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could have, or even should have, been U.S. Department of Justice, Antitrust Washington, DC 20530 (telephone: 202– alleged’’). Because the ‘‘court’s authority to Division, Media, Entertainment, and 305–8376). review the decree depends entirely on the Professional Services Section, 450 Fifth government’s exercising its prosecutorial Street NW, Suite 4000, Washington, DC Patricia A. Brink, discretion by bringing a case in the first 20530, Phone: 202–598–2698, Facsimile: Director of Civil Enforcement. place,’’ it follows that ‘‘the court is only 202–514–7308, Email: [email protected]. District Court authorized to review the decree itself,’’ and * Attorney of Record not to ‘‘effectively redraft the complaint’’ to for the District of Columbia inquire into other matters that the United [FR Doc. 2019–00555 Filed 1–31–19; 8:45 am] United States of America, 450 Fifth Street States did not pursue. Microsoft, 56 F.3d at BILLING CODE 4410–11–P NW, Washington, DC 20530. Plaintiff, v. 1459–60. , INC. 4370 Peachtree In its 2004 amendments,5 Congress made Road NE , 30319; and clear its intent to preserve the practical DEPARTMENT OF JUSTICE , INC. RSA Tower 20th benefits of utilizing consent decrees in Floor 201 Monroe Street Montgomery, antitrust enforcement, adding the Antitrust Division Alabama 36104 Defendants. unambiguous instruction that ‘‘[n]othing in Case No. 1:18–cv–2951 this section shall be construed to require the United States v. Gray Television, Inc., Judge Christopher R. Cooper court to conduct an evidentiary hearing or to et al.; Proposed Final Judgment and require the court to permit anyone to Competitive Impact Statement COMPLAINT intervene.’’ 15 U.S.C. § 16(e)(2); see also U.S. The United States of America, acting under Airways, 38 F. Supp. 3d at 76 (indicating that Notice is hereby given pursuant to the the direction of the Acting Attorney General a court is not required to hold an evidentiary Antitrust Procedures and Penalties Act, of the United States, brings this civil action hearing or to permit intervenors as part of its 15 U.S.C. 16(b)–(h), that a proposed against Gray Television, Inc. (‘‘Gray’’) and review under the Tunney Act). This language Final Judgment, Stipulation, and Raycom Media, Inc. (‘‘Raycom’’) to enjoin Gray’s proposed merger with Raycom. The explicitly wrote into the statute what Competitive Impact Statement have Congress intended when it first enacted the United States complains and alleges as Tunney Act in 1974. As Senator Tunney been filed with the United States follows: District Court for the District of explained: ‘‘[t]he court is nowhere compelled I. NATURE OF THE ACTION to go to trial or to engage in extended Columbia in United States of America v. proceedings which might have the effect of Gray Television, Inc., et al., Civil Action 1. Pursuant to an Agreement and Plan of vitiating the benefits of prompt and less No. 1:18–cv–2951 (CRC). On December Merger dated June 23, 2018, Gray plans to costly settlement through the consent decree 14, 2018, the United States filed a acquire Raycom through a merger transaction process.’’ 119 Cong. Rec. 24,598 (1973) Complaint alleging that the proposed for approximately $3.6 billion in cash and (statement of Sen. Tunney). Rather, the stock. merger between Gray Television, Inc., 2. The proposed merger would combine procedure for the public interest and Raycom Media, Inc., would violate determination is left to the discretion of the two of the largest independent local court, with the recognition that the court’s Section 7 of the Clayton Act, 15 U.S.C. owners in the United States ‘‘scope of review remains sharply proscribed 18. The proposed Final Judgment, filed and would combine many popular local by precedent and the nature of Tunney Act at the same time as the Complaint, television stations that compete against each proceedings.’’ SBC Commc’ns, 489 F. Supp. requires Gray and Raycom to divest other today in several markets, likely 2d at 11. A court can make its public interest certain broadcast television stations in resulting in significant harm to competition. determination based on the competitive Waco-Temple-Bryan, Texas; 3. In nine Designated Market Areas impact statement and response to public Tallahassee, -Thomasville, (‘‘DMAs’’), Gray and Raycom each own at comments alone. U.S. Airways, 38 F. Supp. least one broadcast television station that is Georgia; Toledo, Ohio; Odessa-Midland, an affiliate of one of the ‘‘Big 4’’ television 3d at 76. See also United States v. Enova Texas; Knoxville, Tennessee; Augusta, Corp., 107 F. Supp. 2d 10, 17 (D.D.C. 2000) networks: NBC, CBS, ABC, or FOX. (noting that the ‘‘Tunney Act expressly Georgia; Panama City, Florida; Dothan, 4. These nine ‘‘Overlap DMAs’’ are: (i) allows the court to make its public interest Alabama; and Albany, Georgia. Waco-Temple-Bryan, Texas; (ii) Tallahassee, determination on the basis of the competitive Copies of the Complaint, proposed Florida-Thomasville, Georgia; (iii) Toledo, impact statement and response to comments Final Judgment, and Competitive Impact Ohio; (iv) Odessa-Midland, Texas; (v) alone’’); S. Rep. No. 93–298 93d Cong., 1st Statement are available for inspection Knoxville, Tennessee; (vi) Augusta, Georgia; Sess., at 6 (1973) (‘‘Where the public interest (vii) Panama City, Florida; (viii) Dothan, on the Antitrust Division’s website at Alabama; and (ix) Albany, Georgia. can be meaningfully evaluated simply on the https://www.justice.gov/atr and at the basis of briefs and oral arguments, that is the 5. In each Overlap DMA, the proposed approach that should be utilized.’’). Office of the Clerk of the United States merger would eliminate competition between District Court for the District of Gray and Raycom in (i) the licensing of Big VIII. Determinative Documents Columbia. Copies of these materials may 4 network content (‘‘retransmission consent’’) There are no determinative materials or be obtained from the Antitrust Division to cable, satellite, and fiber optic television documents within the meaning of the APPA upon request and payment of the providers (referred to collectively as that were considered by the United States in copying fee set by Department of Justice multichannel video programming formulating the proposed Final Judgment. regulations. distributors, or ‘‘MVPDs’’), for distribution to Dated: December 13, 2018 their subscribers; and (ii) the sale of spot Public comment is invited within advertising to advertisers interested in Respectfully submitted, sixty (60) days of the date of this notice. reaching viewers in the DMA. lllllllllllllllllllll Such comments, including the name of 6. By eliminating a major competitor, the Lee F. Berger * (D.C. Bar #482435), the submitter, and responses thereto, merger would likely give Gray the power to Trial Attorney. will be posted on the Antitrust charge MVPDs higher fees for its Division’s website, filed with the Court, programming—fees that those companies 5 The 2004 amendments substituted ‘‘shall’’ for would likely pass on, in large measure, to ‘‘may’’ in directing relevant factors for a court to and, under certain circumstances, published in the Federal Register. their subscribers. Additionally, the merger consider and amended the list of factors to focus on would likely allow Gray to charge local competitive considerations and to address Comments should be directed to Owen businesses and other advertisers higher potentially ambiguous judgment terms. Compare 15 Kendler, Chief, Media, Entertainment, U.S.C. § 16(e) (2004), with 15 U.S.C. § 16(e)(1) prices to reach audiences in the Overlap (2006); see also SBC Commc’ns, 489 F. Supp. 2d at and Professional Services Section, DMAs. 11 (concluding that the 2004 amendments ‘‘effected Antitrust Division, Department of 7. As a result, the proposed merger of Gray minimal changes’’ to Tunney Act review). Justice, 450 Fifth Street NW, Suite 4000, and Raycom likely would substantially

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lessen competition in the markets for from the particular MVPD—i.e., an open- 22. Because viewers do not regard non-Big- licensing Big 4 television retransmission ended period during which the MVPD may 4 broadcast stations, or cable networks, as consent in the Overlap DMAs, and selling not distribute those stations to its close substitutes for the programming they broadcast television spot advertising in the subscribers, until a new contract is receive from Big 4 stations, these other Overlap DMAs, in violation of Section 7 of successfully negotiated. sources of programming are not sufficient to the Clayton Act, 15 U.S.C. 18. B. Relevant Markets discipline an increase in the fees charged for II. THE DEFENDANTS Big 4 television retransmission consent. 1. Product Market Accordingly, a hypothetical monopolist of 8. Gray is a Georgia corporation with its 16. Big 4 broadcast content has unique Big 4 television retransmission consent headquarters in Atlanta, Georgia. Gray owns appeal to television viewers, as compared to would likely increase the retransmission 92 television stations in 56 DMAs, of which the other content that is available through consent fees it charges to MVPDs by at least 83 stations are Big 4 affiliates. In 2017, Gray broadcast and cable stations. Big 4 stations a small but significant amount. reported revenues of $883 million. usually are the highest ranked in terms of 23. The licensing of Big 4 television 9. Raycom is a Delaware corporation with audience share and ratings in each DMA, retransmission consent therefore constitutes its headquarters in Montgomery, Alabama. largely because of unique offerings such as a relevant product market and line of Raycom owns 51 television stations in 43 local news, sports, and highly ranked DMAs, of which 45 stations are Big 4 commerce under Section 7 of the Clayton primetime programs. Viewers typically affiliates. In 2017, Raycom earned revenues Act, 15 U.S.C. 18. consider the Big 4 stations to be close of more than $1 billion. substitutes for one another. 2. Geographic Markets III. JURISDICTION AND VENUE 17. Because of Big 4 stations’ popular 24. A DMA is a geographic unit for which 10. The United States brings this action national content and valued local coverage, A.C. Nielsen Company—a firm that surveys under Section 15 of the Clayton Act, 15 MVPDs regard Big 4 programming as highly television viewers—furnishes broadcast U.S.C. 25, as amended, to prevent and desirable for inclusion in the packages they television stations, MVPDs, cable and restrain Defendants from violating Section 7 offer subscribers. satellite television networks, advertisers, and of the Clayton Act, 15 U.S.C. 18. 18. Non-Big-4 broadcast stations are advertising agencies in a particular area with 11. The Court has subject matter typically not close substitutes for viewers of data to aid in evaluating audience size and jurisdiction over this action pursuant to Big 4 stations. Stations that are affiliates of composition. DMAs are widely accepted by Section 15 of the Clayton Act, 15 U.S.C. 25, networks other than the Big 4, such as the industry participants as the standard and 28 U.S.C. 1331, 1337(a), and 1345. CW Network, MyNetworkTV, or Telemundo, geographic areas to use in evaluating 12. Defendants license Big 4 television typically feature niche programming without television audience size and demographic retransmission consent to MVPDs, and sell local news or sports—or, in the case of composition. The Federal Communications broadcast television spot advertising to Telemundo, aimed at a Spanish-speaking Commission (‘‘FCC’’) also uses DMAs as businesses (either directly or through audience. Stations that are unaffiliated with geographic units with respect to its MVPD advertising agencies), in the flow of interstate any network are similarly unlikely to carry regulations. programming with broad popular appeal. commerce, and such activities substantially 25. In the event of a blackout of a Big 4 19. If an MVPD suffers a blackout of a Big affect interstate commerce. network station, FCC rules generally prohibit 4 station in a given DMA, many of the 13. Gray and Raycom have consented to an MVPD from importing the same network’s MVPD’s subscribers in that DMA are likely venue and personal jurisdiction in this content from another DMA. Thus, Big 4 judicial district. Both companies transact to turn to other Big 4 stations in the DMA to watch similar content, such as sports, viewers in one DMA cannot switch to Big 4 business in this district. Venue is therefore programming in another DMA in the face of proper in this district under Section 12 of the primetime shows, and local news and weather. This willingness of viewers to a blackout. Therefore, substitution from Clayton Act, 15 U.S.C. 22, and under 28 outside the DMA cannot discipline an U.S.C. 1391(b)(1) and (c). switch between competing Big 4 broadcast stations limits an MVPD’s expected losses in increase in the fees charged for IV. BIG 4 TELEVISION RETRANSMISSION the case of a blackout, and thus limits a retransmission consent for broadcast stations CONSENT MARKETS broadcaster’s ability to extract higher fees in the DMA. Each DMA thus constitutes a from that MPVD—since an MVPD’s relevant geographic market for the licensing A. Background willingness to pay higher retransmission of Big 4 television retransmission consent 14. MVPDs, such as Comcast, DirecTV, and consent fees for content rises or falls with the within the meaning of Section 7 of the Mediacom, typically pay the owner of each harm it would suffer if that content were lost. Clayton Act, 15 U.S.C. 18. local Big 4 broadcast station in a given DMA 20. Due to the limited programming C. Likely Anticompetitive Effects a per-subscriber fee for the right to retransmit typically offered by non-Big-4 stations, the station’s content to the MVPD’s viewers are much less likely to switch to a 26. The more concentrated a market would subscribers. The per-subscriber fee and other non-Big-4 station than to switch to other Big be as a result of a proposed merger, the more terms under which an MVPD is permitted to 4 stations in the event of a blackout of a Big likely it is that the proposed merger would distribute a station’s content to its 4 station. Accordingly, competition from substantially lessen competition. subscribers is set forth in a retransmission non-Big-4 stations does not typically impose Concentration can be measured by the widely agreement. Retransmission agreements are a significant competitive constraint on the used Herfindahl-Hirschman Index (‘‘HHI’’).1 negotiated directly between a broadcast retransmission consent fees charged by the Under the Horizontal Merger Guidelines station group, such as Gray or Raycom, and owners of Big 4 stations. issued by the Department of Justice and the a given MVPD, and these agreements cover 21. For the same reasons, subscribers—and Federal Trade Commission, mergers that all of the station group’s stations located in therefore MVPDs—generally do not view result in highly concentrated markets (i.e., the MVPDs service area, or ‘‘footprint.’’ cable network programming as a close with an HHI over 2,500) and that increase the 15. Each broadcast station group typically substitute for Big 4 network content. This is HHI by more than 200 points are presumed renegotiates retransmission agreements with primarily because cable channels offer likely to enhance market power. the MVPDs every few years. If an MVPD and different content. For example, cable 27. The chart below summarizes a broadcast station group cannot agree on a channels generally do not offer local news, Defendants’ approximate Big 4 television retransmission consent fee at the expiration which offers a valuable connection to the retransmission consent market shares, based of a retransmission agreement, the result is a local community that is important to viewers on revenue, and the result of the transaction ‘‘blackout’’ of the broadcast group’s stations of Big 4 stations. on the HHI in each Overlap DMA.2 1 The HHI is calculated by squaring the market the relative size distribution of the firms in a the market decreases and as the disparity in size share of each firm competing in the market and market. It approaches zero when a market is between those firms increases. then summing the resulting numbers. For example, occupied by a large number of firms of relatively 2 In this chart and the one below, sums that do for a market consisting of four firms with shares of equal size, and reaches its maximum of 10,000 not agree precisely reflect rounding. 30, 30, 20, and 20 percent, the HHI is 2,600 (302+ points when a market is controlled by a single firm. 302+ 202+ 202= 2,600). The HHI takes into account The HHI increases both as the number of firms in

