United States District Court, D. Columbia.
November 25, 2014
UNITED STATES OF AMERICA, et al., Plaintiffs,
SINCLAIR BROADCAST GROUP, INC., et al., Defendants
For UNITED STATES OF AMERICA, Plaintiff: David Gregory Bentley Lawrence, U.S. DEPARTMENT OF JUSTICE, Washington, DC.
For COMMONWEALTH OF PENNSYLVANIA, Plaintiff: Joseph S. Betsko, LEAD ATTORNEY, OFFICE OF THE ATTORNEY GENERAL FOR PENNSYLVANIA, Harrisburg, PA.
For SINCLAIR BROADCAST GROUP, INC., Defendant: William Joseph Kolasky, Jr., LEAD ATTORNEY, Kathleen MacInnes Fones, HUGHES HUBBARD & REED LLP, Washington, DC.
For PERPETUAL CORPORATION, Defendant: John Parker Erkmann, LEAD ATTORNEY, COOLEY, LLP, Washington, DC.
TANYA S. CHUTKAN, United States District Judge.
The United States of America and the Commonwealth of Pennsylvania (the " Commonwealth" ) bring this case against Sinclair Broadcast Group, Inc. (" Sinclair" ) and Perpetual Corporation (" Perpetual" ) for alleged antitrust violations arising out of Sinclair's proposed acquisition of Perpetual. The United States and the Commonwealth allege that the proposed acquisition would likely substantially lessen competition in the sale of broadcast television spot advertising in the Harrisburg-Lancaster-Lebanon-York, Pennsylvania Designated Market Area (" HLLY DMA" ), in violation of Section 7 of the Clayton Act, 15 U.S.C. § 18. (ECF No. 1, Compl. 1-2; ECF No. 3, Competitive Impact Statement (" CIS" )).
Pending before the Court is the United States' Motion and Memorandum for Entry of the Proposed Final Judgment (ECF No. 14). While the Motion was filed by the United States, the attached Certificate of Compliance indicates that the Commonwealth, Sinclair, and Perpetual join in the Motion. For the following reasons, the Court grants the Motion.
a. Defendants and the proposed acquisition
Sinclair, a Maryland corporation headquartered in Hunt Valley, Maryland, owns or operates over 145 commercial broadcast television stations in 70 markets in the United States, including two in the HLLY DMA, known as WHP-TV and WLYH-TV. (CIS 2). Perpetual, a Delaware corporation
headquartered in Arlington, Virginia, owns and operates American Broadcasting Company (" ABC" ) affiliated full-power broadcast television stations in six DMAs, including the only ABC affiliate serving the HLLY DMA, known as WHTM-TV. ( Id.). On July 28, 2013, Sinclair and Perpetual executed a Purchase Agreement whereby Sinclair would purchase all of the outstanding voting securities of Perpetual. ( Id. at 3).
b. Alleged harm resulting from the acquisition
Pursuant to Section 2(b) of the Antitrust Procedures and Penalties Act (" APPA" or " Tunney Act" ), 15 U.S.C. § 16(b)-(h), the United States filed a CIS with the Complaint to explain the anti-competitive impact of Sinclair's acquisition of Perpetual.
The relevant product market for purposes of Section 7 of the Clayton Act is that of television spot advertising. (Compl. ¶ ¶ 13-18; CIS 3). Television stations sell advertising time during broadcasts to those seeking to reach viewers attracted by television programming. (CIS 3). Advertisers purchase broadcast " spot" advertising to target viewers within specific geographic markets. ( Id.). Spot advertising differs from network and syndicated television advertising, which are sold nationally by major television networks and by producers of syndicated programs and broadcast in every market where the network or program is broadcast. ( Id.). Due to its unique combination of sight, sound, and motion, and its expansive reach to particular geographic markets, television spot advertising has no close substitute for a significant number of advertisers. ( Id.). Through information obtained during individual price negotiations, stations can readily identify advertisers with strong preferences for using broadcast television spot advertising and charge different advertisers different prices. ( Id. at 4). With no close product substitute, a small but significant increase in the price of broadcast television spot advertising is unlikely to cause enough advertising buyers to switch their purchases to other media to make that price increase unprofitable. ( Id.).
The relevant geographic market for purposes of Section 7 of the Clayton Act is the HLLY DMA, which is the 43rd largest in the United States and contains over 740,000 households. ( Id.). Advertisers, whether located within or outside the HLLY DMA, use stations within that DMA to reach the most viewers residing there. ( Id.). Advertising on stations outside the HLLY DMA is not a substitute for advertising on stations within the HLLY DMA, because signals from stations outside that DMA reach relatively few viewers residing within it. ( Id.).
