Justice Department Clears Gannett Purchase of Belo

St. Louis Station to Be Sold as Part of Government OK

Gannett Co. said that it had reached an agreement with the Department of Justice in its $2.2 billion acquisition of Belo Corp., with a deal to sell off Belo’s KMOV-TV in St. Louis, which overlaps with a Gannett station in the same market.

Gannett’s acquisition will nearly double its holdings to 43 stations, giving it TV stations in 21 of the top 25 markets.

Sander Media, headed by former Belo chief Jack Sander, has been preparing to acquire six Belo stations in markets where Gannett and Belo overlap, including KMOV, a CBS affiliate. But the Justice Department said that it was concerned that in St. Louis, even though Sander would acquire KMOV, “various agreements” between Gannett and Sander “would align the incentives” of the two company’s stations in that market. The Justice Department settlement requires that KMOV be sold to an independent purchaser.

Bill Baer, assistant attorney general in charge of the Justice Department’s Antitrust Division, said that Gannett’s KSDK-TV and Belo’s KMOV-TV “compete head-to-head in the sale of broadcast television spot advertising in the St. Louis area, and this rivalry constrains advertising rates. The full divestiture required by the department will ensure that KMOV-TV will remain a vigorous competitor in St. Louis.”

Gannett’s purchase of Belo, announced in June, is among a flurry of recent station group acquisitions, which has raised concerns among public interest groups about media consolidation. The transaction still requires approval from the FCC.

The agreement with the Justice Department also must be approved by a federal judge.

The companies said that they expected that the St. Louis station will be divested some time in 2014.

Other major station acquisitions include Tribune Co.’s proposed purchase of Local TV’s 19 stations, and Sinclair Group’s purchase of 7 Allbritton stations, including its flagship in Washington.

In July, the American Cable Assn., DirecTV and Time Warner Cable filed an objection to the acquisition with the FCC, arguing that the transfers of stations to Sander Media were “third party sidecars” and that Gannett would retain control via sharing agreements. Gannett is providing unsecured loan guarantees to Sander and has other operating agreements. The Justice Department said that those agreements do not include any joint negotiation of retransmission rights in St. Louis.

Matt Wood, policy director at public interest org Free Press, said that they were “pleased that the Department of Justice recognized some of the harms of Gannett’s proposal in St. Louis and took the problem seriously.

“This is a great step, but there is far more for the DoJ and the FCC to do,” he said. “The rest of the station acquisitions in the Gannett-Belo deal, and in several other transactions proposed by Tribune, Sinclair and others, deserve the same careful scrutiny and the same fate.”