divested
pursuant to this Final Judgment and provide that person with a copy of
this Final Judgment. Defendant Clear Channel shall offer to furnish to
all prospective Acquirers, subject to customary confidentiality
assurances, all information and documents relating to the Divestiture
Assets customarily provided in a due diligence process except such
information or documents subject to the attorney-client privilege or
work-product doctrine. Defendant Clear Channel shall make available
such information to the United States at the same time that such
information is made available to any other person.
F. Defendant Clear Channel shall provide to the Acquirer or
Acquirers and the United States information relating to personnel
involved in the operation of the Divestiture Assets to enable the
Acquirer or Acquirers to make offers of employment. Defendants shall
not interfere with any negotiations by the Acquirer or Acquirers to
employ any Clear Channel employee whose primary responsibility is the
operation of the Divestiture Assets.
G. Defendant Clear Channel shall permit prospective Acquirers of
the Divestiture Assets to have reasonable access to personnel and to
make inspections of the physical facilities of the Divestiture Assets;
access to any and all environmental, zoning, and other permit documents
and information; and access to any and all financial, operational, or
other documents and information customarily provided as part of a due
diligence process.
H. Defendant Clear Channel shall warrant to the Acquirer or
Acquirers that each of the assets will be operational on the date of
sale.
I. Defendants shall not take any action that will impede in any way
the permitting, operation, or divestiture of the Divestiture Assets.
J. Defendant Clear Channel shall warrant to the Acquirer or
Acquirers that there are no material defects in the environmental,
zoning, or other permits pertaining to the operation of the Divestiture
Assets, and that following the sale of the Divestiture Assets,
defendants will not undertake, directly or indirectly, any challenges
to the environmental, zoning, or other permits relating to the
operation of the Divestiture Assets.
K. Unless the United States otherwise consents in writing, any
divestiture pursuant to Section IV, or by trustee appointed pursuant to
Section V, of this Final Judgment, shall include the entire Divestiture
Assets, and shall be accomplished in such a way as to satisfy the
United States, in its sole discretion that (i) the Clear Channel Assets
can and will be used by the Acquirer or Acquirers as part of viable,
ongoing businesses engaged in ongoing commercial radio broadcasting;
(ii) the Clear Channel Spanish-language Assets can and will be used by
the Acquirer or Acquirers as part of viable, ongoing businesses engaged
in ongoing commercial Spanish language radio broadcasting; (iii) that
the Divestiture Assets will remain viable; and (iv) that the
divestiture of such assets will remedy the competitive harm alleged in
the Complaint. The sale of the Divestiture Assets may be made to one or
more Acquirers, provided that in each instance it is demonstrated to
the sole satisfaction of the United States that the Divestiture Assets
will remain viable. The divestitures, whether pursuant to Section IV or
Section V of this Final Judgment:
1. Shall be made to an Acquirer or Acquirers that, in the United
States' sole judgment, has the intent and capability (including the
necessary managerial, operational, technical, and financial capability)
to compete effectively in either the commercial radio broadcasting
business (for the Cincinnati Assets and the Houston Assets) or the
commercial Spanish-language radio broadcasting business (for the
Houston Spanish-language Assets, the Las Vegas Spanish-language Assets,
and the San Francisco Spanish-language Assets); and
2. shall be accomplished so as to satisfy the United States, in its
sole discretion, that none of the terms of any agreement between an
Acquirer or Acquirers and defendant Clear Channel gives defendant the
ability to unreasonably raise the Acquirer's costs, to lower the
Acquirer's efficiency, or otherwise to interfere in the ability of the
Acquirer to compete effectively.
v. Appointment of Trustee
A. If defendant Clear Channel has not divested the Divestiture
Assets within the time period specified in Paragraph IV (A), defendants
shall notify the United States of that fact in writing. Upon
application of the United States, the Court shall appoint a trustee
selected by the United States and approved by the Court to effect the
divestiture of the Divestiture Assets.
B. After the appointment of a trustee becomes effective, only the
trustee shall have the right to sell the Divestiture Assets. The
trustee shall have the power and authority to accomplish the
divestiture to an Acquirer acceptable to the United States at such
price and on such terms as are then obtainable upon reasonable effort
by the trustee, subject to the provisions of Sections IV, V, and VI of
this Final Judgment, and shall have such other powers as this Court
deems appropriate. Subject to Paragraph V(D) of this Final Judgment,
the trustee may hire at the cost and expense of defendants any
investment bankers, attorneys, or other agents, who shall be solely
accountable to the trustee, and are reasonably necessary in the
trustee's judgment to assist in the divestiture.
[[Page 10815]]
C. Defendants shall not object to a sale by the trustee on any
ground other than the trustee's malfeasance. Any such objection by
defendants must be conveyed in writing to the United States and the
trustee within ten (10) calendar days after the trustee has provided
the notice required under section VI.
D. The trustee shall serve at the cost and expense of the
defendants, on such terms and conditions as the United States approves,
and shall account for all monies derived from the sale of the assets
sold by the trustee and all costs and expenses so incurred. After
approval by the Court of the trustee's accounting, including fees for
its services and those of any professionals and agents retained by the
trustee, all remaining money shall be paid to the defendants and the
trust shall then be terminated. The compensation of the trustee and any
professionals and agents retained by the trustee shall be reasonable in
light of the value of the Divestiture Assets and based on a fee
arrangement providing the trustee with an incentive based on the price
and terms of the divestiture and the speed with which it is
accomplished, but timeliness is paramount.
E. Defendants shall use their best efforts to assist the trustee in
accomplishing the required divestiture. The trustee and any
consultants, accountants, attorneys, and other persons retained by the
trustee shall have full and complete access to the personnel, books,
records, and facilities of the business to be divested, and the
defendants shall develop financial and other information relevant to
such business as the trustee may reasonably request, subject to
reasonable protection for trade secrets or other confidential research,
development, or commercial information. Defendants shall take no action
to interfere with or to impede the trustee's accomplishment of the
divestiture.
F. After its appointment, the trustee shall file monthly reports
with the United States and the Court setting forth the trustee's
efforts to accomplish the divestiture ordered under this Final
Judgment. To the extent such reports contain information that the
trustee deems confidential, such reports shall not be filed in the
public docket of the Court. Such reports shall include the name,
address, and telephone number of each person who, during the preceding
month, made an offer to acquire, expressed an interest in acquiring,
entered into negotiations to acquire, or was contacted or made an
inquiry about acquiring any interest in the Divestiture Assets, and
shall describe in detail each contact with any such person. The trustee
shall maintain full records of all efforts made to divest the
Divestiture Assets.
G. If the trustee has not accomplished the divestitures ordered
under this Final Judgment within six months after its appointment, the
trustee shall promptly file with the Court a report setting forth: (1)
The trustee's efforts to accomplish the required divestiture; (2) the
reasons, in the trustee's judgment, why the required divestiture has
not been accomplished; and (3) the trustee's recommendations. To the
extent such report contains information that the trustee deems
confidential, such report shall not be filed in the public docket of
the Court. The trustee shall at the same time furnish such report to
the United States, which shall have the right to make additional
recommendations consistent with the purpose of the trust. The Court
thereafter shall enter such orders as it shall deem appropriate to
carry out the purpose of the Final Judgment, which may, if necessary,
include extending the trust and the term of the trustee's appointment
by a period requested by the United States.