Sinclair owns and operates CBS-affiliated WHP-TV and, through an existing agreement with a non-party, operates CW-affiliated WLYH-TV, and therefore controls the advertising revenue of two of six broadcast stations within the HLLY DMA. ( Id.). Post-acquisition, Sinclair would control the advertising revenue of three of six broadcast television stations within that DMA: WHP-TV (CBS), WLYH-TV (CW), and WHTM-TV (ABC). ( Id.). The proposed acquisition would increase Sinclair's share of broadcast television spot advertising revenue from 21 to 30 percent and would substantially increase the already high market concentration in the HLLY DMA. ( Id.).
The United States found that the proposed acquisition would likely substantially lessen competition in the sale of broadcast television spot advertising in the HLLY DMA. ( Id. at 3). Competition between WHTM-TV, WHP-TV, and WLYH-TV for the sale of broadcast television spot advertising in the HLLY DMA would be eliminated entirely, and therefore the
prices for broadcast television spot advertising within the HLLY DMA would likely increase. ( Id. at 5). The United States also found that the proposed acquisition would both increase market concentration and result in a highly concentrated market under the Horizontal Merger Guidelines issued by the Department of Justice and the Federal Trade Commission. ( Id.; see also Compl. App. A).
In addition to increasing market concentration, the United States concluded that the proposed acquisition combines stations in the HLLY DMA that are " close substitutes and vigorous competitors in a market with limited alternatives." (CIS 6). For example, WHP-TV and WHTM-TV and their affiliations with CBS and ABC, respectively, along with their local news coverage, offer a variety of competing programming options that are often substitutes for many advertisers. ( Id.). The stations also share strong viewership in the northern counties of the geographically diverse HLLY DMA and appeal to similar demographic groups. ( Id.).
The only local ABC affiliate, WHTM-TV, vigorously competes with Sinclair's CBS and CW affiliates (WHP-TV and WLYH-TV, respectively) " for the business of local, regional, and national firms seeking spot advertising in the HLLY DMA." ( Id.). Direct competition for spot advertising between WHTM-TV and the Sinclair's existing two stations benefits advertisers seeking to target similar demographics since those advertisers can pit the stations against each other. ( Id.). The United States concluded that Sinclair's acquisition of WHTM-TV and resulting control over three of the six broadcast television stations in the HLLY DMA would eliminate this competition and thereby likely enable Sinclair to raise prices unilaterally for spot advertising on its stations. ( Id.).
The United States also concluded that absent divestiture, any entry or expansion in the HLLY DMA broadcast television spot advertising market would not be timely, likely, or sufficient to prevent anticompetitive harm. ( Id. 6). A new station, should it first overcome the hurdle of obtaining an FCC license, would likely not achieve commercial success for at least a period of years. ( Id. at 7). Alternatively, existing stations in the HLLY DMA could not readily increase their advertising capacity or alter their programming enough to offset a price increase by Sinclair given their existing programming schedules and contractual commitments with their affiliated networks. ( Id.).
c. Procedural history
On July 15, 2014, the United States and the Commonwealth filed their Complaint, alleging that Sinclair's proposed acquisition of Perpetual violates Section 7 of the Clayton Act. Plaintiffs also filed a proposed Hold Separate Stipulation and Order (ECF No. 2-1) intended to maintain competition during the pendency of the ordered divestitures, and a Proposed Final Judgment (ECF No. 2-2) to ultimately ensure Defendants' prompt divestiture of specific " Divestiture Assets" and preserve competition for broadcast spot advertising within the HLLY DMA. On July 21, 2014, the Court issued the Hold Separate Stipulation and Order.
The term " Divestiture Assets," as used in the parties' filings and herein, includes all assets used primarily in the operation of WHTM-TV and are the same assets that Sinclair would have acquired from Perpetual under the Purchase Agreement. (CIS 7). These assets include real property,
equipment, FCC licenses, contracts, intellectual property rights, programming materials, and customer lists maintained by Sinclair or Perpetual in connection with WHTM-TV. ( Id.) They do not include assets that are not primarily used in the operation of WHTM-TV but are instead maintained at the corporate level and used to support multiple stations, such as back-office systems and other corporate-level assets. ( Id. 7-8).
