Media General Obtains Approval For Business Merger Plans
On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Mergers & Acquisitions on Sunday, November 2, 2014.
The United States is known for valuing free market principles. However, this does not mean that a California business can do anything it wants in the marketplace. This is where regulators come in and impose rules and regulations that are designed to keep the marketplace fair and efficient for everybody. In fact, regulator approval may be required for many types of transactions can occur, such as a business merger.
Media General had to obtain approval from the U.S. Justice Department in order to allow it to move forward with a proposed merger to purchase LIN Media. Regulators allowed Media General to purchase LIN, although it imposed certain conditions. The Justice Department was worried because Media General already owned television stations in five markets. The Federal Communications Commission does not allow a firm to own two leading broadcasters serving the same market.
The Justice Department only allowed the merger to go through after Media General agreed to divest itself from five other media companies that it owned. Prior to the merger deal, Media General operated 31 television stations while LIN operated 43 television stations. LIN also owned digital channels in 23 different markets all across the country. The regulators determined that the divestiture requirement was necessary in order to prevent advertising prices from increasing dramatically due to lack of competition.
Many times, and for a variety of reason, regulators deny a proposed business merger in California or elsewhere. In this case it may be necessary to take legal action to seek approval for the transaction to move forward. Understandably, the companies involved will need a firm understanding of the applicable laws and regulations particular to their industry in order to present a strong case for approving the merger in court.
Source: The Providence Journal, "Justice Dept. approves media merger", Oct. 31, 2014