VI. Notice of Proposed Divestitures
A. Within two (2) business days following execution of a definitive
divestiture agreement, defendant Clear Channel or the trustee,
whichever is then responsible for effecting the divestitures required
herein, shall notify the United States of any proposed divestitures
required by Section IV or V of this Final Judgment. If the trustee is
responsible, it shall similarly notify defendants. The notice shall set
forth the details of the proposed divestiture( s) and list the name,
address, and telephone number of each person not previously identified
who offered or expressed an interest in or desire to acquire any
ownership interest in the Divestiture Assets, together with full
details of the same.
B. Within fifteen (15) calendar days of receipt by the United
States of such notice, the United States may request from the
defendants, the proposed Acquirer or Acquirers, any other third party,
or the trustee, if applicable, additional information concerning the
proposed divestitures, the proposed Acquirer or Acquirers, and any
other potential Acquirer. Defendants and the trustee shall furnish any
additional information requested within fifteen (15) calendar days of
the receipt of the request, unless the parties shall otherwise agree.
C. Within thirty (30) calendar days after receipt of the notice or
within twenty (20) calendar days after the United States has been
provided the additional information requested from defendants, the
proposed Acquirer or Acquirers, any third party, and the trustee,
whichever is later, the United States shall provide written notice to
defendants and the trustee, if there is one, stating whether or not it
objects to the proposed divestiture(s). If the United States provides
written notice that it does not object, the divestitures may be
consummated, subject only to defendants' limited right to object to the
sale under Paragraph V(C) of this Final Judgment. Absent written notice
that the United States does not object to the proposed Acquirer or upon
objection by the United States, a divestiture proposed under Section IV
or Section V shall not be consummated. Upon objection by defendant
Clear Channel under Paragraph V(C), a divestiture proposed under
Section V shall not be consummated unless approved by the Court.
VII. Financing
Defendants shall not finance all or any part of any purchase made
pursuant to Section IV or V of this Final Judgment.
VIII. Preservation of Assets/Hold Separate
Until the divestitures required by this Final Judgment have been
accomplished, defendants shall take all steps necessary to comply with
the Hold Separate Stipulation and Order entered by this Court.
Defendants shall take no action that would jeopardize the divestitures
ordered by this Court.
IX. Affidavits
A. Within twenty (20) calendar days of the filing of the Complaint
in this matter, and every thirty (30) calendar days thereafter until
the divestitures have been completed under section IV or V, defendants
shall deliver to the United States an affidavit as to the fact and
manner of their compliance with section IV or V of this Final Judgment.
Each such affidavit shall include the name, address, and telephone
number of each person who, during the preceding thirty (30) calendar
days, made an offer to acquire, expressed an interest in acquiring,
entered into negotiations to acquire, or was contacted or made an
inquiry about acquiring, any interest in the Divestiture Assets, and
shall describe in detail each contact with any such person during that
period. Each such affidavit shall also include a description of the
efforts defendants have taken to solicit buyers for the Divestiture
Assets, and to provide required information to any prospective
[[Page 10816]]
Acquirer, including the limitations, if any, on such information.
Assuming the information set forth in the affidavit is true and
complete, any objection by the United States to information provided by
defendants, including limitations on the information, shall be made
within fourteen (14) calendar days of receipt of such affidavit.
B. Within twenty (20) calendar days of the filing of the Complaint
in this matter, defendants shall deliver to the United States an
affidavit that describes in reasonable detail all actions defendants
have taken and all steps defendants have implemented on an ongoing
basis to comply with Section VIII of this Final Judgment. Defendants
shall deliver to the United States an affidavit describing any changes
to the efforts and actions outlined in defendants' earlier affidavits
filed pursuant to this section within fifteen (15) calendar days after
the change is implemented.
C. Defendants shall keep all records of all efforts made to
preserve and divest the Divestiture Assets until one year after such
divestitures have been completed.
X. Compliance Inspection
A. For the purposes of determining or securing compliance with this
Final Judgment, or of determining whether the Final Judgment should be
modified or vacated, and subject to any legally recognized privilege,
from time to time authorized representatives of the United States
Department of Justice, including consultants and other persons retained
by the United States, shall, upon written request of a duly authorized
representative of the Assistant Attorney General in charge of the
Antitrust Division, and on reasonable notice to defendants, be
permitted:
1. Access during defendants' office hours to inspect and copy, or
at the option of the United States, to require defendants to provide
hard or electronic copies of, all books, ledgers, accounts, records,
data, and documents in the possession, custody, or control of
defendants, relating to any matters contained in this Final Judgment;
and
2. to interview, either informally or on the record, defendants'
officers, employees, or agents, who may have their individual counsel
present, regarding such matters. The interviews shall be subject to the
reasonable convenience of the interviewee and without restraint or
interference by any defendant.
B. Upon the written request of an authorized representative of the
Assistant Attorney General in charge of the Antitrust Division,
defendants shall submit written reports or responses to written
interrogatories, under oath if requested, relating to any of the
matters contained in this Final Judgment as may be requested.
C. No information or documents obtained by the means provided in
this section shall be divulged by the United States to any person other
than an authorized representative of the executive branch of the United
States, except in the course of legal proceedings to which the United
States is a party (including grand jury proceedings), or for the
purpose of securing compliance with this Final Judgment, or as
otherwise required by law.
D. If, at the time information or documents are furnished by
defendants to the United States, defendants represent and identify in
writing the material in any such information or documents to which a
claim of protection may be asserted under Rule 26( c)(7) of the Federal
Rules of Civil Procedure, and defendants mark each pertinent page of
such material, ``Subject to claim of protection under Rule 26(c)(7) of
the Federal Rules of Civil Procedure,'' then the United States shall
give defendants ten (10) calendar days notice prior to divulging such
material in any legal proceeding (other than a grand jury proceeding).
XI. No Reacquisition
A. As long as defendant Bain has any limited liability company
membership or debt, equity, governance, or other beneficial interest in
Clear Channel and either Cumulus Media Partners or CMP Susquehanna,
defendants Bain and Clear Channel may not reacquire any part of the
Clear Channel Divestiture Assets nor enter into any local marketing
agreement, joint sales agreement, or any other cooperative selling
arrangement with respect to the Clear Channel Divestiture Assets.
B. As long as defendant THL has any limited liability company
membership or debt, equity, governance, or other beneficial interest in
Clear Channel and either Cumulus Media Partners or CMP Susquehanna,
defendants THL and Clear Channel may not reacquire any part of the
Clear Channel Divestiture Assets nor enter into any local marketing
agreement, joint sales agreement, or any other cooperative selling
arrangement with respect to the Clear Channel Divestiture Assets.
C. As long as defendant THL has any limited liability company
membership or debt, equity, governance, or other beneficial interest in
Clear Channel and either Univision or BMP-Univision Holdings,
defendants THL and Clear Channel may not reacquire any part of the
Clear Channel Spanish-language Divestiture Assets nor enter into any
local marketing agreement, joint sales agreement, or any other
cooperative selling arrangement with respect to the Clear Channel
Spanish-language Divestiture Assets.
D. If defendants Bain and THL satisfied the requirements of
Paragraph IV (B) of this Final Judgment and thus did not divest the
Clear Channel Assets, no defendant may, so long as Bain or THL has any
limited liability company membership or debt, equity, governance, or
other beneficial interest in Clear Channel, acquire any beneficial
interest in either Cumulus Media Partners or CMP Susquehanna nor enter
into any local marketing agreement, joint sales agreement, or any other
cooperative selling arrangement between Clear Channel and Cumulus Media
Partners or CMP Susquehanna with respect to radio stations in
Cincinnati or Houston.