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Gray share Raycom share Merged share Pre-merger Post-merger Overlap DMA (percent) (percent) (percent) HHI HHI HHI increase

Augusta, GA...... 50 24 74 3,741 6,119 2,379 Panama City, FL ...... 50 24 73 3,731 6,095 2,363 Dothan, AL...... 49 24 73 3,692 6,065 2,373 Tallahassee, FL-Thomasville, GA ...... 33 32 65 3,338 5,448 2,110 Albany, GA...... 33 32 65 3,339 5,440 2,101 Toledo, OH...... 25 24 49 2,504 3,710 1,206 Waco-Temple-Bryan, TX ...... 25 24 49 2,503 3,687 1,184 Knoxville, TN...... 25 24 49 2,503 3,681 1,178 Odessa-Midland, TX ...... 24 24 48 2,504 3,660 1,156

28. As indicated by the preceding chart, particularly memorable and impactful. viewers (more ‘‘ratings points’’) than a single the post-merger HHI in each Overlap DMA is Additionally, broadcast television spot spot on a cable channel. By contrast, MVPDs well above 2,500, and the HHI increase in advertising reaches a large percentage of an offer dozens of cable channels with each Overlap DMA far exceeds the 200-point advertisers’ potential customers in a DMA, specialized programs that appeal to niche threshold. Thus, the proposed merger making it especially effective for promoting audiences. This fragmentation allows presumptively violates Section 7 of the brand awareness. advertisers to target narrower demographic Clayton Act in each Overlap DMA. 35. Advertisers want to advertise on subsets by buying cable spots on particular 29. In addition to substantially increasing broadcast stations because they offer popular channels, but it does not meet the needs of the concentration levels in each Overlap programming such as local news, sports, and advertisers who want to reach a large DMA, the proposed merger would also primetime and syndicated shows that are percentage of a DMA’s population. enable Gray to black out more Big 4 stations especially attractive in reaching a broad 40. Finally, MVPDs’ inventory of cable simultaneously in each of the Overlap DMAs demographic base and a large audience of television spot advertising is limited— than either Gray or Raycom could black out viewers. Typically, an advertiser purchases typically to two minutes per hour— independently today, increasing Gray’s broadcast advertising spots as one contrasting sharply with broadcast stations’ bargaining leverage against any MVPD whose component of an advertising strategy that much larger inventory. Due to the limited footprint includes any of the Overlap DMAs, also includes other components—such as inventories and lower ratings associated with and likely leading to increased cable advertisements, newspaper spot advertisements, these retransmission consent fees charged to such advertisements, billboards, radio spots, and advertisements cannot offer a sufficient MVPDs. digital advertisements. Each component of volume of ratings points, or broad enough 30. Retransmission consent fees generally the advertising budget targets a particular household penetration, to provide a viable are passed through to an MVPD’s subscribers audience and serves a distinct purpose. alternative to broadcast television spot in the form of higher subscription fees or as 36. MVPDs sell spot advertising to be advertising. Because of these limitations, a line item on their bills. Broadcasters shown during breaks in cable network MVPDs and interconnects would be unable typically charge MVPDs uniform programming. For the following reasons, to expand output or increase sales retransmission consent fees across an cable television spot advertising is an sufficiently to defeat a small but significant MVPD’s entire footprint. Thus, higher fees ineffective substitute for broadcast television increase in the prices charged for broadcast resulting from increased leverage in the spot advertising. television spot advertising in a given DMA. Overlap DMAs will likely be experienced by 37. First, broadcast television spot 41. Digital media advertising also is not an subscribers in any DMA where an affected advertisements typically penetrate about effective substitute for broadcast television MVPD retransmits at least one Gray Big 4 ninety percent of the households in a DMA, spot advertising. Digital advertising, such as station, not just by those subscribers who live while cable television spot advertisements static and floating banner advertisements, in the Overlap DMAs. penetrate many fewer homes. A significant static images, text advertisements, wallpaper 31. For these reasons, the proposed merger and growing number of television advertisements, pop-up advertisements, flash of Gray and Raycom likely would households do not subscribe to an MVPD at advertisements, and paid search results, lacks substantially lessen competition in the all, instead receiving broadcast television the combination of sight, sound, and motion licensing of Big 4 television retransmission signals over the air for free. These that makes television spot advertising consent in each of the Overlap DMAs, in households cannot see cable television spot particularly impactful and memorable. violation of Section 7 of the Clayton Act, 15 advertisements. Even in households that do Although online video advertisements do U.S.C. 18. subscribe to cable television, the tier of allow for a combination of sight, sound, and service they receive almost always includes motion, these advertisements face certain V. BROADCAST TELEVISION SPOT all broadcast channels but often excludes challenges. For example, they can be ADVERTISING MARKETS many cable channels. As a result, some cable skipped, minimized, or blocked. A. Background television spot advertisements cannot be seen 42. Digital advertisements also serve a even by households that subscribe to MVPDs. different purpose from broadcast advertising. 32. Broadcast television stations sell 38. Moreover, households that have access Whereas advertisers use broadcast television advertising ‘‘spots’’ during breaks in their to cable networks are divided among spots to reach a large percentage of the programming. An advertiser purchases spots multiple MVPDs within a DMA. Although population in a given DMA to build from a broadcast station to communicate to some MVPDs sell some spot advertising widespread brand awareness, advertisers use viewers within the DMA in which the through consortia called ‘‘interconnects’’— digital advertising to target narrow broadcast television station is located. thereby allowing a cable television spot demographic subsets of a population and 33. Gray and Raycom compete to sell advertisement to reach more television often to generate an immediate response to broadcast television spot advertising in each households than it would through a single the advertisement. of the Overlap DMAs. MVPD—household reach of cable television 43. Other forms of advertising, such as B. Relevant Markets spot advertisements remains limited because radio, newspaper, billboard, and direct-mail not all MVPDs participate in interconnects. advertising, also do not constitute effective 1. Product Market 39. Second, for many advertisers broadcast substitutes for broadcast television spot 34. Broadcast television spot advertising television spot advertising is a more efficient advertising. These forms of media do not possesses a unique combination of attributes option than cable television spot advertising. combine sight, sound, and motion, and they that set it apart from advertising on other Because broadcast television offers highly consequently lack television’s ability to media. Broadcast television spot advertising rated programming with broad appeal, each capture consumers with emotive storytelling. combines sight, sound, and motion in a way broadcast television advertising spot In addition, these forms of media do not that makes television advertisements typically offers the opportunity to reach more reach as many local viewers or drive brand

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awareness to the same extent as broadcast 2. Geographic Markets implement at least a small but significant television does. 45. For an advertiser seeking to reach non-transitory price increase. 46. Each of the Overlap DMAs accordingly 44. For all of these reasons, advertisers potential customers in a given DMA, constitutes a relevant geographic market for likely would not respond to a small but broadcast television stations located outside the sale of broadcast television spot significant non-transitory increase in the of the DMA do not provide effective access advertising within the meaning of Section 7 price of broadcast television spot advertising to the advertiser’s target audience, because of the Clayton Act, 15 § U.S.C. 18. by switching to other forms of advertising— their signals generally do not reach any such as cable, digital, print, radio, or significant portion of the target DMA. C. Likely Anticompetitive Effects billboard advertising—in sufficiently large Because advertisers cannot advertise on 47. The chart below summarizes numbers to make the price increase stations outside a DMA to reach viewers Defendants’ approximate market shares and unprofitable. inside the DMA, a hypothetical monopolist the result of the transaction on the HHIs in of broadcast television spot advertising on the sale of broadcast television spot stations in a given DMA would likely advertising in each of the Overlap DMAs.

Gray share Raycom share Merged share Pre-merger Post-merger Overlap DMA (percent) (percent) (percent) HHI HHI HHI increase

Albany, GA...... 11 71 82 5,407 7,007 1,600 Dothan, AL...... 65 15 80 4,866 6,778 1,912 Toledo, OH...... 38 37 75 3,088 5,872 2,784 Panama City, FL ...... 54 10 64 4,220 5,274 1,054 Augusta, GA...... 44 17 61 3,695 5,197 1,503 Tallahassee, FL-Thomasville, GA ...... 48 16 64 3,267 4,759 1,492 Odessa-Midland, TX ...... 30 35 65 2,563 4,688 2,125 Waco-Temple-Bryan, TX ...... 41 19 60 2,988 4,564 1,576 Knoxville, TN...... 28 10 38 2,791 3,367 576

48. Defendants’ large market shares reflect it more difficult and costly to buy around b. competition between Gray and Raycom the fact that, in each Overlap DMA, Gray and higher prices imposed by the combined in the licensing of Big 4 television Raycom each own at least one Big 4 station, stations. This would likely result in retransmission consent in each of the and often own one or more non-Big-4 increased advertising prices. Overlap DMAs would be eliminated; network affiliates, which also sell spot 53. For these reasons, the proposed merger c. the fees charged to MVPDs for the advertising. likely would substantially lessen competition licensing of retransmission consent in each of 49. As indicated by the preceding chart, in the sale of broadcast television spot the Overlap DMAs and throughout each the post-merger HHI in each Overlap DMA is advertising in each of the Overlap DMAs, in MVPD’s footprint likely would increase; well above 2,500, and the HHI increase in violation of Section 7 of the Clayton Act, 15 d. competition in the sale of broadcast each Overlap DMA far exceeds the 200-point U.S.C. § 18. television spot advertising in each of the threshold above which a transaction is Overlap DMAs likely would be substantially presumed to enhance market power and VI. ABSENCE OF COUNTERVAILING lessened; harm competition. Defendants’ proposed FACTORS e. competition between Gray and Raycom transaction is thus presumptively unlawful 54. Entry of a new broadcast station into in the sale of broadcast television spot advertising in each of the Overlap DMAs in each Overlap DMA. an Overlap DMA would not be timely, likely, would be eliminated; and 50. In addition to substantially increasing or sufficient to prevent or remedy the f. prices for spot advertising on broadcast the concentration levels in each Overlap proposed merger’s likely anticompetitive DMA, the proposed merger would combine television stations in each of the Overlap effects in the relevant markets. The FCC Gray’s and Raycom’s Big 4 broadcast DMAs likely would increase. regulates entry through the issuance of television stations, which are close broadcast television licenses, which are VIII. RELIEF REQUESTED substitutes and generally vigorous difficult to obtain because the availability of competitors in the sale of broadcast 58. The United States requests that: television spot advertising. The merger spectrum is limited and the regulatory a. the Court adjudge the proposed merger would also combine the Defendants’ non-Big- process associated with obtaining a license is to violate Section 7 of the Clayton Act, 15 4 programming streams in the Overlap lengthy. Even if a new signal were to become U.S.C. § 18; DMAs, which are also used to sell spot available, commercial success would come b. the Court enjoin and restrain Defendants advertising. over a period of many years, if at all. from carrying out the merger, or entering into 51. In each Overlap DMA, Defendants’ 55. Defendants cannot demonstrate merger- any other agreement, understanding, or plan broadcast stations compete head to head in specific, verifiable efficiencies sufficient to by which Gray would merge with, acquire, or the sale of broadcast television spot offset the proposed merger’s likely be acquired by Raycom, or Gray and Raycom advertising. Advertisers obtain lower prices anticompetitive effects. would combine any of their respective Big 4 stations in the Overlap DMAs; as a result of this competition. In particular, VII. VIOLATIONS ALLEGED advertisers in the Overlap DMAs can respond c. the Court award the United States the to an increase in one station’s spot 56. The United States repeats and realleges costs of this action; and advertising prices by purchasing, or the allegations of paragraphs 1 through 56 as d. the Court award such other relief to the threatening to purchase, advertising spots on if fully set forth herein. United States as the Court may deem just and one or more stations owned by different 57. The proposed merger of Gray and proper. broadcast station groups—‘‘buying around’’ Raycom likely would substantially lessen Dated: December 14, 2018 competition in interstate trade and the station that raises its prices. This practice Respectfully submitted, allows the advertisers either to avoid the first commerce, in violation of Section 7 of the FOR PLAINTIFF UNITED STATES OF station’s price increase, or to pressure the Clayton Act, 15 U.S.C. § 18. The merger AMERICA first station to lower its prices. likely would have the following effects, lllllllllllllllllllll 52. If Gray acquires Raycom’s stations, among others: advertisers seeking to reach audiences in the a. competition in the licensing of Big 4 Makan Delrahim (D.C. Bar # 457795), Overlap DMAs would have fewer competing television retransmission consent in each of Assistant Attorney General for Antitrust. broadcast television alternatives available to the Overlap DMAs likely would be lllllllllllllllllllll meet their advertising needs, and would find substantially lessened; Andrew C. Finch,

