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Before the
FEDERAL COMMUNICATIONS
COMMISSION
Washington, D.C.
In Re Applications of
Triathlon Broadcasting Company
and
Capstar Radio Broadcasting
Partners, Inc.
For Consent to Assignment of
Licenses of Stations
KFH-AM, Wichita, Kansas
KQAM-AM, Wichita, Kansas
KWSJ-FM, Haysville, Kansas
KRBB-FM, Wichita, Kansas
KEYN-FM, Wichita, Kansas
KZSN-FM, Hutchinson, Kansas
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File Nos.
BTC-980821EE
BTC-980821EF
BTC-980921EG
BTCH-980821EH
BTCH-980821EI
BTCH-980821EJ
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To: Chief, Mass Media Bureau
COMMENT AND PETITION FOR
HEARING
Joel I. Klein
Assistant Attorney General
Donna E. Patterson
Deputy Assistant Attorney General
Susan M. Davies
Senior Counsel
Constance K. Robinson
Director of Merger Enforcement
and Director of Operations |
Craig W. Conrath
Chief, Merger Task Force
Reid B. Horwitz
Assistant Chief, Merger Task Force
Karl D. Knutsen
Joan Farragher
Attorneys
U.S. Department of Justice
Antitrust Division
1401 H Street, N. W., Suite 4000
Washington, D.C. 20530-0001
(202) 514-0976
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Date: October 19, 1998
Page 2
| TABLE OF CONTENTS |
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Page |
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Summary |
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| I. |
Introduction |
1 |
| II. |
The Parties |
2 |
| III. |
The Proposed Acquisition |
3 |
| IV. |
The Commission Properly May Consider Antitrust Issues,
Under the Communications Act, in Approving the Transfer
of a Station License. |
4 |
| V. |
Radio Advertising is the Relevant Product
Market in Which to Analyze the Competitive Effects of the Proposed
Transaction. |
7 |
| VI. |
The Geographic Market is the Wichita, Kansas
Metro Market or the Three County Metro Market of
Butler, Harvey and Sedgwick Counties. |
8 |
| VII. |
Capstar's Proposed Acquisition Should Be Designated for
Hearing Because it Presents Issues of Material Fact as to
Whether It Contrary to the Public Interest Because It Will
Enable Capstar to Control Almost Half of the Advertising
Revenues and Demographic Shares in Wichita,
Thereby Reducing Competition. |
10 |
| VIII. |
Conclusion |
13 |
.
Page 3
SUMMARY
The
Department of Justice of the United States of America
("Department") submits this
Comment and Petition for Hearing to
the Federal Communications Commission ("Commission")
in connection with the Commission's
request for comment on Capstar Broadcasting Partner
Inc.'s ("Capstar") proposed acquisition
of Triathlon Broadcasting Company ("Triathlon").
Capstar currently owns KKRD-FM, KRZZ-FM, and
KNSS-AM in Wichita,
Kansas.
Triathlon currently owns six radio
stations in Wichita: KZSN-FM, KRBB-FM, KEYN-FM,
KWSJ-FM, KFH-AM, and KQAM-AM.
Although Capstar acknowledges in its Commission
filing that it must divest two FM
stations, its share of market revenue would still be over 45%
after it divests the two least significant
FM stations. In addition, Capstar and Triathlon may
even be closer competitors than their
revenue shares suggest because their combined share of
certain demographic groups would
exceed 50% -- even after it divests the two least significant
FM stations. These levels of
concentration raise substantial and material questions of fact as
to
whether the transaction is
anticompetitive.
The
Commission has the responsibility under Section 310(d) of the
Communications Act,
47 U.S.C. § 310(d), to consider
antitrust issues in approving the transfer of a station license.
Under such a public interest
evaluation, Capstar's proposed acquisition of Triathlon's station
licenses presents a number of issues
of material fact as to whether the proposed transaction is
anticompetitive and will lead to higher
prices for radio advertising in Wichita, Kansas. Because
the transfer of Triathlon's stations
raise serious issues as to whether sufficient competition
will
exist after the acquisition, the
Department believes that the Commission should hold a hearing
and determine whether the transfers
serve the public interest.
Page 4
Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C.
