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Justice Dept. Sues, Settles With Sinclair and Others on Antitrust Charges

By Christopher Coble, Esq. on November 14, 2018 5:44 AM

In perhaps a record for shortest litigation ever, the Department of Justice announced that it both filed a lawsuit and agreed to a settlement in the same day with six TV broadcasters, claiming they "engaged in unlawful agreements to share non-public competitively sensitive information with their broadcast television competitors."

What does that mean? Essentially that they conspired to fix ad prices. What does the proposed settlement mean? It would require those broadcasters to cooperate in the DOJ's ongoing investigation, as well as adopt "rigorous antitrust compliance and reporting measures" to make sure they don't cheat again. Here's a look.

Trading Secrets

According to the DOJ, six broadcast television companies -- Sinclair Broadcast Group, Raycom Media, Tribune Media, Meredith Corporation, Griffin Communications, and Dreamcatcher Broadcasting -- agreed to exchange revenue pacing information. Pacing compares a broadcast station's ad revenues booked for a certain time period to revenues booked at the same point the previous year, and provides information on how each station is performing versus the rest of the market.

By sharing pacing information, the broadcasters knew what their competitors were likely to do with their advertising prices, informing their own pricing strategies and negotiations with advertisers. As the DOJ put it: "[T]he information exchanges harmed the competitive price-setting process."

"The unlawful exchange of competitively sensitive information allowed these television broadcast companies to disrupt the normal competitive process of spot advertising in markets across the United States," said Assistant Attorney General Makan Delrahim of the Justice Department's Antitrust Division. "Advertisers rely on competition among owners of broadcast television stations to obtain reasonable advertising rates, but this unlawful sharing of information lessened that competition and thereby harmed the local businesses and the consumers they serve."

Slapping Wrists

The proposed settlements must still be approved by the court, and require the six companies to agree to stop sharing competitively sensitive information. Combined, those broadcasters made around $5.85 billion in 2017 alone, according to the DOJ, but will face no fines for collectively gouging advertisers.

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