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Principal Deputy Assistant Attorney General. A. ‘‘Acquirer’’ means Scripps, TEGNA, G. ‘‘Gray’’ means Defendant Gray lllllllllllllllllllll Lockwood, Marquee, or any other entity or Television, Inc., a Georgia corporation Patricia A. Brink, entities to which Defendants divest any of headquartered in Atlanta, Georgia, its Director of Civil Enforcement. the Divestiture Assets. successors and assigns, and its subsidiaries, lllllllllllllllllllll B. ‘‘Divestiture Assets’’ means the divisions, groups, affiliates, partnerships, and Divestiture Stations and all assets, tangible or joint ventures, and their directors, officers, Owen M. Kendler, intangible, necessary for the operation of the managers, agents, and employees. Chief, Media, Entertainment & Professional Divestiture Stations as viable, ongoing H. ‘‘KRHD–CD’’ means the ABC-affiliated Services Section. commercial broadcast television stations, broadcast television station bearing that call lllllllllllllllllllll including, but not limited to, all real property sign located in the Waco-Temple-Bryan, Yvette Tarlov (DC Bar # 442452), (owned or leased), all broadcast equipment, Texas, DMA, owned by Raycom. Assistant Chief, Media, Entertainment & office equipment, office furniture, fixtures, I. ‘‘KWES–TV’’ means the NBC-affiliated Professional Services Section materials, supplies, and other tangible broadcast television station bearing that call lllllllllllllllllllll property relating to the Divestiture Stations; sign located in the Odessa-Midland, Texas, Matthew Siegel, all licenses, permits, and authorizations DMA, owned by Raycom. Gregg Malawer (D.C. Bar # 481685), issued by, and applications submitted to, the J. ‘‘KXXV’’ means the ABC-affiliated United States Department of Justice, FCC and other government agencies relating broadcast television station bearing that call Antitrust Division, Media, Entertainment & to the Divestiture Stations; all contracts sign located in the Waco-Temple-Bryan, Professional Services Section, 450 Fifth (including programming contracts and Texas, DMA, owned by Raycom. Street NW, Suite 4000, Washington, DC rights), agreements, network affiliation K. ‘‘Lockwood’’ means Greensboro TV, 20530, Telephone: (202) 598–8303, agreements, leases, and commitments and LLC, a Virginia limited liability company Facsimile: (202) 514–7308. understandings of Defendants relating to the headquartered in Hampton, Virginia, its Divestiture Stations; all trademarks, service successors and assigns, and its subsidiaries, UNITED STATES DISTRICT COURT marks, trade names, copyrights, patents, divisions, groups, affiliates, partnerships, and FOR THE DISTRICT OF COLUMBIA slogans, programming materials, and joint ventures, and their directors, members, United States of America, Plaintiff, v. Gray promotional materials relating to the officers, managers, agents, and employees. Television, Inc., and Raycom Media, Inc., Divestiture Stations; all customer lists, L. ‘‘Marquee’’ means Defendants. contracts, accounts, and credit records Georgia, Inc., a Georgia corporation Case No. 1:18–cv–2951 related to the Divestiture Stations; and all headquartered in Lawrenceville, Georgia, its Judge Christopher R. Cooper logs and other records maintained by successors and assigns, and its subsidiaries, Defendants in connection with the divisions, groups, affiliates, partnerships, and PROPOSED FINAL JUDGMENT Divestiture Stations. Divestiture Assets does joint ventures, and their directors, officers, Whereas, Plaintiff, United States of not include Excluded Assets. managers, agents, and employees. America, filed its Complaint on December 14, C. ‘‘Divestiture Stations’’ means WTNZ, M. ‘‘Raycom’’ means Defendant Raycom 2018, and Defendant Gray Television, Inc., WTOL, KXXV, KRHD–CD, WTXL–TV, Media, Inc., a Delaware corporation and Defendant Raycom Media, Inc., by their WFXG, KWES–TV, WPGX, WSWG, and headquartered in Montgomery, Alabama, its respective attorneys, have consented to the WDFX–TV. successors and assigns, and its subsidiaries, entry of this Final Judgment without trial or D. ‘‘DMA’’ means Designated Market Area divisions, groups, affiliates, partnerships, and adjudication of any issue of fact or law and as defined by The Nielsen Company (US), joint ventures, and their directors, officers, without this Final Judgment constituting any LLC, based upon viewing patterns and used managers, agents, and employees. evidence against or admission by any party by BIA Advisory Services’ Investing in N. ‘‘Scripps’’ means the E.W. Scripps regarding any issue of fact or law; Television Market Report 2018 (1st edition). Company, an Ohio corporation And whereas, Defendants agree to be DMAs are ranked according to the number of headquartered in Cincinnati, Ohio, its bound by the provisions of this Final television households therein and are used successors and assigns, and its subsidiaries, Judgment pending its approval by the Court; by broadcasters, advertisers, and advertising divisions, groups, affiliates, partnerships, and And whereas, the essence of this Final agencies to aid in evaluating television joint ventures, and their directors, officers, Judgment is the prompt and certain audience size and composition. managers, agents, and employees. divestiture of certain rights or assets by E. ‘‘Excluded Assets’’ means O. ‘‘TEGNA’’ means TEGNA Inc., a Defendants to assure that competition is not (1) the Telemundo affiliation agreement Delaware corporation headquartered in substantially lessened; and programming stream (including any McLean, Virginia, its successors and assigns, And whereas, the United States requires syndicated programming), receiver, program and its subsidiaries, divisions, groups, Defendants to make certain divestitures for logs and related materials, related intellectual affiliates, partnerships, and joint ventures, the purpose of remedying the loss of property and domain names, relating in all and their directors, officers, managers, competition alleged in the Complaint; cases to KWES–TV and/or the Odessa- agents, and employees. And whereas, Defendants have represented Midland, Texas, DMA; P. ‘‘WDFX–TV’’ means the FOX-affiliated to the United States that the divestitures (2) the CW affiliation agreement and broadcast television station bearing that call required below can and will be made and programming stream (including any sign located in the Dothan, Alabama, DMA, that Defendants will later raise no claim of syndicated programming), receiver, program owned by Raycom. hardship or difficulty as grounds for asking logs and related materials, related intellectual Q. ‘‘WFXG’’ means the FOX-affiliated the Court to modify any of the divestiture property and domain names, relating in all broadcast television station bearing that call provisions contained below; cases to KWES–TV and/or the Odessa- sign located in the Augusta, Georgia, DMA, Now therefore, before any testimony is Midland, Texas, DMA; owned by Raycom. taken, without trial or adjudication of any (3) the Telemundo affiliation agreement R. ‘‘WPGX’’ means the FOX-affiliated issue of fact or law, and upon consent of the and programming stream (including any broadcast television station bearing that call parties, it is ordered, adjudged, and decreed: syndicated programming), receiver, program sign located in the Panama City, Florida, logs and related materials, related intellectual DMA, owned by Raycom. I. JURISDICTION property and domain names, relating in all S. ‘‘WSWG’’ means the CBS-affiliated This Court has jurisdiction over the subject cases to KXXV; and broadcast television station bearing that call matter of and each of the parties to this (4) the CW affiliation agreement and sign located in the Albany, Georgia, DMA, action. The Complaint states a claim upon programming stream (including any owned by Gray. which relief may be granted against syndicated programming), receiver, program T. ‘‘WTNZ’’ means the FOX-affiliated Defendants under Section 7 of the Clayton logs and related materials, related intellectual broadcast television station bearing that call Act, as amended, 15 U.S.C. 18. property and domain names, related in all sign located in the Knoxville, Tennessee, cases to WSWG. DMA, owned by Raycom. II. DEFINITIONS F. ‘‘FCC’’ means the Federal U. ‘‘WTOL’’ means the CBS-affiliated As used in this Final Judgment: Communications Commission. broadcast television station bearing that call

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sign located in the Toledo, Ohio, DMA, WDFX–TV Divestiture Assets to an Acquirer Defendants shall enter into an agreement owned by Raycom. other than Lockwood; or the WSWG with Lockwood to provide to WFXG and V. ‘‘WTXL–TV’’ means the ABC-affiliated Divestiture Assets to an Acquirer other than WDFX–TV (or, if Lockwood is purchasing broadcast television station bearing that call Marquee: just one of those stations, that station) sign located in the Tallahassee, Florida- (1) Defendants, in accomplishing the substantially the same local news Thomasville, Georgia, DMA, owned by divestitures ordered by this Final Judgment, programming as the respective stations Raycom. promptly shall make known, by usual and currently receive from other stations owned customary means, the availability of the or operated by Raycom for one (1) year after III. APPLICABILITY Divestiture Assets; the sale of the WFXG and/or WDFX–TV A. This Final Judgment applies to (2) Defendants shall inform any person Divestiture Assets, respectively, to Defendants and all other persons in active making an inquiry regarding a possible Lockwood, with such agreement to be concert or participation with any of them purchase of the relevant Divestiture Assets terminable by Lockwood on no more than who receive actual notice of this Final that they are being divested pursuant to this thirty (30) days’ notice. The terms and Judgment by personal service or otherwise. Final Judgment and provide that person with conditions of any contractual arrangement B. If, prior to complying with Sections IV a copy of this Final Judgment; intended to satisfy this provision must be and V of this Final Judgment, Defendants sell (3) Defendants shall offer to furnish to all reasonably related to market conditions for or otherwise dispose of all or substantially all prospective Acquirers, subject to customary the services provided, and shall be subject to of their assets or of lesser business units that confidentiality assurances, all information the approval of the United States, in its sole include the Divestiture Assets, they shall and documents relating to the relevant discretion. The United States in its sole require the purchaser to be bound by the Divestiture Assets customarily provided in a discretion, and at the option of Lockwood, provisions of this Final Judgment. due diligence process except such may approve one or more extensions of any Defendants need not obtain such an information or documents subject to the such agreement for a total of up to an agreement from the Acquirers. attorney-client privilege or work-product additional one (1) year. C. If, prior to the entry of this Final doctrine; and J. In the case of Marquee as the Acquirer Judgment, Defendants sell or otherwise (4) Defendants shall make available such of the WSWG Divestiture Assets, the dispose of business units that do not include information to the United States at the same transition services agreement contemplated any of the Divestiture Assets, then this Final time that such information is made available by Paragraph IV(H) shall include, at the Judgment shall not apply to such business to any other person. option of Marquee, an agreement by units. D. Defendants shall provide each Acquirer Defendants to provide to WSWG and the United States information relating to substantially the same local news IV. DIVESTITURES the personnel involved in the operation and programming as that station currently A. Defendants are ordered and directed, management of the relevant Divestiture receives from other stations owned or within ninety (90) calendar days after the Assets to enable the Acquirer to make offers operated by Gray for at least ninety (90) days filing of the Complaint in this matter, or five of employment. Defendants will not interfere after the sale of the WSWG Divestiture (5) calendar days after notice of entry of this with any negotiations by any Acquirer to Assets, with such agreement to be terminable Final Judgment by the Court, whichever is employ or contract with any Defendant by Marquee on no more than thirty (30) days’ later, to divest the Divestiture Assets in a employee whose primary responsibility notice, except that such agreement may omit manner consistent with this Final Judgment relates to the operation or management of the up to two (2) hours of the news programming to one or more Acquirers acceptable to the relevant Divestiture Assets. currently provided to WSWG each week, the United States, in its sole discretion. The E. Defendants shall permit the prospective identification of the hours to be omitted to United States, in its sole discretion, may Acquirers of the Divestiture Assets to have be determined by Marquee. For the agree to one or more extensions of this time reasonable access to personnel and to make avoidance of doubt, the terms and conditions period not to exceed ninety (90) calendar inspections of the physical facilities of the of any contractual arrangement intended to days in total, and shall notify the Court in Divestiture Assets; access to any and all satisfy this provision must be reasonably such circumstances. environmental, zoning, and other permit related to market conditions for the services B. With respect to divestiture of the documents and information; and access to provided, and shall be subject to the approval Divestiture Assets by Defendants, or by the any and all financial, operational, or other of the United States, in its sole discretion. Divestiture Trustee appointed pursuant to documents and information customarily K. Defendants shall warrant to the Section V of this Final Judgment, if provided as part of a due diligence process. Acquirers (1) that there are no material applications have been filed with the FCC F. Defendants shall warrant to the defects in the environmental, zoning, or other within the period permitted for divestiture Acquirers that each asset will be operational permits pertaining to the operation of the seeking approval to assign or transfer licenses on the date of sale. Divestiture Assets, and (2) that, following the to the Acquirer(s) of the Divestiture Assets, G. Defendants shall not take any action that sale of the Divestiture Assets, Defendants but an order or other dispositive action by will impede in any way the permitting, will not undertake, directly or indirectly, any the FCC on such applications has not been operation, or divestiture of the Divestiture challenges to the environmental, zoning, or issued before the end of the period permitted Assets. other permits relating to the operation of the for divestiture, the period shall be extended H. At the option of the respective Acquirer, Divestiture Assets. with respect to divestiture of the Divestiture Defendants shall enter into a transition L. Unless the United States otherwise Assets for which no FCC order has issued services agreement with each Acquirer for a consents in writing, the divestitures pursuant until five (5) days after such order is issued. period of up to six (6) months to facilitate the to Section IV, or by the Divestiture Trustee Defendants agree to use their best efforts to continuous operations of the relevant appointed pursuant to Section V of this Final divest the Divestiture Assets and to obtain all Divestiture Assets until the Acquirer can Judgment, shall include the entire Divestiture necessary FCC approvals as expeditiously as provide such capabilities independently. The Assets and shall be accomplished in such a possible. This Final Judgment does not limit terms and conditions of any contractual way as to satisfy the United States, in its sole the FCC’s exercise of its regulatory powers arrangement intended to satisfy this discretion, that the Divestiture Assets can and process with respect to the Divestiture provision must be reasonably related to and will be used by each Acquirer as part of Assets. Authorization by the FCC to conduct market conditions for the services provided, a viable, ongoing commercial television the divestiture of a Divestiture Asset in a and shall be subject to the approval of the broadcasting business. Divestiture of the particular manner will not modify any of the United States, in its sole discretion. The Divestiture Assets may be made to one or requirements of this Final Judgment. United States in its sole discretion may more Acquirers, provided that in each C. In the event that Defendants are approve one or more extensions of this instance it is demonstrated to the sole attempting to divest the KXXV, KRHD–CD, or agreement for a total of up to an additional satisfaction of the United States that the WTXL–TV Divestiture Assets to an Acquirer six (6) months. Divestiture Assets will remain viable, and the other than Scripps; the WTOL or KWES–TV I. In the case of Lockwood as the Acquirer divestiture of such assets will remedy the Divestiture Assets to an Acquirer other than of the WFXG and/or WDFX–TV Divestiture competitive harm alleged in the Complaint. TEGNA; the WTNZ, WFXG, WPGX, or Assets and at the option of Lockwood, The divestitures, whether made pursuant to

