Court Opinion

ID: 9450438
Source: CourtListenerOpinion
Date Created: 2023-08-04 16:48:03.90487+00
Date Added: 2024-06-11T17:32:19.463550
License: Public Domain

PHILLIPS, Circuit Judge.
Three principal daily newspapers were published in Cincinnati, Ohio, prior to 1958: (1) An afternoon newspaper owned by appellant, known as The Cincinnati Times-Star, (2) The Cincinnati Post, also an afternoon paper, which was a pai't of the Scripps-Howard system; and (3) The Cincinnati Enquirer, a morning paper. As of July 19, 1958, publication of The Times-Star was discontinued and the paper was sold to the owner of its afternoon competitor, the E. W. Seripps Company, and the combined afternoon newspaper thereafter has been published under the name of The Cincinnati Post and Times-Star.
Appellee, the Associated Press, filed a breach of contract action against appellant for failure to pay assessments for the AP’s news services for two years following discontinuance of publication. Jurisdiction is based upon diversity of citizenship. The district judge, sitting without a jury, rendered judgment against appellant in favor of the Associated Press for $158,703.43, plus interest and costs, and dismissed a counterclaim. This appeal is from the judgment of the district court.1
A motion to dismiss the appeal was denied. Associated Press v. Taft-Ingalls Corporation, 323 F.2d 114 (C.A.6).
The Associated Press is a non-profit corporation organized in 1900 under the Membership Corporation Law of New York. It is engaged in gathering, obtaining and procuring any and all kinds of news, which it furnishes to its members for publication. The membership of AP consists of owners of newspapers and radio and television stations. There are two types of membership, regular and associate. The costs of its operations are prorated among the members under a formula of assessments adopted by the Board of Directors, acting under the authority of its By-laws.
At the time of the incorporation of AP in 1900, a representative of Times-Star applied for and was admitted to AP membership. Times-Star subscribed to and used AP wire services as a regular member continuously from that time until discontinuance of publication 58 years later.
1) The Contract Between The Parties
This controversy arose out of a contract between the parties, entered into August 4, 1948, which provided that: “[I]t shall continue * * * until terminated by the Member upon two years’ notice, in writing, by registered mail * * * ” ; and further provided that: “Upon the sale or transfer of the business of the Member to which this agreement relates, the Member shall cause the Member’s successor to agree in writing to fulfill the terms and conditions of *756this agreement during the term thereof and to apply for membership in The Associated Press in the same class as the Member.”
When appellant stopped publication of Times-Star on July 19, 1958, AP was informed by telegram of the sale to Scripps and the following directions were given: ■“Accordingly please cancel all services -x * * immediately under pur contract with you.” No back assessments were owing by appellant when publication of Times-Star ceased. The weekly ■assessment of appellant was paid through June 26, 1958, one week after publication of Times-Star had been discontinued. Thereafter no services were furnished by AP to appellant and no further payments were made. The only assessments at issue in this case are those for the two-year period after termination of publication and after delivery of the AP news wire services to appellant had been discontinued.
The district judge held that appellant was liable to AP for weekly assessments for its wire news service for the two succeeding years because appellant had not notified AP two years in advance of its termination of the news services,2 and since Scripps did not become a member ■of AP and did not subscribe to the AP wire services previously furnished to appellant. The judgment is based upon the assessment of $1583.81 per week which was in effect on the date of termination of publication, less a saving to AP of $43 per week representing the cost of the wire and mechanical facilities, or net damages to AP of $1540.81 per week for 103 weeks.
2) The AP Wire Services
Appellant alleges and appellee admits that AP has an established practice of requiring a member newspaper in the metropolitan cities of this geographical area of the United States to receive and pay for all three of its basic news wire services to such city, and, in addition, in Cincinnati, required appellant to receive and pay for the Kentucky wire as a part of the basic service. This practice, appellant contends, constitutes an unlawful tying arrangement in violation of Section 1 of the Sherman Act,2
3 and renders the contract void and unenforceable.
This AP policy and practice of “tying” four wire services together in a single “package” and requiring that appellant take and pay for four wire services in order to receive any one of them is the principal issue on this appeal.
The wire4 services provided by AP under its contract with appellant were described in a letter from AP’s Chief of Bureau at Columbus, Ohio, to the editor of Post and Times-Star dated August 1, 1958, as follows:
“Pursuant to our telephone conversation I am listing below the basic news service that was delivered to the Cincinnati Times-Star and is proposed to be delivered to the Post and Times-Star;
“ ‘A’ trunk circuit. This is a general news wire carrying stories of top general interest.
*757“ ‘D’ trunk circuit. This circuit carries financial stories, commodity quotations and other business news.
“Ohio Big Cities Circuit. This circuit carries Ohio, regional and general news copy.
“Kentucky regional. Two circuits, ■one operating in TTS style, one in all-caps, deliver Kentucky state news.
“Wirephotos. Full service on this facility consists of the delivery of glossyprints from day and night operation.
“The assessment for the basic minimum news service outlined above is $1,558.05 weekly.
“The assessment for Wirephoto service is $279.80 weekly.
“In addition, the Times-Star received various optional services * * •* ”
A stipulation of facts entered into between the parties describes the basic AP wire services furnished to Times-Star as follows:
“The leased wire news service referred to in the above contract between the AP and the Times-Star consisted of general news and stories of general interest carried and transmitted over the “A” trunk circuit; the financial stories, commodity quotations and business news carried and transmitted over the “D” trunk circuit; and the Ohio regional news and general news copy carried and transmitted over the Ohio Big Cities circuit.”
