Antitrust Lawyer Blog Commentary on Current Developments

Justice Department Suspends Investigation Of Entercom Communications Purchase Of N.Y. Radio Stations From CBS Corporation

The DOJ announced on October 31st that it suspended its investigation of Entercom Communications Corporation’s proposed $262 million acquisition of Texas, Ohio, Tennessee, and New York radio stations from CBS Corporation as long as the companies sell three Rochester radio stations. Entercom informed the DOJ that it planned to divest the three Rochester stations in order to avoid the need for further investigation and to comply with the Federal Communications Commission’s (“FCC”) local ownership rules.

The Antitrust Division focused its investigation on the Rochester area in which Entercom already owns four radio stations-¬one AM and three FM-¬and would acquire four additional FM stations from CBS. The DOJ investigated whether Entercom’s ownership of eight radio stations in the Rochester area, accounting for more than 57 percent of radio advertising revenue, reduced competition and raised the price of radio advertising in that market.

The FCC’s local ownership rules prohibit Entercom from owning more than five FM stations in one area and require Entercom to sell two stations. Prior to the conclusion of the DOJ’s investigation, Entercom said that it planned to sell CBS’s WRMM-FM and WZNE-FM and Entercom’s WFKL-FM to a third party. The DOJ determined that this sale would reduce Entercom’s post-transaction share of Rochester radio advertising revenues to about 40 percent. Based on the reduced share of revenue and the characteristics of the radio stations being sold, the DOJ concluded that it would not have reason to continue its investigation.

Entercom and CBS agreed to complete the planned sale¬ or the sale of an alternative group of Rochester stations that would be subject to DOJ approval within three months. If the planned sales do not take place, the Doj may renew its investigation and could file a complaint and a proposed consent decree in court that would require divestiture of the three Rochester, N.Y. stations.

Authored by

Andre P. Barlow

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