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Section IV or Section V of this Final Divestiture Assets and all costs and expenses shall promptly file with the Court a report Judgment: so incurred. After approval by the Court of setting forth (1) the Divestiture Trustee’s (1) shall be made to Acquirers that, in the the Divestiture Trustee’s accounting, efforts to accomplish the required United States’ sole judgment, have the intent including fees for its services yet unpaid and divestitures, (2) the reasons, in the and capability (including the necessary those of any professionals and agents Divestiture Trustee’s judgment, why the managerial, operational, technical, and retained by the Divestiture Trustee, all required divestitures have not been financial capability) to compete effectively in remaining money shall be paid to Defendants accomplished, and (3) the Divestiture the commercial television broadcasting and the trust shall then be terminated. The Trustee’s recommendations. To the extent business; and compensation of the Divestiture Trustee and such report contains information that the (2) shall be accomplished so as to satisfy any professionals and agents retained by the Divestiture Trustee deems confidential, such the United States, in its sole discretion, that Divestiture Trustee shall be reasonable in reports shall not be filed on the public docket none of the terms of any agreement between light of the value of the Divestiture Assets of the Court. The Divestiture Trustee shall at any Acquirer and Defendants give subject to sale by the Divestiture Trustee and the same time furnish such report to the Defendants the ability unreasonably to raise based on a fee arrangement providing the United States, which shall have the right to the costs of the Acquirer, to lower the Divestiture Trustee with incentives based on make additional recommendations consistent efficiency of the Acquirer, or otherwise to the price and terms of the divestiture and the with the purpose of the trust. The Court interfere in the ability of the Acquirer to speed with which it is accomplished, but the thereafter shall enter such orders as it shall compete effectively. timeliness of the divestiture is paramount. If deem appropriate to carry out the purpose of the Divestiture Trustee and Defendants are this Final Judgment, which may, if necessary, V. APPOINTMENT OF DIVESTITURE unable to reach agreement on the Divestiture include extending the trust and the term of TRUSTEE Trustee’s or any agent’s or consultant’s the Divestiture Trustee’s appointment by a A. If Defendants have not divested the compensation or other terms and conditions period requested by the United States. Divestiture Assets within the time period of engagement within fourteen (14) calendar H. If the United States determines that the specified in Paragraph IV(A) and Paragraph days of the appointment of the Divestiture Divestiture Trustee has ceased to act or failed IV(B), Defendants shall notify the United Trustee, agent, or consultant, the United to act diligently or in a reasonably cost- States of that fact in writing, specifically States may, in its sole discretion, take effective manner, it may recommend that the identifying the Divestiture Assets that have appropriate action, including making a Court appoint a substitute Divestiture not been divested. Upon application of the recommendation to the Court. The Trustee. United States, the Court shall appoint a Divestiture Trustee shall, within three (3) Divestiture Trustee selected by the United business days of hiring any other agents or VI. NOTICE OF PROPOSED DIVESTITURE States and approved by the Court to effect the consultants, provide written notice of such A. Within (10) calendar days after notice of divestiture of the Divestiture Assets that have hiring and the rate of compensation to entry of this Final Judgment by the Court, or not yet been divested. Defendants and the United States. two (2) business days following execution of B. After the appointment of a Divestiture E. Defendants shall use their best efforts to a definitive divestiture agreement, whichever Trustee becomes effective, only the assist the Divestiture Trustee in is later, Defendants or the Divestiture Divestiture Trustee shall have the right to sell accomplishing the required divestitures. The Trustee, whichever is then responsible for the relevant Divestiture Assets. The Divestiture Trustee and any agents or effecting the divestitures required herein, Divestiture Trustee shall have the power and consultants retained by the Divestiture shall notify the United States of any authority to accomplish the divestiture to an Trustee shall have full and complete access proposed divestiture required by Section IV Acquirer acceptable to the United States, in to the personnel, books, records, and or Section V of this Final Judgment. If the its sole discretion, at such price and on such facilities of the business to be divested, and Divestiture Trustee is responsible, it shall terms as are then obtainable upon reasonable Defendants shall provide or develop financial similarly notify Defendants. The notice shall effort by the Divestiture Trustee, subject to and other information relevant to such set forth the details of the proposed the provisions of this Final Judgment, and business as the Divestiture Trustee may divestiture and list the name, address, and shall have such other powers as this Court reasonably request, subject to reasonable telephone number of each person not deems appropriate. Subject to Paragraph V(D) protection for trade secrets; other previously identified who tendered an offer of this Final Judgment, the Divestiture confidential research, development, or for, or expressed an interest in or desire to Trustee may hire at the cost and expense of commercial information; or any applicable acquire, any ownership interest in the Defendants any agents, investment bankers, privileges. Defendants shall take no action to relevant Divestiture Assets, together with full attorneys, accountants, or consultants, who interfere with or to impede the Divestiture details of the same. shall be solely accountable to the Divestiture Trustee’s accomplishment of the divestiture. B. Within fifteen (15) calendar days of Trustee, reasonably necessary in the F. After its appointment, the Divestiture receipt by the United States of such notice, Divestiture Trustee’s judgment to assist in the Trustee shall file monthly reports with the the United States may request from divestiture. Any such agents, investment United States and, as appropriate, the Court Defendants, the proposed Acquirer, any other bankers, attorneys, accountants, or setting forth the Divestiture Trustee’s efforts third party, or the Divestiture Trustee, if consultants shall serve on such terms and to accomplish the relevant divestitures applicable, additional information conditions as the United States approves, ordered under this Final Judgment. To the concerning the proposed divestiture, the including confidentiality requirements and extent such reports contain information that proposed Acquirer, and any other potential conflict of interest certifications. the Divestiture Trustee deems confidential, Acquirers. Defendants and the Divestiture C. Defendants shall not object to a sale by such reports shall not be filed on the public Trustee shall furnish any additional the Divestiture Trustee on any ground other docket of the Court. Such reports shall information requested within fifteen (15) than the Divestiture Trustee’s malfeasance. include the name, address, and telephone calendar days of the receipt of the request, Any such objections by Defendants must be number of each person who, during the unless the parties shall otherwise agree. conveyed in writing to the United States and preceding month, made an offer to acquire, C. Within thirty (30) calendar days after the Divestiture Trustee within ten (10) expressed an interest in acquiring, entered receipt of the notice or within twenty (20) calendar days after the Divestiture Trustee into negotiations to acquire, or was contacted calendar days after the United States has has provided the notice required under or made an inquiry about acquiring, any been provided the additional information Section VI. interest in the Divestiture Assets, and shall requested from Defendants, the proposed D. The Divestiture Trustee shall serve at describe in detail each contact with any such Acquirer, any third party, and the Divestiture the cost and expense of Defendants pursuant person. The Divestiture Trustee shall Trustee, whichever is later, the United States to a written agreement, on such terms and maintain full records of all efforts made to shall provide written notice to Defendants conditions as the United States approves, divest the relevant Divestiture Assets. and the Divestiture Trustee, if there is one, including confidentiality requirements and G. If the Divestiture Trustee has not stating whether or not it objects to the conflict of interest certifications. The accomplished the divestitures ordered under proposed divestiture. If the United States Divestiture Trustee shall account for all this Final Judgment within six (6) months provides written notice that it does not monies derived from the sale of the relevant after its appointment, the Divestiture Trustee object, the divestiture may be consummated,

