83_FR_40711 83 FR 40553 - United States v. The Walt Disney Company, et al.; Proposed Final Judgment and Competitive Impact Statement

83 FR 40553 - United States v. The Walt Disney Company, et al.; Proposed Final Judgment and Competitive Impact Statement

DEPARTMENT OF JUSTICE
Antitrust Division

Federal Register Volume 83, Issue 158 (August 15, 2018)

Page Range40553-40567
FR Document2018-17521

Federal Register, Volume 83 Issue 158 (Wednesday, August 15, 2018)
[Federal Register Volume 83, Number 158 (Wednesday, August 15, 2018)]
[Notices]
[Pages 40553-40567]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-17521]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF JUSTICE

Antitrust Division


United States v. The Walt Disney Company, et al.; Proposed Final 
Judgment and Competitive Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. Sec.  16(b)-(h), that a proposed Final 
Judgment, Stipulation, and Competitive Impact Statement have been filed 
with the United States District Court for the Southern District of New 
York in United States of America v. The Walt Disney Company, et al., 
Civil Action No. 1:18-cv-05800. On June 27, 2018, the United States 
filed a Complaint alleging that The Walt Disney Company's proposed 
acquisition of certain assets from Twenty-First Century Fox, Inc. would 
violate Section 7 of the Clayton Act, 15 U.S.C. 18. The proposed Final 
Judgment, filed at the same time as the Complaint, requires The Walt 
Disney Company to divest Fox's interests in the following regional 
sports networks: (i) Fox Sports Arizona; (ii) Fox Sports Carolinas; 
(iii) Fox Sports Detroit; (iv) Fox Sports Florida; (v) Fox Sports 
Indiana; (vi) Fox Sports Kansas City; (vii) Fox Sports Midwest; (viii) 
Fox Sports New Orleans; (ix) Fox Sports North; (x) Fox Sports Ohio; 
(xi) SportsTime Ohio; (xii) Fox Sports Oklahoma; (xiii) Fox Sports San 
Diego; (xiv) Fox Sports South; (xv) Fox Sports Southeast; (xvi) Fox 
Sports Southwest; (xvii) Fox Sports Sun; (xviii) Fox Sports Tennessee; 
(xix) Fox Sports West; (xx) Prime Ticket; (xxi) Fox Sports Wisconsin; 
and (xxii) the YES Network.
    Copies of the Complaint, proposed Final Judgment, and Competitive 
Impact Statement are available for inspection on the Antitrust 
Division's website at http://www.justice.gov/atr and at the Office of 
the Clerk of the United States District Court for the Southern District 
of New York. Copies of these materials may be obtained from the 
Antitrust Division upon request and payment of the copying fee set by 
Department of Justice regulations.
    Public comment is invited within 60 days of the date of this 
notice. Such comments, including the name of the submitter, and 
responses thereto, will be posted on the Antitrust Division's website, 
filed with the Court, and, under certain circumstances, published in 
the Federal Register. Comments should be directed to Owen M. Kendler, 
Chief, Media, Entertainment, and Professional Services Section, 
Antitrust Division, Department of Justice, Washington, DC 20530, 
(telephone: 202-305-8376).

Patricia A. Brink,
Director of Civil Enforcement.

United States District Court for the Southern District of New York

    United States of America, Plaintiff, v. The Walt Disney Company, 
and Twenty-First Century Fox, Inc., Defendants.

Civil Action No.: 1:18-cv-05800 (CM)(KNF)

COMPLAINT

    The United States of America, acting under the direction of the 
Attorney General of the United States, brings this civil action to 
enjoin the acquisition by The Walt Disney Company (``Disney'') of 
certain assets and businesses of Twenty-First Century Fox, Inc. 
(``Fox'') and to obtain other equitable relief.

I. NATURE OF THE ACTION

    1. Cable sports programming is one of the most popular forms of 
entertainment in the United States. Disney's proposed acquisition of 
Fox's assets would combine two of the country's most valuable cable 
sports properties--Disney's ESPN franchise of networks and Fox's 
portfolio of Regional Sports Networks (``RSNs'')--and thereby likely 
substantially lessen competition in the multiple Designated Market 
Areas (``DMAs'') throughout the United States in which these two firms 
compete.
    2. Pursuant to an Agreement and Plan of Merger dated December 13, 
2017, as amended on June 20, 2018, Disney agreed to acquire certain 
assets and businesses, including Fox's ownership

[[Page 40554]]

of or interests in its RSNs, FX cable networks, National Geographic 
cable networks, television studio, Hulu, film studio, and international 
television businesses, (the ``Sale Assets'') from Fox for approximately 
$71.3 billion (the ``Transaction''). Fox operates and proposes to sell 
to Disney its interests in the following RSNs: (i) Fox Sports Arizona, 
(ii) Fox Sports Carolinas, (iii) Fox Sports Detroit, (iv) Fox Sports 
Florida, (v) Fox Sports Indiana, (vi) Fox Sports Kansas City, (vii) Fox 
Sports Midwest, (viii) Fox Sports New Orleans, (ix) Fox Sports North, 
(x) Fox Sports Ohio, (xi) SportsTime Ohio, (xii) Fox Sports Oklahoma, 
(xiii) Fox Sports San Diego, (xiv) Fox Sports South, (xv) Fox Sports 
Southeast, (xvi) Fox Sports Southwest, (xvii) Fox Sports Sun, (xviii) 
Fox Sports Tennessee, (xix) Fox Sports West, (xx) Prime Ticket, (xxi) 
Fox Sports Wisconsin, and (xxii) the YES Network.
[GRAPHIC] [TIFF OMITTED] TN15AU18.000

    3. An RSN is a cable network that telecasts live games of one or 
more local professional sports team--i.e., a ``home'' team or teams 
within that particular region. An RSN's contract with a local sports 
team typically provides the RSN with the exclusive rights, within a 
team's local region, to telecast live nearly all that team's games. 
Collectively, the Fox RSNs are the largest group of commonly controlled 
RSNs. In the aggregate, the Fox RSNs have approximately 61 million 
subscribers across the country and have rights to telecast live games 
of 44 of 91 (48%) U.S. professional sports teams in three of the four 
major sports leagues: Major League Baseball (``MLB''), the National 
Basketball Association (``NBA'') and the National Hockey League 
(``NHL''). More specifically, the Fox RSNs have the local rights to 15 
of 30 (50%) MLB teams, 17 of 30 (57%) NBA teams, and 12 of 31 (39%) NHL 
teams.
    4. Cable sports television networks--including RSNs--compete to be 
carried in the programming packages that multichannel video programming 
distributors (``MVPDs''), such as Comcast, Charter, DISH, and FiOS, 
offer to their subscribers. For RSNs, the carriage license typically is 
limited to the DMAs comprising the ``home'' territory of the team or 
teams carried on the RSN; whereas, licenses for national television 
networks typically comprise all DMAs in a MVPD's footprint. Disney's 
and Fox's cable sports television programming compete head-to-head to 
be carried on MVPDs in all the DMAs where Fox's RSNs are located: 
Phoenix, Arizona; Detroit, Michigan; Milwaukee, Wisconsin; Cleveland, 
Ohio; Cincinnati, Ohio; Columbus, Ohio; Miami, Florida; Oklahoma City, 
Oklahoma; Tampa Bay, Florida; Dallas, Texas; St. Louis, Missouri; 
Atlanta, Georgia; Indianapolis, Indiana; Orlando, Florida; San Antonio, 
Texas; Minneapolis, Minnesota; Nashville, Tennessee; Memphis, 
Tennessee; San Diego, California; Raleigh-Durham, North Carolina; New 
Orleans, Louisiana; Kansas City, Kansas; Charlotte, North Carolina; Los 
Angeles, California; and New York, New York (collectively, the ``DMA 
Markets'').
    5. If consummated, the proposed acquisition would eliminate the 
substantial head-to-head competition that currently exists between 
Disney and Fox and would likely result in higher prices for cable 
sports programming in each of the DMA Markets. Consequently, 
Defendants' proposed Transaction likely would substantially lessen 
competition in those markets in violation of Section 7 of the Clayton 
Act, 15 U.S.C. Sec.  18.

II. JURISDICTION, VENUE, AND COMMERCE

    6. The United States brings this action pursuant to Section 15 of 
the Clayton Act, 15 U.S.C. Sec.  25, to prevent and restrain Disney and 
Fox from violating Section 7 of the Clayton Act, 15 U.S.C. Sec.  18.
    7. The Court has subject-matter jurisdiction over this action 
pursuant to Section 15 of the Clayton Act, 15 U.S.C. Sec.  25, and 28 
U.S.C. Sec. Sec.  1331, 1337(a), and 1345.
    8. Disney and Fox are engaged in interstate commerce and in 
activities substantially affecting interstate commerce. They each 
license programming to MVPDs located across the country in exchange for 
license, or ``affiliate,'' fees. They each own and operate television 
networks that are distributed to viewers throughout the United States. 
Their television programming licenses have had a substantial effect on 
interstate commerce.
    9. Defendants have consented to venue and personal jurisdiction in 
this

[[Page 40555]]

District. Venue is also proper in this District under Section 12 of the 
Clayton Act, 15 U.S.C. Sec.  22, and 28 U.S.C. Sec.  1391(c).

III. THE DEFENDANTS

    10. Disney is a Delaware corporation headquartered in Burbank, 
California. It reported revenue of $55 billion for fiscal year 2017. 
Disney owns various television programming assets, including 80% of 
ESPN--a sports entertainment company that operates several domestic 
sports television networks. Disney's other television programming 
assets include: (i) the ABC television network; (ii) eight owned-and-
operated ABC broadcast stations; (iii) Disney-branded television 
networks; and (iv) Freeform, a television network geared toward 
teenagers and young adults.
    11. Fox is a Delaware corporation headquartered in New York, New 
York. It reported revenue of $28.5 billion for fiscal year 2017. The 
Fox Sale Assets, which include several television programing assets and 
all of the Fox RSNs, generated $19 billion in revenue for fiscal year 
2017.

IV. RELEVANT MARKETS

    12. The licensing of cable sports programming to MVPDs constitutes 
a relevant product market and line of commerce under Section 7 of the 
Clayton Act. This includes licensing to both MVPDs and virtual MVPDs. 
Cable sports programming includes cable networks that devote a 
substantial portion of programming time to airing live sports events, 
such as MLB games.
    13. The DMA Markets constitute geographic markets under Section 7 
of the Clayton Act. A DMA is a geographical unit for which A.C. Nielsen 
Company--a firm that surveys television viewers--furnishes MVPDs, among 
others, with data to aid in evaluating audience size and composition in 
a particular area. DMAs are widely accepted by MVPDs as the standard 
geographic area to use in evaluating television audience size and 
demographic composition. The Federal Communications Commission also 
uses DMAs as geographic units with respect to its MVPD regulations.
    14. Disney and Fox license cable sports programming to MVPDs in 
each of the DMA Markets in which MVPDs provide programming to 
subscribers as part of bundled channel packages. Disney's and Fox's 
cable sports programming in each of the DMA Markets generates a 
significant amount of revenue through licensing fees to MVPDs in those 
markets.
    15. Sports programming is important to MVPDs because sports viewers 
comprise an important customer group for MVPDs, and MVPDs could not 
attract many of these sports viewers without including sports 
television programming in the MVPDs' packages of available networks.
    16. For MVPDs, sports programming on broadcast television is 
unlikely a sufficient substitute for cable sports programming. MVPDs do 
not typically consider broadcast networks as providing the same type of 
content as cable networks like ESPN and the RSNs. Broadcast networks 
and their affiliates aim to have broad appeal by offering a variety of 
highly-rated programming content including primetime entertainment 
shows, syndicated shows, and local and national news and weather in 
addition to sports, with marquee sports events making up a small 
percentage of a broadcast network's airtime. For that reason, MVPDs do 
not typically consider broadcast network programming as a replacement 
for cable sports programming.
    17. Accordingly, a hypothetical monopolist of all cable sports 
programming in a DMA Market likely would profitably increase licensing 
fees to MVPDs in that DMA Market by at least a small but significant 
amount.

V. LIKELY ANTICOMPETITIVE EFFECTS

    18. The cable sports programming market in nearly all of the DMA 
Markets is already highly concentrated. As a result of the Transaction, 
Disney's networks would account for at least 60 percent of cable sports 
programming revenue in 19 of the DMA Markets and over 45 percent in the 
remaining six DMA Markets. Consequently, bringing Disney's ESPN 
networks and Fox's RSNs under common ownership would significantly 
concentrate the cable sports programming market in each of the DMA 
Markets.
    19. Market concentration is often a useful indicator of the likely 
competitive effects of a merger. The more concentrated a market, and 
the more a transaction would increase concentration in a market, the 
more likely it is that the transaction would result in a meaningful 
reduction in competition that harms consumers.
    20. The Herfindahl-Hirschman Index (``HHI'') is a standard measure 
of market concentration. Under the Horizontal Merger Guidelines issued 
by the Department of Justice and the Federal Trade Commission, mergers 
resulting in highly concentrated markets (with an HHI in excess of 
2,500) that involve an increase in the HHI of more than 200 points are 
presumed to be likely to enhance market power.
    21. Using 2017 gross cable sports programming revenue, in each of 
the DMA Markets, the combination of Disney and the Fox Sale Assets 
would result in HHIs in excess of 2,500 and involve an increase in the 
HHI of more than 200. Therefore, in each DMA Market, the HHI levels are 
above the thresholds at which a merger is presumed likely to enhance 
market power.
    22. For example, in the Detroit DMA Market, where Fox operates Fox 
Sports Detroit, the Transaction would result in a post-merger HHI of 
over 4,000 with an increase of over 1,400. Therefore, in this market, 
the Transaction results in a presumptively anticompetitive level of 
concentration. Similarly, the Transaction would result in presumptively 
anticompetitive levels of concentration in each of the other DMA 
Markets.
    23. In addition to substantially increasing concentration levels in 
each of the DMA Markets, the proposed Transaction would combine cable 
sports networks that are at least partial substitutes. Accordingly, the 
proposed Transaction would likely diminish competition in the 
negotiation of licenses for cable sports programming with MVPDs that 
have subscribers in the DMA Markets. Post-acquisition, Disney would 
gain the ability to threaten MVPDs in each of the DMA Markets with the 
simultaneous blackout of two of the most significant cable networks 
carrying sports programming: ESPN and a local RSN. ESPN and the local 
Fox RSN generate the highest and second-highest affiliate fees per 
subscriber in most of the 25 DMAs, and they are among the networks that 
generate the highest affiliate fees per subscriber in every one of the 
25 DMAs.
    24. The threat of double blackouts in the DMA Markets--and the 
resulting disproportionate loss of an MVPD's subscribers and profits--
likely would significantly strengthen Disney's bargaining position with 
MVPDs. Before the merger, an MVPD's failure to reach an agreement with 
Disney could result in a blackout of Disney's networks in the MVPD's 
footprint and threaten it with some subscriber loss. But the MVPD would 
still be able to offer the sports programming on Fox's RSNs during a 
Disney blackout, thereby minimizing subscription cancellations. After 
the merger, an MVPD negotiating with Disney would face the prospect of 
a dual blackout of ESPN and the local RSN in one or more DMA Markets, 
likely resulting in disproportionately

[[Page 40556]]

more subscriber loss. Because the leverage that a television programmer 
has in negotiations with the MVPD is derived at least in part from its 
leverage within each DMA Market in the MVPD's footprint, the threat of 
a dual blackout would likely cause an MVPD to accede to a demand by 
Disney for higher license fees. For these reasons, the loss of 
competition between Disney and the Fox Sale Assets in each DMA Market 
would likely lead to an increase in total licensing fees in each DMA 
Market and, because increased licensing fees typically are passed on to 
consumers, would result in higher subscription fees for customers of 
MVPDs.

VI. ABSENCE OF COUNTERVAILING FACTORS

    25. Entry would not be timely, likely or sufficient to prevent the 
Transaction's likely anticompetitive effects. Professional sport teams 
auction the exclusive rights to telecast their games under long-term 
contracts. Because these contracts typically last many years, there are 
infrequent opportunities for entrants to bid for these highly valuable 
licensing rights.
    26. Defendants cannot demonstrate acquisition-specific and 
cognizable efficiencies that would be sufficient to offset the proposed 
acquisition's likely anticompetitive effects.

VII. VIOLATIONS ALLEGED

    27. Disney's proposed acquisition of the Fox Sale Assets likely 
would substantially lessen competition in interstate trade and 
commerce, in violation of Section 7 of the Clayton Act, 15 U.S.C. Sec.  
18. The proposed acquisition likely would:

    a. substantially lessen competition in the licensing of cable 
sports programming in each of the DMA Markets;
    b. eliminate actual and potential competition among Disney and Fox 
in the licensing of cable sports programming in each of the DMA 
Markets; and
    c. cause prices for cable sports programming in each of the DMA 
Markets to increase.

VIII. REQUEST FOR RELIEF

    28. The United States requests that the Court:

    a. adjudge the proposed acquisition to violate Section 7 of the 
Clayton Act, 15 U.S.C. Sec.  18;
    b. permanently enjoin and restrain Defendants from carrying out the 
Transaction, or entering into any other agreement, understanding, or 
plan by which Disney would acquire the Fox Sale Assets;
    c. award the United States the costs of this action; and
    d. award such other relief to the United States as the Court may 
deem just and proper.

Dated: June 27, 2018

Respectfully submitted,

FOR PLAINTIFF UNITED STATES OF AMERICA
-----------------------------------------------------------------------

MAKAN DELRAHIM
Assistant Attorney General for Antitrust
-----------------------------------------------------------------------

ANDREW C. FINCH

Principal Deputy Assistant Attorney General
-----------------------------------------------------------------------

PATRICIA A. BRINK

Director of Civil Enforcement
-----------------------------------------------------------------------

OWEN M. KENDLER

Chief, Media, Entertainment & Professional Services Section
-----------------------------------------------------------------------

YVETTE TARLOV

Assistant Chief, Media, Entertainment & Professional Services 
Section
-----------------------------------------------------------------------

CRAIG D. MINERVA
LEE F. BERGER
JEREMY EVANS
RACHEL FLIPSE
BRIAN HANNA
MARK MERVA
KATE RIGGS
LAUREN RIKER
MONSURA SIRAJEE
ADAM C. SPEEGLE
LOWELL STERN

United States Department of Justice, Antitrust Division, Media, 
Entertainment & Professional, Services Section, 450 Fifth Street NW, 
Suite 4000, Washington, DC 20530, Telephone: (202) 353-2384, 
Facsimile: (202) 514-730

United States District Court for the Southern District of New York

    United States of America, Plaintiff, v. The Walt Disney Company, 
and Twenty-First Century Fox, Inc., Defendants.

PROPOSED FINAL JUDGMENT

    WHEREAS, Plaintiff, the United States of America, filed its 
Complaint on June 27, 2018, and defendant The Walt Disney Company 
(``Disney'') and defendant Twenty-First Century Fox, Inc. (``Fox''), by 
their respective attorneys, have consented to the entry of this Final 
Judgment without trial or adjudication of any issue of fact or law, and 
without this Final Judgment constituting any evidence against or 
admission by any party regarding any issue of fact or law;
    AND WHEREAS, defendants agree to be bound by the provisions of this 
Final Judgment pending its approval by the Court;
    AND WHEREAS, the essence of this Final Judgment is the prompt and 
certain divestiture of certain rights or assets by Disney to assure 
that competition is not substantially lessened;
    AND WHEREAS, the United States requires Disney to make certain 
divestitures for the purpose of remedying the loss of competition 
alleged in the Complaint;
    AND WHEREAS, Disney has represented to the United States that the 
divestitures required below can and will be made and that defendants 
will later raise no claim of hardship or difficulty as grounds for 
asking the Court to modify any of the divestiture provisions contained 
below;
    NOW THEREFORE, before any testimony is taken, without trial or 
adjudication of any issue of fact or law, and upon consent of the 
parties, it is ORDERED, ADJUDGED, AND DECREED:

I. JURISDICTION

    This Court has jurisdiction over the subject matter of, and each of 
the parties to, this action. The Complaint states a claim upon which 
relief may be granted against defendants under Section 7 of the Clayton 
Act, as amended, 15 U.S.C. Sec.  18.

II. DEFINITIONS

    As used in this Final Judgment:
    A. ``Disney'' means defendant The Walt Disney Company, a Delaware 
corporation headquartered in Burbank, California, its successors and 
assigns, and its subsidiaries, divisions, groups, affiliates, 
partnerships, and joint ventures, and their directors, officers, 
managers, agents, and employees.
    B. ``Fox'' means defendant Twenty-First Century Fox, Inc., a 
Delaware corporation headquartered in New York, New York, its 
successors and assigns, and its subsidiaries, divisions, groups, 
affiliates, partnerships, and joint ventures, and their directors, 
officers, managers, agents, and employees.
    C. ``Acquirer'' means an entity to which defendants divest any of 
the Divestiture Assets.
    D. ``Fox RSNs'' means all of Fox's interests in the following video 
networks or programming assets:
    (1) Fox Sports Arizona;
    (2) Fox Sports Carolinas;
    (3) Fox Sports Detroit;
    (4) Fox Sports Florida;
    (5) Fox Sports Indiana;
    (6) Fox Sports Kansas City;
    (7) Fox Sports Midwest;
    (8) Fox Sports New Orleans;
    (9) Fox Sports North;
    (10) Fox Sports Ohio;

[[Page 40557]]

    (11) SportsTime Ohio;
    (12) Fox Sports Oklahoma;
    (13) Fox Sports San Diego;
    (14) Fox Sports South;
    (15) Fox Sports Southeast;
    (16) Fox Sports Southwest;
    (17) Fox Sports Sun;
    (18) Fox Sports Tennessee;
    (19) Fox Sports West;
    (20) Prime Ticket;
    (21) Fox Sports Wisconsin; and
    (22) the YES Network.
    E. ``Divestiture Assets'' means all of Fox's interests in the Fox 
RSNs, including all of the assets, tangible or intangible, necessary 
for the operations of the Fox RSNs as viable, ongoing video networks or 
programming assets, including, but not limited to, all real property 
(owned or leased), all broadcast equipment, office furniture, fixtures, 
materials, supplies, and other tangible property; all licenses, permits 
and authorizations issued by any governmental organization relating to 
the operation of the asset; all contracts (including content, 
programming and distribution contracts and rights), agreements 
(including transition services agreements), leases, and commitments and 
understanding of defendants; all trademarks, service marks, trade 
names, copyrights, patents, slogans, programming materials, and 
promotional materials relating to each video network; all customer 
lists, contracts, accounts, credit records, and all logs and other 
records maintained by Fox in connection with each video network. Except 
as set forth in Paragraph IV(H) of this Final Judgment, Divestiture 
Assets do not include trademarks, trade names, service marks, or 
service names containing the name ``Fox.''
    F. The term ``Transaction'' means the transaction that is the 
subject of the Agreement and Plan of Merger among Twenty-First Century 
Fox, Inc., The Walt Disney Company, TWDC Holdco 613 corp., WDC Merger 
Enterprises II Corp., and WDC Merger Enterprises I, LLC, dated June 20, 
2018.

III. APPLICABILITY

    A. This Final Judgment applies to Disney and Fox, as defined above, 
and all other persons in active concert or participation with any of 
them who receive actual notice of this Final Judgment by personal 
service or otherwise.
    B. If, after the closing and prior to complying with Section IV and 
Section V of this Final Judgment, Disney sells or otherwise disposes of 
all or substantially all of the assets or lesser business units that 
include the Divestiture Assets, it shall require the purchaser to be 
bound by the provisions of this Final Judgment. Disney need not obtain 
such an agreement from the Acquirer(s) of the assets divested pursuant 
to this Final Judgment.

