It's a weird way of doing things but who are we to ask how government operates. The Justice Department filed a lawsuit Thursday in federal court regarding the Cumulus/Citadel deal and at the same time approved it contingent upon divestitures that Cumulus was already planning. D.O.J. had red flags in Harrisburg and Flint. They want to be sure Cumulus sells two stations in Harrisburg and one station in Flint. These divestitures are to assure, under government rules, that local advertisers are not bilked on rates. They call it the benefits of competition. Wonder what the call the benefits of newspaper advertising rates. Cumulus already had the two stations in Harrisburg in a trust to satisfy the FCC.
Sharis Pozen is an acting assistant attorney general in charge of the antitrust division. She sent out an e-mail yesterday that said "the divestitures required by the consent decree will enable radio advertisers to continue to receive the benefits of competition? The divestitures will reduce Cumulus?s share of advertising revenue in those regions to less than 40 percent, the Justice Department said in the statement. Cumulus now awaits FCC approval which could come any day. That's followed by the Citadel shareholder vote next week and SEC approval.
Here's more detail from the D.O.J. release:
The Department of Justice announced today that it will require Cumulus Media Inc., one of the largest operators of radio stations in the United States, to divest three radio stations in two markets in order for Cumulus to proceed with its acquisition of Citadel Broadcasting Corporation. The department said that the transaction, as originally proposed, would substantially lessen competition for radio advertising in Flint, Mich., and Harrisburg-Lebanon-Carlisle, Pa.
The department?s Antitrust Division filed a civil antitrust lawsuit today in U.S. District Court in Washington, D.C., to block the proposed acquisition. At the same time, the division filed a proposed settlement that, if approved by the court, would resolve the lawsuit and the department?s competitive concerns. ?The divestitures required by the consent decree will enable radio advertisers to continue to receive the benefits of competition in Harrisburg and Flint,? said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice?s Antitrust Division."According to the complaint, Cumulus?s and Citadel?s radio stations compete head-to-head against one another for the business of local and national companies that seek to purchase radio advertising time that targets listeners in Harrisburg-Lebanon-Carlisle and Flint. Cumulus?s acquisition of Citadel would have eliminated the competition in these markets, increasing prices and reducing levels of service in the sale of radio advertising time. Under the terms of the proposed settlement, Cumulus must divest two stations in Harrisburg-Lebanon-Carlisle and one station in Flint to buyers approved by the division. The divestitures will reduce Cumulus?s share in advertising revenues in Harrisburg-Lebanon-Carlisle and Flint to less than 40 percent, preserving choices for advertisers and ensuring competition."
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