E. If defendant THL satisfied the requirements of Paragraph IV(C)
of this Final Judgment and thus did not divest the Clear Channel
Spanish-language Assets, neither THL nor Clear Channel may, so long as
THL has any limited liability company membership or debt, equity,
governance, or other beneficial interest in Clear Channel, acquire any
beneficial interest in either BMP-Univision Holdings or Univision nor
enter into any local marketing agreement, joint sales agreement, or any
other cooperative selling arrangement between Clear Channel and BMP-
Univision or Univision with respect to radio stations in Houston, Las
Vegas, or San Francisco.
XII. Retention of Jurisdiction
This Court retains jurisdiction to enable any party to this Final
Judgment to apply to this Court at any time for further orders and
directions as may be necessary or appropriate to carry out or construe
this Final Judgment, to modify any of its provisions, to enforce
compliance, and to punish violations of its provisions.
XIII. Expiration of Final Judgment
Unless this Court grants an extension, this Final Judgment shall
expire ten years from the date of its entry.
XIV. Public Interest Determination
Entry of this Final Judgment is in the public interest. The parties
have complied with the requirements of the Antitrust Procedures and
Penalties Act, 15 U.S.C. Section 16, including making copies available
to the public of this Final Judgment, the Competitive Impact Statement,
and any comments thereon
[[Page 10817]]
and the United States' responses to comments. Based upon the record
before the Court, which includes the Competitive Impact Statement and
any comments and response to comments filed with the Court, entry of
this Final Judgment is in the public interest.
Date:
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Court approval subject to procedures of the Antitrust Procedures and
Penalties Act, 15 U.S.C. Section 16: United States District Judge.
In the United States District Court for the District of Columbia
United States of America, Department of Justice, Antitrust
Division, 325 7th Street, NW., Suite 300, Washington, DC 20530,
Plaintiff, v. Bain Capital, LLC, 111 Huntington Ave., Boston, MA
02199, and Thomas H. Lee Partners, L.P., 100 Federal St. 35th Fl.,
Boston, MA 02110, and Clear Channel Communications, Inc., 200 E.
Basse Rd., San Antonio, TX 78209, Defendants.
Civil Action No. 1:08-cv-00245
Filed: Feb. 13, 2008
Assigned to: Robertson, James
Assign Date: 2/13/2008
Description: Antitrust
Competitive Impact Statement
Plaintiff United States of America (``United States''), pursuant to
section 2(b) of the Antitrust Procedures and Penalties Act (``APPA'' or
``Tunney Act''), 15 U.S.C. 16(b)-(h), files this Competitive Impact
Statement relating to the proposed Final Judgment submitted for entry
in this civil antitrust proceeding.
Nature and Purpose of the Proceeding
Defendants entered into an Agreement and Plan of Merger dated
November 16, 2006, pursuant to which a private equity group of
investors led by Bain Capital, LLC (``Bain'') and Thomas H. Lee
Partners, L.P. (``THL'') will acquire a 70 percent interest in Clear
Channel Communications Inc. (``Clear Channel''), the largest operator
of radio stations in the United States.
Plaintiff filed a civil antitrust Complaint on February 13, 2008
seeking to enjoin the proposed acquisition of a controlling interest in
Clear Channel by Bain and THL. The Complaint alleges that, because Bain
and THL hold sizeable interests in two radio operators that compete
with Clear Channel--Cumulus Media Partners LLC (``CMP'') and Univision
Communications, Inc. (``Univision'')--the proposed acquisition would
substantially lessen competition in the provision of radio advertising
and Spanish-language radio advertising in several relevant geographic
markets, in violation of section 7 of the Clayton Act, 15 U.S.C.
section 18. This loss of competition likely would result in the
lessening or elimination of competition in the sale and provision of
advertising on radio stations in the relevant markets, and increased
prices and reduced services associated with advertising on radio
stations in those relevant markets.
At the same time the Complaint was filed, plaintiff also filed a
Hold Separate Stipulation and Order and a proposed Final Judgment,
which, as explained more fully below, are designed to eliminate the
anticompetitive effects of the acquisition. Under the proposed Final
Judgment, defendants are required to divest radio stations in
Cincinnati, Ohio; Houston/Galveston, Texas (``Houston''); Las Vegas,
Nevada; and San Francisco, California (collectively, the ``Divestiture
Assets''). Under the Hold Separate Stipulation and Order, defendants
will take certain steps to ensure that the Divestiture Assets will
remain independent of and uninfluenced by defendants during the
pendency of the ordered divestiture, and that competition is maintained
during the pendency of the ordered divestiture.
Plaintiff and defendants have stipulated that the proposed Final
Judgment may be entered after compliance with the APPA. Entry of the
proposed Final Judgment would terminate this action, except that the
Court would retain jurisdiction to construe, modify, or enforce the
provisions of the proposed Final Judgment and to punish violations
thereof.
II. Description of the Events Giving Rise to the Alleged Violations
A. Defendants, Other Relevant Entities, and the Proposed Transaction
Defendant Bain is a Delaware limited liability company
headquartered in Boston, Massachusetts. Bain is one of the world's
leading private investment firms with over $40 billion in assets under
management. Defendant THL is a Delaware limited partnership
headquartered in Boston, Massachusetts and also is one of the world's
leading private investment firms. THL currently manages approximately
$12 billion of committed capital. Bain and THL raise pools of capital
from private investors, controlling and managing that capital through
private equity funds and co-investment vehicles that invest in discrete
opportunities, such as venture capital, public equity, and leveraged
debt assets. Bain and THL, either directly or indirectly through
management teams they install, typically manage and operate the assets
in which they invest.
Defendant Clear Channel is a diversified media company incorporated
in Texas and headquartered in San Antonio, Texas. Clear Channel owns
various media outlets including radio stations, domestic and
international outdoor advertising assets, television stations, and a
media representation firm. Radio broadcasting is Clear Channel's
largest business segment, representing over 50 percent of Clear
Channel's total revenue. As of February 5, 2008, Clear Channel owned
833 radio stations in the United States, 508 of which were located
within the top 100 markets as ranked by Arbitron, an international
media marketing and research firm, including stations in Cincinnati,
Houston, Las Vegas, and San Francisco.
Bain and THL are owners, along with the Blackstone Group, Cumulus
Broadcasting, Inc., and their affiliates, of CMP, a limited liability
company formed in 2005. Bain and THL each control 25 percent of the
voting interests of CMP and designate two members to its eight member
Board of Directors. Together, Bain and THL control 50 percent of the
voting interests of CMP and designate one-half of the members of its
Board of Directors. As of February 5, 2008, CMP owned 34 radio stations
in various markets, including stations that compete head-to-head with
Clear Channel stations in Cincinnati and Houston.
THL is an owner, along with Haim Saban, TPG Capital, Providence
Equity, Madison Dearborn, and their affiliates, of Univision, the
largest broadcaster of Spanish-language television programming in the
United States. Univision is headquartered in New York City. THL,
through affiliated funds and co-investment vehicles, currently holds a
20 percent equity interest and a 14 percent voting interest in
Univision and designates three members to Univision's 17 member Board
of Directors. Univision owns 70 radio stations that broadcast in
Spanish language in several markets, including Houston, Las Vegas, and
San Francisco, where Univision radio stations compete head-to-head with
Clear Channel's Spanish-language radio stations.