Subject to the Court's Hold Separate Stipulation and Order, Defendants were permitted to consummate the proposed acquisition subject to ongoing requirements that Defendants continued operating WHTM-TV as a competitively independent, economically viable business uninfluenced by Sinclair, with the effect of maintaining competition in the relevant marked until divestiture occurred. On August 1, 2014, pursuant to Section VIII of the proposed Final Judgment, Sinclair notified the United States that it had executed a definitive agreement with non-party Media General Operations, Inc. (" Media General" ) for Media General to acquire the Divestiture Assets. (Mot. 2). Twelve days later, the FCC approved the assignment of the WHTM-TV station license to Medial General, and the transaction closed on September 2, 2014. ( Id.).
Defendants filed their Joint Tunney Act Notice of Written or Oral Communications, in compliance with 15 U.S.C. § 16(g), on July 21, 2014. Pursuant to the Act, the United States filed the Proposed Final Judgment and CIS with the Court simultaneously with the Complaint, and published the Proposed Final Judgment and CIS in the Federal Register on July 23, 2014, see 79 Fed.Reg. 42,817 (July 23, 2014). (ECF No. 14-1, Cert. of Compliance 1). Further, the United States published summaries of the terms of the Proposed Final Judgment and CIS, together with directions for submitting written comments, in The Washington Post for seven days between July 22 and 28, 2014. ( Id.). The sixty-day period for public comments ended on September 26, 2014. ( Id.). The United States received no responsive written comments. ( Id. 2).
Since divestiture has occurred, the Divestiture Assets are now owned by Media General, and all requirements of the Tunney Act have been met, the parties move the Court to enter their Proposed Final Judgment.
a. Standard of review
The Tunney Act states:
(1) Before entering any consent judgment proposed by the United States under this section, the court shall determine that the entry of such judgment is in the public interest. For the purpose of such determination, the court shall consider--
(A) the competitive impact of such judgment, including termination of alleged violations, provisions for enforcement and modification, duration of relief sought, anticipated effects of alternative remedies actually considered, whether its terms are ambiguous, and any other competitive considerations bearing upon the adequacy of such judgment that the court deems necessary to a determination of whether the consent judgment is in the public interest; and
(B) the impact of entry of such judgment upon competition in the relevant market or markets, upon the public generally and individuals alleging specific injury from the violations set forth in the complaint including consideration of the public benefit, if any, to be derived from a determination of the issues at trial.
(2) Nothing in this section shall be construed to require the court to conduct an evidentiary hearing or to require the court to permit anyone to intervene.
15 U.S.C. § 16(e).
In making its determination, the Court may not simply " rubberstamp" the government's proposal; instead, it must engage in an " 'independent' determination of whether a proposed settlement is in the public interest." United States v. SBC Commc'ns, Inc., 489 F.Supp.2d 1, 15 (D.D.C. 2007) (quoting United States v. Microsoft Corp., 56 F.3d 1448, 1458, 312 U.S.App.D.C. 378 (D.C. Cir. 1995)). " [A] district court is not permitted to reject the proposed remedies merely because the court believes other remedies are preferable," Id. at 15 (citation omitted), and " should be deferential to the government's prediction of the proposed remedies." Id.; see also United States v. Am. Tel. & Tel. Co., 552 F.Supp. 131, 151 (D.D.C. 1982) (" [A] proposed consent decree must be approved even if it falls short of the remedy the court would impose on its own, as long as it falls within the range of acceptability or is within the reaches of the public interest." ) (internal quotations and citations omitted). In sum, " the relevant inquiry is whether there is a factual foundation for the government's decisions such that its conclusions regarding the proposed settlement are reasonable." SBC Commc'ns, 489 F.Supp.2d at 15-16, 17.
The court may not, however, " make a de novo determination of facts and issues" in conducting its public interest inquiry. United States v. Western Elec. Co., 993 F.2d 1572, 1577, 301 U.S.App.D.C. 268 (D.C. Cir. 1993), cert. denied, 510 U.S. 984, 114 S.Ct. 487, 126 L.Ed.2d 438 (1993) (internal quotation and citation omitted). Rather, " [t]he balancing of competing social and political interests affected by a proposed antitrust decree must be left, in the first instance, to the discretion of the Attorney General." Id. (internal quotation and citation omitted). The court should therefore reject the proposed final judgment only if " it has exceptional confidence that adverse antitrust consequences will result--perhaps akin to the confidence that would justify a court in overturning the predictive judgments of an administrative agency." Microsoft, 56 F.3d at 1460 (internal quotations and citation omitted); see also SBC Commc'ns, Inc., 489 F.Supp.2d at 15-16 (concluding that the 2004 amendments to the Tunney Act did not address or undermine the deferential standard of review articulated in Microsoft ).