IV. DIVESTITURES

    A. Disney is ordered and directed, within ninety (90) calendar days 
after the closing of the Transaction, or five (5) calendar days after 
notice of entry of this Final Judgment by the Court, whichever is 
later, to divest the Divestiture Assets in a manner consistent with 
this Final Judgment to one or more Acquirers acceptable to the United 
States, in its sole discretion. The United States, in its sole 
discretion, may agree to one or more extensions of this time period not 
to exceed ninety (90) calendar days in total, and shall notify the 
Court in such circumstances. With respect to divestiture of the 
Divestiture Assets by Disney or a trustee appointed pursuant to Section 
V of this Final Judgment, Disney agrees to use its best efforts to 
divest the Divestiture Assets as expeditiously as possible after the 
closing of the Transaction. For the avoidance of doubt, nothing in this 
Final Judgment shall require Fox to divest any of the Divestiture 
Assets prior to the closing of the Transaction.
    B. In accomplishing the divestiture ordered by this Final Judgment, 
Disney promptly shall make known, by usual and customary means, the 
availability of the Divestiture Assets. Disney shall inform any person 
making an inquiry regarding a possible purchase of the Divestiture 
Assets that they are being divested pursuant to this Final Judgment and 
provide that person with a copy of this Final Judgment. Defendants 
shall offer to furnish to all prospective Acquirers, subject to 
customary confidentiality assurances, all information and documents 
relating to the Divestiture Assets customarily provided in a due 
diligence process, except such information or documents subject to the 
attorney-client privilege or work-product doctrine. Defendants shall 
make available such information to the United States at the same time 
that such information is made available to any other person.
    C. Defendants shall provide the Acquirer(s) and the United States 
information relating to the personnel involved in the production and 
operation of the Divestiture Assets to enable the Acquirer(s) to make 
offers of employment. Defendants will not interfere with any 
negotiations by the Acquirer(s) to employ upon closing of the sale of 
each of the Divestiture Assets any defendant employee whose primary 
responsibility is the production and operation of the Divestiture 
Assets.
    D. Defendants shall permit the prospective Acquirer(s) of the 
Divestiture Assets to have reasonable access to personnel and to make 
inspections of the Divestiture Assets; access to any and all 
environmental, zoning, and other permit documents and information; and 
access to any and all financial, operational, or other documents and 
information customarily provided as part of a due diligence process.
    E. Disney shall warrant to the Acquirer(s) that each Divestiture 
Asset will be operational on the date of sale.
    F. Defendants shall not take any action that will impede in any way 
the permitting, operation, or divestiture of the Divestiture Assets.
    G. Disney shall warrant to the Acquirer(s) (1) that there are no 
material defects in the environmental, zoning, or other permits 
pertaining to the operation of each Divestiture Asset, and (2) that 
following the sale of the Divestiture Assets, Disney will not 
undertake, directly or indirectly, any challenges to the environmental, 
zoning, or other permits relating to the operation of the Divestiture 
Assets.
    H. Notwithstanding Paragraph II(E), that the Divestiture Assets do 
not include trademarks, trade names, service marks, or service names 
containing the name ``Fox,'' the defendants shall offer any Acquirer(s) 
of a Fox RSN a non-exclusive royalty-free license for use of the 
``Fox'' trademark consistent with that RSN's current usage of that 
trademark for a time period of at least eighteen (18) months.
    I. At the option of Acquirer(s), on or before the closing date of 
any divestiture, Disney shall enter into one or more transition 
services agreements, approved in advance by the United States in its 
sole discretion, to provide any transition services reasonably 
necessary to operate any Divestiture Assets as viable, ongoing video 
networks or programming assets.
    J. Unless the United States otherwise consents in writing, the 
divestitures pursuant to Section IV, or by trustee appointed pursuant 
to Section V of this Final Judgment, shall include the entire 
Divestiture Assets and be accomplished in such a way as to satisfy the 
United States, in its sole discretion, that the Divestiture Assets can 
and will be used by the Acquirer(s) as part of a viable, ongoing 
business of selling, supplying, or licensing video programming. 
Divestiture of the Divestiture Assets may be made to one or more 
Acquirers, provided that in each instance it is demonstrated to the 
sole satisfaction of

[[Page 40558]]

the United States that the Divestiture Assets will remain viable, and 
the divestiture of such assets will achieve the purposes of this Final 
Judgment and remedy the competitive harm alleged in the Complaint. The 
divestitures, whether pursuant to Section IV or Section V of this Final 
Judgment:

(1) shall be made to an Acquirer(s) that, in the United States' sole 
judgment, has the intent and capability (including the necessary 
managerial, operational, technical, and financial capability) of 
competing effectively in the business of selling, supplying, and 
licensing video programming; and
(2) shall be accomplished so as to satisfy the United States, in its 
sole discretion, that none of the terms of any agreement between the 
Acquirer(s) and defendants gives defendants the ability unreasonably to 
raise the costs of the Acquirer(s), to lower the efficiency of the 
Acquirer(s), or otherwise to interfere in the ability of the 
Acquirer(s) to compete effectively.

V. APPOINTMENT OF TRUSTEE

    A. If Disney has not divested the Divestiture Assets within the 
time period specified in Section IV(A), Disney shall notify the United 
States of that fact in writing, specifically identifying the 
Divestiture Assets that have not been divested (the ``relevant 
Divestiture Assets''). Upon application of the United States, the Court 
shall appoint a trustee selected by the United States and approved by 
the Court to effect the divestiture of the relevant Divestiture Assets.
    B. After the appointment of a trustee becomes effective, only the 
trustee shall have the right to sell the relevant Divestiture Assets. 
The trustee shall have the power and authority to accomplish the 
divestiture to an Acquirer acceptable to the United States at such 
price and on such terms as are then obtainable upon reasonable effort 
by the trustee, subject to the provisions of Sections IV, V, and VI of 
this Final Judgment, and shall have such other powers as this Court 
deems appropriate. Subject to Section V(D) of this Final Judgment, the 
trustee may hire at the cost and expense of Disney any investment 
bankers, attorneys, or other agents, who shall be solely accountable to 
the trustee, reasonably necessary in the trustee's judgment to assist 
in the divestiture. Any such investment bankers, attorneys, or other 
agents shall serve on such terms and conditions as the United States 
approves, including confidentiality requirements and conflict of 
interest certifications.
    C. Defendants shall not object to a sale by the trustee on any 
ground other than the trustee's malfeasance. Any such objections by 
defendants must be conveyed in writing to the United States and the 
trustee within ten (10) calendar days after the trustee has provided 
the notice required under Section VI.
    D. The trustee shall serve at the cost and expense of Disney 
pursuant to a written agreement, on such terms and conditions as the 
United States approves, including confidentiality requirements and 
conflict of interest certifications. The trustee shall account for all 
monies derived from the sale of the relevant Divestiture Assets and all 
costs and expenses so incurred. After approval by the Court of the 
trustee's accounting, including fees for its services yet unpaid and 
those of any professionals and agents retained by the trustee, all 
remaining money shall be paid to Disney and the trust shall then be 
terminated. The compensation of the trustee and any professionals and 
agents retained by the trustee shall be reasonable in light of the 
value of the relevant Divestiture Assets and based on a fee arrangement 
providing the trustee with an incentive based on the price and terms of 
the divestiture and the speed with which it is accomplished, but 
timeliness is paramount. If the trustee and Disney are unable to reach 
agreement on the trustee's or any agents' or consultants' compensation 
or other terms and conditions of engagement within 14 calendar days of 
appointment of the trustee, the United States may, in its sole 
discretion, take appropriate action, including making a recommendation 
to the Court. The trustee shall, within three (3) business days of 
hiring any other professionals or agents, provide written notice of 
such hiring and the rate of compensation to defendants and the United 
States.
    E. Disney shall use its best efforts to assist the trustee in 
accomplishing the required divestiture. The trustee and any 
consultants, accountants, attorneys, and other agents retained by the 
trustee shall have full and complete access to the personnel, books, 
records, and facilities of the business to be divested, and Disney 
shall develop financial and other information relevant to such business 
as the trustee may reasonably request, subject to reasonable protection 
for trade secret or other confidential research, development, or 
commercial information or any applicable privileges. Defendants shall 
take no action to interfere with or to impede the trustee's 
accomplishment of the divestiture.
    F. After its appointment, the trustee shall file monthly reports 
with the United States and, as appropriate, the Court setting forth the 
trustee's efforts to accomplish the divestitures ordered under this 
Final Judgment. To the extent such reports contain information that the 
trustee deems confidential, such reports shall not be filed in the 
public docket of the Court. The trustee's reports shall include the 
name, address, and telephone number of each person who, during the 
preceding month, made an offer to acquire, expressed an interest in 
acquiring, entered into negotiations to acquire, or was contacted or 
made an inquiry about acquiring, any interest in the Divestiture 
Assets, and shall describe in detail each contact with any such person. 
The trustee shall maintain full records of all efforts made to divest 
the relevant Divestiture Assets.
    G. If the trustee has not accomplished the divestitures ordered 
under this Final Judgment within six (6) months after its appointment, 
the trustee shall promptly file with the Court a report setting forth 
(1) the trustee's efforts to accomplish the required divestiture, (2) 
the reasons, in the trustee's judgment, why the required divestiture 
has not been accomplished, and (3) the trustee's recommendations. To 
the extent such report contains information that the trustee deems 
confidential, such report shall not be filed in the public docket of 
the Court. The trustee shall at the same time furnish such report to 
the United States which shall have the right to make additional 
recommendations consistent with the purpose of the trust. The Court 
thereafter shall enter such orders as it shall deem appropriate to 
carry out the purpose of the Final Judgment, which may, if necessary, 
include extending the trust and the term of the trustee's appointment 
by a period requested by the United States.
    H. If the United States determines that the trustee has ceased to 
act or failed to act diligently or in a reasonably cost-effective 
manner, it may recommend the Court appoint a substitute trustee.

VI. NOTICE OF PROPOSED DIVESTITURE

    A. Within two (2) business days following execution of a definitive 
divestiture agreement, Disney or the trustee, whichever is then 
responsible for effecting the divestitures required herein, shall 
notify the United States of any proposed divestiture required by 
Section IV or Section V of this Final Judgment. If the trustee is 
responsible, it shall similarly notify defendants. The notice shall set 
forth the details of the proposed divestiture and list the name, 
address, and telephone number of each person not previously identified 
who offered or expressed an interest in or

[[Page 40559]]

desire to acquire any ownership interest in the Divestiture Assets, 
together with full details of the same.
    B. Within fifteen (15) calendar days of receipt by the United 
States of such notice, the United States may request from defendants, 
the proposed Acquirer, any other third party, or the trustee, if 
applicable, additional information concerning the proposed divestiture, 
the proposed Acquirer, and any other potential Acquirers. Defendants 
and the trustee shall furnish any additional information requested 
within fifteen (15) calendar days of the receipt of the request, unless 
the parties shall otherwise agree.
    C. Within thirty (30) calendar days after receipt of the notice or 
within twenty (20) calendar days after the United States has been 
provided the additional information requested from defendants, the 
proposed Acquirer(s), any third party, and the trustee, whichever is 
later, the United States shall provide written notice to defendants and 
the trustee, if there is one, stating whether or not it objects to the 
proposed divestiture. If the United States provides written notice that 
it does not object, the divestiture may be consummated, subject only to 
defendants' limited right to object to the sale under Paragraph V(C) of 
this Final Judgment. Absent written notice that the United States does 
not object to the proposed Acquirer(s) or upon objection by the United 
States, a divestiture proposed under Section IV or Section V shall not 
be consummated. Upon objection by defendants under Paragraph V(C), a 
divestiture proposed under Section V shall not be consummated unless 
approved by the Court.

VII. FINANCING

    Disney shall not finance all or any part of any purchase made 
pursuant to Section IV or Section V of this Final Judgment.

VIII. HOLD SEPARATE

    Until the divestitures required by this Final Judgment have been 
accomplished, defendants shall take all steps necessary to comply with 
the Hold Separate Stipulation and Order entered by this Court. After 
the Transaction has been consummated or closed, defendants shall take 
no action that would jeopardize the divestiture ordered by this Court.

IX. AFFIDAVITS

    A. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, and every thirty (30) calendar days thereafter until 
the divestiture has been completed under Section IV or Section V of 
this Final Judgment, defendants shall deliver to the United States an 
affidavit, signed by each defendant's Chief Financial Officer and 
General Counsel, which shall describe the fact and manner of 
defendant's compliance with Section IV or Section V of this Final 
Judgment. Each such affidavit shall include the name, address, and 
telephone number of each person who, during the preceding thirty (30) 
calendar days, made an offer to acquire, expressed an interest in 
acquiring, entered into negotiations to acquire, or was contacted or 
made an inquiry about acquiring, any interest in the Divestiture 
Assets, and shall describe in detail each contact with any such person 
during that period. Each such affidavit shall also include a 
description of the efforts defendants have taken to solicit buyers for 
and complete the sale of the Divestiture Assets, including efforts to 
secure regulatory approvals, and to provide required information to 
prospective Acquirers, including the limitations, if any, on such 
information.
    Assuming the information set forth in the affidavit is true and 
complete, any objection by the United States to information provided by 
defendants, including limitations on information, shall be made within 
fourteen (14) calendar days of receipt of such affidavit.
    B. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, defendants shall deliver to the United States an 
affidavit that describes in reasonable detail all actions defendants 
have taken and all steps defendants have implemented on an ongoing 
basis to comply with Section VIII of this Final Judgment. Defendants 
shall deliver to the United States an affidavit describing any changes 
to the efforts and actions outlined in defendant's earlier affidavits 
filed pursuant to this section within fifteen (15) calendar days after 
the change is implemented.
    C. Defendants shall keep all records of all efforts made to 
preserve and divest the Divestiture Assets until one year after such 
divestiture has been completed.

X. COMPLIANCE INSPECTION

    A. For the purposes of determining or securing compliance with this 
Final Judgment, or of any related orders such as any Hold Separate 
Stipulation and Order, or of determining whether the Final Judgment 
should be modified or vacated, and subject to any legally recognized 
privilege, from time to time authorized representatives of the United 
States Department of Justice, including consultants and other persons 
retained by the United States, shall, upon written request of an 
authorized representative of the Assistant Attorney General in charge 
of the Antitrust Division, and on reasonable notice to defendants, be 
permitted:

(1) access during defendants' office hours to inspect and copy, or at 
the option of the United States, to require defendants to provide hard 
copies or electronic copies of, all books, ledgers, accounts, records, 
data, and documents in the possession, custody, or control of 
defendants, relating to any matters contained in this Final Judgment; 
and
(2) to interview, either informally or on the record, defendants' 
officers, employees, or agents, who may have their individual counsel 
present, regarding such matters. The interviews shall be subject to the 
reasonable convenience of the interviewee and without restraint or 
interference by defendants.

    B. Upon the written request of an authorized representative of the 
Assistant Attorney General in charge of the Antitrust Division, 
defendants shall submit written reports or responses to written 
interrogatories, under oath if requested, relating to any of the 
matters contained in this Final Judgment as may be requested.
    C. No information or documents obtained by the means provided in 
this section shall be divulged by the United States to any person other 
than an authorized representative of the executive branch of the United 
States, except in the course of legal proceedings to which the United 
States is a party (including grand jury proceedings), or for the 
purpose of securing compliance with this Final Judgment, or as 
otherwise required by law.
    D. If at the time information or documents are furnished by 
defendants to the United States, defendants represent and identify in 
writing the material in any such information or documents to which a 
claim of protection may be asserted under Rule 26(c)(1)(G) of the 
Federal Rules of Civil Procedure, and defendants mark each pertinent 
page of such material, ``Subject to claim of protection under Rule 
26(c)(1)(G) of the Federal Rules of Civil Procedure,'' then the United 
States shall give defendants ten (10) calendar days' notice prior to 
divulging such material in any legal proceeding (other than a grand 
jury proceeding).

[[Page 40560]]

XI. NO REACQUISITION

    Disney may not reacquire any of the Divestiture Assets during the 
term of this Final Judgment without prior written approval of the 
United States.

XII. RETENTION OF JURISDICTION

    This Court retains jurisdiction to enable any party to this Final 
Judgment to apply to this Court at any time for further orders and 
directions as may be necessary or appropriate to carry out or construe 
this Final Judgment, to modify any of its provisions, to enforce 
compliance, and to punish violations of its provisions.

XIII. ENFORCEMENT OF FINAL JUDGMENT

    A. The United States retains and reserves all rights to enforce the 
provisions of this Final Judgment, including its right to seek an order 
of contempt from this Court. Defendants agree that in any civil 
contempt action, any motion to show cause, or any similar action 
brought by the United States regarding an alleged violation of this 
Final Judgment, the United States may establish a violation of the 
decree and the appropriateness of any remedy therefor by a 
preponderance of the evidence, and they waive any argument that a 
different standard of proof should apply.
    B. The Final Judgment should be interpreted to give full effect to 
the procompetitive purposes of the antitrust laws and to restore all 
competition harmed by the challenged conduct. Defendants agree that 
they may be held in contempt of, and that the Court may enforce, any 
provision of this Final Judgment that, as interpreted by the Court in 
light of these procompetitive principles and applying ordinary tools of 
interpretation, is stated specifically and in reasonable detail, 
whether or not it is clear and unambiguous on its face. In any such 
interpretation, the terms of this Final Judgment should not be 
construed against either party as the drafter.
    C. In any enforcement proceeding in which the Court finds that the 
defendants have violated this Final Judgment, the United States may 
apply to the Court for a one-time extension of this Final Judgment, 
together with such other relief as may be appropriate. In connection 
with any successful effort by the United States to enforce this Final 
Judgement against a Defendant, whether litigated or resolved prior to 
litigation, that Defendant agrees to reimburse the United States for 
any attorneys' fees, experts' fees, and costs incurred in connection 
with that enforcement effort, including the investigation of the 
potential violation.

XIV. EXPIRATION OF FINAL JUDGMENT

    Unless this Court grants an extension, this Final Judgment shall 
expire seven (7) years from the date of its entry, except that this 
Final Judgment may be terminated upon notice by the United States to 
the Court and the defendants that the divestitures have been completed 
and that the continuation of the Final Judgment no longer is necessary.

XV. PUBLIC INTEREST DETERMINATION

    Entry of this Final Judgment is in the public interest. The parties 
have complied with the requirements of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. Sec.  16, including making copies available to 
the public of this Final Judgment, the Competitive Impact Statement, 
and any comments thereon, and the United States' responses to comments. 
Based upon the record before the Court, which includes the Competitive 
Impact Statement and any comments and responses to comments filed with 
the Court, entry of this Final Judgment is in the public interest.

Date:------------------------------------------------------------------

Court approval subject to procedures of Antitrust Procedures and 
Penalties Act, 15 U.S.C. Sec.  16
-----------------------------------------------------------------------

United States District Judge

United States District Court for the Southern District of New York

    United States of America, Plantiff, v. The Walt Disney Company, 
and Twenty-First Century Fox, Inc., Defendants.

Civil Action No. 1:18-cv-05800 (CM) (KNF)

HOLD SEPARATE STIPULATION AND ORDER

    It is hereby stipulated and agreed by and between the undersigned 
parties, subject to approval and entry by the Court, that:

I. Definitions

    As used in this Hold Separate Stipulation and Order:
    A. ``Acquirer'' or ``Acquirers'' means the entity or entities to 
which defendants divest any of the Divestiture Assets.
    B. ``Disney'' means defendant The Walt Disney Company, a Delaware 
corporation headquartered in Burbank, California, its successors and 
assigns, and its subsidiaries, divisions, groups, affiliates, 
partnerships, and joint ventures, and their directors, officers, 
managers, agents, and employees.
    C. ``Fox'' means defendant Twenty-First Century Fox, Inc., a 
Delaware corporation headquartered in New York, New York, its 
successors and assigns, and its subsidiaries, divisions, groups, 
affiliates, partnerships, and joint ventures, and their directors, 
officers, managers, agents, and employees.
    D. ``Fox RSNs'' means all of Fox's interests in the following video 
networks or programming assets:
    (1) Fox Sports Arizona;
    (2) Fox Sports Carolinas;
    (3) Fox Sports Detroit;
    (4) Fox Sports Florida;
    (5) Fox Sports Indiana;
    (6) Fox Sports Kansas City;
    (7) Fox Sports Midwest;
    (8) Fox Sports New Orleans;
    (9) Fox Sports North;
    (10) Fox Sports Ohio;
    (11) SportsTime Ohio;
    (12) Fox Sports Oklahoma;
    (13) Fox Sports San Diego;
    (14) Fox Sports South;
    (15) Fox Sports Southeast;
    (16) Fox Sports Southwest;
    (17) Fox Sports Sun;
    (18) Fox Sports Tennessee;
    (19) Fox Sports West;
    (20) Prime Ticket;
    (21) Fox Sports Wisconsin; and
    (22) the YES Network.
    E. ``Divestiture Assets'' means all of Fox's interests in the Fox 
RSNs, including, all of the assets, tangible or intangible, necessary 
for the operations of the Fox RSNs as viable, ongoing video networks or 
programming assets, including, but not limited to, all real property 
(owned or leased), all broadcast equipment, office furniture, fixtures, 
materials, supplies, and other tangible property; all licenses, permits 
and authorizations issued by any governmental organization relating to 
the operation of the asset; all contracts (including content, 
programming and distribution contracts and rights), agreements 
(including transition services agreements), leases, and commitments and 
understanding of defendants; all trademarks, service marks, trade 
names, copyrights, patents, slogans, programming materials, and 
promotional materials relating to each video network; all customer 
lists, contracts, accounts, credit records, and all logs and other 
records maintained by Fox in connection with each video network. Except 
as provided in the Final Judgment, Divestiture Assets does not include 
trademarks, trade names, service marks, or service names containing the 
name ``Fox.''
    F. The term ``Transaction'' means the transaction that is the 
subject of the Agreement and Plan of Merger among Twenty-First Century 
Fox, Inc., The

[[Page 40561]]

Walt Disney Company, TWDC Holdco 613 corp., WDC Merger Enterprises II 
Corp., and WDC Merger Enterprises I, LLC, dated June 20, 2018.

II. Objectives

    The Final Judgment filed in this case is meant to ensure 
defendants' prompt divestiture of the Divestiture Assets for the 
purpose of establishing one or more viable competitors in the sale, 
supply, or licensing of video programming in the United States in order 
to remedy the effects that the United States alleges would otherwise 
result from the Transaction. This Hold Separate Stipulation and Order 
ensures, prior to such divestitures, that the Divestiture Assets will 
remain economically viable, and ongoing business concerns that will 
remain independent and uninfluenced by Disney or, after the Transaction 
has been consummated, by Fox, and that competition is maintained during 
the pendency of the ordered divestitures.

III. Jurisdiction and Venue

    The Court has jurisdiction over the subject matter of this action 
and over each of the parties hereto, and venue of this action is proper 
in the United States District Court for the Southern District of New 
York.

IV. Compliance with and Entry of the Proposed Final Judgment

    A. The parties stipulate that a Final Judgment in the form attached 
hereto as Exhibit A may be filed with and entered by the Court, upon 
the motion of any party or upon the Court's own motion, at any time 
after compliance with the requirements of the Antitrust Procedures and 
Penalties Act (``APPA''), 15 U.S.C. Sec.  16, and without further 
notice to any party or other proceedings, provided that the United 
States has not withdrawn its consent, which it may do at any time 
before the entry of the proposed Final Judgment by serving notice 
thereof on the defendants and by filing that notice with the Court. 
Disney agrees to arrange, at its expense, publication as quickly as 
possible of the newspaper notice required by the APPA, which shall be 
drafted by the United States, in its sole discretion. The publication 
shall be arranged no later than three business days after defendants' 
receipt from the United States of the text of the notice and the 
identity of the newspaper within which the publication shall be made. 
Disney shall promptly send to the United States (1) confirmation that 
publication of the newspaper notice has been arranged, and (2) the 
certification of the publication prepared by the newspaper within which 
the notice was published.
    B. Defendants shall abide by and comply with the provisions of the 
proposed Final Judgment pending the Final Judgment's entry by the 
Court, or until expiration of time for all appeals of any Court ruling 
declining entry of the proposed Final Judgment and shall, from the date 
of the signing of this Stipulation by the parties, comply with all the 
terms and provisions of the proposed Final Judgment. The United States 
shall have the full rights and enforcement powers in the proposed Final 
Judgment as though the same were in full force and effect as the Final 
Order of the Court.
    C. Defendants shall not consummate the Transaction sought to be 
enjoined by the Complaint herein before the Court has signed this Hold 
Separate Stipulation.
    D. This Hold Separate Stipulation and Order shall apply with equal 
force and effect to any amended proposed Final Judgment agreed upon in 
writing by the parties and submitted to the Court.
    E. In the event (1) the United States has withdrawn its consent, as 
provided in Paragraph IV(A) above, or (2) the proposed Final Judgment 
is not entered pursuant to this Hold Separate Stipulation and Order, 
the time has expired for all appeals of any court ruling declining 
entry of the proposed Final Judgment, and the Court has not otherwise 
ordered continued compliance with the terms and provisions of the 
proposed Final Judgment, then the parties are released from all further 
obligations under this Hold Separate Stipulation and Order, and the 
making of this Hold Separate Stipulation and Order shall be without 
prejudice to any party in this or any other proceeding.
    F. Disney represents that the divestitures ordered in the proposed 
Final Judgment can and will be made, and that defendants will later 
raise no claim of mistake, hardship or difficulty of compliance as 
grounds for asking the Court to modify any of the provisions contained 
therein.

V. Notice of Compliance

    . Within twenty (20) days after the entry of the Hold Separate 
Stipulation and Order, and every thirty (30) calendar days thereafter 
(1) Fox shall deliver to the United States an affidavit, signed by 
Fox's Chief Financial Officer and General Counsel, which shall describe 
the fact and manner of Fox's compliance with Section VI until 
defendants consummate the Transaction; and
    (2) Disney shall deliver to the United States an affidavit, signed 
by Disney's Chief Financial Officer and General Counsel, which shall 
describe the fact and manner of Disney's compliance with Section VII 
until the divestitures required by the Final Judgment have been 
accomplished.

VI. Pre-Closing Asset Preservation Provisions

    Until defendants consummate the Transaction:
    A. Fox shall preserve, maintain, and continue to operate each 
Divestiture Asset as an ongoing, economically viable, competitive video 
network or programming asset.
    B. Fox shall take all steps reasonably necessary to ensure that the 
Divestiture Assets will be maintained and operated as ongoing, 
economically viable and active competitors in the video network or 
programming business.
    C. Fox shall use all reasonable efforts, consistent with past 
practices, to maintain and increase the sales and revenues associated 
with each of the Divestiture Assets.
    D. Fox, consistent with past practices, shall provide sufficient 
working capital and lines and sources of credit to continue to maintain 
each Divestiture Asset as an ongoing, economically viable, and 
competitive video network or programming asset.
    E. Fox shall maintain, in accordance with sound accounting 
principles, separate, accurate and complete financial ledgers, books, 
and records that report on a periodic basis, such as the last business 
day of every month, consistent with past practices, the assets, 
liabilities, expenses, revenues and income of each of the Divestiture 
Assets.
    F. Fox shall preserve the existing relationships between the 
Divestiture Assets and with each customer that advertises on or 
licenses content to a Divestiture Asset, each distributor that licenses 
content from a Divestiture Asset, and with others having business 
relations with any of the Divestiture Assets, in accordance with the 
ordinary course of business.

