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                          UNITED STATES DISTRICT COURT
                        WESTERN DISTRICT OF ARKANSAS
                             FAYETTEVILLE DIVISION

       UNITED STATES OF AMERICA;

       Plaintiff

  vs.


NAT, L. C.
, and, D.R. PARTNERS d/b/a/ DONREY
MEDIA GROUP;


       Defendants.
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Civil Action No.:
[filed 28 March 1995,
Case number 95-5048]




                                COMPLAINT

             The United States of America, acting under the direction of the Attorney
        General of the United States, brings this civil action to obtain equitable and other
        relief against the defendants named and alleges as follows:
             1.   The United States brings this antitrust case to prevent the only two local
        daily newspapers serving the cities of Fayetteville and Springdale, the Morning
        News of Northwest Arkansas
and the Northwest Arkansas Times, from being
        combined under substantially common ownership and control. These two
        newspapers are each other's primary competitor in the sale of local daily
        newspapers to readers and in the sale of local advertising in such newspapers.
             2.   If the combination of these two daily newspapers were permitted, the
        previous vigorous competition for readers of local daily newspapers would be


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        substantially reduced or eliminated and newspaper readers in the Fayetteville
        metropolitan area would be likely to pay higher prices and to receive lower levels
        of quality and service.
             3.   In addition, the combination of these two daily newspapers would
        substantially reduce or eliminate competition for local advertising in local daily
        newspapers in the Fayetteville metropolitan area and local advertisers would be
        likely to pay higher prices and to receive lower levels of quality and service for their
        advertisements.

                     JURISDICTION, VENUE, AND DEFENDANTS
             4.   This Complaint is filed and this action is instituted under Section 15 of
        the Clayton Act, as amended, 15 U.S.C. 25, and Section 4 of the Sherman Antitrust
        Act, 15 U.S.C. 4, to prevent and restrain defendants from violating Section 7 of the
        Clayton Act, as amended, 15 U.S.C. 18, and Section 1 of the Sherman Antitrust
        Act, 15 U.S.C. 1. This Court has jurisdiction over this matter pursuant to 28 U.S.C.
         1331 and 1337.
             5.   NAT, L.C., an Arkansas corporation, was formed for the purpose of
        acquiring the assets of the Northwest Arkansas Times ("Times") from Thomson
        Corporation. On February 6, 1995, NAT, L.C., acquired all of the assets of the Times.
        NAT, L.C., transacts business, maintains offices, and is found in the Western District
        of Arkansas.


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             6.   D.R. Partners is a Nevada partnership. D.R. Partners, through Donrey
        Media Group, owns The Morning News of Northwest Arkansas ("Morning News").
        D.R. Partners transacts business, maintains offices, and is found in the Western District
        of Arkansas.
             7.   The defendants are both engaged in interstate commerce and in
        activities substantially affecting interstate commerce. The defendants purchase
        substantial quantities of news and feature services, equipment, and supplies,
        including newsprint, for use in their respective businesses from sources located
        outside of Arkansas.

                            TRADE AND COMMERCE
             8.   Local daily newspapers sell two products (services) to two sets of
        customers. To readers, they sell daily newspapers. To advertisers, they sell access
        to their readers. Each of these products constitutes a line of commerce and a
        relevant product market within the meaning of Section 7 of the Clayton Act.
             9.   The Fayetteville metropolitan area, which consists of the cities of
        Fayetteville and Springdale, Arkansas, is a section of the country, or relevant
        geographic market, within the meaning of Section 7 of the Clayton Act.
             10.  Local daily newspapers provide a unique package of services to their
        readers. They provide national, state, and local news in a timely manner. The news
        stories are detailed, as compared to the news as reported by radio or television,
        and the daily paper covers a wide range of stories of interest to local readers, not


