Denver Radio: DOJ Sued to Block, Then Proposed Settlement

Entercom spent seven months unsuccessfully trying to persuade the Department of Justice to approve its purchase of Lincoln Financial Media.

According to InsideRadio, the DOJ’s Antitrust Division Tuesday filed a civil suit to stop the deal – along with a proposed settlement.

In what’s believed to be a first, the antitrust regulators scrutinized not only the revenue share that would result from combining Entercom and LFM’s Denver stations. Instead it narrowed the focus to Denver’s English-language radio market, where the combined cluster would have exceeded 37% market share. The government’s analysis didn’t include stations that target the 21% of the market that is Hispanic.

According to the complaint, filed in the U.S. District Court of the District of Columbia, the merger would have eliminated “head-to-head competition” between the two companies’ stations for local and national advertisers targeting English-language listeners.

The transaction “would have resulted in higher prices and a reduced quality of service,” it concluded.  The government claimed the merger would result in “a substantial increase” in the measure it uses to gauge market concentration and increase the likely competitive effects of the merger “well above” acceptable thresholds.

InsideRadio reports DOJ deemed the deal anticompetitive because the Entercom and LFM stations are “close substitutes” for local and national advertisers.  “Entercom and Lincoln own some of the most highly rated radio stations in Denver, and advertisers targeting radio listeners in Denver have benefitted from competition between them,”

Assistant Attorney General Bill Baer of the DOJ’s Antitrust Division said in a statement. “These (resulting) divestures will preserve that competitive dynamic.”

Entercom has entered into an exchange agreement with Bonneville under which Entercom will exchange four stations in Denver for Classic Rock station KSWD-FM The Sound in Los Angeles.