3) Times-Star’s Efforts to Reduce Costs
Faced with an operating deficit, appellant undertook, beginning in 1957, a stringent cost reduction program in an effort to make it possible for Times-Star to survive. A survey was made of AP, UP and INS wire costs. A substantial item of expenditure was the AP assessment, which at that time was $1452.25 per week. Appellant determined that it did not need all of AP’s basic news services. On August 14, 1957, appellant wrote a letter to AP, the text of which is printed in the margin.5 A meeting was held in Cincinnati between representatives of AP and appellant on September 10, 1957, for the purpose of discussing a reduction in the basic news services. During this meeting appellant requested AP to furnish to it only the Ohio Big Cities circuit, which was considered the “most necessary” to appellant of the AP news services. This request would have eliminated the “A,” “D” and Kentucky wires, and, if granted, would have effected a substantial reduction in appellant’s operating costs. AP declined this request, stating that it was the practice of AP to require all members at Ohio trunk points to receive and pay for the “A,” “D” and the Ohio Big Cities news wires, and that appellant must continue to pay the unit price for all these wires in order to receive any of them.
Previously appellant had requested information of AP as to how much was being paid for the Kentucky State wire. AP replied that:
“The Kentucky state service, subject of your October 25 inquiry, is part of the basic Associated Press service in Cincinnati, and provision of this service is an integral part of the basic service covered by your Agreement.
“There is a payment of $10.00 weekly toward maintenance of The Associated Press bureau in Lexing*758ton, but there is no separate charge for the Kentucky state wire other than that included in the contract figure. This wire is not one of the various optional services not covered by the contract figure.”
Its request having been turned down, appellant continued to receive and pay for all of said basic services until continued operating losses of Times-Star compelled discontinuance of publication on July 19, 1958.
Immediately thereafter Scripps proposed to subscribe to the AP “A” wire trunk circuit service and to become an associate member of AP for that purpose. AP declined to provide “A” wire service to Scripps unless Scripps also would agree to subscribe to the “D” wire and the Ohio Big Cities wire (also known as the “S” wire). This policy of treating these three wire services as one inseparable “economic package” has been applied consistently by AP to metropolitan newspapers in this area of the United States, consisting generally of the area north of the Mason-Dixon line and east of Kansas City, Missouri.6
In addition to asserting that this “tying arrangement” was a violation of the Sherman Act and a valid defense against AP’s breach of contract action, appellant filed a counterclaim seeking $157,366.92 in treble damages against AP under the Sherman Act.
The district judge ruled that:
“The Sherman Act’s interpretation .has broadened considerably since the early tie sales cases which-involved products tied to patent-products. It is entirely possible that the Plaintiff’s method of dispensing-its news is in violation of the Sherman Act.” But that: “Defendant has failed to provide this Court with sufficient facts upon which it may be-concluded that there is a natural division in the cost of gathering news-transmitted over the A, D, and State-trunks. Without such a complete division, it is unnecessary and futile to-explore the other elements of the.alleged tying agreement.”
The district court ruled that on the-“paucity of facts,” appellant cannot prevail either in asserting violation of the Sherman Act as a defense or under its-counterclaim.
4) Application of Sherman Act to AP
It is clear that the Associated' Press is subject to the provisions of the-Sherman Act. As said by the Supreme Court in Associated Press v. United States, 326 U.S. 1, 7, 65 S.Ct. 1416, 1418, 89 L.Ed. 2013:
“Member publishers of AP are engaged in business for profit exactly as are other business men who sell' food, steel, aluminum, or anything-*759else people need or want. See International News Service v. Associated Press, 248 U.S. 215, 229, 230 [39 S. Ct. 68, 63 L.Ed. 211, 2 A.L.R. 293]. All are alike covered by the Sherman Act. The fact that the publisher handles news while others handle food does not, as we shall later point out, afford the publisher a peculiar constitutional sanctuary in which he can with impunity violate laws regulating his business practices.”
It follows that if an illegal tying agreement is established by the evidence in this case, AP cannot escape the consequences on the theory that it is a mutual and cooperative association, distributes news only among its own members, pays no dividends, defrays its expenses through assessments, and does not “sell” news for a “price.”
5) The “Tying” Arrangement
 The burden of proving that a contract is illegal is upon the party asserting it, which in this case is appellant. Palmer v. Chamberlin, 191 F.2d 532, 27 A.L.R.2d 416 (C.A.5); Illinois Surety Co. v. O’Brien, 223 F. 933 (C.C.A.6).
 It is undisputed that AP refused to furnish the Ohio Big Cities news circuit separately to appellant and required that appellant, against its own will and business judgment, continue to subscribe and pay for three services which it did not want, the “A,” “D” and Kentucky wires, in order to receive the Ohio regional wire which appellant considered to be essential to its operations. Do the facts concerning this practice, which has been adhered to consistently by AP ever since establishment of the “D” wire in 1935, coupled with evidence ■concerning other essential elements of antitrust violation as hereinafter discussed, constitute a violation of Section 1 of the Sheman Act under the record in this case? If so, it is axiomatic that the contract between appellant and AP is “illegal” under the express terms of the statute. 15 U.S.C. § 1. A party to .an illegal bargain cannot “recover damages for breach thereof.” Restatement, Contracts, § 598; also § 514, special note. As said by the Supreme Court in United States v. Loew’s Inc., 371 U.S. 38, 51, 83 S.Ct. 97, 105, 9 L.Ed.2d 11: “[T]he thrust of the antitrust laws cannot be avoided merely by claiming that otherwise illegal conduct is compelled by contractual obligations. Were it otherwise, the antitrust laws could be nullified. Contractual obligations cannot thus supersede statutory imperatives.”
A tying arrangement has been defined as follows:
“For our purposes a tying arrangement may be defined as an agreement by a party to sell one product but only on the condition that the buyer also purchase a different (or tied) product * * Northern Pacific Railway Co. v. United States, 356 U.S. 1, 5, 78 S. Ct. 514, 518, 2 L.Ed.2d 545.
Such arrangements are frowned upon and in some situations are declared unlawful per se because, as the Supreme Court has pointed out: “[T]ying arrangements serve hardly any purpose beyond the suppression of competition.” Northern Pacific Railroad Co. v. United States, 356 U.S. 1, 6, 78 S.Ct. 514, 518; Black v. Magnolia Liquor Co., 355 U.S. 24, 25, 78 S.Ct. 106, 2 L.Ed.2d 5; Standard Oil Co. of California v. United States, 337 U.S. 293, 305, 69 S.Ct. 1051, 93 L.Ed. 1371.
