Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Commercial subscribers to DirecTV’s “NFL Sunday Ticket” package allege restraint of trade, (Aug 14, 2015)

By Edward L. Puzzo, J.D.

“NFL Sunday Ticket”, a broadcast package of out-of-market National Football League (NFL) games offered to commercial subscribers by DirecTV through its exclusive arrangement with the NFL, is an unreasonable restraint of trade in violation of federal antitrust laws, according to a class action complaint filed in the federal district court in Los Angeles (1465 3rd Ave. Rest. Corp. v. National Football League, Inc., August 13, 2015).

The National Football League (NFL) is an association of thirty-two major league professional football teams and is currently the most popular professional sports league in the United States. Although the teams cooperate to schedule games, set game rules, divide the teams into geographic territories, and assign each team a home television market for broadcasting purposes, each team is separately owned and operated. The NFL has control over the negotiation with national broadcasters for the broadcast of each team’s games outside their home markets.

DirecTV provides direct broadcast satellite television service throughout the United States. DirecTV distributes an exclusive sports content programming package known as “NFL Sunday Ticket,” consisting of live broadcasts of Sunday afternoon out-of-market NFL football games. This package is particularly attractive to commercial subscribers, such as restaurants and bars, as a way of attracting customers to their establishments. While DirecTV charges residential subscribers a fixed charge for “NFL Sunday Ticket,” commercial subscribers are charged fees based on the restaurant’s maximum occupancy as set by local fire codes. These commercial subscription rates range from $1,458 per season to over $120,000 per season.

The complaint states that football is the only major professional sport in the United States with an exclusive out-of-market broadcasting arrangement. The leagues for the other major American professional sports—Major League Baseball (MLB), the National Basketball Association (NBA), and the National Hockey League (NHL)—all distribute their respective live out-of-market games through multiple multi-channel video programming distributors (MVPDs), such as DirecTV, Dish Network, Comcast, Cox Cable, and Time Warner.

The exclusive nature of the arrangement between the NFL and DirecTV eliminates competition, the complaint alleges, allowing DirecTV to extract supracompetitive prices for its service compared to the prices DirecTV charges to subscribers for out-of-market sports packages for baseball, basketball and hockey in competitive markets. But for the unreasonable restraint of trade imposed by the exclusivity agreement, both teams and providers would compete for viewership of the out-of-market games, resulting in increased options and lower prices, the plaintiff alleges.

There are no procompetitive justifications for the exclusivity agreement, and it was created solely for the purpose of artificially inflating the price of out-of-market games, the complaint alleges. On behalf of a putative class of commercial subscribers to “NFL Sunday Ticket,” the plaintiff asserts claims for per se and rule-of-reason violations of Section 1 of the Sherman Act. The action seeks declaratory and injunctive relief, treble damages, pre- and post-judgment interest, and any other just and proper relief.

The case is Civil Action No. 2:15-cv-06145-R-JEM.

Attorneys: Roman M. Silberfeld, David Martinez, Hollis Salzman, Kellie Lerner and Michelle C. Zolnoski (Robins Kaplan LLP) and John Radice and Kenneth Pickle (Radice Law Firm) for 1465 3rd Ave. Rest. Corp.

Companies: 1465 3rd Ave. Rest. Corp.; National Football League, Inc.; NFL Enterprises LLC; DirecTV, LLC; DirecTV Holdings, LLC

News: Antitrust CaliforniaNews