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        just major news highlights. Newspapers are portable and allow the reader to read
        the news, advertisements, and other information at his or her own convenience.
        Readers also value other features of local daily newspapers, such as calendars of
        local events and meetings, movie and TV listings, classified advertisements,
        commercial advertisements, legal notices, comics, syndicated columns, and
        obituaries. Readers of local daily newspapers do not consider weekly newspapers,
        radio news, or television news to be adequate substitutes for local daily
        newspapers. Accordingly, if the price of previously competing local daily
        newspapers were increased, significant numbers of readers would not switch to
        other sources of local news and information, such as weekly newspapers and radio
        and television news.
             11.  Advertising in the Morning News or the Times allows local advertisers
        to reach a broad cross-section of consumers in the Fayetteville metropolitan area
        with a detailed message in a timely manner. A substantial portion of local
        advertisers do not consider other types of advertising, such as advertising in weekly
        newspapers, on radio, or on television, as adequate substitutes for advertising in a
        local daily newspaper. Thus, if the price of previously competitive daily newspaper
        local advertising were increased, significant numbers of local advertisers would not
        substitute these other types of advertising for advertising in a local daily newspaper.
             12.  The Morning News and the Times are each other's primary competitor
        in the sale of local daily newspapers in the Fayetteville metropolitan area. These
        two papers are the only local daily newspapers with significant circulation in that


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        area. Both papers cover local news in Fayetteville and Springdale. The two papers
        have competed aggressively for readers. This competition has been instrumental
        in giving readers in the Fayetteville metropolitan area higher quality, better service,
        and lower prices. A combination of these two newspapers under substantially
        common ownership and control would substantially reduce or eliminate that
        competition and would decrease incentives to maintain high levels of quality and
        service and to keep prices low. The readers of both papers would be harmed.
             13.  A newspaper's ability to attract readers and build its circulation is not
        only critical to competition for readers; it also directly affects its ability to compete
        for advertisers. A newspaper that has more readers is more attractive and more
        valuable to advertisers. Thus, one important reason that the Morning News and the
        Times compete for readers is so that they can better compete for advertisers.
             14.  The Times and the Morning News are the only local daily newspapers
        with significant circulation in the Fayetteville metropolitan area. The figures below,
        measuring circulation in the Fayetteville metropolitan area, are cumulative figures
        for the four zip codes which cover Fayetteville and almost all of Springdale (as well
        as some areas outside the cities): 72701, 72703, 72762, and 72764. These four zip
        codes represent the best available measure of circulation in the Fayetteville
        metropolitan area. Based on audited figures for daily circulation for the year ending
        September 30, 1994, the Times had a daily circulation of 9,863 and the Morning
        News
had a daily circulation of 14,122. Based on audited figures for Sunday
        circulation for the year ending September 30, 1994, the Times had a Sunday


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        circulation of 9,156 and the Morning News had a Sunday circulation of 15,206. If
        the two papers combine under substantially common ownership and control, the
        combined entity will have virtually 100 percent of the sales of local daily
        newspapers to readers, both daily and Sunday, in the Fayetteville metropolitan
        area. Even if a larger area were considered to be the relevant geographic market
        for circulation, such as an area including Rogers, the transaction would nonetheless
        increase concentration significantly and would be anticompetitive.
             15.  Some other daily newspapers circulate in the Fayetteville metropolitan
        area. The Arkansas Democrat-Gazette ("Democrat-Gazette"), a daily newspaper
        based in Little Rock, Arkansas, also has subscribers in the Fayetteville metropolitan
        area. The Democrat-Gazette had a daily circulation of 3260 and Sunday
        circulation of 4795 in the Fayetteville metropolitan area for the year ending March
        31, 1994. Although it does not provide as much local news and information to
        newspaper readers in the Fayetteville metropolitan area as the Morning News and
        the Times, the Democrat-Gazette provides greater regional and national coverage.
         In addition, two other daily newspapers had some circulation in the Fayetteville
        metropolitan area in the year ending March 14, 1994. The Tulsa World had daily
        circulation of 640 and Sunday circulation of 807 and USA Today had daily
        circulation of 832. Even if all of these daily newspapers are included in the market,
        the combined entity would control about 84 percent of the sales of daily
        newspapers and 81 percent of the sales of Sunday editions of daily newspapers to
        readers in the Fayetteville metropolitan area -- a substantial increase in