6) Separability
AP insists that it is engaged in distributing only one product, news from all parts of the world — international, national and local — and that the news transmitted by it is so intermingled that it is inseparable; that although news is transmitted to metropolitan newspapers over several circuits, these circuits are interdependent and form an integrated whole in the delivery of the leased wire news service; that the means by which news is transmitted does not determine the character of the news; and that the leased AP wire news service is a single product and not several separate and dis*760tinct products. AP relies upon the proposition that the essential element of an illegal tying agreement is an obligation imposed by one party upon another to take or purchase an unwanted product as a condition to obtaining a desired product, and that a tying agreement cannot exist within the meaning of the antitrust laws unless the sale of one product is conditioned upon the purchase of another separate and distinct product.
The question of separability is the first issue to be determined on this appeal. In disposing of this issue, however, it it not necessary to pass upon the separability of all four of the wire services furnished by AP to appellant. We are not required to decide whether the “A” wire is separable from the “D” wire, since Times-Star concluded that it did not want or need either of these services. Neither are we required to decide whether the Kentucky State wire was separable from the other services. The only issue of separability is whether the Ohio Big Cities wire was a separable product as distinguished from the other three wires; that is, was the Ohio Big Cities wire, the “tying” product, separable from the “A,” “D” and Kentucky wires, the “tied” product.
Even if it be concluded that the Ohio Big Cities wire was used principally to transmit news of regional and local interest and that the other wire services were used principally to transmit news of different classifications, we are faced with the problem of whether the Ohio wire represents a separate product, or whether it and the other three services involve but one product, that is, news. Though separability of products is an element in every tying case, it has rarely posed a problematical issue before the courts. See United States v. Jerrold Electronics Corp., 187 F.Supp. 545, 559, n. 25 (E.D.Pa.), aff’d, per curiam, 365 U. S. 567, 81 S.Ct. 755, 5 L.Ed.2d 806, rehearing denied, 365 U.S. 890, 81 S.Ct. 1026, 6 L.Ed.2d 200.
In adjudicating the question here involved, we begin by looking to those few cases which bear on separability, although each of them involves distinguishable facts.
In Times-Picayune Publishing Co. v. United States, 345 U.S. 594, 73 S.Ct. 872, 97 L.Ed. 1277, the Supreme Court held that a New Orleans publishing company did not violate the antitrust laws in requiring that advertising space be purchased in both the morning and afternoon-newspapers. One of the reasons for the Court’s holding was its difficulty in delineating two distinct products. The-Court said:
“The common core of the adjudicated unlawful tying arrangements is the forced purchase of a second distinct commodity with the desired purchase-of a dominant ‘tying’ product, resulting in economic harm to competition in the ‘tied’ market. Here, however, two newspapers under-single ownership at the same place,, time, and terms sell indistinguishable products to advertisers; no> dominant ‘tying’ product exists (in fact, since space in neither the-Times-Picayune nor the States can-be bought alone, one may be viewed, as ‘tying’ as the other) ; no leverage in one market excludes sellers in-the second, because for present purposes the products are identical and the market the same.” 345 U.S. at 614, 73 S.Ct. at 883.
AP relies heavily upon Times-Picayune-in support of the decision of the district court. It should be noted, however, that the rationale of Times-Picayune as to-“market dominance” was weakened by the subsequent decision in Northern Pacific Railroad Co. v. United States, supra, 356 U.S. 1, 78 S.Ct. 514. Furthermore,, in contrast to Times-Picayune on the tying issue, there was a dominant “tying”' product in the instant case as applied to-appellant, to wit, the Ohio Big Cities-. news service. This was the “tying” product which appellant considered essential to its operations, while not desiring to-continue its subscription to the “tied”' products, the “A,” “D” and Kentucky State wires. It should be added that, as-to the force of Times-Picayune as a> *761precedent, one court recently said: “Furthermore, the Times-Picayune case has been limited to the exact set of facts before the court * * American Manufacturers Mutual Insurance Co. v. American Broadcasting-Paramount Theatres, Inc., 221 F.Supp. 848, 850 (S.D.N.Y.).
In United States v. Loew’s Inc., supra, 371 U.S. 38, 83 S.Ct. 97, the defendants distributed motion picture films to television stations by the method known as block booking; that is, TV stations were required to purchase a package of films to get any at all. In this way film producers were able to tie bad films to the desirable ones. It was argued, inter alia, that “movies” were a single product and that there was no separability of two distinct products. The Court answered this contention by saying: “The district judge found that each copyrighted film block booked by appellants for television use ‘was in itself a unique product’ ; that feature films ‘varied in theme, in artistic performance, in stars, in audience appeal, etc.,’ and were not fungible. * * *” 371 U.S. at 48, 83 S.Ct. at 104.
A decision in which the facts have some analogy to the instant case is American Manufacturers Mutual Insurance Co. v. American Broadcasting-Paramount Theatres, Inc., supra, 221 F.Supp. 848 (S.D.N.Y.). There Kemper Insurance desired to sponsor an ABC television program on 95 affiliated stations. 'These stations were geographically situated where Kemper’s advertising would be most effective. ABC refused the offer unless Kemper would also sponsor the program on 35 additional stations. ABC .argued that only one product was there involved, to wit, sponsorship of TV programs, and that there was no separability of two or more distinct products. The court disagreed, saying that 35 undesirable stations are not the same as 95 desirable stations. 221 F.Supp. at 850.
A leading case in this area, for its discussion of separability of products, is United States v. Jerrold Electronics Corp., supra, 187 F.Supp. 545 (E.D.Pa.), aff’d per curiam, 365 U.S. 567, 81 S.Ct. 755, rehearing denied, 365 U.S. 890, 81 S.Ct. 1026, involving master television antenna systems for dealers, apartment houses and communities normally unable to receive television signals. Jerrold would not sell its equipment unless the customer would also purchase a service contract which would assure Jerrold supervision over the installation and maintenance ; and also would not sell its various items of equipment designed for community antenna systems separately, but would only sell them as components of a complete system. In holding that this practice violated the Sherman Act, the court first passed upon the question of separability. This issue was stated as follows:
“The difficult question raised by the defendants is whether .this should be treated as a case of tying the sale of one product to the sale of another product or merely as the sale of a single product. It is apparent that, as a general rule, a manufacturer cannot be forced to deal in the minimum product that could be sold or is usually sold. On the other hand, it is equally clear that one cannot circumvent the anti-trust laws simply by claiming that he is selling a single product.” 187 F.Supp. at 559.