VII. Post-Closing Hold Separate and Asset Preservation Provisions

    Once the Transaction has been consummated and until the 
divestitures required by the Final Judgment have been accomplished:
    A. Disney shall preserve, maintain, and continue to operate each 
Divestiture Asset as an independent, ongoing, economically viable, 
competitive video network or programming asset, management, 
programming, distribution, sales and operations of such assets held 
entirely separate, distinct and apart from those of Disney's

[[Page 40562]]

other operations. Disney shall not coordinate its programming, 
production, distribution, marketing, content purchases, or terms of 
sale of any products with those of any of the Divestiture Assets.
    B. Disney shall take all steps necessary to ensure that (1) the 
Divestiture Assets will be maintained and operated as independent, 
ongoing, economically viable and active competitors in the video 
network or programming business; (2) management of the Divestiture 
Assets will not be influenced by Disney; and (3) the books, records, 
competitively sensitive production, programming, distribution, sales, 
content purchases, marketing and pricing information, and decision 
making concerning production, programming, distribution, sales, content 
purchases, pricing and marketing by or under any of the Divestiture 
Assets will be kept separate and apart from Disney's other operations.
    C. Disney shall use all reasonable efforts to maintain and increase 
the sales and revenues associated with each of the Divestiture Assets, 
and shall maintain at 2018 or previously approved levels for 2017, 
whichever is higher, all promotional, advertising, sales, technical 
assistance, marketing and other support for each of the Divestiture 
Assets.
    D. Disney shall provide sufficient working capital and lines and 
sources of credit to continue to maintain each Divestiture Asset as an 
ongoing, economically viable, and competitive video network or 
programming asset.
    E. Disney shall not, except as part of a divestiture approved by 
the United States in accordance with the proposed Final Judgment, 
remove, sell, lease, assign, transfer, destroy, pledge, or otherwise 
dispose of any of the Divestiture Assets.
    F. Disney shall maintain, in accordance with sound accounting 
principles, separate, accurate and complete financial ledgers, books, 
and records that report on a periodic basis, such as the last business 
day of every month, consistent with past practices, the assets, 
liabilities, expenses, revenues and income of each of the Divestiture 
Assets.
    G. Disney shall preserve the existing relationships between the 
Divestiture Assets and with each customer that advertises on or 
licenses content to a Divestiture Asset, each distributor that licenses 
content from a Divestiture Asset, and with others having business 
relations with any of the Divestiture Assets, in accordance with the 
ordinary course of business.
    H. Defendants shall take no action that would jeopardize, delay, or 
impede the sale of the Divestiture Assets.
    I. Defendants shall take no action that would interfere with the 
ability of any trustee appointed pursuant to the proposed Final 
Judgment to fulfill its obligations.
    J. Disney shall appoint a person or persons to oversee the 
Divestiture Assets, who also will be responsible for defendants' 
compliance with this section. Such person or persons shall have 
complete managerial responsibility for the Divestiture Assets, subject 
to the provisions of this Final Judgment. In the event such person is 
unable to perform such duties, Disney shall appoint, subject to the 
approval of the United States, a replacement within ten (10) working 
days. Should Disney fail to appoint a replacement acceptable to the 
United States within this time period, the United States shall appoint 
a replacement.

VIII. Duration of Hold Separate Obligations

    Defendants' obligations under Section VI and VII of this Hold 
Separate Stipulation and Order shall remain in effect until (1) 
consummation of the divestitures required by the proposed Final 
Judgment or (2) until further order of the Court. If the United States 
voluntarily dismisses the Complaint in this matter, defendants are 
released from all further obligations under this Hold Separate 
Stipulation and Order.

Dated: June 27, 2018

    Respectfully submitted,

FOR PLAINTIFF UNITED STATES OF AMERICA
-----------------------------------------------------------------------

Craig Minerva

United States Department of Justice, Antitrust Division, Media, 
Entertainment & Professional Services Section, 450 Fifth Street 
N.W., Suite 4000, Washington, DC 20530, Telephone: (202) 353-2384, 
Facsimile: (202) 514-730

FOR DEFENDANT THE WALT DISNEY COMPANY

COVINGTON & BURLING LLP
-----------------------------------------------------------------------

Andrew A. Ruffino
(aruffino@cov.com)

The New York Times Building, 620 Eighth Avenue, New York, New York 
10018, (212) 841-1097

Thomas 0. Barnett
(tbarnett@cov.com)
(pro hac vice application forthcoming)
Anne Y. Lee
(alee@cov.com)
James Dean
(jdean@cov.com)
Megan Gerking (mgerking@cov.com)

One CityCenter, 850 10th Street NW, Washington, DC 20001, (202) 662-
6000

Kenneth Newman
(Ken.Newman@disney.com)

Associate General Counsel and Assistant Secretary, The Walt Disney 
Company, 77 West 66th Street, 15th Floor, New York, NY 10023, (212) 
456-6080

FOR DEFENDANT
TWENTY-FIRST CENTURY FOX, INC.

CLEARY GOTTLIEB STEEN & HAMILTON LLP
-----------------------------------------------------------------------

George S. Cary
(pro hac vice application forthcoming)
Kenneth S. Reinker
Tara Lynn Tavernia
(pro hac vice application forthcoming)
2000 Pennsylvania Avenue NW, Washington, DC 20006, Phone: (202) 974-
1743, Fax: (202) 974-1999, gcary@cgsh.com, kreinker@cgsh.com, 
ttavernia@cgsh.com

ORDER

    IT IS SO ORDERED by the Court, this __ day of __, 2018.
-----------------------------------------------------------------------

United States District Judge

United States District Court for the Southern District of New York

    United States of America, Plaintiff, v. The Walt Disney Company, 
and Twenty-First Century Fox, Inc., Defendants.

Civil Action No.
18-CV-5800 (CM) (KNF)

COMPETITIVE IMPACT STATEMENT

    Plaintiff United States of America (``United States''), pursuant to 
Section 2(b) of the Antitrust Procedures and Penalties Act (``APPA'' or 
``Tunney Act''), 15 U.S.C. Sec.  16(b)-(h), files this Competitive 
Impact Statement relating to the proposed Final Judgment submitted for 
entry in this civil antitrust proceeding.

I. NATURE AND PURPOSE OF THE PROCEEDING

    Defendants The Walt Disney Company (``Disney'') and Twenty-First 
Century Fox, Inc. (``Fox'') (collectively, ``Defendants'') entered into 
an Agreement and Plan of Merger dated December 13, 2017, amended on 
June 20, 2018, pursuant to which Disney agreed to acquire certain 
assets, including Fox's ownership of, or interests in, twenty-two 
regional sports networks (``RSNs''), the FX cable networks, the 
National Geographic cable networks, television and film studios, Hulu, 
and international television businesses (the ``Fox Sale Assets'') from 
Fox for approximately $71.3 billion (the ``Transaction'').
    Specifically, Fox proposes to sell to Disney its interests in the 
following RSNs: (i) Fox Sports Arizona; (ii) Fox Sports Carolinas; 
(iii) Fox Sports Detroit; (iv) Fox Sports Florida; (v) Fox

[[Page 40563]]

Sports Indiana; (vi) Fox Sports Kansas City; (vii) Fox Sports Midwest; 
(viii) Fox Sports New Orleans; (ix) Fox Sports North; (x) Fox Sports 
Ohio; (xi) SportsTime Ohio; (xii) Fox Sports Oklahoma; (xiii) Fox 
Sports San Diego; (xiv) Fox Sports South; (xv) Fox Sports Southeast; 
(xvi) Fox Sports Southwest; (xvii) Fox Sports Sun; (xviii) Fox Sports 
Tennessee; (xix) Fox Sports West; (xx) Prime Ticket; (xxi) Fox Sports 
Wisconsin; and (xxii) the YES Network.
    The proposed acquisition would combine two of the country's most 
valuable cable sports properties--Disney's ESPN franchise of networks 
and Fox's portfolio of twenty-two RSNs. Cable sports television 
networks compete to be carried in the programming packages that 
distributors, such as cable companies (e.g., Charter Communications and 
Comcast), direct broadcast satellite services (e.g., DISH Network and 
DirecTV), fiber optic networks services (e.g., Verizon's Fios and 
CenturyLink's Prism TV), and online distributors of linear cable 
programming (e.g., Hulu Live and DISH's Sling TV) (hereinafter, 
collectively referred to as ``MVPDs'') offer to their subscribers. 
Consequently, Disney's proposed acquisition of Fox's portfolio of RSNs 
would end the head-to-head competition between them and likely would 
result in higher prices for cable sports programming in each of the 
Designated Market Areas (``DMAs'') in which Disney and Fox compete.
    The United States filed a civil antitrust Complaint on June 27, 
2018, seeking to enjoin the proposed Transaction. The Complaint alleges 
that the likely effect of this acquisition would be to lessen 
competition substantially for the licensing of cable sports programming 
to MVPDs in violation of Section 7 of the Clayton Act, 15 U.S.C. Sec.  
18, in each of the following twenty-five DMAs: Phoenix, Arizona; 
Detroit, Michigan; Milwaukee, Wisconsin; Cleveland, Ohio; Cincinnati, 
Ohio; Columbus, Ohio; Miami, Florida; Oklahoma City, Oklahoma; Tampa 
Bay, Florida; Dallas, Texas; St. Louis, Missouri; Atlanta, Georgia; 
Indianapolis, Indiana; Orlando, Florida; San Antonio, Texas; 
Minneapolis, Minnesota; Nashville, Tennessee; Memphis, Tennessee; San 
Diego, California; Raleigh-Durham, North Carolina; New Orleans, 
Louisiana; Kansas City, Kansas; Charlotte, North Carolina; Los Angeles, 
California; and New York, New York (collectively, the ``DMA Markets''). 
This loss of competition likely would result in increased MVPD 
licensing fees in each DMA Market and because licensing fees typically 
are passed onto consumers, higher subscription fees for MVPD customers.
    At the same time the Complaint was filed, the United States also 
filed a Hold Separate Stipulation and Order (``Hold Separate'') and 
proposed Final Judgment, which are designed to eliminate the likely 
anticompetitive effects of the Transaction. Under the proposed Final 
Judgment, which is explained more fully below, Disney is required to 
divest all of Fox's interests in the Fox RSNs, including all assets 
necessary for the operation of each Fox RSN as a viable, ongoing cable 
sports programming network, to one or more buyers acceptable to the 
United States, in its sole discretion. Under the terms of the Hold 
Separate Stipulation and Order, Disney and Fox will take certain steps 
to ensure that each Fox RSN continues to operate as an ongoing, 
economically viable, competitive cable sports programming network that 
will remain independent and uninfluenced by the consummation of the 
Transaction, and that competition is maintained during the pendency of 
the ordered divestiture.
    The United States and Defendants have stipulated that the proposed 
Final Judgment may be entered after compliance with the APPA. Entry of 
the proposed Final Judgment would terminate this action, except that 
the Court would retain jurisdiction to construe, modify, or enforce the 
provisions of the proposed Final Judgment and to punish violations 
thereof.

II. DESCRIPTION OF THE EVENTS GIVING RISE TO THE ALLEGED VIOLATION

A. The Defendants and the Proposed Transaction

    Disney is a Delaware corporation headquartered in Burbank, 
California. It reported revenue of $55 billion for fiscal year 2017. 
Disney owns various television programming assets, including 80% of 
ESPN--a sports entertainment company that operates several national 
cable sports programming networks. Disney's other programming assets 
include: (i) the ABC television network; (ii) eight owned-and-operated 
ABC broadcast stations; (iii) Disney-branded cable television networks; 
and (iv) Freeform, a cable television network geared toward teenagers 
and young adults. Disney licenses its cable programming networks to 
MVPDs throughout the United States.
    Fox is a Delaware corporation headquartered in New York, New York. 
It reported revenue of $28.5 billion for fiscal year 2017. The Fox Sale 
Assets, which include several cable television programing networks and 
all of the Fox RSNs, generated $19 billion in revenue in fiscal year 
2017. Fox licenses its cable programming networks to MVPDs throughout 
the United States. The Fox Sale Assets do not include Fox Business 
Network, Fox Broadcasting Company, Fox Sports, Fox Television Stations 
Group, FS1, FS2, Fox Deportes, or the Big Ten Network.
    Collectively, the twenty-two Fox RSNs serve approximately 61 
million subscribers in twenty-five separate DMA Markets and license 
local and regional rights to telecast live games of 44 of 91 (48%) U.S. 
professional sports teams in three of the four major sports leagues: 
Major League Baseball (``MLB''), the National Basketball Association 
(``NBA''), and the National Hockey League (``NHL''). More specifically, 
the Fox RSNs have the local or regional broadcast rights to 15 of 30 
(50%) MLB teams, 17 of 30 (57%) NBA teams, and 12 of 31 (39%) NHL 
teams.
    The proposed Transaction would likely lessen competition 
substantially in each of the DMA Markets as a result of Disney's 
acquisition of Fox's RSNs. This Transaction is the subject of the 
Complaint and proposed Final Judgment filed by the United States on 
June 27, 2018.

B. The Transaction's Likely Anticompetitive Effects

1. Relevant Markets

    The Complaint alleges that licensing of cable sports programming to 
MVPDs in each DMA Market constitutes a relevant market under Section 7 
of the Clayton Act.
    Cable sports programming includes cable television networks that 
devote a substantial portion of their programming time to airing live 
sporting events, including MLB, NBA, and NHL games. Consumers that view 
live sporting events are an important customer group for MVPDs. MVPDs 
could not attract or retain those consumers as subscribers without 
including cable sports programming in the packages of cable programming 
networks they offer their subscribers. ESPN and the local Fox RSN 
generate the highest and second-highest affiliate fees per subscriber 
of all networks carried by an MVPD in most of the 25 DMAs and they are 
among the networks that generate the highest affiliate fees per 
subscriber in every one of the 25 DMAs. The high per-subscriber fees 
that MVPDs pay to license these networks reflects the importance of 
these networks to MVPDs and their subscribers.

[[Page 40564]]

    For MVPDs, sports programming on broadcast television is unlikely a 
sufficient substitute for cable sports programming. MVPDs do not 
typically consider broadcast networks as providing the same type of 
content as cable sports networks like ESPN and the RSNs. Broadcast 
networks and their affiliates aim to have broad appeal by offering a 
variety of highly-rated programming content including primetime 
entertainment shows, syndicated shows, and local and national news and 
weather, with live sports events making up a small percentage of a 
broadcast network's airtime. Many MVPD customers demand programming 
focused on, if not dedicated to, live sporting events, and a broadcast 
network's occasional programming of live sporting events does not 
suffice for many customers. For that reason, MVPDs do not typically 
consider broadcast network programming as a replacement for cable 
sports programming.
    With respect to the licensing of cable sports programming to MVPDs, 
each DMA Market constitutes a separate relevant geographic market under 
Section 7 of the Clayton Act. A DMA is a geographic unit for which A.C. 
Nielsen Company--a firm that surveys television viewers--furnishes 
MVPDs, among others, with data to aid in evaluating audience size and 
composition in a particular area. DMAs are widely accepted by MVPDs as 
the standard geographic area to use in evaluating television audience 
size and demographic composition. The Federal Communications Commission 
also uses DMAs as geographic units with respect to its MVPD 
regulations.

2. Harm to Competition in Each of the DMA Markets

    The Complaint alleges that the proposed Transaction likely would 
substantially lessen competition in interstate trade and commerce, in 
violation of Section 7 of the Clayton Act, 15 U.S.C. Sec.  18, and have 
the following effects, among others:
    a. substantially lessen competition in the licensing of cable 
sports programming to MVPDs in each of the DMA Markets;
    b. eliminate actual and potential competition among Disney and Fox 
in the licensing of cable sports programming to MVPDs in each of the 
DMA Markets; and
    c. cause prices for cable sports programming to MVPDs in each of 
the DMA Markets to increase.
    The Transaction, by eliminating the Fox RSNs as separate 
competitors and combining their operations under common ownership and 
control with ESPN, would allow Disney to increase its market share of 
cable sports programming in each DMA Market and likely increase 
licensing fees to MVPDs for ESPN and/or the Fox RSNs. As a result of 
the Transaction, Disney's networks would account for at least 60 
percent of cable sports programming in 19 of the DMA Markets and over 
45 percent in the remaining six DMA Markets.
    As alleged in the Complaint, Disney's acquisition of the Fox RSNs 
would further concentrate already highly concentrated cable sports 
programming markets in each of the DMA Markets. Using the Herfindahl-
Hirschman Index (``HHI''), a standard measure of market concentration, 
the post-acquisition HHI in each of the DMA Markets would exceed 2,500 
and the Transaction would increase each DMA Market's HHI by over 200 
points. As a result, the proposed Transaction is presumed to likely 
enhance market power under the Horizontal Merger Guidelines issued by 
the Department of Justice and the Federal Trade Commission.
    Moreover, the Transaction combines networks that are at least 
partial substitutes and therefore competitors in a product market with 
limited alternatives. The Transaction would provide Disney with the 
ability to threaten MVPDs in each of the DMA Markets with the 
simultaneous blackout of at least two major cable sports programming 
networks: the ESPN networks and the local Fox RSN, thereby diminishing 
competition in the negotiation of licensing agreements with MVPDs in 
each of the DMA markets.
    The threatened loss of cable sports programming, and the resulting 
diminution of an MVPD's subscribers and profits, would significantly 
strengthen Disney's bargaining position. Prior to the Transaction, an 
MVPD's failure to reach a licensing agreement with Disney would result 
in the blackout of Disney's networks, including ESPN, and threaten some 
subscriber loss for the MVPD, including those subscribers that value 
ESPN's content. But because the MVPD still would be able to offer its 
subscribers the local Fox RSN, many MVPD subscribers simply would watch 
the local RSN instead of cancelling their MVPD subscriptions. In the 
event of a Fox RSN blackout, many subscribers likely would switch to 
watching ESPN. After the Transaction, an MVPD negotiating with Disney 
would be faced with the prospect of a dual blackout of significant 
cable sports programming, a result more likely to cause the MVPD to 
lose incremental subscribers (that it would not have lost in a pre-
transaction blackout of only ESPN or the Fox RSN) and therefore accede 
to Disney's demand for higher licensing fees. For these reasons, the 
loss of competition between ESPN and the Fox RSN in each DMA Market 
would likely lead to an increase in MVPD licensing fees in those 
markets. Some of these increased programming costs likely would be 
passed onto consumers, resulting in higher MVPD subscription fees for 
millions of U.S. households.

3. Entry

    The Complaint alleges that entry or expansion into cable sports 
programming would not be timely, likely, or sufficient to prevent the 
Transaction's anticompetitive effects. With respect to RSN sports 
programming, there are a limited number of professional sports teams in 
a given DMA, and these teams auction the exclusive local rights to 
telecast their games under long-term contracts. Because these contracts 
typically last many years, there are infrequent opportunities to bid 
for these licensing rights to expand an existing RSN or create a new 
RSN. Moreover, non-local RSNs cannot enter because their licenses 
typically are limited to the DMAs that comprise the ``home'' territory 
of the team or teams that the RSN carries; and local MVPD subscribers 
would not generally have demand for extensive coverage of another DMA's 
home team. Thus, an MVPD cannot substitute an RSN from another DMA for 
the local RSN in response to an anticompetitive price increase.
    Entry or expansion into national cable sports programming also is 
difficult. For a national sports network to compete effectively, it 
needs to obtain the national broadcast rights from professional sports 
leagues (i.e., MLB, NBA, and NHL), which are expensive and infrequently 
available. Although both Fox and NBCUniversal have national cable 
sports programming networks (FS1 and NBC Sports, respectively), neither 
company has been able to replicate ESPN's competitive position (as 
evidenced by their lower MVPD licensing fees and viewership ratings).

III. EXPLANATION OF THE PROPOSED FINAL JUDGMENT

    The divestiture requirement of the proposed Final Judgment will 
eliminate the likely anticompetitive effects of the Transaction in each 
DMA Market by establishing an independent and economically viable 
competitor. The proposed Final Judgment requires

[[Page 40565]]

Disney, within 90 days after the closing of the Transaction, or five 
days after notice of the entry of the Final Judgment by the Court, 
whichever is later, to divest all of Fox's interests in the Fox RSNs, 
including all assets necessary for the operation of the Fox RSNs as 
viable, ongoing video networks or programming assets. The assets must 
be divested in such a way as to satisfy the United States in its sole 
discretion that the operations can and will be operated by the 
purchaser as viable, ongoing businesses that can compete effectively in 
the relevant markets. Disney must use its best efforts to divest the 
Fox RSNs as expeditiously as possible and shall cooperate with 
prospective purchasers.
    In the event that Disney does not accomplish the divestiture within 
the period prescribed in the proposed Final Judgment, the Final 
Judgment provides that the Court will appoint a trustee selected by the 
United States to effect the divestiture. If a trustee is appointed, the 
proposed Final Judgment provides that Disney will pay all costs and 
expenses of the trustee. The trustee's commission will be structured so 
as to provide an incentive for the trustee based on the price obtained 
and the speed with which the divestiture is accomplished. After his or 
her appointment becomes effective, the trustee will file monthly 
reports with the Court and the United States setting forth his or her 
efforts to accomplish the divestiture. At the end of six months, if the 
divestiture has not been accomplished, the trustee and the United 
States will make recommendations to the Court, which shall enter such 
orders as appropriate, in order to carry out the purpose of the trust, 
including extending the trust or the term of the trustee's appointment.
    The proposed Final Judgment also contains provisions designed to 
promote compliance and make the enforcement of Division consent decrees 
as effective as possible. Paragraph XIII(A) provides that the United 
States retains and reserves all rights to enforce the provisions of the 
proposed Final Judgment, including its rights to seek an order of 
contempt from the Court. Under the terms of this paragraph, Defendants 
have agreed that in any civil contempt action, any motion to show 
cause, or any similar action brought by the United States regarding an 
alleged violation of the Final Judgment, the United States may 
establish the violation and the appropriateness of any remedy by a 
preponderance of the evidence, and Defendants have waived any argument 
that a different standard of proof should apply. This provision aligns 
the standard for compliance obligations with the standard of proof that 
applies to the underlying offense that the compliance commitments 
address.
    Paragraph XIII(B) provides additional clarification regarding the 
interpretation of the provisions of the proposed Final Judgment. The 
proposed Final Judgment was drafted to restore all competition that 
would otherwise be harmed by the merger. Defendants agree that they 
will abide by the proposed Final Judgment, and that they may be held in 
contempt of this Court for failing to comply with any provision of the 
proposed Final Judgment that is stated specifically and in reasonable 
detail, as interpreted in light of this procompetitive purpose.
    Paragraph XIII(C) of the proposed Final Judgment further provides 
that, should the Court find in an enforcement proceeding that 
Defendants have violated the Final Judgment, the United States may 
apply to the Court for a one-time extension of the Final Judgment, 
together with such other relief as may be appropriate. In addition, in 
order to compensate American taxpayers for any costs associated with 
the investigation and enforcement of violations of the proposed Final 
Judgment, Paragraph XIII(C) provides that in any successful effort by 
the United States to enforce the Final Judgment against a Defendant, 
whether litigated or resolved prior to litigation, that Defendant 
agrees to reimburse the United States for attorneys' fees, experts' 
fees, and costs incurred in connection with any enforcement effort, 
including the investigation of the potential violation.
    Finally, Section XIV of the proposed Final Judgment provides that 
the Final Judgment shall expire seven years from the date of its entry, 
except that the Final Judgment may be terminated upon notice by the 
United States to the Court and Defendants that the divestitures have 
been completed and that the continuation of the Final Judgment is no 
longer necessary.
    The divestiture provisions of the proposed Final Judgment will 
eliminate the likely anticompetitive effects of the acquisition in the 
provision of cable sports programming in the DMA Markets.

IV. REMEDIES AVAILABLE TO POTENTIAL PRIVATE LITIGANTS

    Section 4 of the Clayton Act, 15 U.S.C. Sec.  15, provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal court to recover three times 
the damages the person has suffered, as well as costs and reasonable 
attorneys' fees. Entry of the proposed Final Judgment will neither 
impair nor assist the bringing of any private antitrust damage action. 
Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C. 
Sec.  16(a), the proposed Final Judgment has no prima facie effect in 
any subsequent private lawsuit that may be brought against Defendants.