In Re Applications of
Triathlon Broadcasting Company
and
Capstar Radio Broadcasting
Partners, Inc.
For Consent to Assignment of
Licenses of Stations
KFH-AM, Wichita, Kansas
KQAM-AM, Wichita, Kansas
KWSJ-FM, Haysville, Kansas
KRBB-FM, Wichita, Kansas
KEYN-FM, Wichita, Kansas
KZSN-FM, Hutchinson, Kansas
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File Nos.
BTC-980821EE
BTC-980821EF
BTC-980921EG
BTCH-980821EH
BTCH-980821EI
BTCH-980821EJ
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to: Chief, Mass Media Bureau
COMMENT AND PETITION FOR
HEARING
I. Introduction
On
September 18, 1998, the Federal Communications Commission
("Commission")
announced its concerns relating to
increased concentration created by the proposed transfers of
the above-mentioned licenses by
issuing a public notice requesting comments on the transfers,
stating:
Based on our initial analysis of this application and
other publicly
available
Page 2
information . . . the Commission intends to conduct
additional analysis
of
the
ownership concentration in the relevant market.
This analysis is
undertaken
pursuant to the Commission's obligation under
section 310(d) of the
Communications Act, 47 U.S.C. section 310 (d), to
grant an application
to
transfer or assign a broadcast license or permit only
if so doing
serves the
public
interest, convenience and necessity.
Broadcast Applications, FCC
Report No. 24329, at 6 (1998).
In
response to the Commission's notice, the United States Department of
Justice
("Department") submits this Comment
and Petition. The Department is charged with enforcing
the antitrust laws under the Sherman
Act, 15 U.S.C. § 4, and under the Clayton and
Hart-Scott-
Rodino Acts, 15 U.S.C. §§
9, 18a(f), and 25. Pursuant to the discharge of these duties,
the
Department has begun an
investigation of the merger that would result in the proposed license
transfers. Based upon this review, the
Department believes the proposed grant of Triathlon
Broadcasting Company's ("Triathlon")
applications and subsequent consummation of the
transactions raise substantial and
material questions of fact as to whether the license transfers
would be anticompetitive. The
Department therefore believes that it would be appropriate for
the Commission to conduct a hearing
pursuant to Section 310(d) of the Communications Act, 47
U.S.C.§ 310 (d), to examine
whether the acquisition is in the public interest. The
Department
will complete its investigation into the
potential anticompetitive nature of the proposed
acquisition and may bring an action in
United States District Court if it concludes that the
proposed acquisition violates the
antitrust laws and is likely to have an anticompetitive effect
on
the market for radio advertising in
Wichita, Kansas.
II. The Parties
Capstar Radio Broadcasting Partners, Inc.
("Capstar") is the fourth largest radio
broadcaster in a rapidly consolidating
radio broadcasting industry. According to industry
Page 3
estimates, Capstar currently owns
approximately 300 radio stations in 75 markets in the United
States.1 The
Capstar
stations
generate
annual combined revenues of approximately $350
million. Capstar revenues in 1997
from KKRD-FM [Wichita], KRZZ-FM [Derby] and KNSS-
AM [Wichita] in Butler, Harvey and
Sedgwick counties totaled $4.96 million.2 KKRD has a
Class C1 signal while KRZZ has a
Class C2 signal. Broadcast coverage maps are attached to
this Petition as Exhibit B.
Triathlon Broadcasting Company ("Triathlon") owns
or operates approximately 35 radio
stations located in seven markets in
the United States. Its licensee, Triathlon Broadcasting of
Wichita Licensee, Inc., holds the
licenses for the following six stations in Butler, Harvey
and
Sedgwick counties: KFH-AM, Wichita,
Kansas, KQAM-AM, Wichita, Kansas, KWSJ-FM,
Haysville, Kansas, KRBB-FM, Wichita,
Kansas, KEYN-FM, Wichita, Kansas and KZSN-FM,
Hutchinson, Kansas. All four FM
stations have Class C signals. Triathlon's revenue in 1997 was
approximately $33.6 million, about $8
million of which was derived from sales by its Wichita-
based radio stations.