The United States received no public comments in response to the CIS and Proposed Final Judgment and therefore the parties now jointly seek entry of the Proposed Final Judgment without further hearings. (Cert. of Compliance 2). For these reasons and pursuant to its authority under 15 U.S.C. § 16(e)(2), the Court finds no compelling reason to conduct a hearing to aid its public interest determination.
b. Public interest determination
In this case, whether the settlement is in the public interest depends on the adequacy of the divestiture of the WHTM-TV assets. If there is a factual basis for concluding that the divestiture is a reasonably adequate remedy for the harm alleged in the Complaint, then the settlement should be approved; if not, it should be rejected. The United States indicates that it considered no determinative materials or documents within the meaning of the APPA in formulating the Proposed Final Judgment. (CIS 15). Therefore, the Court focuses solely on the CIS.
The impact of the Proposed Final Judgment is to eliminate the anticompetitive effect Plaintiffs allege in their Complaint. That is, the sale of the WHTM-TV Divestiture Assets to Media General precludes
any increase in broadcast television spot advertising in the HLLY DMA that would result directly from Sinclair's ownership of three of the six broadcast television stations in that market. The Court finds that the Proposed Final Judgment includes adequate provisions in Section X enabling the Department of Justice to ensure compliance and enforcement, and detailed provisions in Section XI precluding reacquisition and other detrimental activities short of reacquisition. By its terms, the Proposed Final Judgment will expire in ten years and the Court shall retain jurisdiction over it for purposes of enforcement, modification, and violation. Lastly, the Court considers that the parties agreed to the terms of the Proposed Final Judgment as well as its entry.
Perhaps because divestiture and the Proposed Final Judgment were designed to eliminate the anticompetitive harm it alleged, the United States has not proposed any alternative remedies short of a full trial on the merits. Given the parties' full compliance with the Tunney Act and the absence of any public comments, the Court discerns no public benefit to a trial instead of accepting the parties' proposed resolution of this matter.
The Court is satisfied with the parties' compliance with the Tunney Act and the consummated sale of the Divestiture Assets. Further, the Court finds on the record before it a factual foundation for the government's decisions such that the government's conclusions regarding the Proposed Final Judgment are reasonable, and ultimately that entry of the Proposed Final Judgment is in the public interest.
Accordingly, Plaintiff the United States' Motion and Memorandum for Entry of the Proposed Final Judgment (ECF No. 14) is GRANTED. The Final Judgment shall issue separately.
WHEREAS, plaintiffs, the United States of America and the Commonwealth of Pennsylvania, filed their Complaint on July 15, 2014, and plaintiffs and defendants Sinclair Broadcast Group, Inc. (" Sinclair" ), and Perpetual Corporation (" Perpetual" ), by their respective attorneys, have consented to the entry of this Final Judgment without trial or adjudication of any issue of fact or law herein, and without this Final Judgment constituting any evidence against or an admission by any party with respect to any issue of law or fact herein;
AND WHEREAS, defendants have agreed to be bound by the provisions of this Final Judgment pending its approval by the Court;
AND WHEREAS, the essence of this Final Judgment is the prompt and certain divestiture of certain rights and assets by the defendants to assure that competition is not substantially lessened;
AND WHEREAS, the United States requires defendants to make certain divestitures for the purpose of remedying the loss of competition alleged in the Complaint;
AND WHEREAS, defendants have represented to the United States that the divestitures required below can and will be made, and that defendants will later raise no claim of hardship or difficulty as grounds for asking the Court to modify any of the divestiture provisions contained below;
NOW THEREFORE, before any testimony is taken, without trial or adjudication of any issue of fact or law, and upon consent of the parties, it is hereby ORDERED, ADJUDGED, and DECREED:
This Court has jurisdiction over each of the parties hereto and over the subject matter of this action. The Complaint states a claim upon which relief may be granted against defendants under Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18.
As used in this Final Judgment:
A. " Sinclair" means defendant Sinclair Broadcast Group, Inc., a Maryland corporation headquartered in Hunt Valley, Maryland, its successors and assigns, and its subsidiaries, divisions, groups, affiliates, partnerships and joint ventures, and their directors, officers, managers, agents, and employees.
B. " Perpetual" means defendant Perpetual Corporation, a Delaware corporation headquartered in Arlington, Virginia, its successors and assigns, and its subsidiaries, divisions, groups, affiliates, partnerships and joint ventures, and their directors, officers, managers, agents, and employees.
C. " Acquirer" means Media General, or another entity to which the defendants divest the Divestiture Assets.
D. " Media General" means Media General, Inc., a Virginia corporation headquartered in Richmond, Virginia, its successor and assigns, and its subsidiaries, divisions, groups, affiliates, partnerships and joint ventures, including but not limited to Media General Operations, Inc., and their directors, officers, managers, agents, and employees.
