Antitrust Law Daily Wrap Up, ANTITRUST NEWS: NFL, DirecTV allegedly excluded competition for televising out-of-market football games, (Jul 14, 2015)

By Linda O’Brien, J.D., LL.M.

The National Football League and satellite television service provider DirecTV have conspired to increase their monopoly profits from the broadcast of live out-of-market football games by entering into an exclusive agreement, under which DirecTV is the sole distributor of the game feeds of these games through its satellite service and charges supracompetitive prices for such service, according to a complaint filed in the federal district court in Los Angeles (Ninth Inning Inc. v. National Football League, Inc., July 13, 2015).

The National Football League (NFL) is an association of thirty-two major league professional football teams. Although the teams cooperate to schedule games, set game rules, and divide the teams into geographic territories, each team exists as separate businesses with separate owners. The NFL has control over the negotiation with national broadcasters for the broadcast of each team’s games outside their home territories.

DirecTV and its subsidiary, DirecTV Sports Networks, provide direct broadcast satellite television service throughout the United States. DirecTV distributes an exclusive “out-of-market” sports content programming package known as “NFL Sunday Ticket.”

Ninth Inning Inc. does business as the Mucky Duck, a pub located in San Francisco.

The complaint states that, in 1994, DirecTV entered into an exclusive agreement with the NFL to offer subscribers access to Sunday afternoon games that were not otherwise available in their market via national broadcast networks. Subscribers could purchase NFL Sunday Ticket, a premium subscription package that provides access to all Sunday afternoon broadcast on national networks. The NFL and its teams allegedly have colluded to sell the broadcast rights to out-of-market Sunday afternoon games only through DirecTV. Such arrangement eliminates competition in the distribution out-of-market Sunday afternoon games and anyone wishing to view these games must subscribe to DirecTV, purchase NFL Sunday Ticket, and pay a supracompetitive price dictated by DirecTV, Ninth Inning claims.

Although residential subscribers to DirecTV pay a fixed charge for DirecTV service and NFL Sunday Ticket, commercial subscribers are charged fees based on the maximum occupancy permitted by the local fire code. In recent years, the fee DirecTV charges commercial subscribers has increased substantially, according to the complaint.

The complaint alleges that the exclusive deal between the NFL and DirecTV for the broadcast rights to NFL Sunday Ticket has preserved the exercise of market power created by the NFL teams’ anticompetitive agreement to monopolize the sales of broadcast rights. Without the exclusive deal, the monopoly power created by the collusion among NFL teams would be dissipated by price competition between DirecTV and other satellite service providers.

The complaint also states that the out-of-market Sunday afternoon NFL games constitute a distinct product market and are not interchangeable with the over-the-air telecasts of local NFL games. This is particularly true for commercial subscribers. As a result, commercial subscribers are willing to pay a substantial amount to offer their customers the opportunity to view multiple NFL out-of-market games. The exclusive agreement between the NFL and DirecTV serves no procompetitive purpose, the lawsuit alleged. Instead the defendants entered into the agreement with the intent of maintaining a monopoly price for NFL Sunday Ticket.

The plaintiff asserts claims for restraint of trade and conspiracy to monopolize in violation of Sections 1 and 2 of the Sherman Act. The action seeks declaratory and injunctive relief, treble damages, pre- and post-judgment interest, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 2:15-cv-05261.

Attorneys: Michael D. Hausfeld, Irving Scher, and Michael P. Lehmann (Hausfeld LLP), and Lee Albert and Lionel Z. Glancy (Glancy Pongray & Murray LLP) for Ninth inning Inc.

Companies: Ninth Inning Inc.; National Football League, Inc.; NFL Enterprises LLC; DirecTV, LLC; DirecTV Holdings LLC

News: Antitrust CaliforniaNews