III. The Proposed
Acquisition
On or about July 23, 1998, Capstar and Triathlon
entered into an Agreement and Plan of
Merger ("Agreement"). Under the
terms of the Agreement, Triathlon agreed to transfer its
Page 1
licensee companies, including
Triathlon Broadcasting of Wichita Licensee, Inc., to Triathlon
Broadcasting Company. Also under
the terms of the Agreement, Triathlon agreed to sell
Triathlon Broadcasting Company to
Capstar. Capstar has not yet consummated the acquisition
of the Wichita stations.
Capstar acknowledges that it must divest two FM
stations for Commission
purposes.
Application for Consent to
Transfer of Control of Corporation Holding Broadcast Station
Construction Permit or License,
Capstar Radio Broadcasting Partners, Inc., Transferee, Response
to Section II, Question 7,
Exhibit 7, at 3. The application does not indicate which stations
will
be divested. Id., at 4.
For the purposes of this petition, the Department has assumed
that
Capstar will divest the two FM stations
generating the smallest revenues: KWSJ-FM ($450,000)
and KEYN-FM ($1,400,000).
IV. The
Commission
Properly May Consider Antitrust Issues, Under the
Communications Act, in Approving the Transfer of a
Station
License.
Section 310(d) of the Communications Act provides
that the Commission
shall determine
whether applicants seeking a transfer
of licenses have demonstrated that granting such
application serves the public
interest:
No .
. . station license . . . shall be transferred . . . except .
. . upon finding
by
the
Commission that the public interest, convenience, and necessity
will be
served
thereby.
47 U.S.C. § 310(d). The applicable
regulations state
that the
Commission will make the grant
on the application, pleadings and
materials that it may notice if it finds that
the
application presents no substantial and material question of
fact and
meets the following requirements:
*
*
*
(4) A grant of the application would otherwise serve
the public interest,
convenience and necessity.
Page 5
47 C.F.R. 73.3591(a) (emphasis
added). If the Commission is unable to make the specified
findings based upon a written record,
it will designate the application for hearing. 47 C.F.R.
73.3593.
It is
well established that the Commission may consider antitrust
concerns when
evaluating whether the public interest
is being served. The United States Supreme Court has
repeatedly recognized that antitrust
concerns are a relevant part of the Commission's public
interest inquiry under the
Communications Act. See Federal Communications Comm'n v.
National Citizens Committee for
Broadcasting, 436 U.S. 775, 795 (1978) (noting that the
Commission may properly consider
antitrust issues and collecting cases); United States v.
RCA,
358 U.S. 334, 351 (1959) (observing
that in certain cases the Commission may find that antitrust
considerations alone would prevent
the public interest standard from being satisfied); Federal
Communications Comm'n v. RCA
Communications, Inc., 346 U.S. 86, 94 (1953) (noting that
"[t]here can be no doubt that
competition is a relevant factor in weighing the public interest");
National Broadcasting Co. v.
United States, 319 U.S. 190, 222-23 (1943) (holding that the
Commission may consider the effect
of a broadcast license applicant's anticompetitive conduct
on the public interest).
More recently, the United States Court of Appeals
for the District of
Columbia Circuit
has repeated that the Commission
must consider competitive concerns. Specifically, the D.C.
Circuit has held that the Commission
must "make findings related to the pertinent antitrust
policies, draw conclusions from the
policies, and weigh these conclusions along with other
important public considerations."
United States v. Federal Communications Comm'n, 652
F.2d
72, 82 (D.C. Cir. 1980) (en banc)
(quoting Northern Natural Gas Co. v. Federal Power
Page 6
Comm'n, 399 F.2d 953, 961 (D.C.
Cir. 1968)).3
See also Rogers Radio Communication
Services, Inc. v. Federal
Communications Comm'n, 593 F.2d 1225, 1230 (D.C. Cir. 1978)
(noting that the "[e]ffect on
competition [is] clearly a proper factor for the Commission to
consider under the public interest,
convenience, and necessity standard . . . ."); Home Box
Office,
Inc. v. Federal Communications
Comm'n, 567 F.2d 9, 41 n.68 (D.C. Cir. 1977) (noting that
"there can be no question that the
commission can properly consider antitrust issues" and
collecting cases).
