Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Comcast sued over non-renewal of local TV station’s NBC affiliation, (Mar 11, 2016)

By Linda O’Brien, J.D., LL.M.

Global mass media company Comcast Corporation has engaged in anticompetitive conduct by leveraging its dominant cable programming assets to monopolize the market for the delivery of commercial television programming in the Boston viewing area, according to a complaint filed in the federal district court in Boston (WHDH-TV v. Comcast Corporation, March 10, 2016).

WHDH-TV is a television station serving the Boston area. The station has been an affiliate of the National Broadcasting Company (NBC) since January 1995. The affiliation agreement between WHDH and NBC is set to expire in January 2017. Comcast is a global mass media and technology company and is the largest broadcasting and cable company in the world by revenue.

The complaint states that local network affiliates play a critical role in providing free, over-the-air access to the network’s regular entertainment as well as providing content tailored to the local market, including news broadcasts, weather reports, local sports, community activities, and emergency services. In December 2009, Comcast announced its intention to buy a controlling stake in NBC, a transaction that was subject to significant regulatory scrutiny. One of the many groups that expressed concern over the proposed transaction was the NBC Television Affiliates Association, the trade association comprised of over 200 local broadcast stations.

Since opposition by the NBC affiliates posed a serious threat to the Comcast/NBC transaction, in 2010, Comcast entered into a contract with the Association to obtain its support for the transaction. The agreement provided that the combined entity was committed to maintaining free, over-the-air access to NBC programming; would continue to broadcast major sporting events over the air; and would negotiate renewals of affiliate agreements uninfluenced by Comcast’s cable interests for a period of ten years. While acknowledging potential anticompetitive harms, the Federal Communications Commission (FCC) approved the transaction in January 2011, citing its duty to ensure that the deal was in public interest, the complaint alleges.

According to the complaint, in March 2013, Comcast initiated a plan to bypass WHDH in Boston in order to leverage its dominate cable assets, even though doing so would violate its obligation under the affiliate association agreement. First, Comcast moved its regional Boston cable news channel NECN into the NBC television station division and informed major advertisers in the Boston that NECN would be the local NBC affiliate beginning in January 2017. Subsequently, in September 2015, WHDH was notified that Comcast would not renew its NBC affiliation at the end of 2016. Rather, WHDH would be replaced by Comcast’s start-up station located at NECN’s facility.

Comcast’s plan violates its agreement with NBC affiliates by: (1) refusing to negotiate regarding the renewal of the affiliate agreement; (2) eliminating the option to receive free access to NBC programming for millions of Boston-area viewers; and (3) using Comcast’s cable dominance to monopolize the market for the delivery of commercial television.

The plaintiff asserts claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and monopolization and attempted monopolization in violation of Section 2 of the Sherman Act and Massachusetts Antitrust Act. The action seeks declaratory and injunctive relief, treble damages, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 1:16-cv-10494-JCB.

Attorneys: Michael T. Gass, John A. Nadas, Robert M. Buchanan, Jr., and Anita Spieth (Choate, Hall & Stewart LLP) for WHDH-TV.

Companies: Comcast Corporation

News: Antitrust MassachusettsNews