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        concentration in what is already a highly concentrated market. Using a measure
        of market concentration called the HHI, defined and explained in Appendix A, the
        combination of the previously competing Morning News and Times under
        substantially common ownership and control would increase the HHI, based on
        daily circulation, by about 3378 points from 3740 to 7118, and would increase the
        HHI, based on Sunday circulation of daily newspapers, by about 3102 points from
        3772 to 6874.
             16.  The Morning News and the Times are each other's primary competitor
        in the sale of daily newspaper local advertising. The two papers compete
        aggressively for the business of local advertisers. The Morning News and the Times
        also compete for advertisers by competing for readers. This competition for
        advertisers has resulted in lower advertising rates and better service to local
        advertisers. Consequently, a combination of these two daily newspapers under
        substantially common ownership or control would substantially reduce or eliminate
        that competition and decrease incentives to maintain high levels of service and to
        keep advertising rates low. Local advertisers in the Fayetteville metropolitan area
        would suffer from the loss of competition.
             17.  A newspaper's ability to attract advertisers is not only critical to
        competition for local advertising; it also directly affects its ability to compete for
        readers. A newspaper that has more advertisers is more attractive and more
        valuable to readers. Thus, one important reason that the Morning News and the
        Times compete for local advertisers is so that they can better compete for readers.


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             18.  In 1994, the Times had total local advertising revenues (including local
        display ads, classified ads, and legal ads) of $3,564,305. The Morning News had
        total local advertising revenues of $6,530,567. A large percentage of this
        advertising revenue comes from advertisers seeking readers in the Fayetteville
        metropolitan area; approximately 75% of the Times' readership and 46% of the
        Morning News' readership are located in this area. If the two papers combine
        under substantially common ownership and control, the combined entity will
        control all of the daily newspaper local advertising aimed at residents in the
        Fayetteville metropolitan area.
             19.  The Morning News and the Times are under substantially common
        ownership and control. The Morning News is owned by D.R. Partners, a Nevada
        general partnership doing business as Donrey Media Group. D.R. Partners is owned
        99 percent by Stephens Group, Inc., ("Stephens Group") and one percent by
        Stephens Holding, Inc. According to its Partnership Agreement, management of
        D.R. Partners is exclusively vested in Stephens Group. The Class A Common Stock
        of Stephens Group, which is the voting stock, is owned by four Stephens family
        trusts: J.T. Stephens Trust One, Bess Stephens Trust, Warren A. Stephens Trust, and a
        trust benefitting Wilton R. Stephens. The Class B Common Stock of Stephens Group,
        which is the non-voting stock, is also owned by a number of Stephens family trusts,
        including the same four Stephens family trusts listed above, as well as the Pamela
        Stephens Rose Trust One, Elizabeth Ann Stephens Campbell Revocable Trust, and
        Warren A. Stephens Trust No. One. Ninety-five percent of NAT, L.C., which owns the


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        Times, is also owned by several Stephens family trusts, all of which also own stock
        in Stephens Group.
             20.  Entry into the local daily newspaper market in the Fayetteville
        metropolitan area would not be timely, likely, or sufficient to prevent any harm to
        competition.