The court then proceeded to state four criteria of separability which are discussed hereinafter at page 764 of this opinion.
In Dehydrating Process Co. v. A. O. Smith Corp., 292 F.2d 653 (C.A.1), cert. denied, 368 U.S. 931, 82 S.Ct. 368, 7 L.Ed.2d 194, relied on by the district court in the instant case, the defendant manufactured silos and an unloader which could be installed at the base of a silo. For six years defendant made it a practice to sell its unloader separate from its silo. A number of customers complained that the unloader would not operate successfully on silos of another make. To meet this problem, defendant adopted a policy of not selling unloaders unless they were to be installed in pres*762ently-purehased or already-owned silos of its own manufacture. The question was whether this was a tying arrangement which violated the anti-trust laws.
The court held that in light of the customer complaints the defendant was justified in adopting its new policy; and that the requirement that the unloaders be installed only in defendant’s silos was reasonable under the circumstances.
Thus it will be seen that the court’s decision does not really turn on the question of inseparability. In fact, by basing its decision on “sound business reasons,” the court would seem to presuppose that there are two separate products.
The Dehydrating Process Co. case obviously would be more nearly analogous on its facts to the instant case if the manufacturer had required the purchase of an unloader as a prerequisite to the purchase of a silo.
One of the evils inherent in any tying arrangement is that it forces the buyer to give up his independent judgment as to whether, or where, to purchase the tied product. United States v. Loew’s Inc., supra, 371 U.S. 38, 45, 83 S.Ct. 97; Northern Pacific Railway Co. v. United States, supra, 356 U.S. 1, 6, 78 S.Ct. 514.
Turning again to the instant case, there can be no doubt that the arrangement here involved forced the publishers of Times-Star to give up their independent judgment as to which of the wire services was required for its operations. At the time AP refused to furnish appellant the Ohio Big Cities wire to the exclusion of the “A,” “D” and Kentucky wires, Times-Star was a subscriber to various other wire services. It began using certain UP services in July 1955, and at that time already was an AP and INS subscriber. It was receiving the UP national wire, state wire and sports wire.
Certain of these services were duplications. Appellant’s executives, in an effort to combat an operating deficit, concluded that the AP “A,” “D” and Kentucky services no longer were required. The amount of AP copy published in Times-Star had been greatly reduced. The former assistant to the publisher of Times-Star testified that “we had good coverage in Northern Kentucky” and “had quite a staff over there,” and that, the AP Kentucky wire was no longer needed. He further said that if the AP “D” wire had been dropped as requested, he would have subscribed to the UPI financial wire. On the other hand he described the AP Ohio Big Cities wire as “essential” to the publication of Times-Star. The former Times-Star telegraph editor testified that the AP Ohio Big Cities wire “was far superior to the United Press state service.” The former publisher of Times-Star described the Ohio Big Cities wire as “the major service of The Associated Press” for Times-Star purposes, and said that “we needed that service very badly.”
In this situation, who better than appellant was in a position to choose which wire services it needed and wanted and to exercise independent judgment to that, end?
Yet the record clearly establishes that AP required appellant to continue to subscribe and pay for three wires which appellant did not want and need, in order to receive a fourth wire which it considered to be essential, and thereby forced appellant to give up its independent judgment as to whether to subscribe to the three unwanted and unneeded services. This is one of the situations which is “an object of anti-trust concern.”' United States v. Loew’s Inc., supra, 371 U.S. 38, 44-45, 83 S.Ct. 97, 102.
Lending support to the view that the Ohio Big Cities wire is separable from its other wires is AP’s treatment of the Kentucky wire. AP had refused to give Times-Star a separate quotation for this wire, taking the position that it was a part of the basic service for Cincinnati. Earlier in this opinion we have quoted’ AP’s statement in a letter to appellant that the Kentucky wire was “part of the basic Associated Press Service in Cincinnati, and provision for this service is an integral part of the basic service covered by your agreement.” When Scripps bought the paper in 1958, and proposed. *763to subscribe to the “A” wire, AP agreed to eliminate the Kentucky wire from its basic service, thereby reducing the assessment by $240.60 per week. It had refused to quote a separate assessment to appellant for the Ohio Big Cities wire, .yet it was able to quote a separate charge to Scripps for the Kentucky wire. Thus the cost of the Kentucky wire was separated for Scripps. The parallel conclusion as to the separability of the Ohio Big Cities wire seems obvious to us.
By this action AP demonstrated, contrary to the findings of the district court, that the cost of a state wire can be separated from the cost of its other wire services. On the question of the separability of charges we see no difference between the Kentucky State wire and the Ohio Big Cities regional wire.
Further, the AP sports wire, which ■formerly was a part of the basic wire .service, was separated and a specific •charge was made therefor. AP permitted Times-Star to cancel this separate service in 1956. Other services, such as the wirephoto service, were provided by AP on an optional basis, and for specific separate charges.
The evidence further establishes that the Ohio Big Cities wire was operated at different hours from the other services. 'The Ohio wire was controlled from Columbus, Ohio, while the other wires were controlled elsewhere. The Ohio wire was physically separable in that it connected ■different cities and could be added to or taken from the service provided to any newspaper. The “A” wire connected 193 larger cities; the “D” wire connected 56 cities; the Ohio Big Cities wire connected ten cities in Ohio and West Virginia, two of which did not receive the “D” wire and one of which did not receive either the “A” wire or “D” wire. •Separate receiving equipment was required for each wire.