E. " DMA" means Designated Market Area as defined by A.C. Nielsen Company based upon viewing patterns and used by the Investing in Television BIA Market Report 2014 (1st edition). DMAs are ranked according to the number of households therein and are used by broadcasters, advertisers, and advertising agencies to aid in evaluating television audience size and composition.
F. " WHTM-TV" means the ABC-affiliated broadcast television station located in the Harrisburg-Lancaster-Lebanon-York DMA owned by defendant Perpetual.
G. " Divestiture Assets" means all of the assets, tangible or intangible, used in the operation of WHTM-TV, including, but not limited to, all real property (owned or leased) used in the operation of the station, all broadcast equipment, office equipment, office furniture, fixtures, materials, supplies, and other tangible property used in the operation of the station; all licenses, permits, authorizations, and applications therefore issued by the Federal Communications Commission (" FCC" ) and other government agencies related to the station; all contracts (including programming contracts and rights), agreements, network affiliation agreements, leases and commitments and understandings of Sinclair or Perpetual relating to the operation of WHTM-TV; all trademarks, service marks, trade names, copyrights, patents, slogans, programming materials, and promotional materials relating to WHTM-TV; all customer lists, contracts, accounts, and credit records; and all logs and other records maintained by Sinclair or Perpetual in connection with WHTM-TV.
A. This Final Judgment applies to Sinclair and Perpetual as defined above, and all other persons in active concert or participation with any of them who receive actual notice of this Final Judgment by personal service or otherwise.
B. If, prior to complying with Sections IV and V of this Final Judgment, defendants sell or otherwise dispose of all or substantially all of their assets or of lesser business units that include the defendants' Divestiture Assets, they shall require the purchaser to be bound by the provisions of this Final Judgment. Defendants need not obtain such an agreement from the Acquirer of the assets divested pursuant to the Final Judgment.
A. Defendants are ordered and directed, within ninety (90) calendar days after the filing of the Hold Separate Stipulation and Order in this matter, to divest the Divestiture Assets to an Acquirer acceptable to the United States, in its sole discretion. The United States, in its sole discretion, may agree to one or more extensions of this time period not to exceed ninety (90) calendar days in total, and shall notify the Court in such circumstances. With respect to divestiture of the Divestiture Assets by defendant or the trustee appointed pursuant to Section V of this Final Judgment, if applications have been filed with the FCC within the period permitted for divestiture seeking approval to assign or transfer licenses to the Acquirer of the Divestiture Assets, but an order or other dispositive action by the FCC on such applications has not been issued before the end of the period permitted for divestiture, the period shall be extended with respect to divestiture of the Divestiture Assets for which no FCC order has issued until five (5) days after such order is issued. Defendants shall use their best efforts to accomplish the divestitures ordered by this Final Judgment as expeditiously as possible, including using their best efforts to obtain all necessary FCC approvals as expeditiously as possible. This Final Judgment does not limit the FCC's exercise of its regulatory powers and process with respect to the Divestiture Assets. Authorization by the FCC to conduct the divestiture of a Divestiture Asset in a particular manner will not modify any of the requirements of this decree.
B. In the event that defendants are attempting to divest the assets to an Acquirer other than Media General, in accomplishing the divestiture ordered by this Final Judgment,
(1) Defendants promptly shall make known, by usual and customary means, the availability of the Divestiture Assets;
(2) Defendants shall inform any person making inquiry regarding a possible purchase of the Divestiture Assets that they are being divested pursuant to this Final Judgment and provide that person with a copy of this Final Judgment;
(3) Defendants shall offer to furnish to all prospective Acquirers, subject to customary confidentiality assurances, all information and documents relating to the Divestiture Assets customarily provided in a due diligence process except such information or documents subject to the attorney-client privileges or work-product doctrine; and
(4) Defendants shall make available such information to the United States at the same time that such information is made available to any other person.
C. Defendants shall provide the Acquirer and the United States information relating to the personnel involved in the operation and management of the Divestiture Assets to enable the Acquirer to make offers of employment. Defendants shall not interfere with any negotiations by the Acquirer to employ or contract with any employee of any defendant whose primary responsibility relates to the operation or management of the Divestiture Assets.
D. Defendants shall permit the Acquirer of the Divestiture Assets to have reasonable access to personnel and to make inspections of the physical facilities of WHTM-TV; access to any and all environmental, zoning, and other permit documents and information; and access to any and all financial, operational, or other documents and information customarily provided as part of a due diligence process.
E. Defendants shall warrant to the Acquirer that each asset will be operational on the date of sale.
F. Defendants shall not take any action that will impede in any way the permitting, operation, or divestiture of the Divestiture Assets.