V. PROCEDURES AVAILABLE FOR MODIFICATION OF THE PROPOSED FINAL JUDGMENT

    The United States and Defendants have stipulated that the proposed 
Final Judgment may be entered by the Court after compliance with the 
provisions of the APPA, provided that the United States has not 
withdrawn its consent. The APPA conditions entry upon the Court's 
determination that the proposed Final Judgment is in the public 
interest.
    The APPA provides a period of at least sixty (60) days preceding 
the effective date of the proposed Final Judgment within which any 
person may submit to the United States written comments regarding the 
proposed Final Judgment. Any person who wishes to comment should do so 
within sixty (60) days of the date of publication of this Competitive 
Impact Statement in the Federal Register, or the last date of 
publication in a newspaper of the summary of this Competitive Impact 
Statement, whichever is later. All comments received during this period 
will be considered by the United States Department of Justice, which 
remains free to withdraw its consent to the proposed Final Judgment at 
any time prior to the Court's entry of judgment. The comments and the 
response of the United States will be filed with the Court. In 
addition, comments will be posted on the U.S. Department of Justice, 
Antitrust Division's internet website and, under certain circumstances, 
published in the Federal Register.
    Written comments should be submitted to:

Owen M. Kendler, Chief, Media, Entertainment & Professional Services 
Section Antitrust Division, United States Department of Justice, 450 
Fifth Street, N.W., Suite 4000, Washington, DC 20530

The proposed Final Judgment provides that the Court retains 
jurisdiction over this action, and the parties may apply to the Court 
for any order necessary or appropriate for the modification, 
interpretation, or enforcement of the Final Judgment.

VI. ALTERNATIVES TO THE PROPOSED FINAL JUDGMENT

    The United States considered, as an alternative to the proposed 
Final

[[Page 40566]]

Judgment, a full trial on the merits against Defendants. The United 
States could have continued the litigation and sought preliminary and 
permanent injunctions against Disney's acquisition of the Fox RSNs. The 
United States is satisfied, however, that the divestiture of assets 
described in the proposed Final Judgment will preserve competition for 
the provision of cable sports programming in the DMA Markets identified 
by the United States. Thus, the proposed Final Judgment would achieve 
all or substantially all of the relief the United States would have 
obtained through litigation, but avoids the time, expense, and 
uncertainty of a full trial on the merits of the Complaint.

VII. STANDARD OF REVIEW UNDER THE APPA FOR THE PROPOSED FINAL JUDGMENT

    The Clayton Act, as amended by the APPA, requires that proposed 
consent judgments in antitrust cases brought by the United States be 
subject to a sixty-day comment period, after which the court shall 
determine whether entry of the proposed Final Judgment ``is in the 
public interest.'' 15 U.S.C. Sec.  16(e)(1); see also United States v. 
Int'l Bus. Mach. Corp., 163 F.3d 737, 740 (2d Cir. 1998). In making 
that determination, the court, in accordance with the statute as 
amended in 2004, is required to consider:

    (A) the competitive impact of such judgment, including termination 
of alleged violations, provisions for enforcement and modification, 
duration of relief sought, anticipated effects of alternative remedies 
actually considered, whether its terms are ambiguous, and any other 
competitive considerations bearing upon the adequacy of such judgment 
that the court deems necessary to a determination of whether the 
consent judgment is in the public interest; and
    (B) the impact of entry of such judgment upon competition in the 
relevant market or markets, upon the public generally and individuals 
alleging specific injury from the violations set forth in the complaint 
including consideration of the public benefit, if any, to be derived 
from a determination of the issues at trial.

15 U.S.C. Sec.  16(e)(1)(A) & (B); see generally United States v. 
Keyspan, 763 F. Supp. 2d 633, 637-38 (S.D.N.Y. 2011) (discussing Tunney 
Act standards); United States v. Morgan Stanley, 881 F. Supp. 2d 563, 
567 (S.D.N.Y. 2012) (similar). In considering these statutory factors, 
the court's inquiry is necessarily a limited one as the government is 
entitled to ``broad discretion to settle with the defendant within the 
reaches of the public interest.'' United States v. Microsoft Corp., 56 
F.3d 1448, 1461 (D.C. Cir. 1995); accord United States v. Alex. Brown & 
Sons, Inc., 963 F. Supp. 235, 238 (S.D.N.Y. 1997) (quoting Microsoft, 
56 F.3d at 1460, aff'd sub nom. United States v. Bleznak, 153 F.3d 16 
(2d Cir. 1998)); Keyspan, 763 F. Supp. 2d at 637 (same).
    Under the APPA a court considers, among other things, the 
relationship between the remedy secured and the specific allegations 
set forth in the government's complaint, whether the decree is 
sufficiently clear, whether enforcement mechanisms are sufficient, and 
whether the decree may positively harm third parties. See Microsoft, 56 
F.3d at 1458-62. With respect to the adequacy of the relief secured by 
the decree, ``[t]he Court's function is not to determine whether the 
proposed [d]ecree results in the balance of rights and liabilities that 
is the one that will best serve society, but only to ensure that the 
resulting settlement is within the reaches of the public interest.'' 
Morgan Stanley, 881 F. Supp. 2d at 567 (quoting Alex. Brown & Sons, 963 
F. Supp. at 238) (internal quotations omitted) (emphasis in original). 
In making this determination, ``[t]he [c]ourt is not permitted to 
reject the proposed remedies merely because the court believes other 
remedies are preferable. [Rather], the relevant inquiry is whether 
there is a factual foundation for the government's decision such that 
its conclusions regarding the proposed settlement are reasonable.'' 
Morgan Stanley, 881 F. Supp. 2d at 563 (quoting United States v. 
Abitibi-Consolidated Inc., 584 F. Supp. 2d 162, 165 (D.D.C. 2008)); see 
also United States v. Apple, Inc., 889 F. Supp. 2d 623, 631 (S.D.N.Y. 
2012); Alex. Brown & Sons, 963 F. Supp. at 238.\1\ The government's 
predictions about the efficacy of its remedies are entitled to 
deference. Apple, 889 F. Supp. 2d at 631 (citation omitted).\2\
---------------------------------------------------------------------------

    \1\ See also United States v. Bechtel Corp., 648 F.2d 660, 666 
(9th Cir. 1981) (``The balancing of competing social and political 
interests affected by a proposed antitrust consent decree must be 
left, in the first instance, to the discretion of the Attorney 
General.''); see generally Microsoft, 56 F.3d at 1461 (discussing 
whether ``the remedies [obtained in the decree are] so inconsonant 
with the allegations charged as to fall outside of the `reaches of 
the public interest''').
    \2\ See Microsoft, 56 F.3d at 1461 (noting the need for courts 
to be ``deferential to the government's predictions as to the effect 
of the proposed remedies''); United States v. Archer-Daniels-Midland 
Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (noting that the court 
should grant due respect to the United States' prediction as to the 
effect of proposed remedies, its perception of the market structure, 
and its views of the nature of the case).
---------------------------------------------------------------------------

    Courts have greater flexibility in approving proposed consent 
decrees than in crafting their own decrees following a finding of 
liability in a litigated matter. ``[A] proposed decree must be approved 
even if it falls short of the remedy the court would impose on its own, 
as long as it falls within the range of acceptability or is `within the 
reaches of public interest.' '' United States v. Am. Tel. & Tel. Co., 
552 F. Supp. 131, 151 (D.D.C. 1982) (citation omitted) (quoting United 
States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)), aff'd 
sub nom. Maryland v. United States, 460 U.S. 1001 (1983); see also 
United States v. US Airways Grp., Inc., 38 F. Supp. 3d 69, 74 (D.D.C. 
2014) (noting that room must be made for the government to grant 
concessions in the negotiation process for settlements) (citing 
Microsoft, 56 F.3d at 1461); Morgan Stanley, 881 F. Supp. 2d at 568 
(approving the consent decree even though the court would have imposed 
a greater remedy). To meet this standard, the United States ``need only 
provide a factual basis for concluding that the settlements are 
reasonably adequate remedies for the alleged harms.'' United States v. 
SBC Commc'ns, Inc., 489 F. Supp. 2d 1, 17 (D.D.C. 2007).
    Moreover, the court's role under the APPA is limited to reviewing 
the remedy in relationship to the violations that the United States has 
alleged in its Complaint, and does not authorize the court to 
``construct [its] own hypothetical case and then evaluate the decree 
against that case.'' Microsoft, 56 F.3d at 1459; see also Morgan 
Stanley, 881 F. Supp. 2d at 567 (``A court must limit its review to the 
issues in the complaint and `give due respect to the [Government's] 
perception of . . . its case.''') (quoting Microsoft, 56 F.3d at 1461); 
United States v. InBev N.V./S.A., No. 08-1965 (JR), 2009-2 Trade Cas. 
(CCH) ] 76,736, 2009 U.S. Dist. LEXIS 84787, at *20, (D.D.C. Aug. 11, 
2009) (``the `public interest' is not to be measured by comparing the 
violations alleged in the complaint against those the court believes 
could have, or even should have, been alleged.''). Because the 
``court's authority to review the decree depends entirely on the 
government's exercising its prosecutorial discretion by bringing a case 
in the first place,'' it follows that ``the court is only authorized to 
review the decree itself,'' and not to ``effectively redraft the 
complaint'' to inquire into other matters that the United States did 
not pursue. Microsoft, 56 F.3d at 1459-

[[Page 40567]]

60. Courts cannot look beyond the complaint in making the public 
interest determination ``unless the complaint underlying the decree is 
drafted so narrowly such that its entry would appear `to make a mockery 
of judicial power.''' Apple, 889 F. Supp. 2d at 631 (S.D.N.Y. 2012) 
(citing SBC Commc'ns, 489 F. Supp. 2d at 15).
    In its 2004 amendments, Congress made clear its intent to preserve 
the practical benefits of utilizing consent decrees in antitrust 
enforcement, adding the unambiguous instruction that ``[n]othing in 
this section shall be construed to require the court to conduct an 
evidentiary hearing or to require the court to permit anyone to 
intervene.'' 15 U.S.C. Sec.  16(e)(2); see also U.S. Airways, 38 F. 
Supp. 3d at 75 (indicating that a court is not required to hold an 
evidentiary hearing or to permit intervenors as part of its review 
under the Tunney Act). The language wrote into the statute what 
Congress intended when it enacted the Tunney Act in 1974, as Senator 
Tunney explained: ``[t]he court is nowhere compelled to go to trial or 
to engage in extended proceedings which might have the effect of 
vitiating the benefits of prompt and less costly settlement through the 
consent decree process.'' 119 Cong. Rec. 24, 598 (1973) (statement of 
Sen. Tunney). Rather, the procedure for the public interest 
determination is left to the discretion of the court, with the 
recognition that the court's ``scope of review remains sharply 
proscribed by precedent and the nature of Tunney Act proceedings.'' SBC 
Commc'ns, 489 F. Supp. 2d at 11; see also Apple, 889 F. Supp. 2d at 632 
(``[P]rosecutorial functions vested solely in the executive branch 
could be undermined by the improper use of the APPA as an antitrust 
oversight provision.'') (citation omitted). A court can make its public 
interest determination based on the competitive impact statement and 
response to public comments alone. U.S. Airways, 38 F. Supp. 3d at 
75.\3\
---------------------------------------------------------------------------

    \3\ See United States v. Enova Corp., 107 F. Supp. 2d 10, 17 
(D.D.C. 2000) (noting that the ``Tunney Act expressly allows the 
court to make its public interest determination on the basis of the 
competitive impact statement and response to comments alone''); 
United States v. Mid-Am. Dairymen, Inc., No. 73-CV-681-W-1, 1977-1 
Trade Cas. (CCH) ] 61,508, at 71,980, *22 (W.D. Mo. 1977) (``Absent 
a showing of corrupt failure of the government to discharge its 
duty, the Court, in making its public interest finding, should . . . 
carefully consider the explanations of the government in the 
competitive impact statement and its responses to comments in order 
to determine whether those explanations are reasonable under the 
circumstances.''); S. Rep. No. 93-298, at 6 (1973) (``Where the 
public interest can be meaningfully evaluated simply on the basis of 
briefs and oral arguments, that is the approach that should be 
utilized.'').
---------------------------------------------------------------------------

VIII. DETERMINATIVE DOCUMENTS

    There are no determinative materials or documents within the 
meaning of the APPA that were considered by the United States in 
formulating the proposed Final Judgment.

Dated: August 7, 2018

Respectfully submitted,
-----------------------------------------------------------------------

Lowell R. Stern

United States Department of Justice, Antitrust Division, Media, 
Entertainment & Professional Services Section, 450 Fifth Street, 
N.W., Suite 4000, Washington, DC 20530, Telephone: (202) 514-3676, 
Facsimile: (202) 514-7308, E-mail: lowell.stern@usdoj.gov

Attorney for Plaintiff United States

[FR Doc. 2018-17521 Filed 8-14-18; 8:45 am]
 BILLING CODE 4410-11-P



                                                                          Federal Register / Vol. 83, No. 158 / Wednesday, August 15, 2018 / Notices                                               40553

                                               Commencement of Final Phase                             of the Secretary, U.S. International                  (xvii) Fox Sports Sun; (xviii) Fox Sports
                                               Investigations                                          Trade Commission, Washington, DC,                     Tennessee; (xix) Fox Sports West; (xx)
                                                  Pursuant to section 207.18 of the                    and by publishing the notice in the                   Prime Ticket; (xxi) Fox Sports
                                               Commission’s rules, the Commission                      Federal Register of June 26, 2018 (83 FR              Wisconsin; and (xxii) the YES Network.
                                               also gives notice of the commencement                   29822). The conference was held in                      Copies of the Complaint, proposed
                                               of the final phase of its investigations.               Washington, DC, on July 11, 2018, and                 Final Judgment, and Competitive Impact
                                               The Commission will issue a final phase                 all persons who requested the                         Statement are available for inspection
                                               notice of scheduling, which will be                     opportunity were permitted to appear in               on the Antitrust Division’s website at
                                               published in the Federal Register as                    person or by counsel.                                 http://www.justice.gov/atr and at the
                                               provided in section 207.21 of the                          The Commission made these                          Office of the Clerk of the United States
                                               Commission’s rules, upon notice from                    determinations pursuant to sections                   District Court for the Southern District
                                               the U.S. Department of Commerce                         703(a) and 733(a) of the Act (19 U.S.C.               of New York. Copies of these materials
                                               (‘‘Commerce’’) of affirmative                           1671b(a) and 1673b(a)). It completed                  may be obtained from the Antitrust
                                               preliminary determinations in the                       and filed its determinations in these                 Division upon request and payment of
                                               investigations under sections 703(b) or                 investigations on August 6, 2018. The                 the copying fee set by Department of
                                               733(b) of the Act, or, if the preliminary               views of the Commission are contained                 Justice regulations.
                                               determinations are negative, upon                       in USITC Publication 4811 (August                       Public comment is invited within 60
                                               notice of affirmative final                             2018), entitled Steel Racks from China:               days of the date of this notice. Such
                                               determinations in those investigations                  Investigation Nos. 701–TA–608 and                     comments, including the name of the
                                               under sections 705(a) or 735(a) of the                  731–TA–1420 (Preliminary).                            submitter, and responses thereto, will be
                                               Act. Parties that filed entries of                        By order of the Commission.                         posted on the Antitrust Division’s
                                               appearance in the preliminary phase of                    Issued: August 9, 2018.
                                                                                                                                                             website, filed with the Court, and, under
                                               the investigations need not enter a                                                                           certain circumstances, published in the
                                                                                                       Lisa Barton,
                                               separate appearance for the final phase                                                                       Federal Register. Comments should be
                                                                                                       Secretary to the Commission.                          directed to Owen M. Kendler, Chief,
                                               of the investigations. Industrial users,                [FR Doc. 2018–17476 Filed 8–14–18; 8:45 am]
                                               and, if the merchandise under                                                                                 Media, Entertainment, and Professional
                                               investigation is sold at the retail level,
                                                                                                       BILLING CODE 7020–02–P                                Services Section, Antitrust Division,
                                               representative consumer organizations                                                                         Department of Justice, Washington, DC
                                               have the right to appear as parties in                                                                        20530, (telephone: 202–305–8376).
                                               Commission antidumping and                              DEPARTMENT OF JUSTICE
                                                                                                                                                             Patricia A. Brink,
                                               countervailing duty investigations. The                 Antitrust Division                                    Director of Civil Enforcement.
                                               Secretary will prepare a public service
                                               list containing the names and addresses                                                                       United States District Court for the
                                                                                                       United States v. The Walt Disney
                                               of all persons, or their representatives,                                                                     Southern District of New York
                                                                                                       Company, et al.; Proposed Final
                                               who are parties to the investigations.                  Judgment and Competitive Impact                         United States of America, Plaintiff, v. The
                                                                                                       Statement                                             Walt Disney Company, and Twenty-First
                                               Background                                                                                                    Century Fox, Inc., Defendants.
                                                  On June 20, 2018, the Coalition for                     Notice is hereby given pursuant to the             Civil Action No.: 1:18-cv-05800 (CM)(KNF)
                                               Fair Rack Imports 4 filed petitions with                Antitrust Procedures and Penalties Act,
                                               the Commission and Commerce,                            15 U.S.C. § 16(b)–(h), that a proposed                COMPLAINT
                                               alleging that an industry in the United                 Final Judgment, Stipulation, and                        The United States of America, acting
                                               States is materially injured or                         Competitive Impact Statement have                     under the direction of the Attorney
                                               threatened with material injury by                      been filed with the United States                     General of the United States, brings this
                                               reason of subsidized imports of steel                   District Court for the Southern District              civil action to enjoin the acquisition by
                                               racks from China and LTFV imports of                    of New York in United States of                       The Walt Disney Company (‘‘Disney’’)
                                               steel racks from China. Accordingly,                    America v. The Walt Disney Company,                   of certain assets and businesses of
                                               effective June 20, 2018, the Commission,                et al., Civil Action No. 1:18–cv–05800.               Twenty-First Century Fox, Inc. (‘‘Fox’’)
                                               pursuant to sections 703(a) and 733(a) of               On June 27, 2018, the United States                   and to obtain other equitable relief.
                                               the Act (19 U.S.C. 1671b(a) and                         filed a Complaint alleging that The Walt
                                                                                                       Disney Company’s proposed acquisition                 I. NATURE OF THE ACTION
                                               1673b(a)), instituted countervailing duty
                                               investigation No. 701–TA–608 and                        of certain assets from Twenty-First                      1. Cable sports programming is one of
                                               antidumping duty investigation No.                      Century Fox, Inc. would violate Section               the most popular forms of entertainment
                                               731–TA–1420 (Preliminary).                              7 of the Clayton Act, 15 U.S.C. 18. The               in the United States. Disney’s proposed
                                                  Notice of the institution of the                     proposed Final Judgment, filed at the                 acquisition of Fox’s assets would
                                               Commission’s investigations and of a                    same time as the Complaint, requires                  combine two of the country’s most
                                               public conference to be held in                         The Walt Disney Company to divest                     valuable cable sports properties—
                                               connection therewith was given by                       Fox’s interests in the following regional             Disney’s ESPN franchise of networks
                                               posting copies of the notice in the Office              sports networks: (i) Fox Sports Arizona;              and Fox’s portfolio of Regional Sports
                                                                                                       (ii) Fox Sports Carolinas; (iii) Fox Sports           Networks (‘‘RSNs’’)—and thereby likely
                                                 4 Members of the Coalition are Bulldog Rack           Detroit; (iv) Fox Sports Florida; (v) Fox             substantially lessen competition in the
                                               Company, Weirton, West Virginia; Hannibal               Sports Indiana; (vi) Fox Sports Kansas                multiple Designated Market Areas
daltland on DSKBBV9HB2PROD with NOTICES




                                               Industries, Inc., Los Angeles, California; Husky
                                               Rack and Wire, Denver, North Carolina; Ridg-U-
                                                                                                       City; (vii) Fox Sports Midwest; (viii) Fox            (‘‘DMAs’’) throughout the United States
                                               Rak, Inc., North East, Pennsylvania; SpaceRAK, A        Sports New Orleans; (ix) Fox Sports                   in which these two firms compete.
                                               Division of Heartland Steel Products, Inc.,             North; (x) Fox Sports Ohio; (xi)                         2. Pursuant to an Agreement and Plan
                                               Marysville, Michigan; Speedrack Products Group,         SportsTime Ohio; (xii) Fox Sports                     of Merger dated December 13, 2017, as
                                               Ltd., Sparta, Michigan; Steel King Industries, Inc.,
                                               Stevens Point, Wisconsin; Tri-Boro Shelving &
                                                                                                       Oklahoma; (xiii) Fox Sports San Diego;                amended on June 20, 2018, Disney
                                               Partition Corp., Farmville, Virginia; and UNARCO        (xiv) Fox Sports South; (xv) Fox Sports               agreed to acquire certain assets and
                                               Material Handling, Inc., Springfield, Tennessee.        Southeast; (xvi) Fox Sports Southwest;                businesses, including Fox’s ownership


                                          VerDate Sep<11>2014   18:28 Aug 14, 2018   Jkt 244001   PO 00000   Frm 00055   Fmt 4703   Sfmt 4703   E:\FR\FM\15AUN1.SGM   15AUN1


                                               40554                      Federal Register / Vol. 83, No. 158 / Wednesday, August 15, 2018 / Notices

                                               of or interests in its RSNs, FX cable                   the following RSNs: (i) Fox Sports                    Sports Oklahoma, (xiii) Fox Sports San
                                               networks, National Geographic cable                     Arizona, (ii) Fox Sports Carolinas, (iii)             Diego, (xiv) Fox Sports South, (xv) Fox
                                               networks, television studio, Hulu, film                 Fox Sports Detroit, (iv) Fox Sports                   Sports Southeast, (xvi) Fox Sports
                                               studio, and international television                    Florida, (v) Fox Sports Indiana, (vi) Fox             Southwest, (xvii) Fox Sports Sun, (xviii)
                                               businesses, (the ‘‘Sale Assets’’) from Fox              Sports Kansas City, (vii) Fox Sports                  Fox Sports Tennessee, (xix) Fox Sports
                                               for approximately $71.3 billion (the                    Midwest, (viii) Fox Sports New Orleans,               West, (xx) Prime Ticket, (xxi) Fox Sports
                                               ‘‘Transaction’’). Fox operates and                      (ix) Fox Sports North, (x) Fox Sports                 Wisconsin, and (xxii) the YES Network.
                                               proposes to sell to Disney its interests in             Ohio, (xi) SportsTime Ohio, (xii) Fox




                                                  3. An RSN is a cable network that                    the DMAs comprising the ‘‘home’’                      proposed Transaction likely would
                                               telecasts live games of one or more local               territory of the team or teams carried on             substantially lessen competition in
                                               professional sports team—i.e., a ‘‘home’’               the RSN; whereas, licenses for national               those markets in violation of Section 7
                                               team or teams within that particular                    television networks typically comprise                of the Clayton Act, 15 U.S.C. § 18.
                                               region. An RSN’s contract with a local                  all DMAs in a MVPD’s footprint.
                                                                                                                                                             II. JURISDICTION, VENUE, AND
                                               sports team typically provides the RSN                  Disney’s and Fox’s cable sports
                                                                                                                                                             COMMERCE
                                               with the exclusive rights, within a                     television programming compete head-
                                               team’s local region, to telecast live                   to-head to be carried on MVPDs in all                    6. The United States brings this action
                                               nearly all that team’s games.                           the DMAs where Fox’s RSNs are                         pursuant to Section 15 of the Clayton
                                               Collectively, the Fox RSNs are the                      located: Phoenix, Arizona; Detroit,                   Act, 15 U.S.C. § 25, to prevent and
                                               largest group of commonly controlled                    Michigan; Milwaukee, Wisconsin;                       restrain Disney and Fox from violating
                                               RSNs. In the aggregate, the Fox RSNs                    Cleveland, Ohio; Cincinnati, Ohio;                    Section 7 of the Clayton Act, 15 U.S.C.
                                               have approximately 61 million                           Columbus, Ohio; Miami, Florida;                       § 18.
                                               subscribers across the country and have                 Oklahoma City, Oklahoma; Tampa Bay,                      7. The Court has subject-matter
                                               rights to telecast live games of 44 of 91               Florida; Dallas, Texas; St. Louis,                    jurisdiction over this action pursuant to
                                               (48%) U.S. professional sports teams in                 Missouri; Atlanta, Georgia; Indianapolis,             Section 15 of the Clayton Act, 15 U.S.C.
                                               three of the four major sports leagues:                 Indiana; Orlando, Florida; San Antonio,               § 25, and 28 U.S.C. §§ 1331, 1337(a), and
                                               Major League Baseball (‘‘MLB’’), the                    Texas; Minneapolis, Minnesota;                        1345.
                                               National Basketball Association                         Nashville, Tennessee; Memphis,                           8. Disney and Fox are engaged in
                                               (‘‘NBA’’) and the National Hockey                       Tennessee; San Diego, California;                     interstate commerce and in activities
                                               League (‘‘NHL’’). More specifically, the                Raleigh-Durham, North Carolina; New                   substantially affecting interstate
                                               Fox RSNs have the local rights to 15 of                 Orleans, Louisiana; Kansas City, Kansas;              commerce. They each license
                                               30 (50%) MLB teams, 17 of 30 (57%)                      Charlotte, North Carolina; Los Angeles,               programming to MVPDs located across
                                               NBA teams, and 12 of 31 (39%) NHL                       California; and New York, New York                    the country in exchange for license, or
                                               teams.                                                  (collectively, the ‘‘DMA Markets’’).                  ‘‘affiliate,’’ fees. They each own and
                                                  4. Cable sports television networks—                    5. If consummated, the proposed                    operate television networks that are
daltland on DSKBBV9HB2PROD with NOTICES