In support of its contention that its news services are not separate and distinct products, AP introduced evidence that the “D” wire sometimes is used for the transmission of general news in addition to business, financial and market news, particularly if the “A” wire at the moment cannot accommodate such news; that general news of all kinds in addition to regional news is transmitted over the Ohio Big Cities wire; that news from abroad on occasion has been carried on all of the wires in question; and that if there were four or five major stories coming in at one time, it might be impossible to put them all on one wire, and the excess would be “spilled over” on other wires. Although news may be “spilled over” from the other wires to the Ohio Big Cities wire when the AP circuits are overloaded, this fact was well known to appellant. It was the prerogative of appellant to decide whether it chose to subscribe only to the Ohio Big Cities service, and thereby take the chance of receiving incomplete “spilled over” news of international, national and financial events in addition to the regional and local news carried over the Ohio Big Cities wire.
With reference to the practice of “spilling over” news, the record shows that news from the “A” wire sometimes is “spilled over” on the “D” wire or on the Ohio Big Cities wire, and that “A” and “D” wire news may be “spilled over” on the Ohio Big Cities wire, but we find no evidence that the Ohio regional news which Times-Star considered so essential to its operation was “spilled over” on the “A,” “D” or Kentucky wires. Quite obviously it would be rare indeed for news of local and regional interest carried over the Ohio wire to ten cities in Ohio and West Virginia to be “spilled over” on the “A” wire connecting 193 cities, the “D” wire connecting 56 cities, or the Kentucky state wire carrying news of primary interest to readers in the Kentucky area.
It is clear that Times-Star found it necessary to continue its subscription to the Ohio Big Cities wire because this was the only wire service providing satisfactory coverage of news of regional and local interest. AP contends that the transmission of regional and local news did not make the Ohio wire separable, *764because there are duplications of news carried on this and other wires. The evidence shows, however, that when there is a duplication, it is because the duplicated news item is a matter of interest to newspaper readers in the Ohio area. For example, if the President of the United States spoke at Cleveland or Columbus, Ohio, the story would be transmitted over the “A” wire and also over the Ohio Big Cities wire. A financial story of nationwide interest originating in Ohio might be carried over both the “D” wire and the Ohio Big Cities wire. If a major accident occurred in Ohio, resulting in a substantial number of deaths, it would be carried over the “A” wire, and perhaps also over the Ohio Big Cities circuit. A minor accident in Ohio resulting in one death ordinarily would be reported only over the Ohio Big Cities circuit.
In United States v. Jerrold Electronics Corporation, supra, the court laid down four criteria of separability as follows:
“There are several facts presented in this record which tend to show that a community television antenna system cannot properly be characterized as a single product. Others who entered the community antenna field offered all of the equipment necessary for a complete system, but none of them sold their gear exclusively as a single package as did Jerrold. The record also establishes that the number of pieces in each system varied considerably so that hardly any two versions of the alleged product were the same. Furthermore, the customer was charged for each item of equipment and not a lump sum for the total system. Finally, while Jerrold had cable and antennas to sell which were manufactured by other concerns, it only required that the electronic equipment in the system be bought from it.” 187 F.Supp. at 559.
Transposing these four criteria of separability to the facts of the instant case, we find:
1. AP’s competitor, UPI, offered everything necessary for a complete news service, but did not charge for its basic wires in a single package as did AP;
2. The number of news dispatches of AP and other news services vary considerably and are used by newspapers as space and interest warrant. Hardly any two versions are the same;
3. UPI charges separately for its news wires, as does AP for the Kentucky wire (at least in its proposal to Scripps), the sports wire, and various supplemental wires;
4. Finally, AP offered certain wires on an optional basis, but required appellant to subscribe for the “A” wire, “D” wire and Kentucky wire on a “package” basis in order to receive the Ohio Big Cities wire.
It is true that no tying arrangement is spelled out expressly in the contract between the parties upon which AP based this action, or in the AP By-Laws. The result is accomplished by the By-Law provision that the nature and extent of the news service to be furnished a member shall be determined by the Board of Directors.7
*765A tying arrangement or condition “need not be expressly embodied in written contracts. Such arrangements may be deduced from a course of conduct.” Osborn v. Sinclair Refining Co., 286 F.2d 832, 837 (C.A.4), cert. denied, 366 U.S. 963, 81 S.Ct. 1924, 6 L.Ed.2d 1255. The tying arrangements found unlawful in United States v. Loew’s Inc., supra, and United States v. Paramount Pictures, Inc., 334 U.S. 131, 68 S.Ct. 915, 92 L.Ed. 1260, were not spelled out in contracts. As said in McElhenney Co. v. Western Auto Supply Co., 269 F.2d 332, 338 (C.A.4):
“Admittedly, the written agreement between the parties contains no provision requiring the franchisees to deal only in goods supplied by Western Auto. This, of course, merely means that the contract is not unlawful on its face. The writing could be supplemented by an extrinsic course of conduct from which the illegal condition or understanding might be found.”
The district court laid strong emphasis upon its finding that the record in this case contains insufficient evidence to establish a natural division in the costs of gathering news transmitted over the “A,” “D” and Ohio Big Cities wires and the amounts of the costs to AP of providing these respective services. It expressly held that appellant “has failed to provide this court with sufficient facts upon which it may be concluded that there is a natural division in the costs of gathering news transmitted over the A, D and state trunks.” A finding of fact by the district court is binding upon this court unless “clearly erroneous.” Rule 52(a), Fed.R.Civ.P. It is our obligation as an appellate court to overrule the “clearly erroneous” findings of the district court in an anti-trust case, as in other civil actions tried by a district judge without a jury. Osborn v. Sinclair Refining Co., supra; A. C. Becken Co. v. Gemex Corp., 272 F.2d 1 (C.A.7), cert. denied, 362 U.S. 962, 80 S.Ct. 878, 4 L.Ed.2d 876; Ball v. Paramount Pictures, 169 F.2d 317 (C.A.3), cert. denied, 339 U.S. 911, 70 S.Ct. 568, 94 L.Ed. 1337; 6 Toulmin’s Anti-Trust Laws, § 21.24 (1951). As said in United States v. U. S. Gypsum Co., 333 U.S. 364, 395, 68 S. Ct. 525, 92 L.Ed. 746: “A finding is ‘clearly erroneous’ when although there-is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.”
