(CN) - Gannett will have to sell St. Louis' CBS affiliate to an independent third party as part of its $2.2 billion acquisition of Belo Corp., under a settled complaint filed by the Department of Justice.
In the civil antitrust lawsuit in Washington D.C., the Justice Department claimed the original deal would have hurt competition in the St. Louis market. The settlement offer, which has been accepted by Gannett, is included in the lawsuit.
Gannett plans to buy Belo for $1.5 billion in cash, plus assumption of $715 million in debt.
Gannett owns KSDK, St. Louis' NBC affiliate.
Belo owns 20 TV stations, including St. Louis' CBS affiliate KMOV.
They are the top two news stations in the St. Louis market.
Federal Communications Commission rules limit the number of TV stations a company can own in a single market, so Gannett originally planned to sell KMOV to Sander Media, which is run by former Belo executive Jack Sander.
But that agreement, which included joint sales and services between the stations, would give Gannett too much power in the local spot advertising market, the Justice Department said.
The proposed settlement requires that KMOV be sold to an independent company, and prohibits joint sales and shared services agreements between KMOV and KSDK.
"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," Bill Baer, assistant attorney general in charge of the Department of Justice's Antitrust Division, said in a statement. "The full divestiture required by the department will ensure that KMOV-TV will remain a vigorous competitor in St. Louis."
Acquisition of Belo will make Gannett the fourth-largest owner of major network affiliates in the country.
The FCC has not yet approved the acquisition, which is expected to close by the end of the year.
The Justice Department said its antitrust concerns would be resolved if a federal judge approves the settlement. Sander will assume ownership of KMOV until it is sold to an independent buyer next year.
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