                                               including RSNs—compete to be carried                    acquisition would eliminate the                       distributed to viewers throughout the
                                               in the programming packages that                        substantial head-to-head competition                  United States. Their television
                                               multichannel video programming                          that currently exists between Disney                  programming licenses have had a
                                               distributors (‘‘MVPDs’’), such as                       and Fox and would likely result in                    substantial effect on interstate
                                               Comcast, Charter, DISH, and FiOS, offer                 higher prices for cable sports                        commerce.
                                               to their subscribers. For RSNs, the                     programming in each of the DMA                           9. Defendants have consented to
                                                                                                                                                                                                          EN15AU18.000</GPH>




                                               carriage license typically is limited to                Markets. Consequently, Defendants’                    venue and personal jurisdiction in this


                                          VerDate Sep<11>2014   18:28 Aug 14, 2018   Jkt 244001   PO 00000   Frm 00056   Fmt 4703   Sfmt 4703   E:\FR\FM\15AUN1.SGM   15AUN1


                                                                          Federal Register / Vol. 83, No. 158 / Wednesday, August 15, 2018 / Notices                                           40555

                                               District. Venue is also proper in this                     15. Sports programming is important                increase in the HHI of more than 200
                                               District under Section 12 of the Clayton                to MVPDs because sports viewers                       points are presumed to be likely to
                                               Act, 15 U.S.C. § 22, and 28 U.S.C.                      comprise an important customer group                  enhance market power.
                                               § 1391(c).                                              for MVPDs, and MVPDs could not                           21. Using 2017 gross cable sports
                                                                                                       attract many of these sports viewers                  programming revenue, in each of the
                                               III. THE DEFENDANTS                                     without including sports television                   DMA Markets, the combination of
                                                  10. Disney is a Delaware corporation                 programming in the MVPDs’ packages of                 Disney and the Fox Sale Assets would
                                               headquartered in Burbank, California. It                available networks.                                   result in HHIs in excess of 2,500 and
                                               reported revenue of $55 billion for fiscal                 16. For MVPDs, sports programming                  involve an increase in the HHI of more
                                               year 2017. Disney owns various                          on broadcast television is unlikely a                 than 200. Therefore, in each DMA
                                               television programming assets,                          sufficient substitute for cable sports                Market, the HHI levels are above the
                                               including 80% of ESPN—a sports                          programming. MVPDs do not typically                   thresholds at which a merger is
                                               entertainment company that operates                     consider broadcast networks as                        presumed likely to enhance market
                                               several domestic sports television                      providing the same type of content as                 power.
                                               networks. Disney’s other television                     cable networks like ESPN and the RSNs.                   22. For example, in the Detroit DMA
                                               programming assets include: (i) the ABC                 Broadcast networks and their affiliates               Market, where Fox operates Fox Sports
                                               television network; (ii) eight owned-                   aim to have broad appeal by offering a                Detroit, the Transaction would result in
                                               and-operated ABC broadcast stations;                    variety of highly-rated programming                   a post-merger HHI of over 4,000 with an
                                               (iii) Disney-branded television                         content including primetime                           increase of over 1,400. Therefore, in this
                                               networks; and (iv) Freeform, a television               entertainment shows, syndicated shows,                market, the Transaction results in a
                                               network geared toward teenagers and                     and local and national news and                       presumptively anticompetitive level of
                                               young adults.                                           weather in addition to sports, with                   concentration. Similarly, the
                                                  11. Fox is a Delaware corporation                    marquee sports events making up a                     Transaction would result in
                                               headquartered in New York, New York.                    small percentage of a broadcast                       presumptively anticompetitive levels of
                                               It reported revenue of $28.5 billion for                network’s airtime. For that reason,                   concentration in each of the other DMA
                                                                                                       MVPDs do not typically consider                       Markets.
                                               fiscal year 2017. The Fox Sale Assets,
                                                                                                       broadcast network programming as a                       23. In addition to substantially
                                               which include several television
                                                                                                       replacement for cable sports                          increasing concentration levels in each
                                               programing assets and all of the Fox                                                                          of the DMA Markets, the proposed
                                               RSNs, generated $19 billion in revenue                  programming.
                                                                                                          17. Accordingly, a hypothetical                    Transaction would combine cable sports
                                               for fiscal year 2017.                                                                                         networks that are at least partial
                                                                                                       monopolist of all cable sports
                                               IV. RELEVANT MARKETS                                    programming in a DMA Market likely                    substitutes. Accordingly, the proposed
                                                                                                       would profitably increase licensing fees              Transaction would likely diminish
                                                  12. The licensing of cable sports                                                                          competition in the negotiation of
                                                                                                       to MVPDs in that DMA Market by at
                                               programming to MVPDs constitutes a                                                                            licenses for cable sports programming
                                                                                                       least a small but significant amount.
                                               relevant product market and line of                                                                           with MVPDs that have subscribers in
                                               commerce under Section 7 of the                         V. LIKELY ANTICOMPETITIVE                             the DMA Markets. Post-acquisition,
                                               Clayton Act. This includes licensing to                 EFFECTS                                               Disney would gain the ability to
                                               both MVPDs and virtual MVPDs. Cable                        18. The cable sports programming                   threaten MVPDs in each of the DMA
                                               sports programming includes cable                       market in nearly all of the DMA Markets               Markets with the simultaneous blackout
                                               networks that devote a substantial                      is already highly concentrated. As a                  of two of the most significant cable
                                               portion of programming time to airing                   result of the Transaction, Disney’s                   networks carrying sports programming:
                                               live sports events, such as MLB games.                  networks would account for at least 60                ESPN and a local RSN. ESPN and the
                                                  13. The DMA Markets constitute                       percent of cable sports programming                   local Fox RSN generate the highest and
                                               geographic markets under Section 7 of                   revenue in 19 of the DMA Markets and                  second-highest affiliate fees per
                                               the Clayton Act. A DMA is a                             over 45 percent in the remaining six                  subscriber in most of the 25 DMAs, and
                                               geographical unit for which A.C.                        DMA Markets. Consequently, bringing                   they are among the networks that
                                               Nielsen Company—a firm that surveys                     Disney’s ESPN networks and Fox’s                      generate the highest affiliate fees per
                                               television viewers—furnishes MVPDs,                     RSNs under common ownership would                     subscriber in every one of the 25 DMAs.
                                               among others, with data to aid in                       significantly concentrate the cable                      24. The threat of double blackouts in
                                               evaluating audience size and                            sports programming market in each of                  the DMA Markets—and the resulting
                                               composition in a particular area. DMAs                  the DMA Markets.                                      disproportionate loss of an MVPD’s
                                               are widely accepted by MVPDs as the                        19. Market concentration is often a                subscribers and profits—likely would
                                               standard geographic area to use in                      useful indicator of the likely                        significantly strengthen Disney’s
                                               evaluating television audience size and                 competitive effects of a merger. The                  bargaining position with MVPDs. Before
                                               demographic composition. The Federal                    more concentrated a market, and the                   the merger, an MVPD’s failure to reach
                                               Communications Commission also uses                     more a transaction would increase                     an agreement with Disney could result
                                               DMAs as geographic units with respect                   concentration in a market, the more                   in a blackout of Disney’s networks in
                                               to its MVPD regulations.                                likely it is that the transaction would               the MVPD’s footprint and threaten it
                                                  14. Disney and Fox license cable                     result in a meaningful reduction in                   with some subscriber loss. But the
                                               sports programming to MVPDs in each                     competition that harms consumers.                     MVPD would still be able to offer the
                                               of the DMA Markets in which MVPDs                          20. The Herfindahl-Hirschman Index                 sports programming on Fox’s RSNs
daltland on DSKBBV9HB2PROD with NOTICES




                                               provide programming to subscribers as                   (‘‘HHI’’) is a standard measure of market             during a Disney blackout, thereby
                                               part of bundled channel packages.                       concentration. Under the Horizontal                   minimizing subscription cancellations.
                                               Disney’s and Fox’s cable sports                         Merger Guidelines issued by the                       After the merger, an MVPD negotiating
                                               programming in each of the DMA                          Department of Justice and the Federal                 with Disney would face the prospect of
                                               Markets generates a significant amount                  Trade Commission, mergers resulting in                a dual blackout of ESPN and the local
                                               of revenue through licensing fees to                    highly concentrated markets (with an                  RSN in one or more DMA Markets,
                                               MVPDs in those markets.                                 HHI in excess of 2,500) that involve an               likely resulting in disproportionately


                                          VerDate Sep<11>2014   18:28 Aug 14, 2018   Jkt 244001   PO 00000   Frm 00057   Fmt 4703   Sfmt 4703   E:\FR\FM\15AUN1.SGM   15AUN1


                                               40556                      Federal Register / Vol. 83, No. 158 / Wednesday, August 15, 2018 / Notices

                                               more subscriber loss. Because the                         c. award the United States the costs of                AND WHEREAS, the essence of this
                                               leverage that a television programmer                        this action; and                                 Final Judgment is the prompt and
                                               has in negotiations with the MVPD is                      d. award such other relief to the                   certain divestiture of certain rights or
                                               derived at least in part from its leverage                   United States as the Court may                   assets by Disney to assure that
                                               within each DMA Market in the MVPD’s                         deem just and proper.                            competition is not substantially
                                               footprint, the threat of a dual blackout                                                                      lessened;
                                                                                                       Dated: June 27, 2018
                                               would likely cause an MVPD to accede                                                                             AND WHEREAS, the United States
                                               to a demand by Disney for higher                        Respectfully submitted,                               requires Disney to make certain
                                               license fees. For these reasons, the loss               FOR PLAINTIFF UNITED STATES OF                        divestitures for the purpose of
                                               of competition between Disney and the                   AMERICA                                               remedying the loss of competition
                                                                                                       lllllllllllllllllllll
                                               Fox Sale Assets in each DMA Market                                                                            alleged in the Complaint;
                                               would likely lead to an increase in total               MAKAN DELRAHIM                                           AND WHEREAS, Disney has
                                                                                                       Assistant Attorney General for Antitrust
                                               licensing fees in each DMA Market and,                                                                        represented to the United States that the
                                                                                                       lllllllllllllllllllll
                                               because increased licensing fees                                                                              divestitures required below can and will
                                                                                                       ANDREW C. FINCH
                                               typically are passed on to consumers,                                                                         be made and that defendants will later
                                               would result in higher subscription fees                Principal Deputy Assistant Attorney General           raise no claim of hardship or difficulty
                                                                                                       lllllllllllllllllllll
                                               for customers of MVPDs.                                                                                       as grounds for asking the Court to
                                                                                                       PATRICIA A. BRINK                                     modify any of the divestiture provisions
                                               VI. ABSENCE OF COUNTERVAILING                           Director of Civil Enforcement
                                               FACTORS                                                                                                       contained below;
                                                                                                       lllllllllllllllllllll                                    NOW THEREFORE, before any
                                                  25. Entry would not be timely, likely                OWEN M. KENDLER                                       testimony is taken, without trial or
                                               or sufficient to prevent the Transaction’s              Chief, Media, Entertainment & Professional            adjudication of any issue of fact or law,
                                               likely anticompetitive effects.                         Services Section                                      and upon consent of the parties, it is
                                               Professional sport teams auction the                    lllllllllllllllllllll                                 ORDERED, ADJUDGED, AND
                                               exclusive rights to telecast their games                YVETTE TARLOV                                         DECREED:
                                               under long-term contracts. Because                      Assistant Chief, Media, Entertainment &
                                               these contracts typically last many                     Professional Services Section                         I. JURISDICTION
                                               years, there are infrequent opportunities               lllllllllllllllllllll                                   This Court has jurisdiction over the
                                               for entrants to bid for these highly                    CRAIG D. MINERVA                                      subject matter of, and each of the parties
                                               valuable licensing rights.                              LEE F. BERGER                                         to, this action. The Complaint states a
                                                  26. Defendants cannot demonstrate                    JEREMY EVANS                                          claim upon which relief may be granted
                                               acquisition-specific and cognizable                     RACHEL FLIPSE                                         against defendants under Section 7 of
                                               efficiencies that would be sufficient to                BRIAN HANNA
                                                                                                       MARK MERVA
                                                                                                                                                             the Clayton Act, as amended, 15 U.S.C.
                                               offset the proposed acquisition’s likely                                                                      § 18.
                                                                                                       KATE RIGGS
                                               anticompetitive effects.                                LAUREN RIKER                                          II. DEFINITIONS
                                               VII. VIOLATIONS ALLEGED                                 MONSURA SIRAJEE
                                                                                                       ADAM C. SPEEGLE                                          As used in this Final Judgment:
                                                 27. Disney’s proposed acquisition of                  LOWELL STERN                                             A. ‘‘Disney’’ means defendant The
                                               the Fox Sale Assets likely would                        United States Department of Justice,                  Walt Disney Company, a Delaware
                                               substantially lessen competition in                     Antitrust Division, Media, Entertainment &            corporation headquartered in Burbank,
                                               interstate trade and commerce, in                       Professional, Services Section, 450 Fifth             California, its successors and assigns,
                                               violation of Section 7 of the Clayton                   Street NW, Suite 4000, Washington, DC                 and its subsidiaries, divisions, groups,
                                               Act, 15 U.S.C. § 18. The proposed                       20530, Telephone: (202) 353–2384,                     affiliates, partnerships, and joint
                                               acquisition likely would:                               Facsimile: (202) 514–730                              ventures, and their directors, officers,
                                                 a. substantially lessen competition in                United States District Court for the                  managers, agents, and employees.
                                                    the licensing of cable sports                      Southern District of New York                            B. ‘‘Fox’’ means defendant Twenty-
                                                    programming in each of the DMA                                                                           First Century Fox, Inc., a Delaware
                                                    Markets;                                             United States of America, Plaintiff, v. The         corporation headquartered in New York,
                                                 b. eliminate actual and potential                     Walt Disney Company, and Twenty-First
                                                                                                       Century Fox, Inc., Defendants.
                                                                                                                                                             New York, its successors and assigns,
                                                    competition among Disney and Fox                                                                         and its subsidiaries, divisions, groups,
                                                    in the licensing of cable sports                   PROPOSED FINAL JUDGMENT                               affiliates, partnerships, and joint
                                                    programming in each of the DMA                                                                           ventures, and their directors, officers,
                                                    Markets; and                                          WHEREAS, Plaintiff, the United
                                                                                                                                                             managers, agents, and employees.
                                                 c. cause prices for cable sports                      States of America, filed its Complaint on
                                                                                                                                                                C. ‘‘Acquirer’’ means an entity to
                                                    programming in each of the DMA                     June 27, 2018, and defendant The Walt
                                                                                                                                                             which defendants divest any of the
                                                    Markets to increase.                               Disney Company (‘‘Disney’’) and
                                                                                                                                                             Divestiture Assets.
                                                                                                       defendant Twenty-First Century Fox,
                                               VIII. REQUEST FOR RELIEF                                                                                         D. ‘‘Fox RSNs’’ means all of Fox’s
                                                                                                       Inc. (‘‘Fox’’), by their respective
                                                                                                                                                             interests in the following video
                                                 28. The United States requests that                   attorneys, have consented to the entry of
                                                                                                                                                             networks or programming assets:
                                               the Court:                                              this Final Judgment without trial or                     (1) Fox Sports Arizona;
                                                 a. adjudge the proposed acquisition to                adjudication of any issue of fact or law,                (2) Fox Sports Carolinas;
                                                    violate Section 7 of the Clayton Act,              and without this Final Judgment                          (3) Fox Sports Detroit;
daltland on DSKBBV9HB2PROD with NOTICES




                                                    15 U.S.C. § 18;                                    constituting any evidence against or                     (4) Fox Sports Florida;
                                                 b. permanently enjoin and restrain                    admission by any party regarding any                     (5) Fox Sports Indiana;
                                                    Defendants from carrying out the                   issue of fact or law;                                    (6) Fox Sports Kansas City;
                                                    Transaction, or entering into any                     AND WHEREAS, defendants agree to                      (7) Fox Sports Midwest;
                                                    other agreement, understanding, or                 be bound by the provisions of this Final                 (8) Fox Sports New Orleans;
                                                    plan by which Disney would                         Judgment pending its approval by the                     (9) Fox Sports North;
                                                    acquire the Fox Sale Assets;                       Court;                                                   (10) Fox Sports Ohio;


                                          VerDate Sep<11>2014   18:28 Aug 14, 2018   Jkt 244001   PO 00000   Frm 00058   Fmt 4703   Sfmt 4703   E:\FR\FM\15AUN1.SGM   15AUN1


                                                                          Federal Register / Vol. 83, No. 158 / Wednesday, August 15, 2018 / Notices                                           40557

                                                  (11) SportsTime Ohio;                                purchaser to be bound by the provisions               responsibility is the production and
                                                  (12) Fox Sports Oklahoma;                            of this Final Judgment. Disney need not               operation of the Divestiture Assets.
                                                  (13) Fox Sports San Diego;                           obtain such an agreement from the                        D. Defendants shall permit the
                                                  (14) Fox Sports South;                               Acquirer(s) of the assets divested                    prospective Acquirer(s) of the
                                                  (15) Fox Sports Southeast;                           pursuant to this Final Judgment.                      Divestiture Assets to have reasonable
                                                  (16) Fox Sports Southwest;                                                                                 access to personnel and to make
                                                  (17) Fox Sports Sun;                                 IV. DIVESTITURES                                      inspections of the Divestiture Assets;
                                                  (18) Fox Sports Tennessee;                              A. Disney is ordered and directed,                 access to any and all environmental,
                                                  (19) Fox Sports West;                                within ninety (90) calendar days after                zoning, and other permit documents
                                                  (20) Prime Ticket;                                   the closing of the Transaction, or five (5)           and information; and access to any and
                                                  (21) Fox Sports Wisconsin; and                                                                             all financial, operational, or other
                                                                                                       calendar days after notice of entry of
                                                  (22) the YES Network.                                                                                      documents and information customarily
                                                  E. ‘‘Divestiture Assets’’ means all of               this Final Judgment by the Court,
                                                                                                       whichever is later, to divest the                     provided as part of a due diligence
                                               Fox’s interests in the Fox RSNs,                                                                              process.
                                               including all of the assets, tangible or                Divestiture Assets in a manner
                                                                                                       consistent with this Final Judgment to                   E. Disney shall warrant to the
                                               intangible, necessary for the operations                                                                      Acquirer(s) that each Divestiture Asset
                                               of the Fox RSNs as viable, ongoing                      one or more Acquirers acceptable to the
                                                                                                       United States, in its sole discretion. The            will be operational on the date of sale.
                                               video networks or programming assets,                                                                            F. Defendants shall not take any
                                               including, but not limited to, all real                 United States, in its sole discretion, may
                                                                                                       agree to one or more extensions of this               action that will impede in any way the
                                               property (owned or leased), all                                                                               permitting, operation, or divestiture of
                                               broadcast equipment, office furniture,                  time period not to exceed ninety (90)
                                                                                                       calendar days in total, and shall notify              the Divestiture Assets.
                                               fixtures, materials, supplies, and other                                                                         G. Disney shall warrant to the
                                               tangible property; all licenses, permits                the Court in such circumstances. With
                                                                                                                                                             Acquirer(s) (1) that there are no material
                                               and authorizations issued by any                        respect to divestiture of the Divestiture
                                                                                                                                                             defects in the environmental, zoning, or
                                               governmental organization relating to                   Assets by Disney or a trustee appointed
                                                                                                                                                             other permits pertaining to the
                                               the operation of the asset; all contracts               pursuant to Section V of this Final
                                                                                                                                                             operation of each Divestiture Asset, and
                                               (including content, programming and                     Judgment, Disney agrees to use its best
                                                                                                                                                             (2) that following the sale of the
                                               distribution contracts and rights),                     efforts to divest the Divestiture Assets as           Divestiture Assets, Disney will not
                                               agreements (including transition                        expeditiously as possible after the                   undertake, directly or indirectly, any
                                               services agreements), leases, and                       closing of the Transaction. For the                   challenges to the environmental, zoning,
                                               commitments and understanding of                        avoidance of doubt, nothing in this                   or other permits relating to the
                                               defendants; all trademarks, service                     Final Judgment shall require Fox to                   operation of the Divestiture Assets.
                                               marks, trade names, copyrights, patents,                divest any of the Divestiture Assets                     H. Notwithstanding Paragraph II(E),
                                               slogans, programming materials, and                     prior to the closing of the Transaction.              that the Divestiture Assets do not
                                               promotional materials relating to each                     B. In accomplishing the divestiture                include trademarks, trade names,
                                               video network; all customer lists,                      ordered by this Final Judgment, Disney                service marks, or service names
                                               contracts, accounts, credit records, and                promptly shall make known, by usual                   containing the name ‘‘Fox,’’ the
                                               all logs and other records maintained by                and customary means, the availability of              defendants shall offer any Acquirer(s) of
                                               Fox in connection with each video                       the Divestiture Assets. Disney shall                  a Fox RSN a non-exclusive royalty-free
                                               network. Except as set forth in                         inform any person making an inquiry                   license for use of the ‘‘Fox’’ trademark
                                               Paragraph IV(H) of this Final Judgment,                 regarding a possible purchase of the                  consistent with that RSN’s current usage
                                               Divestiture Assets do not include                       Divestiture Assets that they are being                of that trademark for a time period of at
                                               trademarks, trade names, service marks,                 divested pursuant to this Final                       least eighteen (18) months.
                                               or service names containing the name                    Judgment and provide that person with                    I. At the option of Acquirer(s), on or
                                               ‘‘Fox.’’                                                a copy of this Final Judgment.                        before the closing date of any
                                                  F. The term ‘‘Transaction’’ means the                Defendants shall offer to furnish to all              divestiture, Disney shall enter into one
                                               transaction that is the subject of the                  prospective Acquirers, subject to                     or more transition services agreements,
                                               Agreement and Plan of Merger among                      customary confidentiality assurances,                 approved in advance by the United
                                               Twenty-First Century Fox, Inc., The                     all information and documents relating                States in its sole discretion, to provide
                                               Walt Disney Company, TWDC Holdco                        to the Divestiture Assets customarily                 any transition services reasonably
                                               613 corp., WDC Merger Enterprises II                    provided in a due diligence process,                  necessary to operate any Divestiture
                                               Corp., and WDC Merger Enterprises I,                    except such information or documents                  Assets as viable, ongoing video
                                               LLC, dated June 20, 2018.                               subject to the attorney-client privilege or           networks or programming assets.
                                                                                                       work-product doctrine. Defendants shall                  J. Unless the United States otherwise
                                               III. APPLICABILITY                                      make available such information to the                consents in writing, the divestitures
                                                  A. This Final Judgment applies to                    United States at the same time that such              pursuant to Section IV, or by trustee
                                               Disney and Fox, as defined above, and                   information is made available to any                  appointed pursuant to Section V of this
                                               all other persons in active concert or                  other person.                                         Final Judgment, shall include the entire
                                               participation with any of them who                         C. Defendants shall provide the                    Divestiture Assets and be accomplished
                                               receive actual notice of this Final                     Acquirer(s) and the United States                     in such a way as to satisfy the United
                                               Judgment by personal service or                         information relating to the personnel                 States, in its sole discretion, that the
                                               otherwise.                                              involved in the production and                        Divestiture Assets can and will be used
daltland on DSKBBV9HB2PROD with NOTICES




                                                  B. If, after the closing and prior to                operation of the Divestiture Assets to                by the Acquirer(s) as part of a viable,
                                               complying with Section IV and Section                   enable the Acquirer(s) to make offers of              ongoing business of selling, supplying,
                                               V of this Final Judgment, Disney sells or               employment. Defendants will not                       or licensing video programming.
                                               otherwise disposes of all or                            interfere with any negotiations by the                Divestiture of the Divestiture Assets
                                               substantially all of the assets or lesser               Acquirer(s) to employ upon closing of                 may be made to one or more Acquirers,
                                               business units that include the                         the sale of each of the Divestiture Assets            provided that in each instance it is
                                               Divestiture Assets, it shall require the                any defendant employee whose primary                  demonstrated to the sole satisfaction of


                                          VerDate Sep<11>2014   18:28 Aug 14, 2018   Jkt 244001   PO 00000   Frm 00059   Fmt 4703   Sfmt 4703   E:\FR\FM\15AUN1.SGM   15AUN1