G. Defendants shall warrant to the Acquirer that there are no material defects in the environmental, zoning, or other permits pertaining to the operation of each asset, and that following the sale of the Divestiture Assets, defendants will not undertake, directly or indirectly, any challenges to the environmental, zoning, or other permits relating to the operation of the Divestiture Assets.
H. Unless the United States otherwise consents in writing, the divestiture pursuant to Section IV, or by trustee appointed pursuant to Section V of this Final Judgment, shall include the entire Divestiture Assets, and be accomplished in such a way as to satisfy the United States, in its sole discretion, that the Divestiture Assets can and will be used by the Acquirer as part of a viable, ongoing commercial television broadcasting business, and the divestiture of such assets will achieve the purposes of this Final Judgment and remedy the competitive harm alleged in the Complaint. The divestitures, whether pursuant to Section IV or Section V of this Final Judgment:
(1) shall be made to an Acquirer that, in the United States' sole judgment, has the intent and capability (including the necessary managerial, operational, technical, and financial capability) of competing effectively in the television broadcasting business in the Harrisburg-Lancaster-Lebanon-York DMA; and
(2) shall be accomplished so as to satisfy the United States, in its sole discretion, that none of the terms of any agreement between the Acquirer and defendants gives defendants the ability unreasonably to raise the Acquirer's costs, to lower the Acquirer's efficiency, or otherwise to interfere in the ability of the Acquirer to compete effectively.
V. APPOINTMENT OF TRUSTEE
A. If either (a) the defendants have not divested the Divestiture Assets within the time period specified in Paragraph IV(A), or (b) the defendants have reason to believe that the Acquirer may be unable to complete the purchase of the Divestiture Assets, defendants shall notify the United States of that fact in writing.
B. If (a) the defendants have not divested the Divestiture Assets within the time period specified in Paragraph IV(A), or (b) the United States decides in its sole discretion that the Acquirer is likely to be unable to complete the purchase of the Divestiture Assets, upon application of the United States in its sole discretion, the Court shall appoint a trustee selected by the United States and approved by the Court to effect the divestiture of the Divestiture Assets.
C. After the appointment of a trustee becomes effective, only the trustee shall have the right to sell the Divestiture Assets. The trustee shall have the power and authority to accomplish the divestiture to an Acquirer, and in a manner acceptable to the United States in its sole discretion, at such price and on such terms as are then obtainable upon reasonable effort by the trustee, subject to the provisions of Sections IV, V, and VI of this Final Judgment, and shall have such other powers as this Court deems appropriate. Subject to Paragraph V(E) of this Final Judgment, the trustee may hire at the cost and expense of Sinclair any investment bankers, attorneys, or other agents, who shall be solely accountable to the trustee, reasonably necessary in the trustee's judgment to assist in the divestiture. Defendants shall inform any person making an inquiry regarding a possible purchase of the Divestiture Assets that they are being divested pursuant to this Final Judgment and provide that person with a copy of this Final Judgment and contact information for the trustee.
D. Defendants shall not object to a sale by the trustee on any ground other than the trustee's malfeasance. Any such objection by defendants must be conveyed in writing to the United States and the trustee within ten (10) calendar days after the trustee has provided the notice required under Section VI.
E. The trustee shall serve at the cost and expense of Sinclair, on such terms and conditions as the United States approves, including confidentiality requirements and conflict of interest certifications. The trustee shall account for all monies derived from the sale of the assets sold by the trustee and all costs and expenses so incurred. After approval by the Court of the trustee's accounting, including fees for its services yet unpaid and those of any professionals and agents retained by the trustee, all remaining money shall be paid to defendants and the trust shall then be terminated. The compensation of the trustee and any professionals and agents retained by the trustee shall be reasonable in light of the value of the Divestiture Assets and based on a fee arrangement providing the trustee with an incentive based on the price and terms of the divestiture and the speed with which it is accomplished, but timeliness is paramount. If the trustee and Defendants are unable to reach agreement on the trustee's compensation or other terms and conditions of sale within fourteen (14) calendar days of appointment of the trustee, the United States may, in its sole discretion, take appropriate action, including making a recommendation to the Court.
F. Defendants shall use their best efforts to assist the trustee in accomplishing the required divestiture. The trustee and any consultants, accountants, attorneys, and other persons retained by the trustee shall have full and complete access to the personnel, books, records, and facilities of the business to be divested, and defendants shall develop financial and other information relevant to such business as the trustee may reasonably request, subject to reasonable protection for trade secret or other confidential research, development or commercial information. Defendants shall take no action to interfere with or to impede the trustee's accomplishment of the divestiture.
