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Chancellor Cancels $54-Million Radio Bid

Firm drops plan to acquire four stations from SFX Broadcasting, saying it doesn't want a court fight with Justice Department.

April 01, 1998|From Associated Press

WASHINGTON — A proposed radio merger that the Justice Department had challenged was abandoned Tuesday, and the government is requiring the sell-off of 18 radio stations as a condition of approving two other billion-dollar mergers in the rapidly consolidating industry.

"As the radio industry continues to consolidate in the wake of the Telecommunications Act of 1996, we will continue to seek relief where radio mergers harm the competition that helped make radio an effective and affordable way to advertise," said Assistant Atty. Gen. Joel I. Klein.

Four months after the department's antitrust division brought its first court suit to block a radio merger since the law was passed, Chancellor Media Corp. decided it did not want to fight a court battle.

Instead, Chancellor abandoned its $54-million bid to acquire four radio stations owned by SFX Broadcasting Inc. on Long Island, N.Y.--WBLI-FM, WBAB-FM, WHFM-FM and WGBB-AM. Chancellor also agreed to end the deal under which it was operating the stations pending their acquisition.

The government argued that the merger would have illegally reduced competition by giving Chancellor, which owns two other Long Island stations, more than 65% of the local radio advertising market.

Those four SFX stations on Long Island also figured in a settlement the government reached Tuesday to allow Capstar Broadcasting Partners Inc. to go forward with its $2.1-billion acquisition of SFX.

Capstar agreed to sell 11 stations, including the four SFX Long Island stations, plus four in Greenville, S.C., and one each in Pittsburgh, Houston and Jackson, Miss.

The government said the original deal would have given Capstar and its related entities 74% of radio advertising revenue in Greenville, 65% in Long Island's Suffolk County, 57% in Jackson, 44% in Pittsburgh and 43% in Houston. The government argued those levels of concentration could have brought about an increase in radio advertising rates.

Hicks, Muse, Tate & Furst Inc., a Dallas-based investment firm, owns all the stock of Capstar and a significant portion of the stock of Chancellor, so the market positions of both companies were combined in assessing the Capstar-SFX deal, the Justice Department said.

Capstar will sell KKPN-FM in Houston, WJDX-FM in Jackson, WTAE-AM in Pittsburgh and WESC-FM, WESC-AM, WJMZ-FM and WPTP-FM in Greenville.

In another settlement, CBS Corp., the nation's largest operator of radio stations, with 76 in 17 cities, agreed to sell seven stations to win Justice Department approval of its $1.6-billion acquisition of American Radio Systems Corp.

CBS will sell four stations in Boston, two in St. Louis and one in Baltimore. The government said the original deal would have given CBS 59% of Boston's radio advertising revenue, 49% of St. Louis' and 46% of Baltimore's. With the divestiture, the company will have no more than 40% of the ad revenue in any of the cities.

CBS will sell WEEI-AM, WAAF-FM, WEGQ-FM and WRKO-AM in Boston, KSD-FM and KLOU-FM in St. Louis and WOCT-FM in Baltimore.

Counting Tuesday's developments, 11 merger proposals have been restructured or dropped in the face of government objections since a 1996 law relaxed the limits on radio station ownership. More than 4,000 of the nation's 11,000 radio stations have changed hands since the law went into effect.

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