DOJ Clears Swap Between Billboard Giants

WASHINGTON (CN) – To proceed with a $150 million ad-space swap, the United States said billboard purveyors Clear Channel Outdoor Holdings and Fairway Media Group have agreed to divest a portion of their assets.

Antitrust regulators made the announcement Wednesday in conjunction with the filing of a settled complaint in U.S. District Court for the District of Columbia.

Under terms of the settlement, Clear Channel and Fairway Media, each of which owns prime billboard advertising real estate in Atlanta and Indianapolis, respectively, will be forced to divest 13 billboard structures in Indianapolis to industry competitor Circle City Outdoor LLC. An additional 44 structures must be also be divested and allocated to Link Media Georgia LLC of Atlanta.

Clear Channel and Fairway initially agreed in March to conduct an asset exchange between their companies. According to the complaint, under terms of the initial deal, Clear Channel would acquire a variety of Fairway’s billboard spaces in Atlanta, in exchange for Fairway taking over a host of Clear Channel’s billboard structures in Indianapolis and in Sherman and Denison, Texas.

The Justice Department intervened, however, and determined that consummation of such a deal “would eliminate the substantial head-to-head competition between Clear Channel and Fairway within each of [their markets].”

With the price of radio and television ads often costly, billboard advertising is one of the few affordable mediums for companies that wish bolster their recognition.

“They also seek certain demographic categories of consumers within a city or metropolitan area,” the complaint explains. Advertisers often select billboards both for their proximity to highways or areas where pedestrians and drivers alike will see the signs and have nearby access to the business on display.

As such, the nature of the industry is inherently limiting. Without checks put onto Clear Channel or Fairway’s deal, regulators believed competition would suffer.

Citing standards laid out in the report, Horizonal Merger Guidelines, which was co-written by the Justice Department and the Federal Trade Commission, the government harmonized its understanding of “good market concentration” with Clear Channel and Fairway’s proposed deal.

“The more concentrated a market, and the more a transaction would increase concentration in a market, the more likely it is that a transaction would result in a meaningful reduction in competition harming consumers,” the complaint says.

The department’s review of each advertiser’s assets confirmed that in some markets, if a straight exchange were permitted, Clear Channel and Fairway’s stranglehold would be complete.

Contending that the preservation of “head-to-head competition” between the two companies has long “benefited advertisers through lower prices and better services,” the Justice Department’s Renata Hesse said concerns over chilled competition would be put to rest after the settlement is finalized and the divestitures are completed.

“The loss of competition between Clear Channel and Fairway as a result of the proposed transaction would have led to higher prices for advertisers who rely on billboards to reach consumers within the Atlanta and Indianapolis metropolitan markets,” said Hesse in a statement. “Today’s settlement will ensure that advertisers will continue to enjoy the benefits of competition when they seek to place advertisements on billboards in these areas.”

Clear Channel, one of the nation’s largest outdoor advertising companies, reported profits of $2.8 billion in 2015. Fairway, which is headquartered in South Carolina, owns and operates ad displays across 15 states and reported sales of $110 million in 2015.

Representatives from companies which will receive the divested assets, Circle City Outdoor and Link Media Georgia, did not return a call for comment.

Representatives from Clear Channel and Fairway also did not return a call for comment. Other documents filed with the settlement include a competitive impact statement, a stipulation and order, and an explanation of procedures.