Bain and THL are planning to acquire, each through various
affiliated funds, substantial ownership interests in Clear Channel (the
``transaction''). The anticipated value of the transaction is $28
billion. Under the purchase arrangement, Bain and THL each will acquire
at least a 35 percent voting and economic interest in Clear Channel,
with the remaining interest of up to 30
[[Page 10818]]
percent staying in the hands of those current Clear Channel investors
and option-holders who elect to retain an equity interest in Clear
Channel rather than to receive cash for their shares and/or stock
options. Bain and THL each also will acquire the right to designate
four directors of the 12 member Clear Channel Board of Directors. If
the transaction is consummated, Bain and THL together will control at
least 70 percent of the voting interests of Clear Channel and designate
two-thirds of the members of the Board of Directors. This acquisition
is the subject of the Complaint and proposed Final Judgment filed by
plaintiff.
III. The Competitive Effects of the Acquisition
Given their existing ownership interests in CMP and Univision, the
effect of Bain's and THL's acquisition of substantial partial ownership
interests in Clear Channel may be to substantially lessen competition
in markets in which stations owned by CMP or Univision--Houston,
Cincinnati, Las Vegas, and San Francisco--compete head-to-head with
Clear Channel stations.
A. Relevant Product Markets
1. Radio Advertising is a Relevant Product Market
Radio stations employ various formats for their programming, such
as Adult Contemporary, Sports, or Rock. A station's format can be
important in determining the size and characteristics of its listening
audience. Companies that operate radio stations, such as Clear Channel,
CMP, and Univision, sell advertising time to local and national
advertisers in each geographic market where they operate those
stations. Advertising rates charged by a radio station are based
primarily on the station's ability to attract listening audiences
having certain demographic characteristics in the market area that
advertisers want to reach, as well as on the number of stations and the
relative demand for radio in the market.
Many local and national advertisers purchase radio advertising time
because they consider it preferable to advertising in other media to
meet their specific needs. They may consider radio advertising time to
be more cost-effective than other media to reach their target
audiences. They may also consider radio advertising to be more
efficient than other media to reach their target audiences.
Additionally, radio stations render certain services or promotional
opportunities to advertisers that the advertisers cannot exploit as
effectively using other media. For these reasons, many local and
national advertisers that purchase radio advertising time view radio as
a necessary advertising medium, sometimes as a complement to other
media. A substantial number of advertisers with strong radio
preferences would not turn to other media if faced with a small but
significant increase in the price of advertising time on radio
stations.
Radio stations generally can identify advertisers with strong radio
preferences. Radio stations also negotiate prices individually with
advertisers. Consequently, radio stations can charge different
advertisers different prices. Because of this ability to price
discriminate among customers, radio stations may charge higher prices
to the substantial number of advertisers that view radio as
particularly effective for their needs, while maintaining lower prices
for other advertisers.
In the event of a price increase in radio advertising time, some
local and national advertisers may switch some of their advertising to
other media rather than absorb a price increase in radio advertising
time. However, the existence of such advertisers would not prevent
radio stations from profitably raising their prices by a small but
significant amount for the substantial number of advertisers that would
not switch.
Accordingly, the Complaint alleges that the provision of
advertising time on radio stations is a line of commerce and a relevant
product market within the meaning of section 7 of the Clayton Act.
2. Spanish-language Radio Advertising is a Relevant Product Market
In markets with a large Hispanic population, many local and
national advertisers also consider Spanish-language radio to be
particularly effective or necessary to reach their desired customers,
especially consumers who listen predominantly or exclusively to
Spanish-language radio. A substantial number of these advertisers
consider Spanish-language radio, either alone or as a complement to
other media, to be the most effective way to reach their target
audience, and do not consider other media, including non-Spanish-
language radio, to be a reasonable substitute. These advertisers would
not turn to other media, including radio that is broadcast in a
language other than Spanish, if faced with a small but significant
increase in the price of advertising time on Spanish-language radio.
Accordingly, the Complaint alleges that the provision of
advertising time on Spanish-language radio stations to these
advertisers is a line of commerce and a relevant product market within
the meaning of section 7 of the Clayton Act.
B. Relevant Geographic Markets
Local and national advertisers buy radio advertising time on
stations within areas defined by an Arbitron Metro Survey Area
(``MSA''). An MSA is the geographic unit that is widely accepted by
radio stations, advertisers, and advertising agencies as the standard
geographic market to use in evaluating radio audience size and
composition.
Local and national advertising that is placed on radio stations in
an MSA is aimed at reaching listening audiences in that MSA. Radio
stations in other MSAs do not provide effective access to these
audiences. If there were a small but significant price increase within
an MSA, an insufficient number of advertisers would switch their
advertising time purchases to radio stations outside the MSA to make
the price increase unprofitable.
In the Houston and Cincinnati MSAs, Clear Channel and CMP stations
compete against each other and against other stations in the provision
of radio advertising time to advertisers, regardless of the language
broadcast over the station. If there were a small but significant
increase in radio advertising prices within the Houston MSA or the
Cincinnati MSA, an insufficient number of advertisers seeking to reach
listeners in the Houston MSA or the Cincinnati MSA would switch their
advertising time purchases to radio stations outside that MSA to make
the price increase unprofitable. Accordingly, the Complaint alleges
that the Houston and Cincinnati MSAs (the ``Overlap Markets'') are each
relevant geographic markets within the meaning of section 7 of the
Clayton Act.
In the Houston MSA, Las Vegas MSA, and San Francisco MSA, Clear
Channel and Univision compete against each other in the provision of
Spanish-language radio advertising time to advertisers. If there were a
small but significant increase in Spanish-language radio advertising
prices in the Houston MSA, Las Vegas MSA, or San Francisco MSA, an
insufficient number of advertisers seeking to reach listeners in any of
those MSAs would switch their Spanish-language advertising purchases to
radio stations outside that MSA to make the price increase
unprofitable. Accordingly, the Complaint alleges that the Houston, Las
Vegas, and San Francisco MSAs (the ``Spanish-language Overlap
Markets'') are each relevant geographic markets within the meaning of
Section 7 of the Clayton Act.
[[Page 10819]]
C. Competition in the Relevant Markets
1. Competition in Radio Advertising in Houston and Cincinnati.
Advertisers that use radio to reach their target audience select
radio stations on which to advertise based upon a number of factors
including, among others, the size and characteristics of the station's
audience. Many advertisers seek to reach a large percentage of their
target audience by selecting those stations with a listening audience
that is highly correlated to the advertisers' target audience.
Clear Channel and CMP vigorously compete for listeners and closely
monitor each other's competitive position in the Cincinnati MSA and the
Houston MSA. Their stations are similarly formatted and programmed with
an eye toward attracting listeners from each other.
Clear Channel and CMP stations in Houston and Cincinnati also
currently compete vigorously for radio advertisers that seek to reach
the specific demographic groups listening to their stations. For many
local and national advertisers buying radio advertising time in the
Houston MSA and the Cincinnati MSA, Clear Channel and CMP stations are
each other's next best substitutes. During individualized rate
negotiations, the substantial number of advertisers that desire to
reach these listeners can benefit from this competition by ``playing
off'' Clear Channel and CMP stations against each other to reach better
terms.
Radio station ownership in Houston and Cincinnati is highly
concentrated, with Clear Channel and CMP's combined advertising revenue
share exceeding 37 percent in Houston and 65 percent in Cincinnati.
Additionally, Clear Channel and CMP's combined listener share exceeds
34 percent in Houston and 59 percent in Cincinnati.
