DOJ Settles With Five TV Companies

The Department of Justice announced Monday that it has reached settlements with CBS Corp., Cox Enterprises, E.W. Scripps Co., Fox Corp. and Tegna Inc. to resolve a department lawsuit brought as part of its ongoing investigation into exchanges of competitively sensitive information in the broadcast television industry.

All five companies are alleged to have engaged in unlawful information sharing among their owned broadcast television stations. Cox also owns Cox Reps, one of two large rep firms in the industry that assist broadcast stations in sales to national advertisers. The rep firms are alleged to have participated in the unlawful information sharing conduct.

“The Antitrust Division’s efforts to protect competition in the television broadcast industry continue with today’s settlements that will stop the unlawful exchange of competitively sensitive information among rival broadcasters and their sales rep firms,” said Assistant Attorney General Makan Delrahim of the Department of Justice’s Antitrust Division. “Vigorous competition among broadcast stations allows American businesses across the country to obtain competitive advertising rates. The unlawful sharing of information reduced that competition and thereby harmed businesses that rely on competitive rates to best serve their customers.”

Justice filed a second amended complaint today in the case United States v. Sinclair Broadcast Group, et al., adding CBS, Cox, Scripps, Fox, and Tegna as defendants. At the same time, the department filed proposed settlements with CBS, Cox, Scripps, Fox, and Tegna that, if approved by the court, would resolve the competitive harm alleged in the complaint.

Justice filed its original complaint in the case on Nov. 13, 2018, along with proposed settlements with six other television broadcasting companies. On Dec. 13, 2018, the department filed an amended complaint and a proposed settlement with a seventh television broadcasting company. The court entered final judgment against all seven of those defendants on May 22, 2019.

According to the amended complaint, CBS, Cox, Scripps, Fox and Tegna agreed with other entities in many metropolitan areas across the United States to exchange revenue pacing information, and also engaged in the exchange of other forms of non-public sales information in certain metropolitan areas.

The complaint further alleges that Cox Reps also facilitated and participated in this exchange of pacing information by its broadcast-station clients that operated in the same metropolitan areas. According to Justice, pacing compares a broadcast station’s revenues booked for a certain time period to the revenues booked in the same point in the previous year. Pacing indicates how each station is performing versus the rest of the market and provides insight into each station’s remaining spot advertising for the period.

By exchanging pacing information, Justice said, the five new defendants and other broadcasters were better able to anticipate whether their competitors were likely to raise, maintain, or lower spot advertising prices, which in turn helped inform their stations’ own pricing strategies and negotiations with advertisers. As a result, the information exchanges harmed the competitive price-setting process in markets for the sale of spot advertisements.

Justice said the department “recognizes and commends each of these new defendants for their cooperation with the Antitrust Division in bringing these issues to settlement. In particular, Fox assisted in the expeditious resolution of the division’s investigation, even though Fox’s relevant conduct of which the division is currently aware appears to have occurred before Fox’s spin-off from the recently merged Walt Disney Co. and 21st Century Fox.

The proposed settlements with CBS, Cox, Scripps, Fox and Tegna prohibit the direct or indirect sharing of such competitively sensitive information. Additionally, the department’s proposed settlement with Cox requires that Cox Reps implements firewalls in markets where it represents more than one broadcast station.

Justice said it has determined that these provisions would resolve the antitrust concerns raised as a result of the defendants’ alleged conduct. The proposed settlements further require these five defendants to adopt rigorous antitrust compliance and reporting measures to prevent similar anticompetitive conduct in the future.

The settlements have a seven-year term, and they will continue to apply to stations currently owned by CBS, Cox, Scripps, Fox and Tegna even if those stations are acquired by another company. Finally, the settlements require that the five defendants cooperate in the department’s ongoing investigation.