DOJ is making Gray and Raycom sell stations before it will OK $3.6B merger

U.S. Justice Department
The U.S. Justice Department (Coolcaesar/Wikimedia)

The U.S. Justice Department said it will back off its challenge to the $3.6 billion Gray-Raycom merger if the companies agree to sell off television stations in nine U.S. markets.

The Justice Department’s Antitrust Division filed a civil antitrust lawsuit in the U.S. District Court for the District of Columbia to block the proposed merger. But it also proposed a settlement that would resolve the suit by “remedying the competitive harms alleged in the complaint, through the divestitures and related conditions.”

“Without the required divestitures, Gray’s merger with Raycom threatens serious competitive harm to cable subscribers and small businesses,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division, in a statement. “I am pleased, however, that we have been able to reach a speedy and complete resolution of the Division’s concerns, thanks in part to the parties’ commitment to engage in good faith settlement talks from the outset of our investigation.”

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The divestiture markets are Knoxville, Tennessee; Toledo, Ohio; Waco–Temple–Bryan, Texas; Tallahassee, Florida–Thomasville, Georgia; Augusta, Georgia; Odessa-Midland, Texas; Panama City, Florida; Albany, Georgia; and Dothan, Alabama. With the deal as its currently structured, Gray would own two or more Big Four (ABC, CBS, Fox and NBC) affiliate stations in each of those markets. The DOJ said that if that market power was allowed to proceed unchecked, Gray would likely charge cable and satellite companies higher retransmission fees to carry the combined company’s broadcast stations, resulting in higher monthly cable and satellite bills for millions of Americans.

The prescribed divestitures shouldn’t come as a big surprise to Gray. When the company originally announced the deal in June, it said it had plans to divest stations in those overlapping markets which include Knoxville, Tennessee; Toledo, Ohio; Waco, Texas; Tallahassee, Florida; Augusta, Georgia; Odessa, Texas; Panama City, Florida; Albany, Georgia; and Dothan, Alabama.

Gray expects to either receive cash or station swaps for the operations it’s divesting.

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