.We agree with the district court that such evidence would be indispensable to support the counterclaim filed by appellant. The only evidence in the record on this question was offered by an accountant employed by appellant for the purpose of allocating the basic AP assessment among the “A” wire, the “D” wire and the Ohio Big Cities wire. We agree with the district court that this evidence was. too speculative to support the counterclaim filed by appellant for the recovery of treble damages against AP. The record shows that AP did not keep its records in such a manner as to establish an-accurate division of costs as between its three basic wire services. We are of the-opinion, however, that the determination of the existence of a tying arrangement which is illegal under the Sherman Act, thus constituting a complete defense to-AP’s action for breach of contract, is not controlled by the way AP has kept its-cost records.
AP was able to arrive at a specific charge of $240.60 per week for its Kentucky wire when it decided to offer this-concession to Scripps. The AP wirephoto service was priced separately at $278.80-per week. Separate charges also were established for the sports wire and other-optional services, some of which formerly were a part of the basic service. We have-no doubt that a division could be made by AP for a separate charge for its Ohio Big-Cities wire. Once it is determined that separability exists, it is not important that AP might experience inconvenience in making a breakdown of charges.
The basic error of the district court was in holding that, in order to establish its affirmative anti-trust defense, it was-obligatory upon appellant to prove that *766there was a natural division of costs in gathering news transmitted over the Ohio Big Cities wire and the other wires in question. We do not construe the decisions to impose such a burden upon a defendant asserting an anti-trust defense. Once the other elements of an unlawful tie-in have been established, appellant’s defense should not be nullified by the manner in which AP keeps its books or the unavailability of cost records upon which a precise computation of separate costs could be made.
We hold that this finding of fact by the district court was based upon an incorrect premise and was “clearly erroneous” as applied to the Ohio Big Cities wire. This holding applies only to the Ohio Big Cities wire. We do not hold that the AP “A” and “D” are distinct products separable the one from the other, nor do we hold that the AP “B” wire, which is in use in certain areas other than Cincinnati, is a separate and distinct product. Our holding on the issue of separability is limited solely to the Ohio Big Cities wire; that is, that the Ohio regional wire is separable and distinct from the other three wires involved in the contract between AP and appellant.
It is our opinion that the facts hereinabove set forth establish that the Ohio Big Cities wire was a product separate and distinct from the other AP wire services, just as were motion picture films in United States v. Loew’s Inc., supra, the television program in American Manufacturers Mutual Insurance Co. v. American Broadcasting-Paramount Theatres, Inc., supra, and the community television antenna equipment in United States v. Jerrold Electronic Corporation, supra. We further hold that the established practice of AP in requiring appellant to receive and pay for the “A” and “D” wires, plus the Kentucky state wire, as a prerequisite to receiving the Ohio Big Cities wire, constituted a tying arrangement susceptible to violation of Section 1 of the Sherman Act.
A holding that the Ohio Big Cities wire was separable and that offering it with the other three services in a “package” constituted a tying arrangement does not necessarily mean, however, that the arrangement automatically will be declared unlawful. Other essential elements of anti-trust violation also must be established. In Northern Pacific Railway Co. v. United States, supra, 356 U.S. 1, 6, 78 S.Ct. 514, 518, the court said that tying arrangements “are unreasonable in and of themselves whenever a party has sufficient economic power with respect to the tying product to appreciably restrain free competition in the market for the tied product and a ‘not insubstantial’ amount of interstate commerce is affected. International Salt Co. v. United States, 332 U.S. 392, [68 S.Ct. 12, 92 L.Ed. 20]. Cf. United States v. Paramount Pictures, 334 U.S. 131, 156-159, [68 S.Ct. 915, 92 L. Ed. 1260]; United States v. Griffith Amusement Co., 334 U.S. 100, [68 S.Ct 941, 92 L.Ed. 1236].”
7) Sufficient Economic Power
We come now to the questions of whether AP had “sufficient economic power” with respect to its wire services to restrain free competition in the market for such services and whether a “not insubstantial” amount of interstate commerce is affected.
On the issue of whether AP possessed “sufficient economic power” with respect to its basic news services within the contemplation of the anti-trust decisions, we first emphasize its position of dominance in the field of news. In 1958 it was the largest single news service in the United States, with approximately 150 news bureaus and offices, and a staff of approximately 3500 staff members and employees in this country and foreign countries. Of the total of approximately 1750 English language daily newspapers in the United States, 69 per cent are AP members. In 1957 and 1958 the membership consisted of approximately 1250 regular members which were owners of newspapers, 275 of which were morning newspapers and 975 of which were afternoon newspapers, and approximately 1700 owners of radio and television stations. There were approximately twelve asso*767ciate members which owned and published newspapers. AP members are located at every newspaper market in the United States. The newspapers of AP members cover at least 90 per cent of the nation’s population area.
AP was described by the Supreme Court in Associated Press v. United States, supra, 326 U.S. 1, 18, 65 S.Ct. 1416, 1424, as follows: “ ‘AP is a vast, intricately reticulated organization, the largest of its kind, gathering news from all over the world, the chief single source of news for the American press, universally agreed to be of great consequence.’ ”

a) Uniqueness

The majority opinion of the Supreme Court in Northern Pacific is to the effect that uniqueness alone may establish “sufficient economic power.” In Loew’s, the Court held in a unanimous opinion that:
“Market dominance — some power to control price and to exclude competition — is by no means the only test of whether the seller has the requisite economic power. Even absent a showing of market dominance, the crucial economic power may be inferred from the tying product’s desirability to consumers or from uniqueness in its attributes.” 371 U.S. at 45, 83 S.Ct. at 102 (Emphasis supplied).
In American Manufacturers Mutual Insurance Co. v. American Broadcasting-Paramount Theatres, Inc., supra, 221 F.Supp. 848 (S.D.N.Y.), the Court held that the television program there involved “is of a unique nature sufficient to give ABC a leverage to gain economic power over the tying product.” 221 F.Supp. at 850.