2. Competition in Spanish-language Radio Advertising in Houston,
Las Vegas, and San Francisco
Clear Channel and Univision currently are vigorous competitors and
closely monitor each other's competitive position for Spanish-language
listeners in the Houston, Las Vegas, and San Francisco MSAs, each of
which has a large Hispanic population. Their stations in these markets
are similarly formatted and programmed with an eye toward attracting
Spanish-language listeners from each other.
Clear Channel and Univision stations also currently compete
vigorously for radio advertisers that seek to reach Spanish-language
listeners. For many local and national advertisers, buying Spanish-
language radio advertising time in the Houston, Las Vegas, and San
Francisco Spanish-language Overlap Markets, Clear Channel and Univision
stations are each other's next best substitutes. During individualized
rate negotiations, the substantial number of advertisers that desire to
reach these listeners can benefit from this competition by ``playing
off' Clear Channel and Univision stations against each other to reach
better terms.
Spanish-language radio station ownership in Houston, Las Vegas, and
San Francisco is highly concentrated. Clear Channel and Univision's
combined Spanish-language listener share exceeds 75 percent in Houston,
73 percent in Las Vegas, and 70 percent in San Francisco. Additionally,
Clear Channel and Univision's combined Spanish-language advertising
revenue share exceeds 79 percent in Houston, 78 percent in Las Vegas,
and 63 percent in San Francisco.
D. Anticompetitive Effects of the Transaction in Houston and Cincinnati
Radio Advertising Markets
Clear Channel is one of only a few radio companies competing with
CMP in the sale of radio advertising in Houston and Cincinnati, and
within those markets, the two companies are each other's next best
substitutes for advertisers seeking to reach several key demographic
groups. Bain and THL currently control CMP; together they hold 50
percent of the voting and equity interests and have the right to choose
half of the members of its Board of Directors. CMP's Board of Directors
cannot make decisions without the agreement of either Bain or THL,
which have access to CMP's non-public, competitively sensitive
information and its officers and employees. These ownership interests
and associated rights give each of Bain and THL, as well as Bain and
THL acting together, influence over, if not outright control of, CMP's
management decisions.
Upon consummation of their proposed acquisition of interests in
Clear Channel, defendants Bain and THL together would also control
Clear Channel. Together, they would own at least 70 percent of the
equity and voting interests of Clear Channel and have the right to
select eight of Clear Channel's 12 directors. In addition, Bain and THL
would have access to Clear Channel's non-public, competitively
sensitive information and its officers and employees. After the
acquisition, each of Bain and THL, as well as Bain and THL acting
together, would have influence over, if not outright control of, Clear
Channel's management decisions.
Bain and THL, either directly or indirectly through management
teams they install, typically manage and operate the assets in which
they invest. As significant equity holders in both Clear Channel and
CMP, Bain and THL each would seek to maximize the value of their
investments by increasing the profitability of those companies. With
respect to their interests in CMP and Clear Channel, Bain and THL's
interests would be aligned and they would be expected to work together
to achieve maximum profits at the two companies, including by using
their control, influence, and access to information to reduce
competition between Clear Channel and CMP in order to increase the
companies' total profits.
Bain or THL, or Bain and THL acting together, would have the
incentive and ability to use their ownership, control and influence,
and access to information as to both Clear Channel and CMP to reduce
competition between the companies in markets where they are significant
competitors. They could accomplish such a reduction in competition in
at least four ways:
(1) Through their control of or influence over both Clear Channel
and CMP, Bain or THL, or Bain and THL working together, could cause
Clear Channel and CMP to coordinate their competitive behavior in a
manner that increased both companies' profits but harmed consumers;
(2) Through their governance rights relating to both Clear Channel
and CMP, Bain or THL, or Bain and THL working together, could install a
management team at one of the companies motivated to act in the
interest of Bain and THL, and thereby reduce the vigor of its
competition against the other company in which Bain and THL had a
significant stake;
(3) Through their access to non-public, competitively sensitive
information of both Clear Channel and CMP, and through their contacts
with management at both Clear Channel and CMP, Bain or THL, or Bain and
THL working together, could facilitate coordination between Clear
Channel and CMP; and
(4) Through their control of or influence over both Clear Channel
and CMP, Bain or THL, or Bain and THL working together, could cause
either Clear Channel or CMP to forbear from competing against the
other, knowing that a significant portion of lost sales would be
recaptured by a company in which Bain and THL had a significant
ownership interest.
For example, Clear Channel's management team, acting pursuant to
either Bain's or THL's corporate
[[Page 10820]]
influence, or pursuant to their joint voting control, could be expected
to increase the price of advertising at Clear Channel to those
advertisers that view CMP as Clear Channel's closest alternative,
knowing that Bain and THL would reap the benefits of the price increase
at Clear Channel and recapture the lost profits from any advertisers
that chose to switch to CMP. Alternatively, the transaction would
result in higher prices for purchasers of radio advertising if
management teams at Clear Channel and CMP, acting pursuant to either
Bain's or THL's influence or their joint voting control, were to go
along with price increases at the other's stations, which would be
known to Bain and THL even if not publicly disclosed. Given that
Houston and Cincinnati are highly concentrated markets, advertisers
would find it difficult or impossible to ``buy around'' Clear Channel
and CMP, i.e., to effectively reach their targeted audience without
using Clear Channel or CMP radio stations.
Thus, the Complaint alleges that Bain's and THL's proposed
acquisitions of ownership interests in Clear Channel, if consummated,
would substantially reduce competition for radio advertising in the
Houston and Cincinnati Overlap Markets.
E. Anticompetitive Effects of the Acquisition in Houston, Las Vegas,
and San Francisco Spanish-Language Radio Markets
Clear Channel is one of only a few radio companies competing with
Univision for Spanish-language radio advertising time in Houston, Las
Vegas, and San Francisco, and within those markets, the two companies
are each other's next best substitutes for advertisers targeting
Spanish-language listeners. THL currently has a 20 percent equity
interest and a 14 percent voting interest in Univision, as well as the
right to designate three Univision board members. THL also has access
to Univision's non-public, competitively sensitive information and its
officers and employees. Significant corporate decisions at Univision
require the assent of three of its five owners. THL's ownership
interest and associated rights give it influence over Univision's
management decisions.
Upon consummation of the proposed acquisition of Clear Channel,
defendant THL would own at least 35 percent of the equity and voting
interest of Clear Channel, as well as a right to choose four of its 12
directors. In addition, after the acquisition, THL would have access to
Clear Channel's non-public, competitively sensitive information and its
officers and employees. THL's ownership interest and associated rights
would give it influence over Clear Channel's management decisions.
As a significant equity holder in both Clear Channel and Univision,
THL would seek to maximize the value of its investments by increasing
the profitability of those companies. THL likely would work to achieve
maximum profits at the two companies, including by using its influence
and access to information to reduce competition between Clear Channel
and Univision, in order to increase THL's total profits.
