Gannett Co. won U.S. antitrust approval for its $1.5 billion purchase of Belo Corp. (BLC) under a settlement with the Justice Department that requires the sale of a St. Louis television station.
The deal cleared Justice Department opposition after the companies agreed to sell KMOV-TV to preserve competition in a market where Gannett and Belo overlap, the department said in a statement today. Without the divestiture, Gannett would gain a dominant position in broadcast-television spot advertising in the St. Louis area, resulting in higher prices for advertisers, the U.S. said.
“The full divestiture required by the department will ensure that KMOV-TV will remain a vigorous competitor in St. Louis,” said Bill Baer, who is the head of the department’s antitrust division.
Gannett, the McLean, Virginia-based publisher of USA Today, agreed in June to purchase Dallas-based Belo for $13.75 a share. The deal will make Gannett the fourth-largest owner of major network affiliates, reaching about a third of all U.S. households, according to the company.
Adding more local broadcasters in U.S. cities gives Gannett leverage with cable and satellite distributors when they renegotiate licensing fees. The purchase still requires approval from the Federal Communications Commission, Gannett said in a statement.
Gannett, which owns 23 TV stations, rose 1.8 percent to $26.66 in New York.
The Belo deal continues a streak of consolidation in the local-TV market and underscores a push by newspaper companies to decrease their reliance on print media. In July, Tribune Co. (TRBAA) agreed to buy Local TV Holdings LLC’s 19 TV stations for $2.73 billion.
To acquire Belo, Gannett -- the owner of 82 U.S. daily newspapers, including USA Today -- outbid Sinclair Broadcast Group Inc. (SBGI), which twice tried to top Gannett’s offer, people familiar with the matter said.
To comply with FCC ownership rules, Gannett had agreed to transfer six stations, including Belo-owned KMOV-TV, to Sander Media LLC. Agreements between Gannett and Sander would give Gannett “significant influence” over Sander’s operation of the stations and reduce Gannett’s incentives to compete against Sander, the U.S. said in a court papers.
“The agreements give both Gannett and Sander the incentive and the means to work together cooperatively to maximize their joint profits at the expense of their customers,” the Justice Department said.
To resolve the Justice department’s concerns about competition in the St. Louis television advertising market, KMOV-TV will be sold to an independent purchaser under the settlement. The buyer cannot have any agreements with Gannett concerning KMOV-TV that could limit competition with Gannett’s KSDK-TV such as financing or shared-services deals, the government said. The settlement is subject to court approval. The other five stations will still be sold to Sander.
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