The
public interest standard of Section 310(d) is a flexible one that
encompasses the
"broad aims of the Communications
Act." Application of WorldCom, Inc. and MCI
Communications Corp. for Transfer of
Control of MCI Communications Corp. to WorldCom,
Inc., Memorandum Opinion and
Order, FCC 98-225, ¶ 9 (1998) ("WorldCom/MCI Order").
Among these broad aims is to realize
Congress's desire to implement a "pro-competitive, de-
regulatory national policy framework
designed to . . . open[] all telecommunications markets to
competition . . . ." WorldCom/MCI
Order, ¶ 9 (quoting H.R. Rep. No. 104-458 at 1;
Preamble
to Pub. L. No. 104-104, 110 Stat. 56
(1996)).
Page 7
Since Congress passed the Telecommunications Act
of 1996, the
Commission has
routinely integrated concerns about
antitrust issues into its public interest examination of
mergers by considering antitrust
principles as part of its public interest assessment. In
analyzing
the competitive effects of a proposed
merger, the Commission does not attempt to determine
whether mergers violate specific
antitrust laws -- though it specifically retains the right to do so.
Instead, the Commission considers
more general antitrust or competitive issues as part of its
public interest assessment.
See WorldCom/MCI Order, ¶ 15; Applications of NYNEX
Corp.,
Transferor, and Bell Atlantic Corp.,
Transferee, For Consent to Transfer Control of NYNEX
Corp. and Its Subsidiaries,
Memorandum Opinion and Order, 12 FCC Rcd 19985, 20008, ¶ 37
(1997) ("Bell Atlantic/NYNEX
Order"); In the Matter of the Merger of MCI Communications
Corp. and British Telecommunications
PLC, Memorandum Opinion and Order, 12 FCC Rcd
15351, 15367, ¶ 33 (1997)
("BT/MCI Order"). The Commission has created this
framework
using the principles embodied in the
United States Department of Justice/Federal Trade
Commission Horizontal Merger
Guidelines, as revised ("Merger Guidelines"); existing antitrust
case law; and past Commission
analyses of market power. See WorldCom/MCI Order, ¶ 15;
Bell Atlantic/NYNEX Order, 12
FCC Rcd at 200008, ¶ 37; BT/MCI Order, 12 FCC Rcd
at
15367, ¶ 33.
V. Radio Advertising is the Relevant Product Market in
Which to Analyze the
Competitive Effects of Capstar's Proposed
Acquisition.
Radio has unique advantages over other forms of
media that make another
radio station
a
closer substitute for a specific radio
station than other media. Unlike other media, radio is
exclusively sound-based. Affidavit of
Dr. Sean F. Ennis, ¶ 14 ("Ennis aff." attached as
Exhibit
Page 8
C). Second, radio allows advertisers
to narrowly focus on specific demographic groups (e.g.,
women ages 18-49) that are attractive
to many advertisers. Id. Third, radio is typically
inexpensive enough to allow an
advertiser to build repetition or frequency through its
advertising
at a reasonable price. Id.
Fourth, the cost of producing a radio commercial is much lower
than
producing a television commercial,
id., thus allowing advertisers to change advertisements
more
often. Fifth, radio allows for very fast
turnaround of advertising copy. Id. Sixth, radio
is
portable can therefore reach people
driving in their cars. Id.
As a
result of these unique characteristics of radio, advertisers will
often consider one
radio station, rather than an alternate
form of media, as the closest substitute for another
radio
station. Id., ¶ 15. Radio
stations are also aware that one radio station is the closest
substitute for
another radio station; therefore, they
tend to set the price of their radio advertising time
based
upon prices charged by other radio
stations -- rather than those of alternative media. Id.,
¶ 16.
The
price for radio advertising time is generally individually
negotiated between a radio
station and an advertiser. An
advertiser will typically contact the stations upon which it would
consider advertising and will receive
price quotes that may include added value such as
promotions, sponsorships, live reads,
and remote broadcasts that many advertisers find attractive.
After receiving its quotes -- and perhaps contacting
the
stations to conduct
further negotiations --
the advertiser will determine the
stations upon which it will
place its advertising. Id., ¶ 22.
Inherent in this process are
individually negotiated prices (in economic terms, "price
discrimination") -- a process by which
radio stations charge different prices for the same
advertising spot to different
advertisers depending upon how efficient the spot is for an
advertiser's demographic target and
the degree to which the advertiser needs to advertise on that
specific radio station. Id.,
¶ 23.