                                               40558                      Federal Register / Vol. 83, No. 158 / Wednesday, August 15, 2018 / Notices

                                               the United States that the Divestiture                     C. Defendants shall not object to a sale           United States and, as appropriate, the
                                               Assets will remain viable, and the                      by the trustee on any ground other than               Court setting forth the trustee’s efforts to
                                               divestiture of such assets will achieve                 the trustee’s malfeasance. Any such                   accomplish the divestitures ordered
                                               the purposes of this Final Judgment and                 objections by defendants must be                      under this Final Judgment. To the extent
                                               remedy the competitive harm alleged in                  conveyed in writing to the United States              such reports contain information that
                                               the Complaint. The divestitures,                        and the trustee within ten (10) calendar              the trustee deems confidential, such
                                               whether pursuant to Section IV or                       days after the trustee has provided the               reports shall not be filed in the public
                                               Section V of this Final Judgment:                       notice required under Section VI.                     docket of the Court. The trustee’s
                                               (1) shall be made to an Acquirer(s) that,                  D. The trustee shall serve at the cost             reports shall include the name, address,
                                                    in the United States’ sole judgment,               and expense of Disney pursuant to a                   and telephone number of each person
                                                    has the intent and capability                      written agreement, on such terms and                  who, during the preceding month, made
                                                    (including the necessary                           conditions as the United States                       an offer to acquire, expressed an interest
                                                    managerial, operational, technical,                approves, including confidentiality                   in acquiring, entered into negotiations
                                                    and financial capability) of                       requirements and conflict of interest                 to acquire, or was contacted or made an
                                                    competing effectively in the                       certifications. The trustee shall account             inquiry about acquiring, any interest in
                                                    business of selling, supplying, and                for all monies derived from the sale of               the Divestiture Assets, and shall
                                                    licensing video programming; and                   the relevant Divestiture Assets and all               describe in detail each contact with any
                                               (2) shall be accomplished so as to satisfy              costs and expenses so incurred. After                 such person. The trustee shall maintain
                                                    the United States, in its sole                     approval by the Court of the trustee’s                full records of all efforts made to divest
                                                    discretion, that none of the terms of              accounting, including fees for its                    the relevant Divestiture Assets.
                                                    any agreement between the                          services yet unpaid and those of any                     G. If the trustee has not accomplished
                                                    Acquirer(s) and defendants gives                   professionals and agents retained by the              the divestitures ordered under this Final
                                                    defendants the ability unreasonably                trustee, all remaining money shall be                 Judgment within six (6) months after its
                                                    to raise the costs of the Acquirer(s),             paid to Disney and the trust shall then               appointment, the trustee shall promptly
                                                    to lower the efficiency of the                     be terminated. The compensation of the                file with the Court a report setting forth
                                                    Acquirer(s), or otherwise to                       trustee and any professionals and agents              (1) the trustee’s efforts to accomplish the
                                                    interfere in the ability of the                    retained by the trustee shall be                      required divestiture, (2) the reasons, in
                                                    Acquirer(s) to compete effectively.                reasonable in light of the value of the               the trustee’s judgment, why the required
                                                                                                       relevant Divestiture Assets and based on              divestiture has not been accomplished,
                                               V. APPOINTMENT OF TRUSTEE                               a fee arrangement providing the trustee               and (3) the trustee’s recommendations.
                                                  A. If Disney has not divested the                    with an incentive based on the price                  To the extent such report contains
                                               Divestiture Assets within the time                      and terms of the divestiture and the                  information that the trustee deems
                                               period specified in Section IV(A),                      speed with which it is accomplished,                  confidential, such report shall not be
                                               Disney shall notify the United States of                but timeliness is paramount. If the                   filed in the public docket of the Court.
                                               that fact in writing, specifically                      trustee and Disney are unable to reach                The trustee shall at the same time
                                               identifying the Divestiture Assets that                 agreement on the trustee’s or any agents’             furnish such report to the United States
                                               have not been divested (the ‘‘relevant                  or consultants’ compensation or other                 which shall have the right to make
                                               Divestiture Assets’’). Upon application                 terms and conditions of engagement                    additional recommendations consistent
                                               of the United States, the Court shall                   within 14 calendar days of appointment                with the purpose of the trust. The Court
                                               appoint a trustee selected by the United                of the trustee, the United States may, in             thereafter shall enter such orders as it
                                               States and approved by the Court to                     its sole discretion, take appropriate                 shall deem appropriate to carry out the
                                               effect the divestiture of the relevant                  action, including making a                            purpose of the Final Judgment, which
                                               Divestiture Assets.                                     recommendation to the Court. The                      may, if necessary, include extending the
                                                  B. After the appointment of a trustee                trustee shall, within three (3) business              trust and the term of the trustee’s
                                               becomes effective, only the trustee shall               days of hiring any other professionals or             appointment by a period requested by
                                               have the right to sell the relevant                     agents, provide written notice of such                the United States.
                                               Divestiture Assets. The trustee shall                   hiring and the rate of compensation to                   H. If the United States determines that
                                               have the power and authority to                         defendants and the United States.                     the trustee has ceased to act or failed to
                                               accomplish the divestiture to an                           E. Disney shall use its best efforts to            act diligently or in a reasonably cost-
                                               Acquirer acceptable to the United States                assist the trustee in accomplishing the               effective manner, it may recommend the
                                               at such price and on such terms as are                  required divestiture. The trustee and                 Court appoint a substitute trustee.
                                               then obtainable upon reasonable effort                  any consultants, accountants, attorneys,
                                               by the trustee, subject to the provisions                                                                     VI. NOTICE OF PROPOSED
                                                                                                       and other agents retained by the trustee
                                               of Sections IV, V, and VI of this Final                                                                       DIVESTITURE
                                                                                                       shall have full and complete access to
                                               Judgment, and shall have such other                     the personnel, books, records, and                       A. Within two (2) business days
                                               powers as this Court deems appropriate.                 facilities of the business to be divested,            following execution of a definitive
                                               Subject to Section V(D) of this Final                   and Disney shall develop financial and                divestiture agreement, Disney or the
                                               Judgment, the trustee may hire at the                   other information relevant to such                    trustee, whichever is then responsible
                                               cost and expense of Disney any                          business as the trustee may reasonably                for effecting the divestitures required
                                               investment bankers, attorneys, or other                 request, subject to reasonable protection             herein, shall notify the United States of
                                               agents, who shall be solely accountable                 for trade secret or other confidential                any proposed divestiture required by
                                               to the trustee, reasonably necessary in                 research, development, or commercial                  Section IV or Section V of this Final
daltland on DSKBBV9HB2PROD with NOTICES




                                               the trustee’s judgment to assist in the                 information or any applicable                         Judgment. If the trustee is responsible,
                                               divestiture. Any such investment                        privileges. Defendants shall take no                  it shall similarly notify defendants. The
                                               bankers, attorneys, or other agents shall               action to interfere with or to impede the             notice shall set forth the details of the
                                               serve on such terms and conditions as                   trustee’s accomplishment of the                       proposed divestiture and list the name,
                                               the United States approves, including                   divestiture.                                          address, and telephone number of each
                                               confidentiality requirements and                           F. After its appointment, the trustee              person not previously identified who
                                               conflict of interest certifications.                    shall file monthly reports with the                   offered or expressed an interest in or


                                          VerDate Sep<11>2014   18:28 Aug 14, 2018   Jkt 244001   PO 00000   Frm 00060   Fmt 4703   Sfmt 4703   E:\FR\FM\15AUN1.SGM   15AUN1


                                                                          Federal Register / Vol. 83, No. 158 / Wednesday, August 15, 2018 / Notices                                          40559

                                               desire to acquire any ownership interest                been completed under Section IV or                    States Department of Justice, including
                                               in the Divestiture Assets, together with                Section V of this Final Judgment,                     consultants and other persons retained
                                               full details of the same.                               defendants shall deliver to the United                by the United States, shall, upon written
                                                  B. Within fifteen (15) calendar days of              States an affidavit, signed by each                   request of an authorized representative
                                               receipt by the United States of such                    defendant’s Chief Financial Officer and               of the Assistant Attorney General in
                                               notice, the United States may request                   General Counsel, which shall describe                 charge of the Antitrust Division, and on
                                               from defendants, the proposed Acquirer,                 the fact and manner of defendant’s                    reasonable notice to defendants, be
                                               any other third party, or the trustee, if               compliance with Section IV or Section                 permitted:
                                               applicable, additional information                      V of this Final Judgment. Each such
                                               concerning the proposed divestiture, the                affidavit shall include the name,                     (1) access during defendants’ office
                                               proposed Acquirer, and any other                        address, and telephone number of each                      hours to inspect and copy, or at the
                                               potential Acquirers. Defendants and the                 person who, during the preceding thirty                    option of the United States, to
                                               trustee shall furnish any additional                    (30) calendar days, made an offer to                       require defendants to provide hard
                                               information requested within fifteen                    acquire, expressed an interest in                          copies or electronic copies of, all
                                               (15) calendar days of the receipt of the                acquiring, entered into negotiations to                    books, ledgers, accounts, records,
                                               request, unless the parties shall                       acquire, or was contacted or made an                       data, and documents in the
                                               otherwise agree.                                        inquiry about acquiring, any interest in                   possession, custody, or control of
                                                  C. Within thirty (30) calendar days                  the Divestiture Assets, and shall                          defendants, relating to any matters
                                               after receipt of the notice or within                   describe in detail each contact with any                   contained in this Final Judgment;
                                               twenty (20) calendar days after the                     such person during that period. Each                       and
                                               United States has been provided the                     such affidavit shall also include a                   (2) to interview, either informally or on
                                               additional information requested from                   description of the efforts defendants                      the record, defendants’ officers,
                                               defendants, the proposed Acquirer(s),                   have taken to solicit buyers for and                       employees, or agents, who may
                                               any third party, and the trustee,                       complete the sale of the Divestiture                       have their individual counsel
                                               whichever is later, the United States                   Assets, including efforts to secure                        present, regarding such matters.
                                               shall provide written notice to                         regulatory approvals, and to provide                       The interviews shall be subject to
                                               defendants and the trustee, if there is                 required information to prospective                        the reasonable convenience of the
                                               one, stating whether or not it objects to               Acquirers, including the limitations, if                   interviewee and without restraint or
                                               the proposed divestiture. If the United                 any, on such information.                                  interference by defendants.
                                               States provides written notice that it                     Assuming the information set forth in
                                               does not object, the divestiture may be                 the affidavit is true and complete, any                  B. Upon the written request of an
                                               consummated, subject only to                            objection by the United States to                     authorized representative of the
                                               defendants’ limited right to object to the              information provided by defendants,                   Assistant Attorney General in charge of
                                               sale under Paragraph V(C) of this Final                 including limitations on information,                 the Antitrust Division, defendants shall
                                               Judgment. Absent written notice that the                shall be made within fourteen (14)                    submit written reports or responses to
                                               United States does not object to the                    calendar days of receipt of such                      written interrogatories, under oath if
                                               proposed Acquirer(s) or upon objection                  affidavit.                                            requested, relating to any of the matters
                                               by the United States, a divestiture                        B. Within twenty (20) calendar days                contained in this Final Judgment as may
                                               proposed under Section IV or Section V                  of the filing of the Complaint in this                be requested.
                                               shall not be consummated. Upon                          matter, defendants shall deliver to the                  C. No information or documents
                                               objection by defendants under                           United States an affidavit that describes             obtained by the means provided in this
                                               Paragraph V(C), a divestiture proposed                  in reasonable detail all actions                      section shall be divulged by the United
                                               under Section V shall not be                            defendants have taken and all steps                   States to any person other than an
                                               consummated unless approved by the                      defendants have implemented on an                     authorized representative of the
                                               Court.                                                  ongoing basis to comply with Section                  executive branch of the United States,
                                                                                                       VIII of this Final Judgment. Defendants               except in the course of legal proceedings
                                               VII. FINANCING                                          shall deliver to the United States an                 to which the United States is a party
                                                 Disney shall not finance all or any                   affidavit describing any changes to the               (including grand jury proceedings), or
                                               part of any purchase made pursuant to                   efforts and actions outlined in                       for the purpose of securing compliance
                                               Section IV or Section V of this Final                   defendant’s earlier affidavits filed                  with this Final Judgment, or as
                                               Judgment.                                               pursuant to this section within fifteen               otherwise required by law.
                                                                                                       (15) calendar days after the change is
                                               VIII. HOLD SEPARATE                                     implemented.                                             D. If at the time information or
                                                 Until the divestitures required by this                  C. Defendants shall keep all records of            documents are furnished by defendants
                                               Final Judgment have been                                all efforts made to preserve and divest               to the United States, defendants
                                               accomplished, defendants shall take all                 the Divestiture Assets until one year                 represent and identify in writing the
                                               steps necessary to comply with the Hold                 after such divestiture has been                       material in any such information or
                                               Separate Stipulation and Order entered                  completed.                                            documents to which a claim of
                                               by this Court. After the Transaction has                                                                      protection may be asserted under Rule
                                                                                                       X. COMPLIANCE INSPECTION                              26(c)(1)(G) of the Federal Rules of Civil
                                               been consummated or closed,
                                               defendants shall take no action that                      A. For the purposes of determining or               Procedure, and defendants mark each
                                               would jeopardize the divestiture                        securing compliance with this Final                   pertinent page of such material,
daltland on DSKBBV9HB2PROD with NOTICES




                                               ordered by this Court.                                  Judgment, or of any related orders such               ‘‘Subject to claim of protection under
                                                                                                       as any Hold Separate Stipulation and                  Rule 26(c)(1)(G) of the Federal Rules of
                                               IX. AFFIDAVITS                                          Order, or of determining whether the                  Civil Procedure,’’ then the United States
                                                 A. Within twenty (20) calendar days                   Final Judgment should be modified or                  shall give defendants ten (10) calendar
                                               of the filing of the Complaint in this                  vacated, and subject to any legally                   days’ notice prior to divulging such
                                               matter, and every thirty (30) calendar                  recognized privilege, from time to time               material in any legal proceeding (other
                                               days thereafter until the divestiture has               authorized representatives of the United              than a grand jury proceeding).


                                          VerDate Sep<11>2014   18:28 Aug 14, 2018   Jkt 244001   PO 00000   Frm 00061   Fmt 4703   Sfmt 4703   E:\FR\FM\15AUN1.SGM   15AUN1


                                               40560                      Federal Register / Vol. 83, No. 158 / Wednesday, August 15, 2018 / Notices

                                               XI. NO REACQUISITION                                    including the investigation of the               C. ‘‘Fox’’ means defendant Twenty-
                                                 Disney may not reacquire any of the                   potential violation.                          First Century Fox, Inc., a Delaware
                                               Divestiture Assets during the term of                                                                 corporation headquartered in New York,
                                                                                                       XIV. EXPIRATION OF FINAL
                                               this Final Judgment without prior                                                                     New York, its successors and assigns,
                                                                                                       JUDGMENT
                                               written approval of the United States.                                                                and its subsidiaries, divisions, groups,
                                                                                                          Unless this Court grants an extension, affiliates, partnerships, and joint
                                               XII. RETENTION OF JURISDICTION                          this Final Judgment shall expire seven        ventures, and their directors, officers,
                                                                                                       (7) years from the date of its entry,         managers, agents, and employees.
                                                  This Court retains jurisdiction to
                                                                                                       except that this Final Judgment may be           D. ‘‘Fox RSNs’’ means all of Fox’s
                                               enable any party to this Final Judgment
                                                                                                       terminated upon notice by the United          interests in the following video
                                               to apply to this Court at any time for
                                                                                                       States to the Court and the defendants        networks or programming assets:
                                               further orders and directions as may be
                                                                                                       that the divestitures have been                  (1) Fox Sports Arizona;
                                               necessary or appropriate to carry out or
                                                                                                       completed and that the continuation of           (2) Fox Sports Carolinas;
                                               construe this Final Judgment, to modify
                                                                                                       the Final Judgment no longer is                  (3) Fox Sports Detroit;
                                               any of its provisions, to enforce
                                                                                                       necessary.                                       (4) Fox Sports Florida;
                                               compliance, and to punish violations of
                                                                                                                                                        (5) Fox Sports Indiana;
                                               its provisions.                                         XV. PUBLIC INTEREST                              (6) Fox Sports Kansas City;
                                                                                                       DETERMINATION                                    (7) Fox Sports Midwest;
                                               XIII. ENFORCEMENT OF FINAL
                                               JUDGMENT                                                   Entry of this Final Judgment is in the        (8) Fox Sports New Orleans;
                                                                                                       public interest. The parties have                (9) Fox Sports North;
                                                  A. The United States retains and                                                                      (10) Fox Sports Ohio;
                                                                                                       complied with the requirements of the
                                               reserves all rights to enforce the                                                                       (11) SportsTime Ohio;
                                                                                                       Antitrust Procedures and Penalties Act,
                                               provisions of this Final Judgment,                                                                       (12) Fox Sports Oklahoma;
                                                                                                       15 U.S.C. § 16, including making copies
                                               including its right to seek an order of                                                                  (13) Fox Sports San Diego;
                                                                                                       available to the public of this Final
                                               contempt from this Court. Defendants                                                                     (14) Fox Sports South;
                                                                                                       Judgment, the Competitive Impact
                                               agree that in any civil contempt action,                                                                 (15) Fox Sports Southeast;
                                                                                                       Statement, and any comments thereon,
                                               any motion to show cause, or any                                                                         (16) Fox Sports Southwest;
                                                                                                       and the United States’ responses to
                                               similar action brought by the United                                                                     (17) Fox Sports Sun;
                                                                                                       comments. Based upon the record
                                               States regarding an alleged violation of                                                                 (18) Fox Sports Tennessee;
                                                                                                       before the Court, which includes the
                                               this Final Judgment, the United States                                                                   (19) Fox Sports West;
                                                                                                       Competitive Impact Statement and any
                                               may establish a violation of the decree                                                                  (20) Prime Ticket;
                                                                                                       comments and responses to comments
                                               and the appropriateness of any remedy                                                                    (21) Fox Sports Wisconsin; and
                                                                                                       filed with the Court, entry of this Final
                                               therefor by a preponderance of the                                                                       (22) the YES Network.
                                                                                                       Judgment is in the public interest.
                                               evidence, and they waive any argument                                                                    E. ‘‘Divestiture Assets’’ means all of
                                               that a different standard of proof should               Date: llllllllllllllllll Fox’s interests in the Fox RSNs,
                                               apply.                                                  Court approval subject to procedures of       including, all of the assets, tangible or
                                                  B. The Final Judgment should be                      Antitrust Procedures and Penalties Act, 15    intangible, necessary for the operations
                                               interpreted to give full effect to the                  U.S.C. § 16                                   of the Fox RSNs as viable, ongoing
                                                                                                       lllllllllllllllllllll
                                               procompetitive purposes of the antitrust                                                              video networks or programming assets,
                                               laws and to restore all competition                     United States District Judge                  including, but not limited to, all real
                                               harmed by the challenged conduct.                       United States District Court for the          property (owned or leased), all
                                               Defendants agree that they may be held                  Southern District of New York                 broadcast equipment, office furniture,
                                               in contempt of, and that the Court may                                                                fixtures, materials, supplies, and other
                                                                                                          United States of America, Plantiff, v. The
                                               enforce, any provision of this Final                                                                  tangible property; all licenses, permits
                                                                                                       Walt Disney Company, and Twenty-First
                                               Judgment that, as interpreted by the                    Century Fox, Inc., Defendants.                and authorizations issued by any
                                               Court in light of these procompetitive                                                                governmental organization relating to
                                                                                                       Civil Action No. 1:18–cv–05800 (CM) (KNF)
                                               principles and applying ordinary tools                                                                the operation of the asset; all contracts
                                               of interpretation, is stated specifically               HOLD SEPARATE STIPULATION AND (including content, programming and
                                               and in reasonable detail, whether or not                ORDER                                         distribution contracts and rights),
                                               it is clear and unambiguous on its face.                   It is hereby stipulated and agreed by      agreements (including transition
                                               In any such interpretation, the terms of                and between the undersigned parties,          services agreements), leases, and
                                               this Final Judgment should not be                       subject to approval and entry by the          commitments and understanding of
                                               construed against either party as the                   Court, that:                                  defendants; all trademarks, service
                                               drafter.                                                                                              marks, trade names, copyrights, patents,
                                                  C. In any enforcement proceeding in                  I. Definitions                                slogans, programming materials, and
                                               which the Court finds that the                             As used in this Hold Separate              promotional materials relating to each
                                               defendants have violated this Final                     Stipulation and Order:                        video network; all customer lists,
                                               Judgment, the United States may apply                      A. ‘‘Acquirer’’ or ‘‘Acquirers’’ means     contracts, accounts, credit records, and
                                               to the Court for a one-time extension of                the entity or entities to which               all logs and other records maintained by
                                               this Final Judgment, together with such                 defendants divest any of the Divestiture Fox in connection with each video
                                               other relief as may be appropriate. In                  Assets.                                       network. Except as provided in the
                                               connection with any successful effort by                   B. ‘‘Disney’’ means defendant The          Final Judgment, Divestiture Assets does
daltland on DSKBBV9HB2PROD with NOTICES




                                               the United States to enforce this Final                 Walt Disney Company, a Delaware               not include trademarks, trade names,
                                               Judgement against a Defendant, whether                  corporation headquartered in Burbank,         service marks, or service names
                                               litigated or resolved prior to litigation,              California, its successors and assigns,       containing the name ‘‘Fox.’’
                                               that Defendant agrees to reimburse the                  and its subsidiaries, divisions, groups,         F. The term ‘‘Transaction’’ means the
                                               United States for any attorneys’ fees,                  affiliates, partnerships, and joint           transaction that is the subject of the
                                               experts’ fees, and costs incurred in                    ventures, and their directors, officers,      Agreement and Plan of Merger among
                                               connection with that enforcement effort,                managers, agents, and employees.              Twenty-First Century Fox, Inc., The


                                          VerDate Sep<11>2014   18:28 Aug 14, 2018   Jkt 244001   PO 00000   Frm 00062   Fmt 4703   Sfmt 4703   E:\FR\FM\15AUN1.SGM   15AUN1


                                                                          Federal Register / Vol. 83, No. 158 / Wednesday, August 15, 2018 / Notices                                            40561

                                               Walt Disney Company, TWDC Holdco                           B. Defendants shall abide by and                   Counsel, which shall describe the fact
                                               613 corp., WDC Merger Enterprises II                    comply with the provisions of the                     and manner of Disney’s compliance
                                               Corp., and WDC Merger Enterprises I,                    proposed Final Judgment pending the                   with Section VII until the divestitures
                                               LLC, dated June 20, 2018.                               Final Judgment’s entry by the Court, or               required by the Final Judgment have
                                                                                                       until expiration of time for all appeals              been accomplished.
                                               II. Objectives
                                                                                                       of any Court ruling declining entry of
                                                  The Final Judgment filed in this case                the proposed Final Judgment and shall,                VI. Pre-Closing Asset Preservation
                                               is meant to ensure defendants’ prompt                   from the date of the signing of this                  Provisions
                                               divestiture of the Divestiture Assets for               Stipulation by the parties, comply with                  Until defendants consummate the
                                               the purpose of establishing one or more                 all the terms and provisions of the                   Transaction:
                                               viable competitors in the sale, supply,                 proposed Final Judgment. The United                      A. Fox shall preserve, maintain, and
                                               or licensing of video programming in                    States shall have the full rights and                 continue to operate each Divestiture
                                               the United States in order to remedy the                enforcement powers in the proposed                    Asset as an ongoing, economically
                                               effects that the United States alleges                  Final Judgment as though the same were                viable, competitive video network or
                                               would otherwise result from the                         in full force and effect as the Final                 programming asset.
                                               Transaction. This Hold Separate                         Order of the Court.                                      B. Fox shall take all steps reasonably
                                               Stipulation and Order ensures, prior to                    C. Defendants shall not consummate                 necessary to ensure that the Divestiture
                                               such divestitures, that the Divestiture                 the Transaction sought to be enjoined by              Assets will be maintained and operated
                                               Assets will remain economically viable,                 the Complaint herein before the Court                 as ongoing, economically viable and
                                               and ongoing business concerns that will                 has signed this Hold Separate                         active competitors in the video network
                                               remain independent and uninfluenced                     Stipulation.                                          or programming business.
                                               by Disney or, after the Transaction has                    D. This Hold Separate Stipulation and                 C. Fox shall use all reasonable efforts,
                                               been consummated, by Fox, and that                      Order shall apply with equal force and                consistent with past practices, to
                                               competition is maintained during the                    effect to any amended proposed Final                  maintain and increase the sales and
                                               pendency of the ordered divestitures.                   Judgment agreed upon in writing by the                revenues associated with each of the
                                                                                                       parties and submitted to the Court.                   Divestiture Assets.
                                               III. Jurisdiction and Venue
                                                                                                          E. In the event (1) the United States                 D. Fox, consistent with past practices,
                                                  The Court has jurisdiction over the                  has withdrawn its consent, as provided                shall provide sufficient working capital
                                               subject matter of this action and over                  in Paragraph IV(A) above, or (2) the                  and lines and sources of credit to
                                               each of the parties hereto, and venue of                proposed Final Judgment is not entered                continue to maintain each Divestiture
                                               this action is proper in the United States              pursuant to this Hold Separate                        Asset as an ongoing, economically
                                               District Court for the Southern District                Stipulation and Order, the time has                   viable, and competitive video network
                                               of New York.                                            expired for all appeals of any court                  or programming asset.
                                               IV. Compliance with and Entry of the                    ruling declining entry of the proposed                   E. Fox shall maintain, in accordance
                                               Proposed Final Judgment                                 Final Judgment, and the Court has not                 with sound accounting principles,
                                                                                                       otherwise ordered continued                           separate, accurate and complete
                                                  A. The parties stipulate that a Final                compliance with the terms and                         financial ledgers, books, and records
                                               Judgment in the form attached hereto as                 provisions of the proposed Final                      that report on a periodic basis, such as
                                               Exhibit A may be filed with and entered                 Judgment, then the parties are released               the last business day of every month,
                                               by the Court, upon the motion of any                    from all further obligations under this               consistent with past practices, the
                                               party or upon the Court’s own motion,                   Hold Separate Stipulation and Order,                  assets, liabilities, expenses, revenues
                                               at any time after compliance with the                   and the making of this Hold Separate                  and income of each of the Divestiture
                                               requirements of the Antitrust                           Stipulation and Order shall be without                Assets.
                                               Procedures and Penalties Act (‘‘APPA’’),                prejudice to any party in this or any                    F. Fox shall preserve the existing
                                               15 U.S.C. § 16, and without further                     other proceeding.                                     relationships between the Divestiture
                                               notice to any party or other proceedings,                  F. Disney represents that the                      Assets and with each customer that
                                               provided that the United States has not                 divestitures ordered in the proposed                  advertises on or licenses content to a
                                               withdrawn its consent, which it may do                  Final Judgment can and will be made,                  Divestiture Asset, each distributor that
                                               at any time before the entry of the                     and that defendants will later raise no               licenses content from a Divestiture
                                               proposed Final Judgment by serving                      claim of mistake, hardship or difficulty              Asset, and with others having business
                                               notice thereof on the defendants and by                 of compliance as grounds for asking the               relations with any of the Divestiture
                                               filing that notice with the Court. Disney               Court to modify any of the provisions                 Assets, in accordance with the ordinary
                                               agrees to arrange, at its expense,                      contained therein.                                    course of business.
                                               publication as quickly as possible of the
                                               newspaper notice required by the                        V. Notice of Compliance                               VII. Post-Closing Hold Separate and
                                               APPA, which shall be drafted by the                       . Within twenty (20) days after the                 Asset Preservation Provisions
                                               United States, in its sole discretion. The              entry of the Hold Separate Stipulation                  Once the Transaction has been
                                               publication shall be arranged no later                  and Order, and every thirty (30)                      consummated and until the divestitures
                                               than three business days after                          calendar days thereafter (1) Fox shall                required by the Final Judgment have
                                               defendants’ receipt from the United                     deliver to the United States an affidavit,            been accomplished:
                                               States of the text of the notice and the                signed by Fox’s Chief Financial Officer                 A. Disney shall preserve, maintain,
                                               identity of the newspaper within which                  and General Counsel, which shall                      and continue to operate each Divestiture
daltland on DSKBBV9HB2PROD with NOTICES




