To: AllPolitics Subject: Justice Department Moves To Block Radio Mergers
From: Terry Frieden/CNN
In: Washington
Posted: 2-26-97
Justice Department lawyers took action Thursday to block a major merger of radio broadcasters, which they said was necessary to preserve competition in the rapidly consolidating radio industry.
At the same time, government lawyers outlined a proposed deal that would allow the merger to go on. The Antitrust Division filed two lawsuits in Washington, along with proposed settlements which would pave the way for Boston-based American Radio Systems Corporation to go ahead with its $655-million merger with E-Z Communications. American Radio owns 75 radio stations and E-Z owns 23 radio stations.
The government's moves are the latest in a series of steps following passage of the Telecommunications Reform Act of 1996 which relaxed the limits on radio station ownership.
The Justice Department announced it has reached an agreement with American Radio which allows it go ahead with the merger as long as it divests two radio stations -- one in Sacramento, and one in Charlotte, N.C. The government also forced E-Z and other radio owners in Charlotte to abandon a proposed station swap which they said could have stifled competition.
"We only get involved in cases such as this one where the proposed deal could hurt consumers, such as small businesses that rely on competition to keep prices low for radio advertising," said Antitrust Division acting-chief Joel Klein. "Where we see that happening, we'll move vigorously to stop it."
Justice lawyers said the action was needed because the merger could have resulted in American Radio having 55 percent of the all radio advertising revenues in Charlotte. Under the proposed settlement, the firm must divest itself of Charlotte's leading rock station. Even after the restructuring, the government says American Radio will still own seven Charlotte stations accounting for a total of 40 percent of the areas's ad revenues.
American Radio will have to divest itself of a powerful FM station in Sacramento. The government said without the move American Radio would control six of the 12 FM stations in Sacramento, with 36 percent of the radio ad money.
The proposed settlement said that the company's share of ad revenues will drop to 33 percent under the deal filed in court Thursday.