THL would have the incentive and ability to use its ownership,
control and influence, and access to information as to both Clear
Channel and Univision to reduce competition between the companies in
markets where they are significant competitors. THL could accomplish
such a reduction in competition in at least four ways:
(1) Through its influence over both Clear Channel and Univision,
THL could cause Clear Channel and Univision to coordinate their
competitive behavior in a manner that increased both companies' profits
but harmed consumers;
(2) Through its governance rights relating to both Clear Channel
and Univision, THL could work to install a management team at one of
the companies motivated to act in THL's interests, or influence a
management team to account for THL's interests, and thereby reduce the
vigor of its competition against the other company in which THL had a
significant stake;
(3) Through its access to non-public, competitively sensitive
information of both Clear Channel and Univision, and through its
contacts with management at both Clear Channel and Univision, THL could
facilitate coordination between Clear Channel and Univision; and
(4) Through its influence over both Clear Channel and Univision,
THL could cause either Clear Channel or Univision to forbear from
competing against the other, knowing that a significant portion of lost
sales would be recaptured by a company in which THL had a significant
ownership interest.
For example, as a result of the acquisition, with access to both
companies' non-public competitively sensitive information, THL would
have the ability and the incentive to facilitate the coordination of
pricing and other competitive decisions between Clear Channel and
Univision in the Spanish-language Overlap Markets. Given that those
markets are highly concentrated, advertisers would find it difficult or
impossible to ``buy around'' Clear Channel and Univision, i.e., to
effectively reach their targeted audience without using Clear Channel
or Univision radio stations, resulting in higher prices and lower
service levels for purchasers of Spanish-language radio advertising.
Thus, the Complaint alleges that THL's acquisition of a substantial
partial ownership interest in Clear Channel would substantially lessen
competition in the sale of Spanish-language radio advertising in
Houston, Las Vegas, and San Francisco, in violation of section 7 of the
Clayton Act, as amended, 15 U.S.C. 18.
F. Federal Communication Commission Obligations
In order to meet FCC radio ownership rules, Bain and THL, prior to
consummating their acquisition of ownerships interests in Clear
Channel, plan to convert all of their governance rights and ownership
interests in CMP into passive equity interests, which means they will
no longer have voting rights and will withdraw all Bain and THL
directors from the CMP Board. For the same reason, THL likewise plans
to convert its interests in Univision to passive equity interests, and
withdraw from the Univision Board.
Such changes would not eliminate the potential for the competitive
harm in the markets where Clear Channel competes with CMP or Univision.
Because the FCC-required conversions would not reduce the magnitude of
any defendant's equity stake in the three companies, the defendants
would still profit from any reduction in competition between either
Clear Channel and CMP or between Clear Channel and Univision. In
addition, the FCC-required conversions would not affect Bain or THL's
control of Clear Channel, or eliminate their access to non-public,
confidential information and officers and employees at Clear Channel,
CMP, and Univision.
As a result, the conversions would not eliminate the ability of
Bain and THL, whether acting individually or together, to cause a
reduction in competition. For example, Bain and/or THL would still have
the incentive and ability, given their combined 70 percent share in
Clear Channel, to influence Clear Channel's management team to increase
the price of advertising at Clear Channel to those advertisers that
view CMP as Clear Channel's closest alternative, knowing that Bain and
THL would reap the benefits of the price increase at Clear Channel and
recapture the lost profits from any advertisers that chose to switch to
CMP. Alternatively, because the FCC regulatory scheme does not require
that THL relinquish its access to non-public, confidential information
at
[[Page 10821]]
either Clear Channel or Univision, THL could still have the ability to
be an information conduit between the two companies so as to facilitate
the coordination of pricing and other competitive decisions between
them in the Spanish-language Overlap Markets. Accordingly, a decree
mandating divestitures is necessary to restore competition.
G. Entry Will Not Mitigate the Likely Anticompetitive Effects
Successful entry into the Houston or Cincinnati Overlap Markets or
the Houston, Las Vegas, or San Francisco Spanish-language Overlap
Markets would not be timely, likely, or sufficient to offset the
anticompetitive effects resulting from this transaction.
Entry could occur by obtaining a license for new radio spectrum or
by reformatting an existing station. However, acquisition of new radio
spectrum is highly unlikely because spectrum is a scarce and expensive
commodity. Reformatting by existing stations in any of the relevant
geographic markets would not be sufficient to mitigate the competitive
harm likely to result from this acquisition. For those stations in
these markets that have large shares in other coveted demographics, a
format shift solely in response to small but significant increases in
price by Clear Channel, CMP, or Univision is not likely because it
would not be profitable. For those radio stations that may have
incentives to change formats in response to small but significant
increases in price by Clear Channel, CMP, and Univision, their shift
would not be sufficient to mitigate the anticompetitive effects
resulting from this acquisition.
IV. Explanation of the Proposed Final Judgment
A. Clear Channel Radio Stations Must Be Divested
The proposed Final Judgment will eliminate the anticompetitive
effects that would result from Bain's and THL's acquisition of
substantial ownership interests in Clear Channel. Paragraph IV(A) of
the proposed Final Judgment requires defendant Clear Channel, within 90
days after the closing of their transaction, or five calendar days
after notice of the entry of the Final Judgment by the Court, whichever
is later, to divest certain of its radio stations in Houston,
Cincinnati, Las Vegas, and San Francisco. In order to maximize the
likelihood that appropriate radio stations are divested promptly to
qualified buyers, the proposed Final Judgment provides Clear Channel
with the flexibility to choose between two equivalently effective
divestiture packages in Houston and Cincinnati.
The Divestiture Assets comprise the following stations and all
tangible and intangible assets used in their operation:
1. the Clear Channel Assets are:
a. a Houston station--either KHMX or, at the discretion of the
defendants, KTBZ;
b. two Cincinnati stations--either WLW and WKFS or, at the
discretion of the defendants, WOFX and WNNF;
2. the Clear Channel Spanish-language Assets are:
a. KLOL, a Houston Spanish-language station;
b. KWID, a Las Vegas Spanish-language station; and
c. KSJO, a San Francisco Spanish-language station.
These stations must be divested to acquirer(s) that, in the United
States' sole judgment, will use them as part of viable, ongoing
businesses engaged in commercial radio broadcasting or Spanish-language
radio broadcasting. The proposed Final Judgment requires defendants to
take all reasonable steps necessary to accomplish the divestiture
quickly and to cooperate with prospective acquirers.
The sale of the Divestiture Assets according to the terms of the
proposed Final Judgment will eliminate the anti-competitive effects of
the acquisition in the Houston and Cincinnati Overlap Markets for radio
advertising and in the Houston, Las Vegas, and San Francisco Spanish-
language Overlap Markets for Spanish-language radio advertising. In
each market, the divestitures will establish a new, independent, and
economically viable competitor.
The proposed Final Judgment relieves the defendants of some or all
of their obligations to divest under three sets of circumstances.
First, the proposed Final Judgment takes into account that the FCC has
required that Clear Channel sell a San Francisco station in order to
comply with FCC media ownership limitations. Paragraph IV(D) of the
proposed Final Judgment thus provides that, if the San Francisco
station has been transferred to an FCC-authorized trust prior to the
completion of the required divestitures, defendants' obligation to
divest that station is suspended and will be eliminated if the station
is sold under the terms of the FCC-authorized trust, in which case the
objectives of the proposed Final Judgment would have been achieved.
Second, if Bain and THL both divest 100 percent of their interests
in CMP, thereby eliminating the overlap between CMP and Clear Channel
achieved by the transaction, Paragraph IV(B) of the proposed Final
Judgment would no longer require that the defendants divest those
stations that comprise the Clear Channel Assets. If these assets are
not divested, Paragraph XI(D) of the proposed Final Judgment would bar
the reacquisition by Bain or THL of any interest in CMP so long as they
continue to have some interest in Clear Channel.