While a patent or copyright is no longer held to be an essential prerequisite to illegal tying arrangements, the monopoly created by a patent or copyright has been emphasized strongly in many opinions, including United States v. Loew’s Inc., supra.
The evidence in this case demonstrates that AP asserts property rights in its news dispatches which are comparable-to a copyright. In International News Service v. Associated Press, 248 U.S. 215, 39 S.Ct. 68, 63 L.Ed. 211, the Supreme-Court held that AP has a quasi-property right in the news it gathers and distributes, as against a rival in the same business. The Court compared this interest to a common law copyright in a literary composition and held that it was not abandoned upon first publication.
Since prior to 1929 AP has required each newspaper using its news dispatches-to print the following notice:
“The AP is exclusively entitled to the use for reproduction of all news dispatches credited to it or not otherwise credited in this newspaper and also local news published therein.”
An AP official testified that the purpose-of this notice is to protect both AP and its members, warning that “anyone who gets a copy of a newspaper is not entitled’ to lift and sell the news” or reuse it in-any way.
We, therefore, conclude that AP news dispatches not only are unique, but they possess a uniqueness “to suggest comparison with a monopoly by patent.” Northern Pacific Railway Co. v. United States, supra, 356 U.S. 1, 19, 78 S.Ct. 514, 525 (dissenting opinion).

b) Desirability of Tied Product

As stated in Loew’s, supra, one test of “sufficient economic power” is the desirability of the tied product to purchaser. There can be no doubt of the desirability of AP’s news wires to newspapers.
“Inability to buy news from the largest news agency, or any one of its multitude of members, can have-most serious effects on the publication of competitive newspapers, both those presently published and those-which but for these restrictions, might be published in the future.”' Associated Press v. United States, supra, 326 U.S. 1, 13, 65 S.Ct. 1416, 1421.
Appellant found the Ohio Big Cities wire to be so desirable and indispensable-*768to its requirements that, when AP refused to furnish it except when “tied to” three other wires, appellant continued to subscribe to and pay for all four wires, although it desired only the Ohio regional service and was experiencing a recurring operating deficit.
Both uniqueness and desirability having been established, it follows that “sufficient economic power” will be inferred. United States v. Loew’s Inc., supra, 371 U.S. at 45, 83 S.Ct. 97.
8) Effect on Interstate Commerce
We come next to the question of whether a “ ‘not insubstantial' amount of interstate commerce is affected.” Northern Pacific Railway Co. v. United States, supra, 356 U.S. 1, 6, 78 S.Ct. 514, 518.
The activities of AP are interstate commerce. Associated Press v. N. L. R. B., 301 U.S. 103, 57 S.Ct. 650, 81 L.Ed. 953. AP’s contract with appellant was a standard contract, which it required to be executed by all its members. The practice of tying news wire services together has been followed by AP continuously since 1935, when the separate “D” wire was first established. This tying practice has been a requirement that has ■continued with no variation. The newspaper circulation of members of AP at the 43 principal metropolitan trunk points in the United States comprises 94 per cent of the total circulation of all newspapers in these areas subscribing to news service agencies. They comprise :87 per cent of all subscribing newspapers in these areas. More daily newspapers throughout the nation subscribe to AP than to any other news service. In short AP is the chief source of news for the American press.
While there is no proof in this case as to precise percentages, there can be no ■doubt that the amount of commerce affected or restrained by the tying practice is substantial. Standard Oil Co. of California v. United States, supra, 337 U.S. 293, 69 S.Ct. 1051; International Salt Co. v. United States, supra, 332 U.S. 392, 68 S.Ct. 12; Osborn v. Sinclair Refining Co., supra, 286 F.2d 832 (C.A. 4), cert. denied, 366 U.S. 963, 81 S.Ct. 1924.
When appellant has established that a tying arrangement exists, coupled with “sufficient economic power to impose an appreciable restraint on free competition in the tied product” affecting a “not insubstantial” amount of interstate commerce, its defense under the Sherman Act does not require affirmative evidence of actual harm to competition or the extent of such harm. Northern Pacific Railway Co. v. United States, supra, 356 U.S. 1, 12, 78 S.Ct. 514; Standard Oil Co. of California v. United States, supra, 337 U.S. 293, 305, 69 S.Ct. 1051.
The impact of the tying arrangement upon competition is illustrated by the fact that if Times-Star had been permitted to drop the AP “D” (financial) wire as requested, it would have subscribed to the UPI financial wire. By adhering to its tying arrangement, AP precluded its competitor, UPI, from selling its financial wire to Times-Star, and prevented Times-Star from subscribing to a competing financial wire which it considered to be more desirable for its purposes.
In International Salt, the Court said: “[I]t is unreasonable, per se, to foreclose competitors from any substantial market” by means of tying arrangements. 332 U.S. at 396, 68 S.Ct. at 15. In Loew's, the Court said:
“Moreover, there can be no question in this case of the adverse effects on free competition resulting from appellants’ illegal block booking contracts. Television stations forced by appellants to take unwanted films were denied access to films marketed by other distributors who, in turn, were foreclosed from selling to the stations.” 371 U.S. at 48, 49, 83 S.Ct. at 104.
It is a reasonable conclusion under the evidence in this case that “a ‘not insubstantial’ amount of interstate commerce is affected.”
9) Illegality of Contract as Defense
Finally, there is an ancillary proposition which should be discussed. *769Here appellant raises the question of the unlawfulness of the contract by way of defense. The Supreme Court has said: “As a defense to an action based on contract, the plea of illegality based on violation of the Sherman Act has not met with much favor in this Court. This has been notably the case where the plea has been made by a purchaser in an action to recover from him the agreed price of goods sold.” Kelly v. Kosuga, 358 U.S. 516, 518, 79 S.Ct. 429, 431, 3 L.Ed.2d 475. This holding is rooted in the principle that a party to an illegal contract cannot subsequently use this illegality to avoid his contractual obligations. The Court went on to note, however, that this view will not apply “ * * where the judgment of the Court would itself be enforcing the precise conduct made unlawful by the Act. * * * ” 358 U.S. at 520, 79 S.Ct. at 432.