                           VIOLATIONS ALLEGED
             21.  Pursuant to an Asset Purchase Agreement, dated February 6, 1995,
        NAT, L.C. acquired substantially all the assets of the Times from Thomson
        Corporation. As a result of this transaction, the Morning News and the Times are
        under substantially common ownership and control.
             22.  This combination is likely substantially to lessen competition and
        unreasonably to restrain trade both in the market for local daily newspapers and
        in the market for local advertising in such newspapers in the Fayetteville
        metropolitan area, in violation of Section 7 of the Clayton Act and Section 1 of the
        Sherman Antitrust Act.
             23.  The combination will have the following effects, among others:
                a.  actual and potential competition between the Morning News
                and the Times in the sale of local daily newspapers in the Fayetteville
                metropolitan area will be substantially reduced or eliminated;
                b.  actual and potential competition between the Morning News
                and the Times in the sale of daily newspaper local advertising in the


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                Fayetteville metropolitan area will be substantially reduced or
                eliminated;
                c.  competition generally in the sale of local daily newspapers in
                the Fayetteville metropolitan area is likely to be substantially lessened;
                and
                d. competition generally in the sale of daily newspaper local
                advertising in the Fayetteville metropolitan area is likely to be
                substantially lessened.

                            REQUEST FOR RELIEF
        Plaintiff requests a judgment:
             1.   That the acquisition of the Times by NAT, L.C., and the substantially
        common ownership and control of the Times by NAT, L.C. and the Morning News
        by Stephens Group, and the resulting indirect acquisition of the Times by D.R.
        Partners, be adjudged a violation of Section 7 of the Clayton Act, as amended, 15
        U.S.C. 18, and Section 1 of the Sherman Antitrust Act, 15 U.S.C. 1;
             2.   That the Court's preliminary injunction be continued until such time as
        the defendant, NAT, L.C., divests itself of the assets of the Times;
             3.   That NAT, L.C. be required to divest itself of these assets within two
        months after the date of the Court's Order, and further that:


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                a.  pending sale, the assets be put under the control of an
             independent trustee, who is given the power and incentive to maintain the
             value and competitive viability of the assets, and
                b.  that this trustee be directed to sell the assets to a person that is
             competitively suitable and capable of managing the Times effectively and
             is not affiliated in any way with Stephens Group, with any Stephens family
             member or any trust, partnership, or corporation or entity with which a
             Stephens family member is affiliated, or affiliated in any way with D.R.
             Partners or with any trust, partnership, corporation, or entity with which D.R.
             Partners is affiliated;
             4.   That plaintiff have such other relief as the Court may deem proper; and
.


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             5.   That plaintiff recover the costs of this action.






        Anne K. Bingaman               Craig W. Conrath
        Assistant Attorney General         Chief, Merger Task Force




        Constance K. Robinson                Allee A. Ramadhan
        Director of Operations              Phillip R. Malone
                                      Burney P.C. Huber
                                      Nora W. Terres
                                      Anne M. Purcell
                                      Alexander Y. Thomas
                                      Brigid L. Kerrigan
                                      Attorneys
                                      U.S. Department of Justice
                                      1401 H St., N.W.
                                      Washington, DC 20530
                                      (202) 307-5779

                    [March 28, 1995]
        Dated: _____________________
.


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                                Appendix A

             "HHI" means the Herfindahl-Hirschman Index, a commonly accepted
        measure of market concentration calculated by squaring the market share of each
        firm competing in the market and then summing the resulting numbers. For
        example, a market consisting of four firms with market shares of 30, 30, 20, and 20
        percent, has an HHI of 2,600 (30 squared + 30 squared + 20 squared + 20 squared
        = 2,600). The HHI, which takes into account the number and size distribution of the
        firms in the market, ranges from virtually zero to 10,000. The index approaches zero
        when a market consists of a large number of firms of relatively equal size. The index
        increases as the number of firms in the market decreases and may also increase
        as the disparity in size between the leading firms and the remaining firms increases.
        Thus, a market of two firms with shares of 60 and 40 percent would have an HHI of
        5200 (60 squared + 40 squared = 3600 + 1600 = 5200).
             The Department of Justice and Federal Trade Commission 1992 Horizontal
        Merger Guidelines consider that markets in which the HHI is between 1000 and 1800
        are moderately concentrated and those in which the HHI is in excess of 1800 points
        are concentrated. Transactions that increase the HHI by more than 100 points in
        moderately concentrated and concentrated markets presumptively raise antitrust
        concerns under the Merger Guidelines.