Third, if THL divests 100 percent of its interests in Univision,
thereby eliminating the overlap between Univision and Clear Channel
achieved by the transaction, Paragraph IV(C) of the proposed Final
Judgment would no longer require that the defendants divest those
stations that comprise the Clear Channel Spanish-language Assets. If
these assets are not divested, however, Paragraph XI(E) of the proposed
Final Judgment would bar the reacquisition of by THL of any interest in
Univision so long as it continues to have some interest in Clear
Channel.
B. Timing of Divestitures
In antitrust cases involving mergers or joint ventures in which the
United States seeks a divestiture remedy, it requires completion of the
divestiture within the shortest time period reasonable under the
circumstances. As noted above, the proposed Final Judgment requires
defendant Clear Channel to complete the divestitures within 90 days
after the transaction closes, or five calendar days after notice of the
entry of the Final Judgment by the Court, whichever is later. The
United States in its sole discretion may extend the time period for
divestiture by up to 60 days.
In this matter, Paragraph IV(A) of the proposed Final Judgment also
provides for an additional extension in certain circumstances. This
extension takes into account the FCC's role in connection with
transfers of radio stations from one operator to another. If the
defendants have found a buyer or buyers for the assets (and the buyers
have been approved by the United States) and have filed applications
with the FCC seeking approval to assign or transfer the licenses within
the initial period for divestiture, but the FCC has not yet issued a
final order approving such transfers, the proposed Final Judgment
allows for an extension of the divestiture period until ten days after
the FCC's order approving the transfer is issued.
The divestiture timing provisions of the proposed Final Judgment
will ensure that the divestitures are carried out in a timely manner,
and at the same time will permit defendants an adequate opportunity to
accomplish the
[[Page 10822]]
divestitures consistent with their FCC obligations. Even if the Clear
Channel stations have not been divested upon consummation of the
transaction, there should be no adverse impact on competition given the
limited duration of the period of common ownership and the detailed
requirements of the Hold Separate Stipulation and Order.
C. Use of a Trustee
In the event that the defendants do not accomplish the divestiture
within the periods prescribed in the proposed Final Judgment, the Final
Judgment provides that the Court will appoint a trustee selected by
plaintiff to effect the divestiture.
Section V details the requirements for the establishment of the
divestiture trust, the selection and compensation of the trustee, and
the responsibilities of the trustee in connection with the divestiture.
The trustee will have the sole responsibility, under Paragraph V(B),
for the sale of the stations to be divested. The trustee has the
authority to accomplish the divestiture at the earliest possible time
and ``at such price and on such terms as are then obtainable upon
reasonable effort by the trustee.''
The proposed Final Judgment provides that defendants will pay all
costs and expenses of the trustee. The trustee's commission will be
structured, under Paragraph V(D) of the proposed Final Judgment, so as
to provide an incentive for the trustee based on the price and terms
obtained and the speed with which the divestiture is accomplished.
After his or her appointment becomes effective, the trustee will file
monthly reports with the Court and plaintiff setting forth his or her
efforts to accomplish the divestiture. At the end of six months, if the
divestiture has not been accomplished, the trustee and plaintiff will
make recommendations to the Court, which shall enter such orders as
appropriate in order to carry out the purpose of the Final Judgment,
including extending the trust or term of the trustee's appointment.
D. The Hold Separate Stipulation and Order
The Hold Separate Stipulation and Order, filed at the same time as
the Complaint, ensures that, pending divestiture of the Clear Channel
stations, (i) defendants will take no steps to limit those stations'
ability to operate as competitively independent, economically viable,
and ongoing business concerns, (ii) defendants will not influence those
stations' business, and (iii) competition will be maintained. The Hold
Separate Stipulation and Order requires Clear Channel to hold the
stations to be divested separate as independent, ongoing, economically
viable, and active competitors in their particular markets. This means
that their management, including decision-making functions relating to
marketing and pricing, will be kept separate and apart from, and not
influenced by, defendants Bain or THL or Clear Channel's other
operations.
V. Remedies Available to Potential Private Litigants
Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any
person who has been injured as a result of conduct prohibited by the
antitrust laws may bring suit in federal court to recover three times
the damages the person has suffered, as well as costs and reasonable
attorneys' fees. Entry of the proposed Final Judgment will neither
impair nor assist the bringing of any private antitrust damage action.
Under the provisions of section 5(a) of the Clayton Act, 15 U.S.C.
16(a), the proposed Final Judgment has no prima facie effect in any
subsequent private lawsuit that may be brought against defendants.
VI. Procedures Available for Modification of the Proposed Final
Judgment
Plaintiff and defendants have stipulated that the proposed Final
Judgment may be entered by the Court after compliance with the
provisions of the APPA, provided that plaintiff has not withdrawn its
consent. The APPA conditions entry upon the Court's determination that
the proposed Final Judgment is in the public interest.
The APPA provides a period of at least sixty (60) days preceding
the effective date of the proposed Final Judgment within which any
person may submit to plaintiff written comments regarding the proposed
Final Judgment. Any person who wishes to comment should do so within
sixty (60) days of the date of publication of this Competitive Impact
Statement in the Federal Register or the last date of publication in a
newspaper of the summary of this Competitive Impact Statement;
whichever is later. All comments received during this period will be
considered by the United States Department of Justice, which remains
tree to withdraw its consent to the proposed Final Judgment at any time
prior to the Court's entry of judgment. The comments and the response
of plaintiff will be filed with the Court and published in the Federal
Register.
Written comments should be submitted to: John R. Read, Chief,
Litigation III Section, Antitrust Division, U.S. Department of Justice,
325 7th Street, NW., Suite 300, Washington, DC 20530.
The proposed Final Judgment provides that the Court retains
jurisdiction over this action, and the parties may apply to the Court
for any order necessary or appropriate for the modification,
interpretation, or enforcement of the Final Judgment.
VII. Alternatives to the Proposed Final Judgment
Plaintiff considered, as an alternative to the proposed Final
Judgment, a full trial on the merits against defendants. Plaintiff
could have continued the litigation and sought preliminary and
permanent injunctions against Bain and THL's acquisition of Clear
Channel. Plaintiff is satisfied, however, that the divestiture of the
stations described in the proposed Final Judgment will preserve
competition in the provision of radio advertising in Houston and
Cincinnati, and competition in the provision of Spanish-language radio
advertising in Houston, Las Vegas and San Francisco, the relevant
markets identified in the Complaint. Thus, the proposed Final Judgment
would achieve all or substantially all of the relief the United States
would have obtained through litigation, but avoids the time, expense,
and uncertainty of a full trial on the merits of the Complaint.
VIII. Standard of Review Under the APPA for the Proposed Final Judgment
The Clayton Act, as amended by the APPA, requires that proposed
consent judgments in antitrust cases brought by the United States be
subject to a sixty-day comment period, after which the Court shall
determine whether entry of the proposed Final Judgment ``is in the
public interest.'' 15 U.S.C. 16(e)(1). In making that determination,
the court, in accordance with the statute as amended in 2004, is
required to consider:
(A) The competitive impact of such judgment, including termination
of alleged violations, provisions for enforcement and modification,
duration of relief sought, anticipated effects of alternative remedies
actually considered, whether its terms are ambiguous, and any other
competitive considerations bearing upon the adequacy of such judgment
that the court deems necessary to a determination of whether the
consent judgment is in the public interest; and
(B) The impact of entry of such judgment upon competition in the
relevant market or markets, upon the
[[Page 10823]]
public generally and individuals alleging specific injury from the
violations set forth in the complaint including consideration of the
public benefit, if any, to be derived from a determination of the
issues at trial.
