miketheradioguy
Leading Participant
Entercom would settle sports rights issues with the DOJ, like they would with certain stations they’re divesting.
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Entercom sale to EMF
- Thread starter AMRocks
- Start date
Entercom would settle sports rights issues with the DOJ, like they would with certain stations they’re divesting.
No, the Department of Justice only regulates sports betting as part of the Wire Act. They have nothing to do with numbers of broadcast sports carriage, and would have nothing to do with the sale or placing stations in a trust.
CTListener
Walk of Fame Participant
There are markets that are only major league in two sports. Nashville (football and hockey) and Indianapolis (football and basketball) come to mind. If a CBS station owned one team's rights and an Entercom station the other's, would Entercom have to immediately divest that CBS station -- or CBS sell it to someone else pre-merger -- to make the merger pass muster? Do college sports rights figure into the equation in markets like those, which have much stronger interest (fan and advertiser) in college sports than pro-dominated markets like Boston?
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No, this whole part of the discussion about what stations carry however many teams in a market, is something that Mike assumes in an issue. There would be nothing to prevent a merger or station sale based on what sports teams are carried on whom. Radio stations negotiate sports contracts with the teams, usually through a bid process. No government entity weighs in on what station carries what team.
The only way the DOJ would get involved, is (as mentioned above) there were some suspicions of gambling, or promotion of gambling on the station, related to teams that were carried on the station.
I was in Kansas City when Entercom bought Sinclair's radio stations. Entercom tried to get the KC Chiefs from KCFX, which it was divesting to Susquehanna, for its then-KYYS 99.7. The DOJ said it would sue to block the deal unless Entercom sent the Chiefs to Susquehanna with KCFX.
The DOJ can and has considered sports rights in regards to how they affect revenue concentration within the market. It's hard to say how such a dispute would shake out in court, but no two parties are likely to hold off on a deal for several years to litigate.
The DOJ can and has considered sports rights in regards to how they affect revenue concentration within the market. It's hard to say how such a dispute would shake out in court, but no two parties are likely to hold off on a deal for several years to litigate.
CTListener
Walk of Fame Participant
If it's not an issue and the DOJ has no authority to hold the deal up on that basis, then why isn't WBZ-FM being included in the deal? It's a cash cow and reaches a demographic advertisers can't touch with most other formats. Surely Entercom would rather CBS spin off one of its music stations, right?
miketheradioguy
Leading Participant
As Kent mentioned, sports rights have an effect on revenue concentration, and Entercom has dealt with the DOJ on this issue before. Divesting WBZ-FM would mean there would be less scrutiny for Entercom in order to get the merger approved.
PTBoardOp94
Walk of Fame Participant
In Indianapolis, Emmis has substantially all of the sports rights. Pacers, Colts, Hoosiers, and Indianapolis Motor Speedway. When Emmis bought back the Colts rights from Clear Channel years ago, there was never a question of market concentration.
I'm not aware of the DOJ ever getting involved in sports rights deals negotiated on the free market. I can’t imagine most of those deals being large enough to even trigger a DOJ investigation on their own.
When the DOJ investigates larger deals on antitrust concerns, it has a wide latitude over what it can review. In the case of sports rights in Boston, it probably won’t say it’s over sports so much as it would be over preventing Entercom from being able to cherry pick a specific audience and unfairly hinder competition for advertisers trying to reach that audience.
miketheradioguy
Leading Participant
Boston is larger than Indianapolis, in terms of both its market size and professional sports teams.
CTListener
Walk of Fame Participant
Why should that be the Department of Justice's concern? If the other station owners want a piece of 35-54 male, let them change or tweak the formats of their stations to attract those listeners and then they can get the advertisers. Nothing's stopping them.
SEC Filing at this link: http://www.sec.gov/Archives/edgar/data/1067837/000119312517307226/d362252ds4a.htm
First, the DoJ has its own definition of what is excessive control, and that has several times gone into the area of formats. In the case of Sports, the merger would put all the long-term sports rights and related revenue in the hands of one operator, who could exercise predatory pricing.