G. After its appointment, the trustee shall file monthly reports with the United States and, as appropriate, the Court setting forth the trustee's efforts to accomplish the divestiture ordered under this Final Judgment. To the extent such reports contain information that the trustee deems confidential, such reports shall not be filed in the public docket of the Court. Such reports shall include the name, address and telephone number of each person who, during the preceding month, made an offer to acquire, expressed an interest in acquiring, entered into negotiations to acquire, or was contacted or made an inquiry about acquiring, any interest in the Divestiture Assets, and shall describe in detail each contact with any such person. The trustee shall maintain full records of all efforts made to divest the Divestiture Assets.
H. If the trustee has not accomplished the divestiture ordered under this Final Judgment within six (6) months after its appointment, the trustee shall promptly file with the Court a report setting forth: (1) the trustee's efforts to accomplish the required divestiture, (2) the reasons, in the trustee's judgment, why the required divestiture has not been accomplished, and (3) the trustee's recommendations. The trustee shall at the same time furnish such report to the United States, which shall have the right to make additional recommendations consistent with the purpose of the trust. The Court thereafter shall enter such orders as it shall deem appropriate to carry out the purpose of the Final Judgment, which may, if necessary, include extending the trust and the term of the trustee's appointment by a period requested by the United States.
I. If the United States determines that the trustee has ceased to act or failed to act diligently or in a reasonably cost-effective manner, it may recommend the Court appoint a substitute trustee.
VI. NOTICE OF PROPOSED DIVESTITURE
A. If the trustee is responsible for effecting the divestitures required herein, within two (2) business days following execution of a definitive divestiture agreement, the trustee, shall notify the United States of any proposed divestiture required by Section IV or V of this Final Judgment. The notice provided to the United States shall set forth the details of the proposed divestiture and list the name, address, and telephone number of each person not previously identified who offered or expressed an interest in or desire to acquire any ownership interest in the Divestiture Assets, together with full details of the same.
B. Within fifteen (15) calendar days of receipt by the United States of such notice, the United States may request from defendants, the proposed Acquirer, any other third party, or the trustee if applicable, additional information concerning the proposed divestiture, the proposed Acquirer, and any other potential Acquirer. Defendants and the trustee shall furnish any additional information requested within fifteen (15) calendar days of the receipt of the request, unless the parties shall otherwise agree.
C. Within thirty (30) calendar days after receipt of the notice or within twenty (20) calendar days after the United States has been provided the additional information requested from defendants, the proposed Acquirer, any third party, and the trustee, whichever is later, the United States shall provide written notice to defendants and the trustee, if there is one, stating whether or not it objects to the proposed divestiture in its sole discretion. If the United States provides written notice that it does not object, the divestiture may be consummated, subject only to defendants' limited right to object to the sale under Paragraph V(D) of this Final Judgment. Absent written notice that the United States does not object to the proposed Acquirer or upon objection by the United States, a divestiture proposed under Section IV or Section V shall not be consummated. Upon objection by defendants under Paragraph V(D), a divestiture proposed under Section V shall not be consummated unless approved by the Court.
Defendants shall not finance all or any part of any purchase made pursuant to Section IV or V of this Final Judgment.
VIII. HOLD SEPARATE
Until the divestiture required by this Final Judgment has been accomplished, defendants shall take all steps necessary to comply with the Hold Separate Stipulation and Order entered by this Court. Defendants shall take no action that would jeopardize the divestiture ordered by this Court.
A. Within twenty (20) calendar days of the filing of the Complaint in this matter, and every thirty (30) calendar days thereafter until the divestiture has been completed under Section IV or V of this Final Judgment, defendants shall deliver to the United States and to the Commonwealth of Pennsylvania an affidavit as to the fact and manner of their compliance with Section IV or V of this Final Judgment. Each such affidavit shall include the name, address and telephone number of each person who, during the preceding thirty (30) days, made an offer to acquire, expressed an interest in acquiring, entered into negotiations to acquire, or was contacted or made an inquiry about acquiring, any interest in the Divestiture Assets, and shall describe in detail each contact with any such person during that period. Each such affidavit shall also include a description of the efforts defendants have taken to solicit buyers for and complete the sale of the Divestiture Assets, including efforts to secure FCC or other regulatory approvals, and to provide required information to prospective acquirers, including the limitations, if any, on such information. Assuming the information set forth in the affidavit is true and complete, any objection by the United States to information provided by defendants, including limitations on information, shall be made within fourteen (14) days of receipt of such affidavit.