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subject only to Defendants’ limited right to fifteen (15) calendar days after the change is the Divestiture Assets; (2) acquire any option object to the sale under Paragraph V(C) of implemented. to reacquire any part of the Divestiture Assets this Final Judgment. Absent written notice C. Defendants shall keep all records of all or to assign the Divestiture Assets to any that the United States does not object to the efforts made to preserve and divest the other person; (3) enter into any local proposed Acquirer, or upon objection by the Divestiture Assets until one year after such marketing agreement, joint sales agreement, United States, a divestiture proposed under divestitures have been completed. other cooperative selling arrangement, or shared services agreement (except as Section IV or Section V shall not be X. COMPLIANCE INSPECTION consummated. Upon objection by Defendants provided in this Paragraph XI(A) or in under Paragraph V(C), a divestiture proposed A. For the purposes of determining or Paragraph XI(B)), or conduct other business under Section V shall not be consummated securing compliance with this Final negotiations jointly with any Acquirer with unless approved by the Court. Judgment, or of any related orders such as respect to the Divestiture Assets divested to any Hold Separate Stipulation and Order, or such Acquirer; or (4) provide financing or VII. FINANCING of determining whether the Final Judgment guarantees of financing with respect to the Defendants shall not finance all or any part should be modified or vacated, and subject Divestiture Assets. The shared services of any purchase made pursuant to Section IV to any legally recognized privilege, from time prohibition does not preclude Defendants or Section V of this Final Judgment. to time authorized representatives of the from continuing or entering into agreements United States, including agents and in a form customarily used in the industry to VIII. HOLD SEPARATE consultants retained by the United States, (a) share news helicopters or (b) pool generic shall, upon written request of an authorized Until the divestitures required by this Final video footage that does not include recording representative of the Assistant Attorney Judgment have been accomplished, a reporter or other on-air talent, and does not General in charge of the Antitrust Division, Defendants shall take all steps necessary to preclude Defendants from entering into any and on reasonable notice to Defendants, be comply with the Hold Separate Stipulation non-sales-related shared services agreement permitted: and Order entered by this Court. Defendants or transition services agreement that is (1) access during Defendants’ office hours shall take no action that would jeopardize the approved in advance by the United States in to inspect and copy, or at the option of the divestitures ordered by this Court. its sole discretion. United States, to require Defendants to B. Paragraph XI(A) shall not prevent IX. AFFIDAVITS provide electronic copies of, all books, Defendants from entering into agreements to A. Within twenty (20) calendar days of the ledgers, accounts, records, data, and documents in the possession, custody, or provide news programming to broadcast filing of the Complaint in this matter, and television stations included in the Divestiture every thirty (30) calendar days thereafter control of Defendants, relating to any matters contained in this Final Judgment; and Assets, provided that Defendants do not sell, until the divestitures have been completed price, market, hold out for sale, or profit from under Section IV and Section V of this Final (2) to interview, either informally or on the record, Defendants’ officers, employees, or the sale of advertising associated with the Judgment, Defendants shall deliver to the news programming provided by Defendants United States an affidavit, signed by each agents, who may have their individual counsel present, regarding such matters. The under such agreements except by approval of Defendant’s Chief Financial Officer and interviews shall be subject to the reasonable the United States in its sole discretion. General Counsel or, subject to the approval convenience of the interviewee and without of the United States, an officer of the XII. RETENTION OF JURISDICTION restraint or interference by Defendants. Defendant, which shall describe the fact and B. Upon the written request of an The Court retains jurisdiction to enable any manner of Defendants’ compliance with authorized representative of the Assistant party to this Final Judgment to apply to the Section IV and Section V of this Final Attorney General in charge of the Antitrust Court at any time for further orders and Judgment. Each such affidavit shall include Division, Defendants shall submit written directions as may be necessary or appropriate the name, address, and telephone number of reports or responses to written to carry out or construe this Final Judgment, each person who, during the preceding thirty interrogatories, under oath if requested, to modify any of its provisions, to enforce (30) calendar days, made an offer to acquire, relating to any of the matters contained in compliance, and to punish violations of its expressed an interest in acquiring, entered this Final Judgment as may be requested. provisions. into negotiations to acquire, or was contacted C. No information or documents obtained or made an inquiry about acquiring, any XIII. ENFORCEMENT OF FINAL by the means provided in this Section shall JUDGMENT interest in the Divestiture Assets, and shall be divulged by the United States to any describe in detail each contact with any such person other than an authorized A. The United States retains and reserves person during that period. Each such representative of the executive branch of the all rights to enforce the provisions of this affidavit shall also include a description of United States, except in the course of legal Final Judgment, including the right to seek the efforts Defendants have taken to solicit proceedings to which the United States is a an order of contempt from the Court. buyers for and complete the sale of the party (including grand jury proceedings), or Defendants agree that in any civil contempt Divestiture Assets, including efforts to secure for the purpose of securing compliance with action, any motion to show cause, or any FCC or other regulatory approvals, and to this Final Judgment, or as otherwise required similar civil action brought by the United provide required information to prospective by law. States regarding an alleged violation of this Acquirers, including the limitations, if any, D. If at the time that Defendants furnish Final Judgment, the United States may on such information. Assuming the information or documents to the United establish a violation of the decree and the information set forth in the affidavit is true States, Defendants represent and identify in appropriateness of any remedy therefor by a and complete, any objection by the United writing the material in any such information preponderance of the evidence, and States to information provided by or documents to which a claim of protection Defendants waive any argument that a Defendants, including limitations on may be asserted under Rule 26(c)(1)(G) of the different standard of proof should apply. information, shall be made within fourteen Federal Rules of Civil Procedure, and B. The Final Judgment should be (14) calendar days of receipt of such affidavit. Defendants mark each pertinent page of such interpreted to give full effect to the B. Within twenty (20) calendar days after material, ‘‘Subject to claim of protection procompetitive purposes of the antitrust laws the filing of the Complaint in this matter, under Rule 26(c)(1)(G) of the Federal Rules and to restore all competition the United Defendants shall deliver to the United States of Civil Procedure,’’ then the United States States alleged was harmed by the challenged an affidavit that describes in reasonable shall give Defendants ten (10) calendar days’ conduct. Defendants agree that they may be detail all actions Defendants have taken and notice prior to divulging such material in any held in contempt of, and that the Court may all steps Defendants have implemented on an legal proceeding (other than a grand jury enforce, any provision of this Final Judgment ongoing basis to comply with Section VIII of proceeding). that, as interpreted by the Court in light of this Final Judgment. Defendants shall deliver these procompetitive principles and applying to the United States an affidavit describing XI. NO REACQUISITION AND ordinary tools of interpretation, is stated any changes to the efforts and actions LIMITATIONS ON COLLABORATIONS specifically and in reasonable detail, whether outlined in Defendants’ earlier affidavits filed A. During the term of this Final Judgment, or not it is clear and unambiguous on its face. pursuant to this Paragraph IX(B) within Defendants may not (1) reacquire any part of In any such interpretation, the terms of this

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Final Judgment should not be construed I. NATURE AND PURPOSE OF THE Panama City, Florida, DMA; (viii) WDFX–TV, against either party as the drafter. PROCEEDING located in the Dothan, Alabama, DMA; and C. In any enforcement proceeding in which On June 23, 2018, Defendant Gray (ix) WSWG, located in the Albany, Georgia, the Court finds that Defendants have violated Television, Inc. (‘‘Gray’’) and Raycom Media, DMA. Under the Hold Separate, Defendants this Final Judgment, the United States may Inc. (‘‘Raycom,’’ and together with Gray, will take certain steps to ensure that the apply to the Court for a one-time extension ‘‘Defendants’’) entered into an Agreement Divestiture Stations will operate as of this Final Judgment, together with such and Plan of Merger (the ‘‘Merger Agreement’’) independent, economically viable, and other relief as may be appropriate. In pursuant to which Gray proposes to acquire ongoing business concerns that will remain connection with any successful effort by the Raycom for approximately $3.6 billion. The independent and uninfluenced by the United States to enforce this Final Judgment United States filed a civil antitrust Complaint consummation of the acquisition, and that against a Defendant, whether litigated or on December 14, 2018, seeking to enjoin the competition is maintained during the resolved prior to litigation, that Defendant proposed merger. The Complaint alleges that pendency of the ordered divestitures. agrees to reimburse the United States for the the proposed merger likely would The United States and Defendants have fees and expenses of its attorneys, as well as substantially lessen competition in violation stipulated that the proposed Final Judgment may be entered after compliance with the any other costs including experts’ fees, of Section 7 of the Clayton Act, 15 U.S.C. APPA. Entry of the proposed Final Judgment incurred in connection with that enforcement § 18, in nine local geographic markets, in (1) would terminate this action, except that the effort, including in the investigation of the the licensing of the television programming Court would retain jurisdiction to construe, potential violation. of NBC, CBS, ABC, and FOX (‘‘Big 4’’) affiliate stations to cable, satellite, and fiber modify, or enforce the provisions of the XIV. EXPIRATION OF FINAL JUDGMENT optic television providers (referred to proposed Final Judgment and to punish violations thereof. Unless the Court grants an extension, this collectively as multichannel video Final Judgment shall expire ten (10) years programming distributors, or ‘‘MVPDs’’) for II. DESCRIPTION OF THE EVENTS GIVING from the date of its entry, except that after retransmission to their subscribers (known as RISE TO THE ALLEGED VIOLATION five (5) years from the date of its entry, this ‘‘retransmission consent’’), and (2) the sale of broadcast television spot advertising. The A. The Defendants and the Proposed Final Judgment may be terminated upon Transaction notice by the United States to the Court and nine Designated Market Areas (‘‘DMAs’’) in Gray is a Georgia corporation with its Defendants that the divestitures have been which a substantial reduction in competition headquarters in Atlanta, Georgia. Gray owns completed and that the continuation of the is alleged are: (i) Waco-Temple-Bryan, Texas; (ii) Tallahassee, Florida-Thomasville, 92 television stations in 56 DMAs, of which Final Judgment no longer is necessary or in Georgia; (iii) Toledo, Ohio; (iv) Odessa- 83 are Big 4 affiliates. the public interest. Midland, Texas; (v) Knoxville, Tennessee; Raycom is a Delaware corporation with its XV. PUBLIC INTEREST DETERMINATION (vi) Augusta, Georgia; (vii) Panama City, headquarters in Montgomery, Alabama. Florida; (viii) Dothan, Alabama; and (ix) Raycom owns 51 television stations in 43 Entry of this Final Judgment is in the Albany, Georgia (collectively, ‘‘the Overlap DMAs, of which 45 are Big 4 affiliates. public interest. The parties have complied DMAs’’).1 The loss of competition alleged in Pursuant to the Merger Agreement, Gray with the requirements of the Antitrust the Complaint likely would result in an agreed to acquire Raycom for approximately Procedures and Penalties Act, 15 U.S.C. § 16, increase in retransmission consent fees $3.6 billion, through a merger transaction. including making copies available to the charged to MVPDs, much of which would be This merger is the subject of the Complaint public of this Final Judgment, the passed through to subscribers, and higher and proposed Final Judgment filed in this Competitive Impact Statement, any prices for broadcast television spot case. comments thereon, and the United States’ advertising in each Overlap DMA. B. Big 4 Television Retransmission Consent responses to comments. Based upon the Concurrent with the filing of the record before the Court, which includes the Complaint, the United States filed a Hold 1. Background Competitive Impact Statement and any Separate Stipulation and Order (‘‘Hold MVPDs, such as Comcast, DirecTV, and comments and responses to comments filed Separate’’) and proposed Final Judgment, Mediacom, typically pay the owner of each with the Court, entry of this Final Judgment which are designed to eliminate the local Big 4 broadcast station in a given DMA is in the public interest. anticompetitive effects that would have a per-subscriber fee for the right to retransmit Date: llllllllllllllllll resulted from Gray’s merger with Raycom. the station’s content to the MVPD’s Court approval subject to procedures of Under the proposed Final Judgment, which subscribers. The per-subscriber fee and other Antitrust Procedures and Penalties Act, 15 is explained more fully below, Defendants terms under which an MVPD is permitted to U.S.C. § 16 are required to divest the following broadcast distribute a station’s content to its television stations (the ‘‘Divestiture lllllllllllllllllllll subscribers is set forth in a retransmission Stations’’) to acquirers acceptable to the United States District Judge agreement. Retransmission agreements are United States in its sole discretion: (i) KXXV negotiated directly between a broadcast UNITED STATES DISTRICT COURT FOR and KRHD–CD, located in the Waco-Temple- station group, such as Gray or Raycom, and THE DISTRICT OF COLUMBIA Bryan, Texas, DMA; (ii) WTXL–TV, located a given MVPD, and these agreements cover in the Tallahassee, Florida-Thomasville, all of the station group’s stations located in United States of America, 450 Fifth Street Georgia, DMA; (iii) WTOL, located in the the MVPDs service area, or ‘‘footprint.’’ NW, Washington, DC 20530. Plaintiff, v. Gray Toledo, Ohio, DMA; (iv) KWES–TV, located Each broadcast station group typically Television, Inc., 4370 Peachtree Road NE, in the Odessa-Midland, Texas, DMA; (v) renegotiates retransmission agreements with Atlanta, Georgia 30319; and Raycom Media, WTNZ, located in the Knoxville, Tennessee, the MVPDs every few years. If an MVPD and Inc., RSA Tower 20th Floor, 201 Monroe DMA; (vi) WFXG, located in the Augusta, a broadcast station group cannot agree on a Street, Montgomery, Alabama 36104 Georgia, DMA; (vii) WPGX, located in the retransmission consent fee at the expiration Defendants. of a retransmission agreement, the result is a Case No. 1:18–cv–2951 1 A DMA is a geographic unit for which A.C. ‘‘blackout’’ of the broadcast group’s stations Judge Christopher R. Cooper Nielsen Company—a firm that surveys television from the particular MVPD—i.e., an open- viewers—furnishes broadcast television stations, COMPETITIVE IMPACT STATEMENT ended period during which the MVPD may MVPDs, cable and satellite television networks, not distribute those stations to its Plaintiff United States of America (‘‘United advertisers, and advertising agencies in a particular subscribers, until a new contract is area with data to aid in evaluating audience size States’’), pursuant to Section 2(b) of the successfully negotiated. Antitrust Procedures and Penalties Act and composition. DMAs are widely accepted by (‘‘APPA’’ or ‘‘Tunney Act’’), 15 U.S.C. industry participants as the standard geographic 2. Relevant Markets areas to use in evaluating television audience size § 16(b)–(h), files this Competitive Impact and demographic composition. The Federal The licensing of Big 4 television Statement relating to the proposed Final Communications Commission (‘‘FCC’’) also uses retransmission consent constitutes a relevant Judgment submitted for entry in this civil DMAs as geographic units with respect to its MVPD product market and line of commerce under antitrust proceeding. regulations. Section 7 of the Clayton Act. Big 4 broadcast

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content has unique appeal to television harm it would suffer if that content were lost. The relevant geographic markets for the viewers, as compared to the other content Due to the limited programming typically licensing of Big 4 television retransmission that is available through broadcast and cable offered by non-Big-4 stations, viewers are consent are the individual DMAs in which stations. Big 4 stations usually are the highest much less likely to switch to a non-Big-4 such licensing occurs. In the event of a ranked in terms of audience share and ratings station than to switch to other Big 4 stations blackout of a Big 4 network station, FCC rules in each DMA, largely because of unique in the event of a blackout of a Big 4 station. generally prohibit an MVPD from importing offerings such as local news, sports, and Accordingly, competition from non-Big-4 the same network’s content from another highly ranked primetime programs. Viewers stations does not typically impose a DMA, so substitution to stations in other typically consider the Big 4 stations to be significant competitive constraint on the DMAs cannot discipline a fee increase by close substitutes for one another. Due to retransmission consent fees charged by the stations within a given DMA. these features, MVPDs regard Big 4 owners of Big 4 stations. For the same 3. Anticompetitive Effects programming as highly desirable for reasons, subscribers—and therefore MVPDs— inclusion in the packages they offer generally do not view cable network In each of the Overlap DMAs, Gray and subscribers. Non-Big-4 broadcast stations are programming as a close substitute for Big 4 Raycom each own at least one Big 4 affiliate typically not close substitutes for viewers of network content. broadcast television station. By combining Big 4 stations. Because viewers do not regard non-Big-4 the Defendants’ Big 4 stations, the proposed If an MVPD suffers a blackout of a Big 4 broadcast stations, or cable networks, as close merger would increase the Defendants’ station in a given DMA, many of the MVPD’s substitutes for the programming they receive market shares in the licensing of Big 4 subscribers in that DMA are likely to turn to from Big 4 stations, these other sources of television retransmission consent in each other Big 4 stations in the DMA to watch programming are not sufficient to discipline Overlap DMA, and would increase the similar content. This willingness of viewers an increase in the fees charged for Big 4 market concentration in that business in each to switch between competing Big 4 broadcast television retransmission consent. Overlap DMA. The chart below summarizes stations limits an MVPD’s expected losses in Accordingly, a small but significant increase the Defendants’ approximate Big 4 the case of a blackout, and thus limits a in the retransmission consent fees of Big 4 retransmission consent market shares, and broadcaster’s ability to extract higher fees affiliates would not cause enough MVPDs to market concentrations measured by the from that MVPD—since an MVPD’s forego carrying the content of the Big 4 widely used Herfindahl-Hirschman Index willingness to pay higher retransmission affiliates to make such an increase (‘‘HHI’’) 2, in each Overlap DMA, before and consent fees for content rises or falls with the unprofitable for the Big 4 affiliates. after the proposed merger.

