Clear Channel Keeping Metro Traffic 'Separate' Pending DOJ Review
July 7, 2011 at 6:57 AM (PT)
ALL ACCESS has obtained a memo from CLEAR CHANNEL RADIO Pres./CEO JOHN HOGAN detailing the purchase of METRO TRAFFIC from WESTWOOD ONE, and explaining to his staff that the company has reached an agreement with the U.S. DEPARTMENT OF JUSTICE to keep METRO TRAFFIC as a separate, independent entity pending a DOJ review. Wrote HOGAN:
Good morning, all:
As you may have heard, we recently learned that the U.S. DEPARTMENT OF JUSTICE, commonly called the DOJ, will be conducting a routine investigation of our acquisition of METRO NETWORKS and associated businesses, including SMART ROUTE SYSTEMS and SIGALERT. For ease of communication, we will refer to all of these businesses collectively as METRO in this email. On FRIDAY, in connection with the investigation, we signed an agreement with the DOJ to hold separate and operate METRO independently from CLEAR CHANNEL. While this agreement remains in effect, we must:
* Cease any further combination, coordination, or integration of METRO and CLEAR CHANNEL;
* Take all steps necessary to ensure that METRO will be maintained and operated as an independent, economically viable, and active competitor, including substantially complying with Metro's pre-existing business plans, providing Metro with sufficient working capital and lines and sources of credit, keeping METRO's books and records in accordance with sound accounting principles, and keeping such books and records -- along with all competitively sensitive sales, marketing, and pricing information -- separate and apart from CLEAR CHANNEL's other operations;
* Take all steps necessary to ensure that METRO's management, including the performance of decision-making functions regarding marketing and pricing, will be kept separate and apart from CLEAR CHANNEL's other operations;
* Refrain from accessing any competitively sensitive information relating to any aspect of METRO's operation;
* Refrain from selling, leasing, assigning, transferring, licensing, pledging, or otherwise disposing of any part of METRO's business;
* Refrain from firing (other than for cause), transferring, or reassigning METRO employees with responsibility for management, sales, marketing, or content creation. In the case of terminations for cause, where practical CLEAR CHANNEL must provide 72 hour advance notice and, if advance notice is not practical, must provide notice to the DOJ within 72 hours.
Notwithstanding these obligations, METRO may continue to use the corporate services of CLEAR CHANNEL to support the METRO business (including CLEAR CHANNEL's legal, human resources, tax, and IT services). In addition, METRO will continue to report to RICK BARAN during the hold separate period.
From a practical standpoint, in order to satisfy the obligations outlined above, METRO and CLEAR CHANNEL employees must behave as if they are employed by separate companies. In other words, it is necessary to treat the other entity in the same way you would treat an unaffiliated competitor -- i.e., apply the same rules you would apply with respect to all communications, information sharing, business dealings, and other activities.
The full cooperation of all employees is necessary in order to ensure that CLEAR CHANNEL meets its obligations under the agreement. To the extent you have questions or need further guidance on how best to comply with the hold separate obligations, please consult with RICK BARAN.
I appreciate your cooperation and will keep you posted as we work through this issue with DOJ.