Page 9
VI. The
Geographic Market
is Wichita, Kansas or the Three County Metro Market of
Butler, Harvey and Sedgwick Counties.
The
Department's initial investigation suggests that Wichita, Kansas
and/or Butler,
Harvey and Sedgwick counties
constitute a relevant geographic market within which to assess
the competitive effects of the
proposed acquisition. Three factors are especially relevant in
determining the relevant geographic
market in this matter: industry recognition, geographic
coverage of broadcast signals, and
customer demand.
First, the professional radio trade services treat the
three county
area as a distinct
economic unit. BIA reports which
radio stations are contained in a metro market and defines the
Wichita metro area as Butler, Harvey,
and Sedgwick counties. See generally BIA. Whether
an
advertiser would consider buying radio
time on a certain station in order to reach that
advertiser's target geographic
audience is an important factor in determining the relevant
geographic market. See Ennis
aff., ¶ 26. The fact that the industry recognizes an area
as a
relevant geographic market is
significant because it generally identifies the radio stations
within
that geographic market which media
buyers would consider close substitutes. Id. In
addition,
the Arbitron rating service will
generally allow a radio station to declare itself as belonging
to
only one home geographic market.
Stations therefore will generally declare their home market
as the one from which they believe
they will attract the most advertisers. Id, ¶ 25. The
fact that
both industry trade groups indicate
that Wichita, Kansas is a distinct geographic market is an
important indication that it may be a
geographic market for antitrust purposes.
Second, examining population density and contour
maps of stations'
signal strength
reveals that the three county metro
area constitutes the core of the listening audience.
According
to BIA industry statistics, the Wichita
metro market is the 89th largest metro market in the
United States in terms of population.
BIA, at 382. The population of the Wichita metro market
Page 10
is concentrated in Sedgwick county,
with approximately 423,700 residents, including the city of
Wichita. Id. The adjacent
counties of Harvey and Butler contain relatively smaller
populations
of 31,900 and 58,900, respectively.
Id. Moreover, the Wichita metro market is isolated
from
other densely populated areas
surrounding the metro area. Few Wichita consumers, therefore,
listen to radio stations from other
areas. The closest cities to Wichita are Hutchinson, Kansas
(59 miles away), Salina, Kansas (92
miles), topeka, Kansas (140 miles), Kansas City, Missouri
(188 miles), and Joplin, Missouri (211
miles). Rand McNally Road Atlas, at 36 (1998 ed.).
Third, and perhaps most importantly, radio
advertisers customarily
recognize and rely
upon industry geographic distinctions
in making their purchasing decisions. Ennis aff., ¶ 26.
Thus advertisers wishing to reach
radio audiences in the Wichita metro region must advertise on
radio stations in the Wichita metro
market rather than on stations in distant cities that do not
reach Wichita and to which Wichita
consumers generally do not listen.
VII. Capstar's Proposed Acquisition Should Be
Designated for Hearing Because it
Presents Issues of Material Fact as to Whether It Is
Contrary to the
Public Interest
Because It Will Enable Capstar to Control Almost
Half of the
Advertising Revenues
and
Demographic Shares in Wichita, Thereby Reducing
Competition.
Capstar currently controls 20.3% and Triathlon
controls 32.8% of
Wichita metro market
radio advertising revenues. If the
combined entity were to divest only the two least significant
FM radio stations to meet the
Commission's guidelines, Capstar would still have a market share
of 45.5%.4
Page 11
In
addition, the Wichita radio market is already concentrated. The
level of
concentration in the Wichita radio
market is similar to that where courts have presumed antitrust
violations. Courts presume a
transaction challenged under Section 7 of the Clayton Act, 15
U.S.C. § 18, to be illegal if the
government can show that the combined entity would have a
significant market share in a
concentrated market. United States v. Philadelphia Nat'l Bank,
374
U.S. 321, 363 (1963); Federal
Trade Comm'n v. University Health, Inc., 938 F.2d 1206, 1218
(11th Cir. 1991). In Philadelphia
Nat'l Bank, the Supreme Court held that a merger resulting
in
a single firm controlling 30% of a
market in which four firms had 78% of the sales was
presumptively illegal, calling the
merger inherently likely to lessen competition substantially.