Gray share Raycom share Merged share Pre-merger Post-merger Overlap DMA (percent) (percent) (percent) HHI HHI HHI increase

Augusta, GA...... 50 24 74 3,741 6,119 2,379 Panama City, FL ...... 50 24 73 3,731 6,095 2,363 Dothan, AL...... 49 24 73 3,692 6,065 2,373 Tallahassee, FL-Thomasville, GA ...... 33 32 65 3,338 5,448 2,110 Albany, GA...... 33 32 65 3,339 5,440 2,101 Toledo, OH...... 25 24 49 2,504 3,710 1,206 Waco-Temple-Bryan, TX ...... 25 24 49 2,503 3,687 1,184 Knoxville, TN...... 25 24 49 2,503 3,681 1,178 Odessa-Midland, TX ...... 24 24 48 2,504 3,660 1,156

As indicated by the preceding chart, in C. Broadcast Television Spot Advertising making it especially effective for promoting each Overlap DMA the post-merger HHI brand awareness. Advertisers want to 1. Background would exceed 2,500 and the merger would advertise on broadcast stations because they increase the HHI by more than 200 points. As Broadcast television stations sell offer popular programming such as local a result, the proposed merger is presumed advertising ‘‘spots’’ during breaks in their news, sports, and primetime and syndicated programming. An advertiser purchases spots shows that are especially attractive in likely to enhance market power under the from a broadcast station to communicate to reaching a broad demographic base and a Horizontal Merger Guidelines issued by the viewers within the DMA in which the large audience of viewers. Department of Justice and the Federal Trade broadcast television station is located. Gray MVPDs sell spot advertising to be shown Commission. and Raycom compete to sell broadcast during breaks in cable network programming. In addition to substantially increasing the television spot advertising in each of the However, cable television spot advertising is concentration levels in each Overlap DMA, Overlap DMAs. an ineffective substitute for broadcast the proposed merger would also enable Gray television spot advertising. Cable television 2. Relevant Markets to black out more Big 4 stations spot advertising reaches far fewer television simultaneously in each of the Overlap DMAs Broadcast television spot advertising households within a DMA, is limited in than either Gray or Raycom could black out constitutes a relevant product market and supply, and generally offers more specialized line of commerce under Section 7 of the independently today, increasing Gray’s programs that appeal to niche audiences. Clayton Act. Broadcast television spot bargaining leverage and likely leading to Digital media advertising is not an effective advertising possesses a unique combination substitute for broadcast television spot increased retransmission consent fees to any of attributes that set it apart from advertising advertising. Most forms of digital advertising MVPD whose footprint includes any of the on other media. Broadcast television spot lack the combination of sight, sound, and Overlap DMAs. Retransmission consent advertising combines sight, sound, and motion that characterize television fees—and thus the fee increases likely to be motion in a way that makes television advertising, and, while online video caused by the proposed merger—generally advertisements particularly memorable and advertisements can combine sight, sound, are passed through to an MVPD’s subscribers impactful. Additionally, broadcast television and motion, these advertisements face in the form of higher subscription fees or as spot advertising reaches a large percentage of challenges including the fact that they can be a line item on their bills. an advertisers’ potential customers in a DMA, skipped, minimized, or blocked. Also, digital

2 The HHI is calculated by squaring the market + 302 + 202 + 202 = 2,600). The HHI takes into points when a market is controlled by a single firm. share of each firm competing in the market and account the relative size distribution of the firms in The HHI increases both as the number of firms in then summing the resulting numbers. For example, a market. It approaches zero when a market is the market decreases and as the disparity in size for a market consisting of four firms with shares of occupied by a large number of firms of relatively between those firms increases. 30, 30, 20, and 20 percent, the HHI is 2,600 (302 equal size, and reaches its maximum of 10,000

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advertising serves a different purpose from For these reasons, advertisers likely would their signals generally do not reach any broadcast advertising, as it typically targets not respond to a small but significant significant portion of the target DMA. narrow demographic subsets of a population increase in the price of broadcast television 3. Anticompetitive Effects and often seeks to generate an immediate spot advertising by switching to other forms By combining the broadcast television response. of advertising in sufficiently large numbers to stations of Gray and Raycom under common Other forms of advertising, such as radio, make the price increase unprofitable. newspaper, billboard, and direct-mail ownership, the proposed merger would The relevant geographic markets for the advertising, also are not effective substitutes. increase the combined entity’s market shares They do not combine sight, sound, and sale of broadcast television spot advertising of the broadcast television spot advertising motion, and consequently lack television’s are the individual DMAs in which such business in each of the Overlap DMAs. The ability to capture consumers with emotive advertising is sold. For an advertiser seeking chart below summarizes Defendants’ storytelling. In addition, they do not reach as to reach potential customers in a given DMA, approximate market shares and the result of many local viewers or drive brand awareness broadcast television stations located outside the transaction on HHIs in the sale of to the same extent as broadcast television of the DMA do not provide effective access broadcast television spot advertising in each does. to the advertiser’s target audience, because Overlap DMA.

Gray share Raycom share Merged share Pre-merger Post-merger Overlap DMA (percent) (percent) (percent) HHI HHI HHI increase

Albany, GA...... 11 71 82 5,407 7,007 1,600 Dothan, AL...... 65 15 80 4,866 6,778 1,912 Toledo, OH...... 38 37 75 3,088 5,872 2,784 Panama City, FL ...... 54 10 64 4,220 5,274 1,054 Augusta, GA...... 44 17 61 3,695 5,197 1,503 Tallahassee, FL-Thomasville, GA ...... 48 16 64 3,267 4,759 1,492 Odessa-Midland, TX ...... 30 35 65 2,563 4,688 2,125 Waco-Temple-Bryan, TX ...... 41 19 60 2,988 4,564 1,576 Knoxville, TN...... 28 10 38 2,791 3,367 576

Defendants’ large market shares reflect the prices by purchasing, or threatening to spectrum is limited and the regulatory fact that, in each Overlap DMA, Gray and purchase, advertising spots on one or more process associated with obtaining a license is Raycom each own at least one Big 4 station, stations owned by different broadcast station lengthy. Even if a new signal were to become and often own one or more non-Big-4 groups, allowing the advertisers to avoid the available, commercial success would come network affiliates, which also sell spot price increase or pressure the first station to over a period of many years, if at all. advertising. lower its prices. The proposed merger would III. EXPLANATION OF THE PROPOSED As indicated by the preceding chart, in reduce the number of alternative sellers of FINAL JUDGMENT each Overlap DMA the post-merger HHI broadcast television spot advertising to would exceed 2,500 and the merger would which such advertisers could turn to meet A. The Divestitures their needs, likely resulting in higher increase the HHI by more than 200 points. As The divestiture requirements of the advertising prices. a result, the proposed merger is presumed proposed Final Judgment will eliminate the likely to enhance market power under the D. Entry substantial anticompetitive effects of the Horizontal Merger Guidelines. Entry of a new broadcast station into an merger in each Overlap DMA, by maintaining In each Overlap DMA, Defendants’ Overlap DMA would not be timely, likely, or the Divestiture Stations as independent, broadcast stations compete head-to-head in sufficient to prevent or remedy the proposed economically viable competitors. The the sale of broadcast television spot merger’s likely anticompetitive effects. The proposed Final Judgment requires Gray to advertising. Advertisers targeting viewers in FCC regulates entry through the issuance of divest the Big 4 affiliates owned by either the Overlap DMAs can respond to an broadcast television licenses, which are Gray or Raycom in each of the Overlap increase in one station’s spot advertising difficult to obtain because the availability of DMAs, as shown in the following chart:

Big 4 affiliation Current owner Overlap DMA Divestiture of divestiture of divestiture stations stations stations

Waco-Temple-Bryan, Texas ...... KXXV and KRHD–CD .. ABC ...... Raycom. Tallahassee, Florida-Thomasville, Georgia ...... WTXL–TV ...... ABC ...... Raycom. Toledo, Ohio ...... WTOL ...... CBS ...... Raycom. Odessa-Midland, Texas ...... KWES–TV ...... NBC ...... Raycom. Knoxville, Tennessee ...... WTNZ ...... FOX ...... Raycom. Augusta, Georgia ...... WFXG ...... FOX ...... Raycom. Panama City, Florida ...... WPGX ...... FOX ...... Raycom. Dothan, Alabama ...... WDFX–TV ...... FOX ...... Raycom. Albany, Georgia ...... WSWG ...... CBS ...... Gray.

The Divestiture Stations must be divested assets, tangible or intangible, necessary for and CW programming streams currently in such a way as to satisfy the United States the operation of the Divestiture Stations as broadcast on KWES–TV in the Odessa- in its sole discretion that the Divestiture viable, ongoing commercial broadcast Midland, Texas, DMA; (2) the Telemundo Stations (1) can and will be operated by the television stations. programming stream currently broadcast on purchaser(s) as part of a viable, ongoing KXXV in the Waco-Temple-Bryan, Texas, B. The Excluded Assets commercial television broadcasting business, DMA; and (3) the CW programming stream and (2) are divested to acquirer(s) that have Certain assets are excluded from the assets currently broadcast on WSWG in the Albany, the intent and capability to compete to be divested, as described in Definitions S Georgia, DMA. effectively in that business. The proposed and T of the proposed Final Judgment. The The excluded Telemundo and CW Final Judgment requires divestiture of all excluded assets relate to: (1) the Telemundo programming streams currently are derived

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from separate network affiliations, and are Overlap DMA is avoided by the sale of one proposed Final Judgment provides that, at broadcast from digital subchannels of the Defendant’s Big 4 affiliates in each Overlap the option of an acquirer of a Divestiture Divestiture Stations. As a result, the DMA. Station, Defendants shall enter into a Defendants’ retention of these Telemundo C. General Conditions and Proposed Buyers transition services agreement with the acquirer for a period of up to six months. and CW programming streams will not Under the proposed Final Judgment, prevent the divestiture buyers from operating Defendants agree to use their best efforts to The United States has determined that the the Divestiture Stations as viable, divest the Divestiture Stations and to obtain following companies are acceptable independent competitors. Nor will any necessary FCC approvals as purchasers of Divestiture Stations: The E.W. Defendants’ retention of these assets expeditiously as possible. The proposed Scripps Company; TEGNA Inc.; Greensboro substantially lessen competition. Divesting Final Judgment contains requirements for TV, LLC, a member of the Lockwood one of the Defendants’ Big 4 affiliates in each Defendants to provide prospective Broadcast Group of companies; and Marquee Overlap DMA will ensure that competition in purchasers of the Divestiture Stations with Broadcasting Georgia, Inc. (respectively, the granting of Big 4 television access to relevant personnel and information. together with their subsidiaries and affiliated retransmission consent is not diminished. Additionally, to facilitate the continuous entities and individuals, ‘‘Scripps,’’ Also, nearly all of the merger-induced operations of the Divestiture Stations until ‘‘TEGNA,’’ ‘‘Lockwood,’’ and ‘‘Marquee’’). increase in concentration in the sale of the acquirers can provide such capabilities The following table sets out the proposed broadcast television spot advertising in each independently, Paragraph IV(H) of the purchaser for each Divestiture Station.

Divestiture Proposed Overlap DMA stations purchaser

Waco-Temple-Bryan, Texas ...... KXXV and KRHD–CD .. Scripps. Tallahassee, Florida-Thomasville, Georgia ...... WTXL–TV ...... Scripps. Toledo, Ohio ...... WTOL ...... TEGNA. Odessa-Midland, Texas ...... KWES–TV ...... TEGNA. Knoxville, Tennessee ...... WTNZ ...... Lockwood. Augusta, Georgia ...... WFXG ...... Lockwood. Panama City, Florida ...... WPGX ...... Lockwood. Dothan, Alabama ...... WDFX–TV ...... Lockwood. Albany, Georgia ...... WSWG ...... Marquee.