                                               the publication shall be made. Disney                   describe the fact and manner of Fox’s                 Asset as an independent, ongoing,
                                               shall promptly send to the United States                compliance with Section VI until                      economically viable, competitive video
                                               (1) confirmation that publication of the                defendants consummate the                             network or programming asset,
                                               newspaper notice has been arranged,                     Transaction; and                                      management, programming,
                                               and (2) the certification of the                          (2) Disney shall deliver to the United              distribution, sales and operations of
                                               publication prepared by the newspaper                   States an affidavit, signed by Disney’s               such assets held entirely separate,
                                               within which the notice was published.                  Chief Financial Officer and General                   distinct and apart from those of Disney’s


                                          VerDate Sep<11>2014   18:28 Aug 14, 2018   Jkt 244001   PO 00000   Frm 00063   Fmt 4703   Sfmt 4703   E:\FR\FM\15AUN1.SGM   15AUN1


                                               40562                      Federal Register / Vol. 83, No. 158 / Wednesday, August 15, 2018 / Notices

                                               other operations. Disney shall not                        H. Defendants shall take no action                  Kenneth Newman
                                               coordinate its programming, production,                 that would jeopardize, delay, or impede               (Ken.Newman@disney.com)
                                               distribution, marketing, content                        the sale of the Divestiture Assets.                   Associate General Counsel and Assistant
                                               purchases, or terms of sale of any                        I. Defendants shall take no action that             Secretary, The Walt Disney Company, 77
                                               products with those of any of the                       would interfere with the ability of any               West 66th Street, 15th Floor, New York, NY
                                               Divestiture Assets.                                     trustee appointed pursuant to the                     10023, (212) 456–6080
                                                  B. Disney shall take all steps                       proposed Final Judgment to fulfill its                FOR DEFENDANT
                                               necessary to ensure that (1) the                        obligations.                                          TWENTY-FIRST CENTURY FOX, INC.
                                               Divestiture Assets will be maintained                     J. Disney shall appoint a person or                 CLEARY GOTTLIEB STEEN & HAMILTON
                                               and operated as independent, ongoing,                   persons to oversee the Divestiture                    LLP
                                               economically viable and active                          Assets, who also will be responsible for              lllllllllllllllllllll
                                               competitors in the video network or                     defendants’ compliance with this                      George S. Cary
                                               programming business; (2) management                    section. Such person or persons shall                 (pro hac vice application forthcoming)
                                               of the Divestiture Assets will not be                   have complete managerial responsibility               Kenneth S. Reinker
                                                                                                                                                             Tara Lynn Tavernia
                                               influenced by Disney; and (3) the books,                for the Divestiture Assets, subject to the
                                                                                                                                                             (pro hac vice application forthcoming)
                                               records, competitively sensitive                        provisions of this Final Judgment. In the             2000 Pennsylvania Avenue NW, Washington,
                                               production, programming, distribution,                  event such person is unable to perform                DC 20006, Phone: (202) 974–1743, Fax: (202)
                                               sales, content purchases, marketing and                 such duties, Disney shall appoint,                    974–1999, gcary@cgsh.com, kreinker@
                                               pricing information, and decision                       subject to the approval of the United                 cgsh.com, ttavernia@cgsh.com
                                               making concerning production,                           States, a replacement within ten (10)
                                               programming, distribution, sales,                       working days. Should Disney fail to                   ORDER
                                               content purchases, pricing and                          appoint a replacement acceptable to the                IT IS SO ORDERED by the Court, this
                                               marketing by or under any of the                        United States within this time period,                ll day of ll, 2018.
                                               Divestiture Assets will be kept separate                the United States shall appoint a                     lllllllllllllllllllll
                                               and apart from Disney’s other                           replacement.                                          United States District Judge
                                               operations.
                                                  C. Disney shall use all reasonable                   VIII. Duration of Hold Separate                       United States District Court for the
                                               efforts to maintain and increase the                    Obligations                                           Southern District of New York
                                               sales and revenues associated with each                    Defendants’ obligations under Section                United States of America, Plaintiff, v. The
                                               of the Divestiture Assets, and shall                    VI and VII of this Hold Separate                      Walt Disney Company, and Twenty-First
                                               maintain at 2018 or previously                          Stipulation and Order shall remain in                 Century Fox, Inc., Defendants.
                                               approved levels for 2017, whichever is                  effect until (1) consummation of the                  Civil Action No.
                                               higher, all promotional, advertising,                   divestitures required by the proposed                 18–CV–5800 (CM) (KNF)
                                               sales, technical assistance, marketing                  Final Judgment or (2) until further order             COMPETITIVE IMPACT STATEMENT
                                               and other support for each of the                       of the Court. If the United States
                                               Divestiture Assets.                                     voluntarily dismisses the Complaint in  Plaintiff United States of America
                                                  D. Disney shall provide sufficient                   this matter, defendants are released (‘‘United States’’), pursuant to Section
                                               working capital and lines and sources of                                                     2(b) of the Antitrust Procedures and
                                                                                                       from all further obligations under this
                                               credit to continue to maintain each                     Hold Separate Stipulation and Order. Penalties Act (‘‘APPA’’ or ‘‘Tunney
                                               Divestiture Asset as an ongoing,                                                             Act’’), 15 U.S.C. § 16(b)–(h), files this
                                                                                                       Dated: June 27, 2018
                                               economically viable, and competitive                                                         Competitive Impact Statement relating
                                                                                                         Respectfully submitted,
                                               video network or programming asset.                                                          to the proposed Final Judgment
                                                  E. Disney shall not, except as part of               FOR PLAINTIFF UNITED STATES OF       submitted for entry in this civil antitrust
                                                                                                       AMERICA
                                               a divestiture approved by the United                    lllllllllllllllllllll
                                                                                                                                            proceeding.
                                               States in accordance with the proposed                  Craig Minerva                        I. NATURE AND PURPOSE OF THE
                                               Final Judgment, remove, sell, lease,                                                         PROCEEDING
                                                                                                       United States Department of Justice,
                                               assign, transfer, destroy, pledge, or                   Antitrust Division, Media, Entertainment &
                                               otherwise dispose of any of the                         Professional Services Section, 450 Fifth
                                                                                                                                                                Defendants The Walt Disney
                                               Divestiture Assets.                                     Street N.W., Suite 4000, Washington, DC               Company (‘‘Disney’’) and Twenty-First
                                                  F. Disney shall maintain, in                         20530, Telephone: (202) 353–2384,                     Century Fox, Inc. (‘‘Fox’’) (collectively,
                                               accordance with sound accounting                        Facsimile: (202) 514–730                              ‘‘Defendants’’) entered into an
                                               principles, separate, accurate and                      FOR DEFENDANT THE WALT DISNEY                         Agreement and Plan of Merger dated
                                               complete financial ledgers, books, and                  COMPANY                                               December 13, 2017, amended on June
                                               records that report on a periodic basis,                COVINGTON & BURLING LLP                               20, 2018, pursuant to which Disney
                                               such as the last business day of every                  lllllllllllllllllllll                                 agreed to acquire certain assets,
                                               month, consistent with past practices,                  Andrew A. Ruffino                                     including Fox’s ownership of, or
                                               the assets, liabilities, expenses, revenues             (aruffino@cov.com)                                    interests in, twenty-two regional sports
                                               and income of each of the Divestiture                   The New York Times Building, 620 Eighth               networks (‘‘RSNs’’), the FX cable
                                               Assets.                                                 Avenue, New York, New York 10018, (212)               networks, the National Geographic cable
                                                  G. Disney shall preserve the existing                841–1097                                              networks, television and film studios,
                                               relationships between the Divestiture                   Thomas 0. Barnett                                     Hulu, and international television
                                               Assets and with each customer that                      (tbarnett@cov.com)                                    businesses (the ‘‘Fox Sale Assets’’) from
daltland on DSKBBV9HB2PROD with NOTICES




                                               advertises on or licenses content to a                  (pro hac vice application forthcoming)                Fox for approximately $71.3 billion (the
                                                                                                       Anne Y. Lee
                                               Divestiture Asset, each distributor that                (alee@cov.com)
                                                                                                                                                             ‘‘Transaction’’).
                                               licenses content from a Divestiture                     James Dean                                               Specifically, Fox proposes to sell to
                                               Asset, and with others having business                  (jdean@cov.com)                                       Disney its interests in the following
                                               relations with any of the Divestiture                   Megan Gerking (mgerking@cov.com)                      RSNs: (i) Fox Sports Arizona; (ii) Fox
                                               Assets, in accordance with the ordinary                 One CityCenter, 850 10th Street NW,                   Sports Carolinas; (iii) Fox Sports
                                               course of business.                                     Washington, DC 20001, (202) 662–6000                  Detroit; (iv) Fox Sports Florida; (v) Fox


                                          VerDate Sep<11>2014   18:28 Aug 14, 2018   Jkt 244001   PO 00000   Frm 00064   Fmt 4703   Sfmt 4703   E:\FR\FM\15AUN1.SGM   15AUN1


                                                                          Federal Register / Vol. 83, No. 158 / Wednesday, August 15, 2018 / Notices                                            40563

                                               Sports Indiana; (vi) Fox Sports Kansas                  consumers, higher subscription fees for               which include several cable television
                                               City; (vii) Fox Sports Midwest; (viii) Fox              MVPD customers.                                       programing networks and all of the Fox
                                               Sports New Orleans; (ix) Fox Sports                        At the same time the Complaint was                 RSNs, generated $19 billion in revenue
                                               North; (x) Fox Sports Ohio; (xi)                        filed, the United States also filed a Hold            in fiscal year 2017. Fox licenses its cable
                                               SportsTime Ohio; (xii) Fox Sports                       Separate Stipulation and Order (‘‘Hold                programming networks to MVPDs
                                               Oklahoma; (xiii) Fox Sports San Diego;                  Separate’’) and proposed Final                        throughout the United States. The Fox
                                               (xiv) Fox Sports South; (xv) Fox Sports                 Judgment, which are designed to                       Sale Assets do not include Fox Business
                                               Southeast; (xvi) Fox Sports Southwest;                  eliminate the likely anticompetitive                  Network, Fox Broadcasting Company,
                                               (xvii) Fox Sports Sun; (xviii) Fox Sports               effects of the Transaction. Under the                 Fox Sports, Fox Television Stations
                                               Tennessee; (xix) Fox Sports West; (xx)                  proposed Final Judgment, which is                     Group, FS1, FS2, Fox Deportes, or the
                                               Prime Ticket; (xxi) Fox Sports                          explained more fully below, Disney is                 Big Ten Network.
                                               Wisconsin; and (xxii) the YES Network.                  required to divest all of Fox’s interests                Collectively, the twenty-two Fox
                                                  The proposed acquisition would                       in the Fox RSNs, including all assets                 RSNs serve approximately 61 million
                                               combine two of the country’s most                       necessary for the operation of each Fox               subscribers in twenty-five separate DMA
                                               valuable cable sports properties—                       RSN as a viable, ongoing cable sports                 Markets and license local and regional
                                               Disney’s ESPN franchise of networks                     programming network, to one or more                   rights to telecast live games of 44 of 91
                                               and Fox’s portfolio of twenty-two RSNs.                 buyers acceptable to the United States,               (48%) U.S. professional sports teams in
                                               Cable sports television networks                        in its sole discretion. Under the terms of            three of the four major sports leagues:
                                               compete to be carried in the                            the Hold Separate Stipulation and                     Major League Baseball (‘‘MLB’’), the
                                               programming packages that distributors,                 Order, Disney and Fox will take certain               National Basketball Association
                                               such as cable companies (e.g., Charter                  steps to ensure that each Fox RSN                     (‘‘NBA’’), and the National Hockey
                                               Communications and Comcast), direct                     continues to operate as an ongoing,                   League (‘‘NHL’’). More specifically, the
                                               broadcast satellite services (e.g., DISH                economically viable, competitive cable                Fox RSNs have the local or regional
                                               Network and DirecTV), fiber optic                       sports programming network that will                  broadcast rights to 15 of 30 (50%) MLB
                                               networks services (e.g., Verizon’s Fios                 remain independent and uninfluenced                   teams, 17 of 30 (57%) NBA teams, and
                                               and CenturyLink’s Prism TV), and                        by the consummation of the                            12 of 31 (39%) NHL teams.
                                               online distributors of linear cable                     Transaction, and that competition is                     The proposed Transaction would
                                               programming (e.g., Hulu Live and                        maintained during the pendency of the                 likely lessen competition substantially
                                               DISH’s Sling TV) (hereinafter,                          ordered divestiture.                                  in each of the DMA Markets as a result
                                               collectively referred to as ‘‘MVPDs’’)                     The United States and Defendants                   of Disney’s acquisition of Fox’s RSNs.
                                               offer to their subscribers. Consequently,               have stipulated that the proposed Final               This Transaction is the subject of the
                                               Disney’s proposed acquisition of Fox’s                  Judgment may be entered after                         Complaint and proposed Final
                                               portfolio of RSNs would end the head-                   compliance with the APPA. Entry of the                Judgment filed by the United States on
                                               to-head competition between them and                    proposed Final Judgment would                         June 27, 2018.
                                               likely would result in higher prices for                terminate this action, except that the
                                                                                                                                                             B. The Transaction’s Likely
                                               cable sports programming in each of the                 Court would retain jurisdiction to
                                                                                                                                                             Anticompetitive Effects
                                               Designated Market Areas (‘‘DMAs’’) in                   construe, modify, or enforce the
                                               which Disney and Fox compete.                           provisions of the proposed Final                      1. Relevant Markets
                                                  The United States filed a civil                      Judgment and to punish violations                       The Complaint alleges that licensing
                                               antitrust Complaint on June 27, 2018,                   thereof.                                              of cable sports programming to MVPDs
                                               seeking to enjoin the proposed                          II. DESCRIPTION OF THE EVENTS                         in each DMA Market constitutes a
                                               Transaction. The Complaint alleges that                 GIVING RISE TO THE ALLEGED                            relevant market under Section 7 of the
                                               the likely effect of this acquisition                   VIOLATION                                             Clayton Act.
                                               would be to lessen competition                                                                                  Cable sports programming includes
                                               substantially for the licensing of cable                A. The Defendants and the Proposed                    cable television networks that devote a
                                               sports programming to MVPDs in                          Transaction                                           substantial portion of their
                                               violation of Section 7 of the Clayton                      Disney is a Delaware corporation                   programming time to airing live sporting
                                               Act, 15 U.S.C. § 18, in each of the                     headquartered in Burbank, California. It              events, including MLB, NBA, and NHL
                                               following twenty-five DMAs: Phoenix,                    reported revenue of $55 billion for fiscal            games. Consumers that view live
                                               Arizona; Detroit, Michigan; Milwaukee,                  year 2017. Disney owns various                        sporting events are an important
                                               Wisconsin; Cleveland, Ohio; Cincinnati,                 television programming assets,                        customer group for MVPDs. MVPDs
                                               Ohio; Columbus, Ohio; Miami, Florida;                   including 80% of ESPN—a sports                        could not attract or retain those
                                               Oklahoma City, Oklahoma; Tampa Bay,                     entertainment company that operates                   consumers as subscribers without
                                               Florida; Dallas, Texas; St. Louis,                      several national cable sports                         including cable sports programming in
                                               Missouri; Atlanta, Georgia; Indianapolis,               programming networks. Disney’s other                  the packages of cable programming
                                               Indiana; Orlando, Florida; San Antonio,                 programming assets include: (i) the ABC               networks they offer their subscribers.
                                               Texas; Minneapolis, Minnesota;                          television network; (ii) eight owned-                 ESPN and the local Fox RSN generate
                                               Nashville, Tennessee; Memphis,                          and-operated ABC broadcast stations;                  the highest and second-highest affiliate
                                               Tennessee; San Diego, California;                       (iii) Disney-branded cable television                 fees per subscriber of all networks
                                               Raleigh-Durham, North Carolina; New                     networks; and (iv) Freeform, a cable                  carried by an MVPD in most of the 25
                                               Orleans, Louisiana; Kansas City, Kansas;                television network geared toward                      DMAs and they are among the networks
daltland on DSKBBV9HB2PROD with NOTICES




                                               Charlotte, North Carolina; Los Angeles,                 teenagers and young adults. Disney                    that generate the highest affiliate fees
                                               California; and New York, New York                      licenses its cable programming networks               per subscriber in every one of the 25
                                               (collectively, the ‘‘DMA Markets’’). This               to MVPDs throughout the United States.                DMAs. The high per-subscriber fees that
                                               loss of competition likely would result                    Fox is a Delaware corporation                      MVPDs pay to license these networks
                                               in increased MVPD licensing fees in                     headquartered in New York, New York.                  reflects the importance of these
                                               each DMA Market and because licensing                   It reported revenue of $28.5 billion for              networks to MVPDs and their
                                               fees typically are passed onto                          fiscal year 2017. The Fox Sale Assets,                subscribers.


                                          VerDate Sep<11>2014   18:28 Aug 14, 2018   Jkt 244001   PO 00000   Frm 00065   Fmt 4703   Sfmt 4703   E:\FR\FM\15AUN1.SGM   15AUN1


                                               40564                      Federal Register / Vol. 83, No. 158 / Wednesday, August 15, 2018 / Notices

                                                  For MVPDs, sports programming on                     common ownership and control with                     would not have lost in a pre-transaction
                                               broadcast television is unlikely a                      ESPN, would allow Disney to increase                  blackout of only ESPN or the Fox RSN)
                                               sufficient substitute for cable sports                  its market share of cable sports                      and therefore accede to Disney’s
                                               programming. MVPDs do not typically                     programming in each DMA Market and                    demand for higher licensing fees. For
                                               consider broadcast networks as                          likely increase licensing fees to MVPDs               these reasons, the loss of competition
                                               providing the same type of content as                   for ESPN and/or the Fox RSNs. As a                    between ESPN and the Fox RSN in each
                                               cable sports networks like ESPN and the                 result of the Transaction, Disney’s                   DMA Market would likely lead to an
                                               RSNs. Broadcast networks and their                      networks would account for at least 60                increase in MVPD licensing fees in
                                               affiliates aim to have broad appeal by                  percent of cable sports programming in                those markets. Some of these increased
                                               offering a variety of highly-rated                      19 of the DMA Markets and over 45                     programming costs likely would be
                                               programming content including                           percent in the remaining six DMA                      passed onto consumers, resulting in
                                               primetime entertainment shows,                          Markets.                                              higher MVPD subscription fees for
                                               syndicated shows, and local and                            As alleged in the Complaint, Disney’s              millions of U.S. households.
                                               national news and weather, with live                    acquisition of the Fox RSNs would
                                                                                                       further concentrate already highly                    3. Entry
                                               sports events making up a small
                                               percentage of a broadcast network’s                     concentrated cable sports programming                    The Complaint alleges that entry or
                                               airtime. Many MVPD customers demand                     markets in each of the DMA Markets.                   expansion into cable sports
                                               programming focused on, if not                          Using the Herfindahl-Hirschman Index                  programming would not be timely,
                                               dedicated to, live sporting events, and a               (‘‘HHI’’), a standard measure of market               likely, or sufficient to prevent the
                                               broadcast network’s occasional                          concentration, the post-acquisition HHI               Transaction’s anticompetitive effects.
                                               programming of live sporting events                     in each of the DMA Markets would                      With respect to RSN sports
                                               does not suffice for many customers. For                exceed 2,500 and the Transaction would                programming, there are a limited
                                               that reason, MVPDs do not typically                     increase each DMA Market’s HHI by                     number of professional sports teams in
                                               consider broadcast network                              over 200 points. As a result, the                     a given DMA, and these teams auction
                                               programming as a replacement for cable                  proposed Transaction is presumed to                   the exclusive local rights to telecast
                                               sports programming.                                     likely enhance market power under the                 their games under long-term contracts.
                                                  With respect to the licensing of cable               Horizontal Merger Guidelines issued by                Because these contracts typically last
                                               sports programming to MVPDs, each                       the Department of Justice and the                     many years, there are infrequent
                                               DMA Market constitutes a separate                       Federal Trade Commission.                             opportunities to bid for these licensing
                                               relevant geographic market under                           Moreover, the Transaction combines                 rights to expand an existing RSN or
                                               Section 7 of the Clayton Act. A DMA is                  networks that are at least partial                    create a new RSN. Moreover, non-local
                                               a geographic unit for which A.C.                        substitutes and therefore competitors in              RSNs cannot enter because their
                                               Nielsen Company—a firm that surveys                     a product market with limited                         licenses typically are limited to the
                                               television viewers—furnishes MVPDs,                     alternatives. The Transaction would                   DMAs that comprise the ‘‘home’’
                                               among others, with data to aid in                       provide Disney with the ability to                    territory of the team or teams that the
                                               evaluating audience size and                            threaten MVPDs in each of the DMA                     RSN carries; and local MVPD
                                               composition in a particular area. DMAs                  Markets with the simultaneous blackout                subscribers would not generally have
                                               are widely accepted by MVPDs as the                     of at least two major cable sports                    demand for extensive coverage of
                                               standard geographic area to use in                      programming networks: the ESPN                        another DMA’s home team. Thus, an
                                               evaluating television audience size and                 networks and the local Fox RSN,                       MVPD cannot substitute an RSN from
                                               demographic composition. The Federal                    thereby diminishing competition in the                another DMA for the local RSN in
                                               Communications Commission also uses                     negotiation of licensing agreements with              response to an anticompetitive price
                                               DMAs as geographic units with respect                   MVPDs in each of the DMA markets.                     increase.
                                               to its MVPD regulations.                                   The threatened loss of cable sports                   Entry or expansion into national cable
                                                                                                       programming, and the resulting                        sports programming also is difficult. For
                                               2. Harm to Competition in Each of the                   diminution of an MVPD’s subscribers                   a national sports network to compete
                                               DMA Markets                                             and profits, would significantly                      effectively, it needs to obtain the
                                                  The Complaint alleges that the                       strengthen Disney’s bargaining position.              national broadcast rights from
                                               proposed Transaction likely would                       Prior to the Transaction, an MVPD’s                   professional sports leagues (i.e., MLB,
                                               substantially lessen competition in                     failure to reach a licensing agreement                NBA, and NHL), which are expensive
                                               interstate trade and commerce, in                       with Disney would result in the                       and infrequently available. Although
                                               violation of Section 7 of the Clayton                   blackout of Disney’s networks,                        both Fox and NBCUniversal have
                                               Act, 15 U.S.C. § 18, and have the                       including ESPN, and threaten some                     national cable sports programming
                                               following effects, among others:                        subscriber loss for the MVPD, including               networks (FS1 and NBC Sports,
                                                  a. substantially lessen competition in               those subscribers that value ESPN’s                   respectively), neither company has been
                                               the licensing of cable sports                           content. But because the MVPD still                   able to replicate ESPN’s competitive
                                               programming to MVPDs in each of the                     would be able to offer its subscribers the            position (as evidenced by their lower
                                               DMA Markets;                                            local Fox RSN, many MVPD subscribers                  MVPD licensing fees and viewership
                                                  b. eliminate actual and potential                    simply would watch the local RSN                      ratings).
                                               competition among Disney and Fox in                     instead of cancelling their MVPD
                                                                                                       subscriptions. In the event of a Fox RSN              III. EXPLANATION OF THE
                                               the licensing of cable sports
                                                                                                       blackout, many subscribers likely would               PROPOSED FINAL JUDGMENT
                                               programming to MVPDs in each of the
daltland on DSKBBV9HB2PROD with NOTICES