We do not construe Kelly v. Kosuga, supra, to preclude appellant from asserting Section 1 of the Sherman Act as a defense to the instant action for breach of contract. Appellant has paid for all AP services ever received by it. The Sherman Act is interposed as a defense, not to defeat an obligation for services received, but to avoid paying weekly assessments for two years after appellant had ceased publication of Times-Star and had sold its newspaper. Although a plea of illegality based on the Sherman Act is not favored in actions based on contracts, the statute by its express terms declares contracts in violation thereof to be illegal. 15 U.S.C. § 1. Illegality of the contract under the Sherman Act is a valid defense. Bement & Sons v. National Harrow Co., 186 U.S. 70, 87, 88, 22 S.Ct. 747, 46 L.Ed. 1058.
“At an early date it was recognized that, despite the absence of a provision in the Sherman Act authorizing a defense of illegality in a private suit on a contract, such a defense might be used; that any one sued upon a contract may set up as a defense that it is a violation of anti-trust laws, and if found to be so, that fact will constitute a good defense to the action.” 6 Toulmin’s Anti-Trust Laws, § 18.3 (1951).
Having found a violation of Section 1 of the Sherman Act, this court will not enforce the contract by requiring appellant to pay for two years of service it never received, and thereby enforce “ * * * the precise conduct made unlawful by the Act * * * ” 358 U.S. at 520, 79 S.Ct. at 432.
10) The Counterclaim
 We affirm the action of the district court in dismissing appellant’s counterclaim, since the evidence of damages is too speculative to support the counterclaim. Judgments in anti-trust cases cannot be rendered on speculation or guesswork, even against a party who by his own wrong has precluded a more precise computation of damages. Bigelow v. RKO Radio Pictures, 327 U.S. 251, 264, 66 S.Ct. 574, 90 L.Ed. 652; Volasco Products Co. v. Lloyd A. Fry Roofing Co., 308 F.2d 383, 392 (C.A. 6), cert. denied, 372 U.S. 907, 83 S.Ct. 721, 9 L.Ed.2d 717.
The judgment of the District Court awarding damages against appellant is reversed and the case is remanded with instructions to dismiss the complaint.

. Contemporaneously with the sale of its newspaper, the name of appellant, an Ohio Corporation, was changed from The Cincinnati Times-Star Company to TaftIngalls Corporation. Appellee sometimes will he referred to in this opinion as “The Associated Press” or “AP,” the Cincinnati Times-Star as “Times-Star,” the Cincinnati Post and Times-Star as “Post and Times-Star,” the E. W. Seripps Company as “Seripps,” the United Press as “UP,” the International News Service as “INS,” and United Press International as “UPI.” UP and INS were merged into UPI in 1957.

. In June 1954, appellant transferred ownersbip and publication of Times-Star to its wholly-owned subsidiary, The Cincinnati Publishing Company, which in turn sold the newspaper to Scripps four years later. Appellant’s contract with AP was never assigned to its subsidiary. AP had no cause to deal with the subsidiary because appellant continued to act as a member. The District Court held that there was no novation within the requirements of Ohio law. This intervening period of ownership and operation by appellant’s subsidiary is not considered to have any significance for the purposes of this appeal.

. The use of the word “wire” grows out of the earlier method of transmitting news over telegraph by Morse Code. The term is explained in the record as follows: “It is not a physical wire; it is an electronic channel. In many cases there is no wire, it is a wireless beam used by the telephone company or Western Union.”

. 15 U.S.C. § 1. “Every contract, combination in tbe form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal * S!

. “We are undergoing a stringent cost reduction program at the TIMES-STAR and in surveying our wire service costs, we feel that the Basic News Service charge of $1,452.25 weekly is excessive.
“Our files will show that we have greatly reduced the amount of AP copy that we are carrying and as we have no Sunday edition, many AP features are of no use to us.
“An analysis of our rates shows that a figure somewhere in the neighborhood of $700 per week would come much closer to our use of the service.
“We will anticipate discussion on the subject before taking any other action.”

. AP has approximately 250,000 miles of leased news wire connecting most of the cities of the United States. This network of wires is leased by AP from the American Telephone and Telegraph Company and the Western Union Telegraph Company. In each AP office and in the office of each AP member where there are AP employees, there is one transmitting machine and one receiving machine attached to each circuit for the purpose of transmitting and receiving news on the circuit. Each member that uses this kind of equipment leases it from AP and pays AP for it. There are approximately 43 metropolitan areas throughout the country including Cincinnati, which are considered by AP to be “trunk point cities.” These cities make up the major newspaper markets, of the United States.
News originating in the United States is. not sent to a single point, but is transmitted to AP members directly from the-AP news bureau in the area in which the-news originates. News from abroad is sent to AP offices in New York, from-which it is transmitted throughout the-United States. Leased wire services furnished to newspapers in smaller cities are transmitted over a single circuit, and: to members in large cities over multiple-circuits. As held by the District Court:“These multiple circuits, commonly called, trunks, have come into existence because, under present technology, it is impossible to transmit all state, national; and international news on one circuit.”

. Article VII, Section 1 and 2 of the By-Laws, entitled “Use of News,” provides as follows:
“Sec. 1. Tlie nature and extent of the news service to be furnished to a member shall be determined by the Board of Directors, upon the member’s admission, and the initial assessment shall be fixed at the same time and by the same authority. Both the nature and extent of such news service and the assessment may be changed from time to time by the Board of Directors, provided that the Board of Directors shall not omit the news service to any member except for cause as provided in these By-Laws.
“Sec. 2. Each member shall take the news service of the Corporation as specified in Section 1 of this article and use it in whole or in part as provided in his or its contract with the Corporation and' in conformity with the By-Laws thereof.”' Paragraph 6 of the contract between the parties provides:
“In the event that any of the terms and conditions of this agreement shall be or become contrary to or inconsistent with the By-Laws of the Associated Press, the By-Laws shall control.”