Philadelphia Nat'l Bank, 374
U.S. at 364. Similarly, in United States v. Continental Can
Co.,
378 U.S. 441, 461 (1964), the Court
found a merger presumptively illegal where the combining
firms' aggregate market share was
25%, the acquired firm's pre-merger share was 3.1%, and the
leading four firms accounted for
64.7% of the relevant market.
A
growing number of courts, including those in the District of Columbia
Circuit, have
relied upon the Merger Guidelines'
approach for assessing pre- and post-merger concentration
through use of the
Herfindahl-Hirschman Index ("HHI"). See, e.g., Federal Trade Comm'n v.
PPG Indutries, Inc., 798 F.2d
1500, 1503 n.4 (D.C. Cir. 1986) (noting that the Merger
Guidelines provide a useful illustration
of the application of the HHI); Federal Trade Comm'n
v. Cardinal Health Care,
Inc., 12 F. Supp.2d 34, 53 (D.D.C. 1998) (stating that while
the
Merger Guidelines are not binding,
they constitute the agencies' informed judgment on the area
of their expertise; accordingly, the
courts have turned to the Merger Guidelines for assistance
and over the years have come to
accept the HHI as the most prominent and accurate method of
measuring market concentration);
Federal Trade Comm'n v. Staples, Inc., 970 F. Supp. 1066,
Page 12
1082 (D.D.C. 1997) (noting that the
Merger Guidelines are useful and provide guidance). The
HHI for a market is calculated by
summing the squares of the individual market shares of all
firms participating in the market.
Merger Guidelines, ¶ 1.5.
Under the Merger Guidelines' approach, markets
with an HHI below 1000
are deemed
unconcentrated; those with an HHI
between 1000 and 1800 are moderately concentrated; and
those with an HHI above 1800 are
termed highly concentrated. Id., ¶ 1.5. In cases where
the
post-merger market is highly
concentrated, and an acquisition would result in an increase of
more than 100 points in the HHI, the
acquisition is presumed to be likely to create or enhance
market power or facilitate its
exercise. Id. For example, the court in Staples found
that the
proposed merger would increase the
HHI by an average of 2715 points in already highly
concentrated markets, and thus the
FTC had shown a "reasonable probability" that the proposed
merger would have an
anti-competitive effect. Staples, 970 F. Supp. at 1082. Similarly,
in
Cardinal Health, the court
found that an increase in HHI from 1648 to 2450 (802 points)
brought about by one proposed
merger, and from 1648 to 2277 (629 points) brought about by a
second proposed merger, required the
court to presume that the proposed mergers pose a risk to
competition. Cardinal Health,
12 F.Supp.2d at 53.
In
this case, the market is already concentrated. The second largest
radio company in
Wichita -- Great Empire -- directly
controls 35.5% of the market. Great Empire further
maintains a joint selling agreement
with Violet, Viola and Gary -- owners of KDGS and KAYY
with 3.7% of the market. Counting
post-acquisition Capstar and Great Empire's joint selling
arrangement, the two largest radio
companies in Wichita would control 84% of the market.
Currently, the HHI is 3040. If Triathlon
divests only the two least significant FM stations, the
post-merger HHI would be 3680,
representing an increase of 640 points. Ennis aff., ¶ 9.
This
Page 13
level of concentration is higher than
that in either merger in Cardinal Health, and
presents
"substantial and material reasons to
believe that the merger may reduce competition among radio
stations that serve Wichita."
Id., ¶ 5.
In
addition, if Capstar divests only the two least significant FM
stations, it will control
over 50% of key demographic groups
that many advertisers are interested in reaching. For
example, Capstar currently controls
24.6% of the adults ages 25-54 demographic while Triathlon
controls 39.6% of this demographic.
Id., ¶ 32. If the acquisition proceeds, Capstar
would
control 54.0% of this demographic.
Id. This level of control would make it difficult for
advertisers seeking to reach many
listeners, but also attempting to avoid Capstar stations, to do
so. Id. Advertisers would thus
have fewer choices on where to place radio advertising,
id., ¶¶
11 & 32, and may therefore have to
pay higher prices.