15 U.S.C. 16(e)(1)(A) & (B). In considering these statutory
factors, the court's inquiry is necessarily a limited one, as the
government is entitled to ``broad discretion to settle with the
defendant within the reaches of the public interest.'' United States v.
Microsoft Corp., 56 F.3d 1448, 1461 (D.C. Cir. 1995); see generally
United States v. SBC Commc'ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007)
(assessing public interest standard under the Tunney Act).\1\
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\1\ The 2004 amendments substituted ``shall'' for ``may'' in
directing relevant factors for court to consider and amended the
list of factors to focus on competitive considerations and to
address potentially ambiguous judgment terms. Compare 15 U.S.C.
16(e) (2004), with 15 U.S.C. 16(e)(1) (2006); see also SBC Commc'ns,
489 F. Supp. 2d at 11 (concluding that the 2004 amendments
``effected minimal changes'' to Tunney Act review).
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As the United States Court of Appeals for the District of Columbia
Circuit has held, under the APPA a court considers, among other things,
the relationship between the remedy secured and the specific
allegations set forth in the government's complaint, whether the decree
is sufficiently clear, whether enforcement mechanisms are sufficient,
and whether the decree may positively harm third parties. See
Microsoft, 56 F.3d at 1458-62. With respect to the adequacy of the
relief secured by the decree, a court may not ``engage in an
unrestricted evaluation of what relief would best serve the public.''
United States v. BNS, Inc., 858 F.2d 456, 462 (9th Cir. 1988) (citing
United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see
also Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152
F. Supp. 2d 37, 40 (D.D.C. 2001). Courts have held that:
The balancing of competing social and political interests
affected by a proposed antitrust consent decree must be left, in the
first instance, to the discretion of the Attorney General. The
court's role in protecting the public interest is one of insuring
that the government has not breached its duty to the public in
consenting to the decree. The court is required to determine not
whether a particular decree is the one that will best serve society,
but whether the settlement is ``within the reaches of the public
interest.'' More elaborate requirements might undermine the
effectiveness of antitrust enforcement by consent decree.
Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\2\
In determining whether a proposed settlement is in the public interest,
a district court ``must accord deference to the government's
predictions about the efficacy of its remedies, and may not require
that the remedies perfectly match the alleged violations.'' SBC
Commc'ns, 489 F. Supp. 2d at 17; see also Microsoft, 56 F.3d at 1461
(noting the need for courts to be ``deferential to the government's
predictions as to the effect of the proposed remedies''); United States
v. Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003)
(noting that the court should grant due respect to the United States'
prediction as to the effect of proposed remedies, its perception of the
market structure, and its views of the nature of the case).
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\2\ Cf. BNS, 858 F.2d at 464 (holding that the court's
``ultimate authority under the [APPA] is limited to approving or
disapproving the consent decree''); United States v. Gillette Co.,
406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the
court is constrained to ``look at the overall picture not
hypercritically, nor with a microscope, but with an artist's
reducing glass''). See generally Microsoft, 56 F.3d at 1461
(discussing whether ``the remedies [obtained in the decree are] so
inconsonant with the allegations charged as to fall outside of the
`reaches of the public interest' '').
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Courts have greater flexibility in approving proposed consent
decrees than in crafting their own decrees following a finding of
liability in a litigated matter. ``[A] proposed decree must be approved
even if it falls short of the remedy the court would impose on its own,
as long as it falls within the range of acceptability or is `within the
reaches of public interest.' '' United States v. Am. Tel. & Tel. Co.,
552 F. Supp. 131, 151 (D.D.C. 1982) (citations omitted) (quoting United
States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)), aff'd
sub nom. Maryland v. United States, 460 U.S. 1001 (1983); see also
United States v. Alcan Aluminum Ltd., 605 F. Supp. 619, 622 (W.D. Ky.
1985) (approving the consent decree even though the court would have
imposed a greater remedy). To meet this standard, the United States
``need only provide a factual basis for concluding that the settlements
are reasonably adequate remedies for the alleged harms.'' SBC Commc'ns,
489 F. Supp. 2d at 17.
Moreover, the court's role under the APPA is limited to reviewing
the remedy in relationship to the violations that the United States has
alleged in its Complaint, and does not authorize the court to
``construct [its] own hypothetical case and then evaluate the decree
against that case.'' Microsoft, 56 F.3d at 1459. Because the ``court's
authority to review the decree depends entirely on the government's
exercising its prosecutorial discretion by bringing a case in the first
place,'' it follows that ``the court is only authorized to review the
decree itself,'' and not to ``effectively redraft the complaint'' to
inquire into other matters that the United States did not pursue. Id.
at 1459-60. As this Court recently confirmed in SBC Communications,
courts ``cannot look beyond the complaint in making the public interest
determination unless the complaint is drafted so narrowly as to make a
mockery of judicial power.'' SBC Commc'ns, 489 F. Supp. 2d at 15.
In its 2004 amendments to the APPA, Congress made clear its intent
to preserve the practical benefits of utilizing consent decrees in
antitrust enforcement, adding the unambiguous instruction that
``[n]othing in this section shall be construed to require the court to
conduct an evidentiary hearing or to require the court to permit anyone
to intervene.'' 15 U.S.C. 16(e)(2). The language wrote into the statute
what Congress intended when it enacted the Tunney Act in 1974, as
Senator Tunney explained: ``The court is nowhere compelled to go to
trial or to engage in extended proceedings which might have the effect
of vitiating the benefits of prompt and less costly settlement through
the consent decree process.'' 119 Cong. Rec. 24,598 (1973) (statement
of Senator Tunney). Rather, the procedure for the public interest
determination is left to the discretion of the court, with the
recognition that the court's ``scope of review remains sharply
proscribed by precedent and the nature of Tunney Act proceedings.'' SBC
Commc'ns, 489 F. Supp. 2d at 11.\3\
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\3\ See United States v. Enova Corp., 107 F. Supp. 2d 10, 17
(D.D.C. 2000) (noting that the ``Tunney Act expressly allows the
court to make its public interest determination on the basis of the
competitive impact statement and response to comments alone''); S.
Rep. No. 93-298, 93d Cong., 1st Sess., at 6 (1973) (``Where the
public interest can be meaningfully evaluated simply on the basis of
briefs and oral arguments, that is the approach that should be
utilized.''); United States v. Mid-Am. Dairymen, Inc., 1977-1 Trade
Cas. (CCH) ] 61,508, at 71,980 (W.D. Mo. 1977) (``Absent a showing
of corrupt failure of the government to discharge its duty, the
Court, in making its public interest finding, should * * * carefully
consider the explanations of the government in the competitive
impact statement and its responses to comments in order to determine
whether those explanations are reasonable under the
circumstances.'').
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IX. Determinative Documents
There are no determinative materials or documents within the
meaning of the APPA that were considered by plaintiff United States in
formulating the proposed Final Judgment.
Dated: February 13, 2008
Respectfully submitted,
Daniel McCuaig (DC Bar No. 478199),
Christopher Ries,
[[Page 10824]]
Attorneys, Litigation III Section, Antitrust Division, U.S.
Department of Justice, 325 7th Street, NW., Suite 300, Washington,
DC 20530, (202) 307-0520, Facsimile: (202) 514-7308.
[FR Doc. 08-867 Filed 2-27-08; 8:45 am]
BILLING CODE 4410-11-M