B. Within twenty (20) calendar days of the filing of the Complaint in this matter, each defendant shall deliver to the United States and to the Commonwealth of Pennsylvania an affidavit that describes in reasonable detail all actions defendants have taken and all steps defendants have implemented on an ongoing basis to comply with Section VIII of this Final Judgment. Each such affidavit shall also include a description of the efforts defendants have taken to complete the sale of the Divestiture Assets, including efforts to secure FCC or other regulatory approvals. Defendants shall deliver to the United States and to the Commonwealth of Pennsylvania an affidavit describing any changes to the efforts and actions outlined in defendants' earlier affidavits filed pursuant to this section within fifteen (15) calendar days after the change is implemented.
C. Defendants shall keep all records of all efforts made to preserve and divest the Divestiture Assets until one year after such divestiture has been completed.
X. COMPLIANCE INSPECTION
A. For the purposes of determining or securing compliance with this Final Judgment, or of any related orders such as the Hold Separate Stipulation and Order, or of determining whether the Final Judgment should be modified or vacated, and subject to any legally recognized privilege, from time to time duly authorized representatives of the United States Department of Justice, including consultants and other persons retained by the United States, shall, upon written request of an authorized representative of the Assistant Attorney General in charge of the Antitrust Division, and on reasonable notice to defendants, be permitted:
(1) access during defendants' office hours to inspect and copy, or at the option of the United States, to require defendants to provide hard copies or electronic copies of, all books, ledgers, accounts, records, data and documents in the possession, custody or control of defendants, relating to any matters contained in this Final Judgment; and
(2) to interview, either informally or on the record, defendants' officers, employees, or agents, who may have their individual counsel present, regarding such matters. The interviews shall be subject to the reasonable convenience of the interviewee and without restraint or interference by defendants.
B. Upon the written request of an authorized representative of the Assistant Attorney General in charge of the Antitrust Division, defendants shall submit written reports or responses to written interrogatories, under oath if requested, relating to any of the matters contained in this Final Judgment as may be requested.
C. No information or documents obtained by the means provided in this section shall be divulged by the United States to any person other than an authorized representative of the executive branch of the United States, or of the Commonwealth of Pennsylvania, except in the course of legal proceedings to which the United States is a party (including grand jury proceedings), or for the purpose of securing compliance with this Final Judgment, or as otherwise required by law.
D. If at the time information or documents are furnished by defendants to the United States, defendants represent and identify in writing the material in any such information or documents to which a claim of protection may be asserted under Rule 26(c)(1)(G) of the Federal Rules of Civil Procedure, and defendants mark each pertinent page of such material, " Subject to claim of protection under Rule 26(c)(1)(G) of the Federal Rules of Civil Procedure," then the United States shall give defendants ten (10) calendar days notice prior to divulging such material in any legal proceeding (other than a grand jury proceeding).
XI. NO REACQUISITION OR OTHER PROHIBITED ACTIVITIES
Defendants may not (1) reacquire any part of the Divestiture Assets, (2) acquire any option to reacquire any part of the Divestiture Assets or to assign the Divestiture Assets to any other person, (3) enter into any local marketing agreement, joint sales agreement, other cooperative selling arrangement, or shared services agreement, or conduct other business negotiations jointly with the Acquirer with respect to the Divestiture Assets, or (4) provide financing or guarantees of financing with respect to the Divestiture Assets, during the term of this Final Judgment. The shared services prohibition does not preclude Defendants from continuing or entering into agreements in a form customarily used in the industry to (1) share news helicopters or (2) pool generic video footage that does not include recording a reporter or other on-air talent, and does not preclude defendants from entering into any non-sales-related shared services agreement that is approved in advance by the United States in its sole discretion.
XII. RETENTION OF JURISDICTION
This Court retains jurisdiction to enable any party to this Final Judgment to apply to this Court at any time for further orders and directions as may be necessary or appropriate to carry out or construe this Final Judgment, to modify any of its provisions, to enforce compliance, and to punish violations of its provisions.
XIII. EXPIRATION OF FINAL JUDGMENT
Unless this Court grants an extension, this Final Judgment shall expire ten (10) years from the date of its entry.
XIV. PUBLIC INTEREST DETERMINATION
Entry of this Final Judgment is in the public interest. The parties have complied with the requirements of the Antitrust Procedures and Penalties Act, 15 U.S.C. § 16, including making copies available to the public of this Final Judgment, the Competitive Impact Statement, and any comments thereon, and the United States' responses to comments. Based on the record before the Court, which includes the Competitive Impact Statement and any comments and responses to comments filed with the Court, entry of this Final Judgment is in the public interest.