VIII. Conclusion
Capstar and Triathlon propose a merger that would
result in a highly
concentrated
market. After an initial review, the
Department believes that the proposed transaction raises
substantial and material issues of fact
as to whether the proposed transaction is anticompetitive
because of the currently concentrated
Wichita radio market, the increase in concentration that
the
merger creates, and Capstar's
potential control over important demographic groups. The
Department therefore believes that the
Commission should fully investigate whether the
acquisition serves the public interest
by designating a hearing. The Department, meanwhile, will
Page 14
Respectfully Submitted,
Joel I. Klein
Assistant Attorney General
Donna E. Patterson
Deputy Assistant Attorney General
Susan M. Davies
Senior Counsel
Constance K. Robinson
Director of Merger Enforcement and
Director of Operations
/s/
Craig W. Conrath, Chief
Reid B. Horwitz, Assistant Chief
Merger Task Force
/s/
Karl D. Knutsen
Joan Farragher
Atorrneys
Merger Task Force
Dated: October 19, 1998
U.S. Department of Justice
Antitrust Division
1401 H Street, N.W.
Washington, D.C. 20530
(202) 514-0976
Page 15
CERTIFICATE OF SERVICE
I, Rex Y. Fujichaku, of the Antitrust
Division of the United States Department of Justice,
do hereby certify that true copies of
the foregoing Comment and Petition for Hearing were
served this 19th day of
October, 1998, by hand delivery, to the following:
Roy J. Stewart, Esq.
Chief, Mass Media Bureau
Federal Communications
Commission
1919 M Street, N.W., Room 314
Washington, D.C. 20554
Colette M. Capretz
Fisher Wayland Cooper Leader &
Zaragoza L.L.P.
2001 Pennsylvania Avenue,
N.W.
Washington, D.C. 20006
Counsel for Triathlon
Broadcasting Company
Nathaniel Emmons
Wiley, Rein & Fielding
1776 K Street, N.W.
Washington, D.C. 20006
Counsel for Capstar Broadcasting
Partners, Inc.
/s/
Rex Y. Fujichaku
FOOTNOTES
1
These figures are for Capstar only. Capstar
and
Chancellor
Media Company have announced plans to merge. Chancellor is a sister company of
Capstar with whom it has common shareholders. Alejandro
Bodipo-Memba and Carlos
Tejada, Hicks-Muse to Combine Big Radio Firms, Wall St. J., August 28, 1998, at
A3. If the merger proceeds, the combined entity will own
463 stations in 105 markets.
Id.
2
Revenue figures for each station are derived from BIA,
Investing in
Radio
Market Report æ98, 3rd ed. ("BIA") (attached as Attachment A).
3
The District of Columbia Circuit's reliance upon Northern
Natural
Gas in
Federal Communications Comm'n is further support for the proposition that
regulatory agencies should generally consider antitrust issues
when evaluating the public interest.
See, e.g., Federal Maritime Comm'n v. Aktiebolaget Svenska Amerika Linien,
390 U.S. 238, 245-46 (1968) (approving the Federal Maritime
Commission's conclusion
that antitrust violations constituted substantial evidence that steamship agreement was
contrary to public interest); McLean Trucking Co. v.
United States, 321 U.S. 67, 86-88
(1944) (holding that the Interstate Commerce Commission had a duty to consider the
effect of common carrier consolidation in evaluating the
public interest); United Distribution
Cos. v. Federal Energy Regulatory Comm'n, 88 F.3d 1105, 1163 (D.C. Cir. 1996)
(holding that FERC's power to protect competition exceeds that
of the Federal Trade
Commission and noting that "[a]ntitrust policies governing the FTC do not exhaust the
public interest authority under which the Commission may
[act]"); Northern Natural Gas Co.
v. Federal Power Comm'n, 399 F.2d 953, 961 (D.C. Cir. 1968) (noting that
"competitive considerations are an important element of the æpublic
interest'").
4
Since Capstar must divest two FM stations to satisfy other
Commission
regulations relating to the number of stations that can be owned in a given market, this
petition and the accompanying affidavit have assumed
that the two smallest FM stations
will be divested. The two smallest FM stations -- KEYN and KWSJ -- account for
approximately 7.5% of market revenue.
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