Under the proposed Final Judgment, in the of these stations, and make and implement calendar days after the filing of the event that Defendants attempt to divest plans for the replacement of this news Complaint, or five calendar days after notice KXXV, KRHD–CD, or WTXL–TV to an programming with other sources of news. of entry of the Final Judgment by the Court, acquirer other than Scripps; WTOL or Allowing these transitional arrangements to whichever is later, to one or more acquirers KWES–TV to an acquirer other than TEGNA; be extended for up to one year provides a acceptable to the United States, in its sole WTNZ, WFXG, WPGX, or WDFX–TV to an safety mechanism, in case Lockwood has not discretion. The United States, in its sole acquirer other than Lockwood; or WSWG to fully implemented its plans to replace the discretion, may agree to one or more an acquirer other than Marquee, Defendants Defendants’ news by the end of the one-year extensions of this time period not to exceed agree to cooperate with these prospective period. 90 calendar days in total, and shall notify the acquirers as contemplated in Paragraph IV(C) In the case of Marquee as the Acquirer of Court in such circumstances. Paragraph IV(B) of the proposed Final Judgment. WSWG, Paragraph IV(J) of the proposed Final of the proposed Final Judgment provides for D. Conditions Specific to Certain Divestiture Judgment provides that the transition the tolling of deadlines for divestitures that Stations services agreement contemplated by would otherwise be required to meet those Paragraph IV(H) shall include, at the option deadlines, in the case where a divestiture The proposed Final Judgment also contains of Marquee, an agreement by Defendants to requires certain FCC action but the FCC has provisions that will ensure the efficient provide to WSWG (with small exceptions) not taken such action by the time the operation of the Divestiture Stations as they substantially the same local news deadline would otherwise occur. transition to new ownership and new programming as that station currently arrangements for their news programming. In To provide for the possibility that receives from other stations owned or Defendants do not accomplish all required the case of Lockwood as the acquirer of operated by Gray for at least 90 days after the WFXG and/or WDFX–TV, Paragraph IV(I) of divestitures within the periods set forth in sale of WSWG. Paragraph IV(A) and Paragraph IV(B) of the the proposed Final Judgment provides that, WSWG currently receives its news at the option of Lockwood, Defendants shall proposed Final Judgment, Section V of the programming from Gray’s WCTV in the proposed Final Judgment provides that in enter into an agreement with Lockwood to Tallahassee, Florida-Thomasville, Georgia, provide to WFXG and/or WDFX–TV such a case the Court shall appoint a DMA. Marquee already operates an Divestiture Trustee, selected by the United substantially the same local news unaffiliated station in Albany, Georgia, States and approved by the Court, to effect programming as the respective stations which produces its own local news. the divestitures. The proposed Final currently receive from other stations owned Therefore, Marquee will likely require a Judgment provides that if a Divestiture or operated by Raycom for a period of one relatively short transition period during Trustee is appointed, Defendants shall pay year after the sale of WFXG and/or WDFX– which it continues to receive out-of-DMA TV, respectively, to Lockwood, with such news before implementing its plans for local the costs and expenses of the Divestiture agreement being subject to extensions for a news programming on WSWG. The Trustee. The Divestiture Trustee’s total of up to one additional one year, at the agreement to continue supplying out-of-DMA compensation is to be structured so as to approval of the United States, and at the news for at least 90 days is reasonably provide an incentive based on the price option of Lockwood. sufficient to allow Marquee to complete its obtained and the speed with which the WFXG currently receives a portion of its transition. divestitures are accomplished. After the news programming from Raycom’s WTOC– appointment of the Divestiture Trustee TV in Savannah, Georgia. WDFX–TV E. Timeline for Divestitures, Appointment of becomes effective, the Divestiture Trustee is currently receives its news programming Divestiture Trustee, and Conditions To required to file monthly reports with the from Raycom’s WSFA in Montgomery, Ensure Independent Operation of the United States and, as appropriate, the Court, Alabama. Continuation of the provision of Divestiture Stations Post-Divestiture setting forth the Divestiture Trustee’s efforts this news programming to WFXG and Under Paragraph IV(A) of the proposed to accomplish the required divestitures. If the WDFX–TV for one year would provide Final Judgment, divestiture of each of the Divestiture Trustee has not accomplished the Lockwood with enough time to take control Divestiture Stations must occur within 90 required divestitures within six months after

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the Divestiture Trustee’s appointment, the Paragraph XIII(B) provides additional V. PROCEDURES AVAILABLE FOR Divestiture Trustee must promptly file a clarification regarding the interpretation of MODIFICATION OF THE PROPOSED report with the Court, which shall enter such the provisions of the proposed Final FINAL JUDGMENT orders as it deems appropriate to carry out Judgment. The proposed Final Judgment was The United States and Defendants have the purpose of the Final Judgment, which drafted to restore all competition the United stipulated that the proposed Final Judgment may include extending the term of the States alleged was harmed by the merger. may be entered by the Court after compliance Divestiture Trustee’s appointment by a Defendants agree that they will abide by the with the provisions of the APPA, provided period requested by the United States. proposed Final Judgment, and that they may that the United States has not withdrawn its To ensure that the Divestiture Stations are be held in contempt of this Court for failing consent. The APPA conditions entry of the operated independently from Defendants to comply with any provision of the after the divestitures, Paragraph XI(A) of the proposed Final Judgment upon the Court’s proposed Final Judgment that is stated proposed Final Judgment provides that determination that the proposed Final specifically and in reasonable detail, as during the term of the Final Judgment Judgment is in the public interest. Defendants shall not (1) reacquire any part of interpreted in light of this procompetitive The APPA provides a period of at least 60 the assets required to be divested; (2) acquire purpose. days preceding the effective date of the any option to reacquire any part of such Paragraph XIII(C) of the proposed Final proposed Final Judgment within which any assets or to assign them to any other person; Judgment further provides that should the person may submit to the United States (3) enter into any local marketing agreement, Court find in an enforcement proceeding that written comments regarding the proposed joint sales agreement, other cooperative the Defendants have violated the Final Final Judgment. Any person who wishes to selling arrangement, or shared services Judgment, the United States may apply to the comment should do so within 60 days of the agreement (except as provided in in Court for a one-time extension of the Final date of publication of this Competitive Paragraph XI(A) or Paragraph XI(B)), or Judgment, together with such other relief as Impact Statement in the Federal Register, or conduct other business negotiations jointly may be appropriate. In addition, in order to the last date of publication in a newspaper with any acquirer of any of the assets compensate American taxpayers for any costs of the summary of this Competitive Impact required to be divested with respect to those associated with the investigation of Statement, whichever is later. All comments assets; or (4) provide financing or guarantees violations of, and the enforcement of, the received during this period will be of financing with respect to the assets proposed Final Judgment, Paragraph XIII(C) considered by the United States Department required to be divested. provides that in connection with any of Justice, which remains free to withdraw its consent to the proposed Final Judgment at The shared services prohibition does not successful effort by the United States to any time before the Court’s entry of preclude Defendants from continuing or enforce the Final Judgment against a judgment. The comments and the response of entering into agreements in a form Defendant, whether litigated or resolved the United States will be filed with the Court. customarily used in the industry to (a) share prior to litigation, that Defendant agrees to news helicopters or (b) pool generic video In addition, comments will be posted on the reimburse the United States for the fees and footage that does not include recording a U.S. Department of Justice, Antitrust expenses of its attorneys, as well as any other reporter or other on-air talent, and does not Division’s internet website and, under certain costs including experts’ fees, incurred in preclude Defendants from entering into any circumstances, published in the Federal non-sales-related shared services agreement connection with that enforcement effort, Register. or transition services agreement that is including the investigation of the potential Written comments should be submitted to: violation. approved in advance by the United States in Owen M. Kendler, Chief, Media, its sole discretion. Additionally, Paragraph Finally, Section XIV of the proposed Final Entertainment, and Professional Services XI(B) provides that the restrictions of Judgment provides that the Final Judgment Section, Antitrust Division, United States Paragraph XI(A) do not prevent Defendants shall expire ten years from the date of its Department of Justice, 450 5th Street, NW, from entering into agreements to provide entry, except that after five years from the Suite 4000, Washington, DC 20530 date of its entry, the Final Judgment may be news programming to the Divestiture The proposed Final Judgment provides that Stations, provided that Defendants do not terminated upon notice by the United States the Court retains jurisdiction to enable any sell, price, market, hold out for sale, or profit to the Court and Defendants that the party to the Final Judgment to apply to the from the sale of advertising associated with divestitures have been completed and that Court at any time for further orders and the news programming provided by the continuation of the Final Judgment is no directions as may be necessary or appropriate Defendants under such agreements except by longer necessary or in the public interest. to carry out or construe the Final Judgment, approval of the United States in its sole G. Summary to modify any of its provisions, to enforce discretion. The divestiture provisions of the proposed compliance, and to punish violations of its F. Enforcement and Expiration of the Final provisions. Judgment Final Judgment will eliminate the substantial anticompetitive effects of the merger in the VI. ALTERNATIVES TO THE PROPOSED The proposed Final Judgment contains licensing of Big 4 television retransmission FINAL JUDGMENT provisions designed to promote compliance consent and the sale of broadcast television and make enforcement of Division consent The United States considered, as an spot advertising in each of the Overlap decrees as effective as possible. Paragraph alternative to the proposed Final Judgment, DMAs. XIII(A) provides that the United States a full trial on the merits against Defendants. retains and reserves all rights to enforce the IV. REMEDIES AVAILABLE TO POTENTIAL The United States could have continued the provisions of the proposed Final Judgment, PRIVATE LITIGANTS litigation and sought preliminary and including its right to seek an order of permanent injunctions against Gray’s merger Section 4 of the Clayton Act, 15 U.S.C. 15, contempt from the Court. Under the terms of with Raycom. The United States is satisfied, provides that any person who has been this paragraph, Defendants have agreed that however, that the divestiture of assets in any civil contempt action, any motion to injured as a result of conduct prohibited by required by the proposed Final Judgment, show cause, or any similar civil action the antitrust laws may bring suit in federal together with the other restrictions contained brought by the United States regarding an court to recover three times the damages the in the proposed Final Judgment, will alleged violation of the Final Judgment, the person has suffered, as well as costs and preserve competition in the licensing of Big United States may establish the violation and reasonable attorneys’ fees. Entry of the 4 television retransmission consent and the the appropriateness of any remedy by a proposed Final Judgment will neither impair sale of broadcast television spot advertising preponderance of the evidence, and nor assist the bringing of any private antitrust in the Overlap DMAs. Thus, the proposed Defendants have waived any argument that a damage action. Under the provisions of Final Judgment would achieve all or different standard of proof should apply. Section 5(a) of the Clayton Act, 15 U.S.C. substantially all of the relief the United This provision aligns the standard for 16(a), the proposed Final Judgment has no States would have obtained through compliance obligations with the standard of prima facie effect in any subsequent private litigation, but avoids the time, expense, and proof that applies to the underlying offense lawsuit that may be brought against uncertainty of a full trial on the merits of the that the compliance commitments address. Defendants. Complaint.