Second, the combined billing of just the two leading sports stations is just about 25% of total market billings. Add in the other stations and there is no way the DoJ can preserve market competitiveness without breaking up the sports stations and the cluster.
The review takes place at the time of station transfers, at which point both grandfathering of clusters and revenue share are visited.
This does not mean "less scrutiny". It means the Entercom and CBS folks sat down with the DoJ and a battalion of lawyers and negotiated what had to be done to get approval. The deal, then, became contingent on divesting certain properties. When the conditions were met, the DoJ would have indicated that, other than the paperwork, the deal would be approved and then go to the FCC for the final stamp of approval.
David explains it quite well. Another point, though, is that it’s the law. The DOJ's job is to enforce the law, and that includes a series of antitrust laws that prohibit unfair and predatory pricing. It has an entire division devoted specifically to antitrust concerns. The DOJ investigated antitrust concerns with respect to radio and concluded 40% of the market radio revenue was the maximum a single operator could control without violating antitrust statutes. Some operators and attorneys think the entire market media revenue should be considered instead of just radio, but, as I've mentioned previously, no deal could survive a court battle as two parties aren’t going to want to fight this out for years. Plus, 40% of the radio revenue is a good deal, and it’s too good of a deal for anybody to walk away from.
If you don’t think the DOJ should be concerned with matters like this, feel free to contact your representative and senator. The law can be changed if enough people want it changed. Until then, the DOJ will continue to do what the law requires it to do.
miketheradioguy
Leading Participant
Nonetheless, I'm still looking forward to this deal being approved.
Mike again your sounding like a cheer leader that has no idea what they are cheering for. I recommend you work in radio for a few years, maybe even at an Entercom station to see how companies operate. There is good and there is WTF. Right now real people at CBS are going WTF, from Engineers to sales people that wonder if they will have a job after 2018.
If you look forward to people losing there jobs, making people wonder if they will have a job 3-6 months down the road, then you may have a wonderful career in radio management. Until you get a couple of radio jobs under your belt and experience what some of the CBS employees are felling right now. I have to ask what part are you looking forward to? The potential format changes or the cost savings through consolidation and people losing their jobs. It's inevitable that people will lose jobs with this merger, it's the way things are going. You come off sometimes sounding like your the broker doing the deal, waiting for your commission check and caring less about the people that may be impacted by this merger. I have friends that may be impacted by this, so do others on this thread and discussion board, so we/I have a different view than you, when you come across all excited about this merger. For some people this is a slow train wreck with a sad ending. Consolidation is inevitable and helps save money and the radio industry, but I don't look forward to the people losing work. I hope everyone lands on their feet.
I'm looking forward to the deal closing so people can move on with their lives. For some people that means no longer working in radio or finding another job in radio. For others it may open up their first job in radio. I think you need to add context to your enthusiasm for the deal. Whats at stake for you in this. Do you have any friends that think they may be unemployed when the dust settles on the deal? Are you looking at potential new job openings in the new company to start a career?
I'm looking forward with cautious optimism, it will be interesting if some of the stuff I have been told will unfold and people can move forward.
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SEC Filing dated 10/16/2017 outlining voting procedures on CBS + Entercom stock prior to the Entercom shareholders meeting of 11/15/2017 where they will be asked to approve various steps -
a foregone conclusion given that Entercom founder Joe Field has already announced he favors the CBS Radio deal.
https://www.sec.gov/Archives/edgar/data/1067837/000119312517311047/d362266ddefm14a.htm
a foregone conclusion given that Entercom founder Joe Field has already announced he favors the CBS Radio deal.
https://www.sec.gov/Archives/edgar/data/1067837/000119312517311047/d362266ddefm14a.htm
Of course, and his son David Field gets a huge golden parachute. As does the company's CFO.
The surprise is how much ownership the CBS shareholders get. In a way it's basically a management deal, where CBS stockholders still control over 70% of the shares, and Entercom owns the minority. This may work out for the CBS shareholders in the short term, but they might be advised to sell quickly if there's any bounce after the approval. If you look back at the Disney-Citadel deal, the Disney stockholders lost a lot of money.
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