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By Lillian Rizzo
A group of five television station owners on Monday agreed to settle Justice Department charges that they used third-party firms to illegally coordinate on sales of local advertising spots.
CBS Corp., Cox Enterprises Inc., E.W. Scripps Co., Fox Corp., and Tegna Inc. all agreed to consent decrees barring them from sharing certain competitively sensitive information for the next seven years, according to court documents filed Monday. In addition, each company is required to adopt rigorous antitrust compliance and reporting measures.
Court papers didn't indicate any financial penalties as part of the settlement.
The Justice Department alleged the TV station owners shared advertising information among themselves regarding spot advertising revenues in local markets.
Pricing for spot advertising is negotiated by advertisers and the companies, and often, the advertisers "play off" the stations against each other to receive competitive revenues. Cox's sales rep firm, Cox Reps Inc., is among the top two sales reps firms that represents hundreds of stations throughout the U.S. The Justice Department alleges Cox Reps, another sales rep firm and the stations shared station-specific revenue pacing data.
The government said such pacing data, which compares sales bookings against prior-year results, gave station owners insights into each station's remaining spot ad inventory.
The civil complaint alleged the data was shared two ways: both through the sales reps firms and, in some regions, directly between station employees.
"Vigorous competition among broadcast stations allows American businesses across the country to obtain competitive advertising rates," Assistant Attorney General Makan Delrahim, the Justice Department's top antitrust official, said in a statement. "The unlawful sharing of information reduced that competition and thereby harmed businesses that rely on competitive rates to best serve their customers."
A Tegna spokeswoman said Monday the company disagreed with the Justice Department's allegations but determined the settlement was in its best interest.
Representatives for the other companies didn't immediately respond to comment. Fox Corp. and Wall Street Journal parent News Corp share common ownership.
The civil complaint against CBS, Cox and the other companies was filed in December, along with similar settlements with six other station owners. At the time, Sinclair Broadcast Group Inc., Tribune Media Co., Raycom Media Inc., Meredith Corp., Griffin Communications LLC and Dreamcatcher Broadcasting LLC agreed to similar consent decrees.
Authorities caught wind of the ad-sales firms' sharing information on their clients' behalf last year during a previously unrelated review of Sinclair's plans to acquire Tribune, which later never went through. The Wall Street Journal earlier reported that information of Sinclair and others provided to Justice Department officials led them to open a separate investigation into the station groups' ad-sales practices.
Write to Lillian Rizzo at Lillian.Rizzo@wsj.com
(END) Dow Jones Newswires
June 17, 2019 22:29 ET (02:29 GMT)
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