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VII. STANDARD OF REVIEW UNDER THE at 1460–62; United States v. Alcoa, Inc., 152 such that its conclusions regarding the APPA FOR THE PROPOSED FINAL F. Supp. 2d 37, 40 (D.D.C. 2001); InBev, 2009 proposed settlements are reasonable); InBev, JUDGMENT U.S. Dist. LEXIS 84787, at *3. Instead: 2009 U.S. Dist. LEXIS 84787, at *20 (‘‘the The Clayton Act, as amended by the APPA, [t]he balancing of competing social and ‘public interest’ is not to be measured by requires that proposed consent judgments in political interests affected by a proposed comparing the violations alleged in the antitrust cases brought by the United States antitrust consent decree must be left, in the complaint against those the court believes be subject to a 60-day comment period, after first instance, to the discretion of the could have, or even should have, been which the court shall determine whether Attorney General. The court’s role in alleged’’). Because the ‘‘court’s authority to entry of the proposed Final Judgment ‘‘is in protecting the public interest is one of review the decree depends entirely on the the public interest.’’ 15 U.S.C. 16(e)(1). In insuring that the government has not government’s exercising its prosecutorial making that determination, the court, in breached its duty to the public in consenting discretion by bringing a case in the first accordance with the statute as amended in to the decree. The court is required to place,’’ it follows that ‘‘the court is only 2004, is required to consider: determine not whether a particular decree is authorized to review the decree itself,’’ and (A) the competitive impact of such the one that will best serve society, but not to ‘‘effectively redraft the complaint’’ to judgment, including termination of alleged whether the settlement is ‘‘within the reaches inquire into other matters that the United violations, provisions for enforcement and of the public interest.’’ More elaborate States did not pursue. Microsoft, 56 F.3d at requirements might undermine the modification, duration of relief sought, 1459–60. effectiveness of antitrust enforcement by 4 anticipated effects of alternative remedies In its 2004 amendments, Congress made consent decree. actually considered, whether its terms are clear its intent to preserve the practical ambiguous, and any other competitive Bechtel, 648 F.2d at 666 (emphasis added) benefits of utilizing consent decrees in considerations bearing upon the adequacy of (citations omitted).3 antitrust enforcement, adding the such judgment that the court deems In determining whether a proposed unambiguous instruction that ‘‘[n]othing in necessary to a determination of whether the settlement is in the public interest, a district this section shall be construed to require the consent judgment is in the public interest; court ‘‘must accord deference to the court to conduct an evidentiary hearing or to and government’s predictions about the efficacy require the court to permit anyone to (B) the impact of entry of such judgment of its remedies, and may not require that the intervene.’’ 15 U.S.C. 16(e)(2); see also U.S. upon competition in the relevant market or remedies perfectly match the alleged Airways, 38 F. Supp. 3d at 76 (indicating that markets, upon the public generally and violations.’’ SBC Commc’ns, 489 F. Supp. 2d a court is not required to hold an evidentiary individuals alleging specific injury from the at 17; see also U.S. Airways, 38 F. Supp. 3d hearing or to permit intervenors as part of its violations set forth in the complaint at 74–75 (noting that a court should not reject review under the Tunney Act). This language including consideration of the public benefit, the proposed remedies because it believes explicitly wrote into the statute what if any, to be derived from a determination of others are preferable and that room must be Congress intended when it first enacted the the issues at trial. made for the government to grant Tunney Act in 1974. As Senator Tunney explained: ‘‘[t]he court is nowhere compelled 15 U.S.C. 16(e)(1)(A) & (B). In considering concessions in the negotiation process for settlements); Microsoft, 56 F.3d at 1461 to go to trial or to engage in extended these statutory factors, the court’s inquiry is proceedings which might have the effect of necessarily a limited one as the government (noting the need for courts to be ‘‘deferential to the government’s predictions as to the vitiating the benefits of prompt and less is entitled to ‘‘broad discretion to settle with costly settlement through the consent decree the defendant within the reaches of the effect of the proposed remedies’’); United process.’’ 119 Cong. Rec. 24,598 (1973) public interest.’’ United States v. Microsoft States v. Archer-Daniels-Midland Co., 272 F. (statement of Sen. Tunney). Rather, the Corp., 56 F.3d 1448, 1461 (D.C. Cir. 1995); Supp. 2d 1, 6 (D.D.C. 2003) (noting that the procedure for the public interest see generally United States v. SBC court should grant ‘‘due respect to the determination is left to the discretion of the Commc’ns, Inc., 489 F. Supp. 2d 1 (D.D.C. government’s prediction as to the effect of court, with the recognition that the court’s 2007) (assessing public interest standard proposed remedies, its perception of the ‘‘scope of review remains sharply proscribed under the Tunney Act); United States v. U.S. market structure, and its views of the nature by precedent and the nature of Tunney Act Airways Group, Inc., 38 F. Supp. 3d 69, 75 of the case’’). The ultimate question is proceedings.’’ SBC Commc’ns, 489 F. Supp. (D.D.C. 2014) (explaining that the ‘‘court’s whether ‘‘the remedies [obtained in the inquiry is limited’’ in Tunney Act decree are] so inconsonant with the 2d at 11. A court can make its public interest settlements); United States v. InBev N.V./ allegations charged as to fall outside of the determination based on the competitive S.A., No. 08–1965 (JR), 2009 U.S. Dist. LEXIS ‘reaches of the public interest.’’’ Microsoft, 56 impact statement and response to public 84787, at *3 (D.D.C. Aug. 11, 2009) (noting F.3d at 1461 (quoting United States v. comments alone. U.S. Airways, 38 F. Supp. that the court’s review of a consent judgment Western Elec. Co., 900 F.2d 283, 309 (D.C. 3d at 76. See also United States v. Enova is limited and only inquires ‘‘into whether Cir. 1990)). To meet this standard, the United Corp., 107 F. Supp. 2d 10, 17 (D.D.C. 2000) the government’s determination that the States ‘‘need only provide a factual basis for (noting that the ‘‘Tunney Act expressly proposed remedies will cure the antitrust concluding that the settlements are allows the court to make its public interest violations alleged in the complaint was reasonably adequate remedies for the alleged determination on the basis of the competitive reasonable, and whether the mechanisms to harms.’’ SBC Commc’ns, 489 F. Supp. 2d at impact statement and response to comments enforce the final judgment are clear and 17. alone’’); S. Rep. No. 93–298, 93d Cong., 1st manageable.’’). Moreover, the court’s role under the APPA Sess., at 6 (1973) (‘‘Where the public interest As the United States Court of Appeals for is limited to reviewing the remedy in can be meaningfully evaluated simply on the the District of Columbia Circuit has held, relationship to the violations that the United basis of briefs and oral arguments, that is the under the APPA a court considers, among States has alleged in its complaint, and does approach that should be utilized.’’). not authorize the court to ‘‘construct [its] other things, the relationship between the VIII. DETERMINATIVE DOCUMENTS remedy secured and the specific allegations own hypothetical case and then evaluate the set forth in the government’s complaint, decree against that case.’’ Microsoft, 56 F.3d There are no determinative materials or whether the decree is sufficiently clear, at 1459; see also U.S. Airways, 38 F. Supp. documents within the meaning of the APPA whether its enforcement mechanisms are 3d at 75 (noting that the court must simply that were considered by the United States in sufficient, and whether the decree may determine whether there is a factual formulating the proposed Final Judgment. positively harm third parties. See Microsoft, foundation for the government’s decisions 56 F.3d at 1458–62. With respect to the 4 The 2004 amendments substituted ‘‘shall’’ for adequacy of the relief secured by the decree, 3 See also. BNS, 858 F.2d at 464 (holding that the ‘‘may’’ in directing relevant factors for a court to a court may not ‘‘engage in an unrestricted court’s ‘‘ultimate authority under the [APPA] is consider and amended the list of factors to focus on evaluation of what relief would best serve the limited to approving or disapproving the consent competitive considerations and to address decree’’); United States v. Gillette Co., 406 F. Supp. potentially ambiguous judgment terms. Compare 15 public.’’ United States v. BNS, Inc., 858 F.2d 713, 716 (D. Mass. 1975) (noting that, in this way, U.S.C. 16(e) (2004), with 15 U.S.C. 16(e)(1) (2006); 456, 462 (9th Cir. 1988) (quoting United the court is constrained to ‘‘look at the overall see also SBC Commc’ns, 489 F. Supp. 2d at 11 States v. Bechtel Corp., 648 F.2d 660, 666 picture not hypercritically, nor with a microscope, (concluding that the 2004 amendments ‘‘effected (9th Cir. 1981)); see also Microsoft, 56 F.3d but with an artist’s reducing glass’’). minimal changes’’ to Tunney Act review).

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Dated: December 14, 2018. Inc. alleging that the defendants civil penalties, injunctive relief to Respectfully submitted, violated Sections 203(a)(1), (2), (3)(A), remedy the violations (including lllllllllllllllllllll and (3)(B) of the Clean Air Act—42 mitigation of excess NOX emissions), Matthew D. Siegel * U.S.C. 7522(a)(1), (2), (3)(A), and costs, and other equitable relief. Trial Attorney Media, Entertainment, and (3)(B)—with regard to approximately The lodged Consent Decree is entered Professional Services Section, Antitrust into between the United States, Division, U.S. Department of Justice, 450 104,000 model year 2014 to 2016 Jeep Fifth Street, NW, Suite 4000, Washington, DC Cherokee and Ram 1500 vehicles California, and the defendants (Fiat 20530, Phone: 202–598–8303, Email: containing 3.0 liter EcoDiesel engines. Chrysler Automobiles, N.V., FCA US [email protected]. The United States’ complaint alleges, LLC, V.M. Motori S.p.A., and V.M. * Attorney of Record among other things, that each Subject North America, Inc.). The Decree provides a remedy for the vehicles on [FR Doc. 2019–00556 Filed 1–31–19; 8:45 am] Vehicle contains computer software the road by requiring Fiat Chrysler to BILLING CODE 4410–11–P functions that are undisclosed Auxiliary Emission Control Devices (‘‘AECDs’’) offer all Eligible Owners and Lessees of and prohibited defeat devices that cause Eligible Vehicles (all as defined in the DEPARTMENT OF JUSTICE the emissions control system of those Decree) the Approved Emissions vehicles to perform differently during Modification and applicable warranties Notice of Lodging of Proposed normal vehicle operation and use than (as defined and described in the Consent Decree Under the Clean Air during emissions testing. The complaint Decree). Fiat Chrysler must install the Act alleges that the defeat devices cause the Approved Emissions Modification on at vehicles, during normal vehicle least 85% of the Subject Vehicles (as On January 10, 2019, the Department operation and use, to emit excess oxides further described in the Decree) by no of Justice lodged a proposed Consent of nitrogen (‘‘NO ’’). The complaint later than two years after the Decree is Decree with the United States District X seeks, among other things, injunctive entered by the Court. If it fails to do so, Court for the Northern District of Fiat Chrysler must make a payment to California in the lawsuit entitled In re: relief to remedy the violations, the United States of $5.5 million for Chrysler-Dodge-Jeep ‘‘Ecodiesel’’ including mitigation of excess NOX emissions, and civil penalties. each 1% that Fiat Chrysler falls short of Marketing, Sales Practices, and the 85% rate. Fiat Chrysler must also On January 9, 2019, the People of the Products Liability Litigation, Case No. achieve a separate 85% recall rate for State of California, by and through the 3:17–md–2777 EMC (JSC), resolving vehicles in California, and must pay civil Clean Air Act claims and various California Air Resources Board, and $825,000 to California for each 1% that California claims (including under the Xavier Becerra, Attorney General of the it falls short of this target. See Decree California Health and Safety Code) State of California (collectively, Paragraph 41. For each Subject Vehicle against Fiat Chrysler Automobiles, N.V., ‘‘California’’), filed a complaint against that receives the Approved Emissions FCA US, LLC and others (‘‘Fiat the defendants alleging that, in Modification, Fiat Chrysler must Chrysler’’), concerning noncompliant connection with the certification, provide Eligible Owners and Lessees 3.0 liter ‘‘EcoDiesel’’ vehicles (‘‘Subject marketing, distribution, and sale of with an Extended Warranty. See Decree Vehicles’’). In addition, on the same approximately 14,000 Subject Vehicles Paragraph 45. The Extended Warranty date, the private Plaintiffs’ Steering in California, the defendants violated covers all components, parts, and Committee filed a proposed Consumer Section 304(a)(1) of the Clean Air Act, associated labor described in Appendix Class Action Settlement Agreement and 42 U.S.C. 7604(a)(1); California Health E of the Decree. Fiat Chrysler must mail Release (‘‘Class Action Settlement’’) and Safety Code §§ 43016, 43017, notice of the recall to all known Eligible with Fiat Chrysler with respect to the 43151, 43152, 43153, 43154, 43205, Owners and Eligible Lessees. Fiat same EcoDiesel vehicles, and Customs 43211, and 43212; 13 C.C.R. §§ 1961, Chrysler may provide this notice and Border Protection entered into an 1961.2, 1965, 1968.2, and 2037, and the through a Court-approved Class Action administrative Settlement Agreement 40 CFR sections incorporated therein by Settlement Notice or through an with Fiat Chrysler based on allegations reference; and California Business and alternative means approved by the of illegal importation of a portion of Professions Code §§ 17200 et seq., 17500 United States and California. See Decree these noncompliant diesel vehicles et seq., and 17580.5. California’s Paragraph 43. (‘‘CBP Agreement’’). In addition to its complaint alleges that each Subject There is no end date for the emissions joint settlement with the United States, Vehicle contains, as part of the modification recall. Fiat Chrysler must on the same day, California entered into electronic control module, certain offer the Approved Emissions two additional settlements with the software functions and calibrations that Modification to Eligible Owners and defendants concerning the Subject cause the emission control system of Eligible Lessees for eighteen years after Vehicles. The First California Partial those vehicles to perform differently the Court enters the Decree (the Consent Decree resolves California’s during normal vehicle operation and ‘‘Effective Date’’); following the claim for mitigation (and is discussed use than during emissions testing. eighteenth anniversary of the Effective further below), and the Second California’s complaint alleges that these Date, Fiat Chrysler must make California Partial Consent Decree software functions and calibrations are reasonable efforts to ensure that the resolves defendants’ alleged violation of undisclosed AECDs in violation of Approved Emissions Modification California consumer protection laws California and federal law, and that they remains available. See Decree Paragraph related to the Subject Vehicles. These are also prohibited defeat devices. 39. five settlements resolve separate claims California’s complaint alleges that the In addition, the Decree requires Fiat but offer coordinated relief. defeat devices and undisclosed AECDs Chrysler to perform a mitigation On May 23, 2017, the United States, cause the Subject Vehicles to emit NOX program, which is estimated to mitigate on behalf of the Environmental in excess of CARB-compliant levels. the lifetime excess tons of NOX caused Protection Agency (‘‘EPA’’) filed a California’s complaint also alleges that by Defendants’ violations in all 50 complaint against Fiat Chrysler defendants’ actions violated California states, except California, by Automobiles, N.V., FCA US LLC, V.M. consumer protection laws. California’s implementing a program to improve the Motori S.p.A., and V.M. North America, complaint seeks, among other things, efficiency of 200,000 aftermarket

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