                                               DMA Markets; and                                        switch to watching ESPN. After the                       The divestiture requirement of the
                                                  c. cause prices for cable sports                     Transaction, an MVPD negotiating with                 proposed Final Judgment will eliminate
                                               programming to MVPDs in each of the                     Disney would be faced with the                        the likely anticompetitive effects of the
                                               DMA Markets to increase.                                prospect of a dual blackout of                        Transaction in each DMA Market by
                                                  The Transaction, by eliminating the                  significant cable sports programming, a               establishing an independent and
                                               Fox RSNs as separate competitors and                    result more likely to cause the MVPD to               economically viable competitor. The
                                               combining their operations under                        lose incremental subscribers (that it                 proposed Final Judgment requires


                                          VerDate Sep<11>2014   18:28 Aug 14, 2018   Jkt 244001   PO 00000   Frm 00066   Fmt 4703   Sfmt 4703   E:\FR\FM\15AUN1.SGM   15AUN1


                                                                          Federal Register / Vol. 83, No. 158 / Wednesday, August 15, 2018 / Notices                                          40565

                                               Disney, within 90 days after the closing                with the standard of proof that applies               private antitrust damage action. Under
                                               of the Transaction, or five days after                  to the underlying offense that the                    the provisions of Section 5(a) of the
                                               notice of the entry of the Final Judgment               compliance commitments address.                       Clayton Act, 15 U.S.C. § 16(a), the
                                               by the Court, whichever is later, to                       Paragraph XIII(B) provides additional              proposed Final Judgment has no prima
                                               divest all of Fox’s interests in the Fox                clarification regarding the interpretation            facie effect in any subsequent private
                                               RSNs, including all assets necessary for                of the provisions of the proposed Final               lawsuit that may be brought against
                                               the operation of the Fox RSNs as viable,                Judgment. The proposed Final Judgment                 Defendants.
                                               ongoing video networks or programming                   was drafted to restore all competition
                                               assets. The assets must be divested in                  that would otherwise be harmed by the                 V. PROCEDURES AVAILABLE FOR
                                               such a way as to satisfy the United                     merger. Defendants agree that they will               MODIFICATION OF THE PROPOSED
                                               States in its sole discretion that the                  abide by the proposed Final Judgment,                 FINAL JUDGMENT
                                               operations can and will be operated by                  and that they may be held in contempt                    The United States and Defendants
                                               the purchaser as viable, ongoing                        of this Court for failing to comply with              have stipulated that the proposed Final
                                               businesses that can compete effectively                 any provision of the proposed Final                   Judgment may be entered by the Court
                                               in the relevant markets. Disney must use                Judgment that is stated specifically and              after compliance with the provisions of
                                               its best efforts to divest the Fox RSNs as              in reasonable detail, as interpreted in               the APPA, provided that the United
                                               expeditiously as possible and shall                     light of this procompetitive purpose.                 States has not withdrawn its consent.
                                               cooperate with prospective purchasers.                     Paragraph XIII(C) of the proposed                  The APPA conditions entry upon the
                                                  In the event that Disney does not                    Final Judgment further provides that,                 Court’s determination that the proposed
                                               accomplish the divestiture within the                   should the Court find in an enforcement               Final Judgment is in the public interest.
                                               period prescribed in the proposed Final                 proceeding that Defendants have                          The APPA provides a period of at
                                               Judgment, the Final Judgment provides                   violated the Final Judgment, the United               least sixty (60) days preceding the
                                               that the Court will appoint a trustee                   States may apply to the Court for a one-              effective date of the proposed Final
                                               selected by the United States to effect                 time extension of the Final Judgment,                 Judgment within which any person may
                                               the divestiture. If a trustee is appointed,             together with such other relief as may be             submit to the United States written
                                               the proposed Final Judgment provides                    appropriate. In addition, in order to                 comments regarding the proposed Final
                                               that Disney will pay all costs and                      compensate American taxpayers for any                 Judgment. Any person who wishes to
                                               expenses of the trustee. The trustee’s                  costs associated with the investigation               comment should do so within sixty (60)
                                               commission will be structured so as to                  and enforcement of violations of the                  days of the date of publication of this
                                               provide an incentive for the trustee                    proposed Final Judgment, Paragraph                    Competitive Impact Statement in the
                                               based on the price obtained and the                     XIII(C) provides that in any successful               Federal Register, or the last date of
                                               speed with which the divestiture is                     effort by the United States to enforce the            publication in a newspaper of the
                                               accomplished. After his or her                          Final Judgment against a Defendant,                   summary of this Competitive Impact
                                               appointment becomes effective, the                      whether litigated or resolved prior to                Statement, whichever is later. All
                                               trustee will file monthly reports with                  litigation, that Defendant agrees to                  comments received during this period
                                               the Court and the United States setting                 reimburse the United States for                       will be considered by the United States
                                               forth his or her efforts to accomplish the              attorneys’ fees, experts’ fees, and costs             Department of Justice, which remains
                                               divestiture. At the end of six months, if               incurred in connection with any                       free to withdraw its consent to the
                                               the divestiture has not been                            enforcement effort, including the                     proposed Final Judgment at any time
                                               accomplished, the trustee and the                       investigation of the potential violation.             prior to the Court’s entry of judgment.
                                               United States will make                                    Finally, Section XIV of the proposed               The comments and the response of the
                                               recommendations to the Court, which                     Final Judgment provides that the Final                United States will be filed with the
                                               shall enter such orders as appropriate,                 Judgment shall expire seven years from                Court. In addition, comments will be
                                               in order to carry out the purpose of the                the date of its entry, except that the                posted on the U.S. Department of
                                               trust, including extending the trust or                 Final Judgment may be terminated upon                 Justice, Antitrust Division’s internet
                                               the term of the trustee’s appointment.                  notice by the United States to the Court              website and, under certain
                                                  The proposed Final Judgment also                     and Defendants that the divestitures                  circumstances, published in the Federal
                                               contains provisions designed to promote                 have been completed and that the                      Register.
                                               compliance and make the enforcement                     continuation of the Final Judgment is no                 Written comments should be
                                               of Division consent decrees as effective                longer necessary.                                     submitted to:
                                               as possible. Paragraph XIII(A) provides                    The divestiture provisions of the
                                               that the United States retains and                      proposed Final Judgment will eliminate                Owen M. Kendler, Chief, Media,
                                               reserves all rights to enforce the                      the likely anticompetitive effects of the             Entertainment & Professional Services
                                               provisions of the proposed Final                        acquisition in the provision of cable                 Section Antitrust Division, United
                                               Judgment, including its rights to seek an               sports programming in the DMA                         States Department of Justice, 450 Fifth
                                               order of contempt from the Court. Under                 Markets.                                              Street, N.W., Suite 4000, Washington,
                                               the terms of this paragraph, Defendants                                                                       DC 20530
                                               have agreed that in any civil contempt                  IV. REMEDIES AVAILABLE TO                             The proposed Final Judgment provides
                                               action, any motion to show cause, or                    POTENTIAL PRIVATE LITIGANTS                           that the Court retains jurisdiction over
                                               any similar action brought by the United                  Section 4 of the Clayton Act, 15                    this action, and the parties may apply to
                                               States regarding an alleged violation of                U.S.C. § 15, provides that any person                 the Court for any order necessary or
                                               the Final Judgment, the United States                   who has been injured as a result of                   appropriate for the modification,
daltland on DSKBBV9HB2PROD with NOTICES




                                               may establish the violation and the                     conduct prohibited by the antitrust laws              interpretation, or enforcement of the
                                               appropriateness of any remedy by a                      may bring suit in federal court to                    Final Judgment.
                                               preponderance of the evidence, and                      recover three times the damages the
                                               Defendants have waived any argument                     person has suffered, as well as costs and             VI. ALTERNATIVES TO THE
                                               that a different standard of proof should               reasonable attorneys’ fees. Entry of the              PROPOSED FINAL JUDGMENT
                                               apply. This provision aligns the                        proposed Final Judgment will neither                     The United States considered, as an
                                               standard for compliance obligations                     impair nor assist the bringing of any                 alternative to the proposed Final


                                          VerDate Sep<11>2014   18:28 Aug 14, 2018   Jkt 244001   PO 00000   Frm 00067   Fmt 4703   Sfmt 4703   E:\FR\FM\15AUN1.SGM   15AUN1


                                               40566                      Federal Register / Vol. 83, No. 158 / Wednesday, August 15, 2018 / Notices

                                               Judgment, a full trial on the merits                    factors, the court’s inquiry is necessarily                Courts have greater flexibility in
                                               against Defendants. The United States                   a limited one as the government is                      approving proposed consent decrees
                                               could have continued the litigation and                 entitled to ‘‘broad discretion to settle                than in crafting their own decrees
                                               sought preliminary and permanent                        with the defendant within the reaches of                following a finding of liability in a
                                               injunctions against Disney’s acquisition                the public interest.’’ United States v.                 litigated matter. ‘‘[A] proposed decree
                                               of the Fox RSNs. The United States is                   Microsoft Corp., 56 F.3d 1448, 1461                     must be approved even if it falls short
                                               satisfied, however, that the divestiture                (D.C. Cir. 1995); accord United States v.               of the remedy the court would impose
                                               of assets described in the proposed                     Alex. Brown & Sons, Inc., 963 F. Supp.                  on its own, as long as it falls within the
                                               Final Judgment will preserve                            235, 238 (S.D.N.Y. 1997) (quoting                       range of acceptability or is ‘within the
                                               competition for the provision of cable                  Microsoft, 56 F.3d at 1460, aff’d sub                   reaches of public interest.’ ’’ United
                                               sports programming in the DMA                           nom. United States v. Bleznak, 153 F.3d                 States v. Am. Tel. & Tel. Co., 552 F.
                                               Markets identified by the United States.                16 (2d Cir. 1998)); Keyspan, 763 F.                     Supp. 131, 151 (D.D.C. 1982) (citation
                                               Thus, the proposed Final Judgment                       Supp. 2d at 637 (same).                                 omitted) (quoting United States v.
                                               would achieve all or substantially all of                  Under the APPA a court considers,                    Gillette Co., 406 F. Supp. 713, 716 (D.
                                               the relief the United States would have                 among other things, the relationship                    Mass. 1975)), aff’d sub nom. Maryland
                                               obtained through litigation, but avoids                 between the remedy secured and the                      v. United States, 460 U.S. 1001 (1983);
                                               the time, expense, and uncertainty of a                 specific allegations set forth in the                   see also United States v. US Airways
                                               full trial on the merits of the Complaint.              government’s complaint, whether the                     Grp., Inc., 38 F. Supp. 3d 69, 74 (D.D.C.
                                                                                                       decree is sufficiently clear, whether                   2014) (noting that room must be made
                                               VII. STANDARD OF REVIEW UNDER                           enforcement mechanisms are sufficient,                  for the government to grant concessions
                                               THE APPA FOR THE PROPOSED                               and whether the decree may positively                   in the negotiation process for
                                               FINAL JUDGMENT                                          harm third parties. See Microsoft, 56                   settlements) (citing Microsoft, 56 F.3d at
                                                  The Clayton Act, as amended by the                   F.3d at 1458–62. With respect to the                    1461); Morgan Stanley, 881 F. Supp. 2d
                                               APPA, requires that proposed consent                    adequacy of the relief secured by the                   at 568 (approving the consent decree
                                               judgments in antitrust cases brought by                 decree, ‘‘[t]he Court’s function is not to              even though the court would have
                                               the United States be subject to a sixty-                determine whether the proposed                          imposed a greater remedy). To meet this
                                               day comment period, after which the                     [d]ecree results in the balance of rights               standard, the United States ‘‘need only
                                               court shall determine whether entry of                  and liabilities that is the one that will               provide a factual basis for concluding
                                               the proposed Final Judgment ‘‘is in the                 best serve society, but only to ensure                  that the settlements are reasonably
                                               public interest.’’ 15 U.S.C. § 16(e)(1); see            that the resulting settlement is within                 adequate remedies for the alleged
                                               also United States v. Int’l Bus. Mach.                  the reaches of the public interest.’’                   harms.’’ United States v. SBC
                                               Corp., 163 F.3d 737, 740 (2d Cir. 1998).                Morgan Stanley, 881 F. Supp. 2d at 567                  Commc’ns, Inc., 489 F. Supp. 2d 1, 17
                                               In making that determination, the court,                (quoting Alex. Brown & Sons, 963 F.                     (D.D.C. 2007).
                                               in accordance with the statute as                       Supp. at 238) (internal quotations                         Moreover, the court’s role under the
                                               amended in 2004, is required to                         omitted) (emphasis in original). In                     APPA is limited to reviewing the
                                               consider:                                               making this determination, ‘‘[t]he                      remedy in relationship to the violations
                                                                                                       [c]ourt is not permitted to reject the                  that the United States has alleged in its
                                                  (A) the competitive impact of such
                                                                                                       proposed remedies merely because the                    Complaint, and does not authorize the
                                                    judgment, including termination of
                                                                                                       court believes other remedies are                       court to ‘‘construct [its] own
                                                    alleged violations, provisions for
                                                                                                       preferable. [Rather], the relevant inquiry              hypothetical case and then evaluate the
                                                    enforcement and modification,
                                                                                                       is whether there is a factual foundation                decree against that case.’’ Microsoft, 56
                                                    duration of relief sought,
                                                                                                       for the government’s decision such that                 F.3d at 1459; see also Morgan Stanley,
                                                    anticipated effects of alternative
                                                                                                       its conclusions regarding the proposed                  881 F. Supp. 2d at 567 (‘‘A court must
                                                    remedies actually considered,
                                                                                                       settlement are reasonable.’’ Morgan                     limit its review to the issues in the
                                                    whether its terms are ambiguous,                   Stanley, 881 F. Supp. 2d at 563 (quoting                complaint and ‘give due respect to the
                                                    and any other competitive                          United States v. Abitibi-Consolidated                   [Government’s] perception of . . . its
                                                    considerations bearing upon the                    Inc., 584 F. Supp. 2d 162, 165 (D.D.C.                  case.’’’) (quoting Microsoft, 56 F.3d at
                                                    adequacy of such judgment that the                 2008)); see also United States v. Apple,                1461); United States v. InBev N.V./S.A.,
                                                    court deems necessary to a                         Inc., 889 F. Supp. 2d 623, 631 (S.D.N.Y.                No. 08–1965 (JR), 2009–2 Trade Cas.
                                                    determination of whether the                       2012); Alex. Brown & Sons, 963 F. Supp.                 (CCH) ¶ 76,736, 2009 U.S. Dist. LEXIS
                                                    consent judgment is in the public                  at 238.1 The government’s predictions                   84787, at *20, (D.D.C. Aug. 11, 2009)
                                                    interest; and                                      about the efficacy of its remedies are                  (‘‘the ‘public interest’ is not to be
                                                  (B) the impact of entry of such                      entitled to deference. Apple, 889 F.                    measured by comparing the violations
                                                    judgment upon competition in the                   Supp. 2d at 631 (citation omitted).2                    alleged in the complaint against those
                                                    relevant market or markets, upon                                                                           the court believes could have, or even
                                                    the public generally and                             1 See also United States v. Bechtel Corp., 648 F.2d
                                                                                                                                                               should have, been alleged.’’). Because
                                                    individuals alleging specific injury               660, 666 (9th Cir. 1981) (‘‘The balancing of            the ‘‘court’s authority to review the
                                                    from the violations set forth in the               competing social and political interests affected by
                                                                                                                                                               decree depends entirely on the
                                                    complaint including consideration                  a proposed antitrust consent decree must be left, in
                                                                                                       the first instance, to the discretion of the Attorney   government’s exercising its
                                                    of the public benefit, if any, to be               General.’’); see generally Microsoft, 56 F.3d at 1461   prosecutorial discretion by bringing a
                                                    derived from a determination of the                (discussing whether ‘‘the remedies [obtained in the
                                                                                                                                                               case in the first place,’’ it follows that
                                                    issues at trial.                                   decree are] so inconsonant with the allegations
                                                                                                                                                               ‘‘the court is only authorized to review
daltland on DSKBBV9HB2PROD with NOTICES




                                                                                                       charged as to fall outside of the ‘reaches of the
                                               15 U.S.C. § 16(e)(1)(A) & (B); see                      public interest’’’).                                    the decree itself,’’ and not to ‘‘effectively
                                               generally United States v. Keyspan, 763                   2 See Microsoft, 56 F.3d at 1461 (noting the need
                                                                                                                                                               redraft the complaint’’ to inquire into
                                               F. Supp. 2d 633, 637–38 (S.D.N.Y. 2011)                 for courts to be ‘‘deferential to the government’s      other matters that the United States did
                                               (discussing Tunney Act standards);                      predictions as to the effect of the proposed
                                                                                                       remedies’’); United States v. Archer-Daniels-           not pursue. Microsoft, 56 F.3d at 1459–
                                               United States v. Morgan Stanley, 881 F.                 Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003)
                                               Supp. 2d 563, 567 (S.D.N.Y. 2012)                       (noting that the court should grant due respect to      proposed remedies, its perception of the market
                                               (similar). In considering these statutory               the United States’ prediction as to the effect of       structure, and its views of the nature of the case).



                                          VerDate Sep<11>2014   18:28 Aug 14, 2018   Jkt 244001   PO 00000   Frm 00068   Fmt 4703   Sfmt 4703   E:\FR\FM\15AUN1.SGM     15AUN1


                                                                                    Federal Register / Vol. 83, No. 158 / Wednesday, August 15, 2018 / Notices                                                                                        40567

                                               60. Courts cannot look beyond the                                           functions vested solely in the executive                                     DATES:  Registered bulk manufacturers of
                                               complaint in making the public interest                                     branch could be undermined by the                                            the affected basic classes, and
                                               determination ‘‘unless the complaint                                        improper use of the APPA as an                                               applicants therefore, may file written
                                               underlying the decree is drafted so                                         antitrust oversight provision.’’) (citation                                  comments on or objections to the
                                               narrowly such that its entry would                                          omitted). A court can make its public                                        issuance of the proposed registration on
                                               appear ‘to make a mockery of judicial                                       interest determination based on the                                          or before October 15, 2018.
                                               power.’’’ Apple, 889 F. Supp. 2d at 631                                     competitive impact statement and
                                               (S.D.N.Y. 2012) (citing SBC Commc’ns,                                       response to public comments alone.                                           ADDRESSES:   Written comments should
                                               489 F. Supp. 2d at 15).                                                     U.S. Airways, 38 F. Supp. 3d at 75.3                                         be sent to: Drug Enforcement
                                                  In its 2004 amendments, Congress                                                                                                                      Administration, Attention: DEA Federal
                                               made clear its intent to preserve the                                       VIII. DETERMINATIVE DOCUMENTS                                                Register Representative/DRW, 8701
                                               practical benefits of utilizing consent                                       There are no determinative materials                                       Morrissette Drive, Springfield, Virginia
                                               decrees in antitrust enforcement, adding                                    or documents within the meaning of the                                       22152.
                                               the unambiguous instruction that                                            APPA that were considered by the
                                               ‘‘[n]othing in this section shall be                                        United States in formulating the                                             SUPPLEMENTARY INFORMATION:
                                               construed to require the court to                                           proposed Final Judgment.                                                        The Attorney General has delegated
                                               conduct an evidentiary hearing or to                                        Dated: August 7, 2018                                                        his authority under the Controlled
                                               require the court to permit anyone to                                                                                                                    Substances Act to the Administrator of
                                                                                                                           Respectfully submitted,
                                               intervene.’’ 15 U.S.C. § 16(e)(2); see also                                                                                                              the Drug Enforcement Administration
                                                                                                                           lllllllllllllllllllll
                                               U.S. Airways, 38 F. Supp. 3d at 75                                                                                                                       (DEA), 28 CFR 0.100(b). Authority to
                                                                                                                           Lowell R. Stern
                                               (indicating that a court is not required                                                                                                                 exercise all necessary functions with
                                               to hold an evidentiary hearing or to                                        United States Department of Justice,
                                                                                                                           Antitrust Division, Media, Entertainment &                                   respect to the promulgation and
                                               permit intervenors as part of its review
                                                                                                                           Professional Services Section, 450 Fifth                                     implementation of 21 CFR part 1301,
                                               under the Tunney Act). The language                                         Street, N.W., Suite 4000, Washington, DC
                                               wrote into the statute what Congress                                                                                                                     incident to the registration of
                                                                                                                           20530, Telephone: (202) 514–3676,                                            manufacturers, distributors, dispensers,
                                               intended when it enacted the Tunney                                         Facsimile: (202) 514–7308, E-mail:
                                               Act in 1974, as Senator Tunney                                              lowell.stern@usdoj.gov
                                                                                                                                                                                                        importers, and exporters of controlled
                                               explained: ‘‘[t]he court is nowhere                                                                                                                      substances (other than final orders in
                                                                                                                           Attorney for Plaintiff United States
                                               compelled to go to trial or to engage in                                                                                                                 connection with suspension, denial, or
                                                                                                                           [FR Doc. 2018–17521 Filed 8–14–18; 8:45 am]
                                               extended proceedings which might have                                                                                                                    revocation of registration) has been
                                                                                                                           BILLING CODE 4410–11–P
                                               the effect of vitiating the benefits of                                                                                                                  delegated to the Assistant Administrator
                                               prompt and less costly settlement                                                                                                                        of the DEA Diversion Control Division
                                               through the consent decree process.’’                                       DEPARTMENT OF JUSTICE                                                        (‘‘Assistant Administrator’’) pursuant to
                                               119 Cong. Rec. 24, 598 (1973) (statement                                                                                                                 section 7 of 28 CFR part 0, appendix to
                                               of Sen. Tunney). Rather, the procedure                                      Drug Enforcement Administration                                              subpart R.
                                               for the public interest determination is                                                                                                                    In accordance with 21 CFR
                                               left to the discretion of the court, with                                   [Docket No. DEA–392]
                                                                                                                                                                                                        1301.33(a), this is notice that on June
                                               the recognition that the court’s ‘‘scope
                                                                                                                           Bulk Manufacturer of Controlled                                              28th, 2018, Rhodes Technologies, 498
                                               of review remains sharply proscribed by
                                               precedent and the nature of Tunney Act                                      Substances Application: Rhodes                                               Washington Street, Coventry, Rhode
                                               proceedings.’’ SBC Commc’ns, 489 F.                                         Technologies                                                                 Island 02816 applied to be registered as
                                               Supp. 2d at 11; see also Apple, 889 F.                                                                                                                   a bulk manufacturer of the following
                                                                                                                           ACTION:       Notice of application.                                         basic classes of controlled substances:
                                               Supp. 2d at 632 (‘‘[P]rosecutorial

                                                                                                                       Controlled substance                                                                                         Drug code     Schedule

                                               Marihuana ......................................................................................................................................................................           7360   I
                                               Tetrahydrocannabinols ..................................................................................................................................................                   7370   I
                                               Dihydromorphine ............................................................................................................................................................               9145   I
                                               Methylphenidate .............................................................................................................................................................              1724   II
                                               Codeine ..........................................................................................................................................................................         9050   II
                                               Dihydrocodeine ..............................................................................................................................................................              9120   II
                                               Oxycodone .....................................................................................................................................................................            9143   II
                                               Hydromorphone .............................................................................................................................................................                9150   II
                                               Hydrocodone ..................................................................................................................................................................             9193   II
                                               Levorphanol ...................................................................................................................................................................            9220   II
                                               Morphine ........................................................................................................................................................................          9300   II
                                               Oripavine ........................................................................................................................................................................         9330   II
                                               Thebaine ........................................................................................................................................................................          9333   II
                                               Oxymorphone ................................................................................................................................................................               9652   II
                                               Noroxymorpohone .........................................................................................................................................................                  9668   II
                                               Tapentadol .....................................................................................................................................................................           9780   II
daltland on DSKBBV9HB2PROD with NOTICES




                                                 3 See United States v. Enova Corp., 107 F. Supp.                          Cas. (CCH) ¶ 61,508, at 71,980, *22 (W.D. Mo. 1977)                          determine whether those explanations are
                                               2d 10, 17 (D.D.C. 2000) (noting that the ‘‘Tunney                           (‘‘Absent a showing of corrupt failure of the                                reasonable under the circumstances.’’); S. Rep. No.
                                               Act expressly allows the court to make its public                           government to discharge its duty, the Court, in                              93–298, at 6 (1973) (‘‘Where the public interest can
                                               interest determination on the basis of the                                  making its public interest finding, should . . .                             be meaningfully evaluated simply on the basis of
                                               competitive impact statement and response to                                carefully consider the explanations of the
                                                                                                                                                                                                        briefs and oral arguments, that is the approach that
                                               comments alone’’); United States v. Mid-Am.                                 government in the competitive impact statement
                                               Dairymen, Inc., No. 73–CV–681–W–1, 1977–1 Trade                             and its responses to comments in order to                                    should be utilized.’’).




                                          VerDate Sep<11>2014         18:28 Aug 14, 2018          Jkt 244001       PO 00000       Frm 00069        Fmt 4703       Sfmt 4703       E:\FR\FM\15AUN1.SGM               15AUN1



Document Created: 2018-08-15 01:27:10
Document Modified: 2018-08-15 01:27:10
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation83 FR 40553 

2024 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR