Media General Strikes Deal to Complete Merger

(CN) - Media General Inc., will divest of several television stations around the country in order to complete its $1.5 billion acquisition of LIN Media, the U.S. Justice Department announced.

Under the terms of a settlement with the agency, Media General, which is based in Richmond, Va., will sell stations in Alabama, Georgia, Florida, Rhode Island, Massachusetts and Wisconsin.

The company, which currently owns 31 television stations in 29 metropolitan areas, announced its intention to purchase LIN Media in March.

LIN, which is headquartered in Austin, Texas, owns, operates or provides programming or sales services to more than 50 stations in 23 metropolitan areas.

The Justice Department intervened out of a concern the deal would substantially lessen competition for spot advertising certain markets.

Spot advertising consists of those ads that are sold in the local market served by an individual television station, and they are typically purchased by advertisers who want to target potential customers in a specific geographic area.

In a federal complaint filed in Washington, the United States said the transaction would combine stations that are either close substitutes or vigorous competitors in markets with limited alternatives.

"After the proposed acquisition, advertisers in each of the ... markets would likely find it more difficult to 'buy around' the Defendants' combined stations in response to higher advertising rates, than to 'buy around' Media General's stations or LIN's stations, as separate entities, as they could have done before the proposed acquisition," the complaint states.

It continues: "Because a significant number of advertisers would likely be unable to reach their desired audiences as effectively unless they advertise on at least one station that Media General would control after the proposed acquisition, those advertisers' bargaining position would be weaker, and the advertising rates they pay would likely increase."

Bill Baer, assistant attorney general for the department's Antitrust Division, said in a statement that the divestitures "will ensure that these stations remain vigorous competitors in their designated market areas."

In a statement of its own, Media General said it was pleased with the terms of the settlement.

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