Justice Department Requires Divestiture from Gannett Co. Inc. in Order to Proceed with Its Acquisition of Belo Corp.

The Department of Justice will require Gannett Company, Belo and Sander Media LLC to divest their interests in KMOV TV, a CBS affiliate in St. Louis, in order to proceed with Gannett’s acquisition of Belo, and Sander’s related acquisition of six Belo television stations that Gannett cannot hold under Federal Communications Commission (FCC) rules.

The Department said that, without the required divestiture, Gannett would have gained a dominant position in broadcast television spot advertising in the St. Louis area, resulting in higher prices advertisers. In addition to acquiring the six stations from Belo, Sander will enter into several agreements with Gannett in order to both finance purchasing the stations and facilitate operating the stations. KMOV-TV is one of the six stations Sander would acquire from Belo and would be subject to agreements between Sander and Gannett. These agreements, however, do not include any joint negotiation of retransmission rights in St. Louis. The Gannett-Belo acquisition is valued at approximately $2.2 billion.

The Department’s Antitrust Division filed a civil antitrust lawsuit in the US District Court for the District of Columbia to block the proposed acquisition and related agreements between Gannett and Sander, including an option for Gannett to assign or acquire the Belo stations sold to Sander, a financing guarantee and a long-term shared services agreement. At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the competitive concerns alleged in the lawsuit. “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,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The full divestiture required by the department will ensure that KMOV-TV will remain a vigorous competitor in St. Louis.”