Antitrust Law Daily Wrap Up, ANTITRUST NEWS: NFL, DirecTV allegedly used exclusive deal to limit competition for broadcasting out-of-market football games, (Jul 22, 2015)

By Linda O’Brien, J.D., LL.M.

The National Football League and satellite television service provider DirecTV have conspired to protect and increase their 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 exorbitant prices to consumers for such service, according to a complaint filed in the federal district court in Los Angeles (Aliano v. National Football League, Inc., July 21, 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, 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 “out-of-market” sports content programming package known as “NFL Sunday Ticket.”

Mario Aliano is a consumer who subscribed to NFL Sunday Ticket, which was distributed and sold by DirecTV.

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 the NFL Sunday Ticket, a premium subscription package that provides access to all Sunday afternoon broadcast on national networks. Through this exclusive agreement with the NFL, DirecTV distributes the live game telecast feeds provided by the networks to NFL Sunday Ticket subscribers on DirecTV channels so subscribers can access all network games, except for in-market games broadcast by local affiliates.

The NFL and its teams allegedly have colluded to sell the broadcast rights to out-of-market Sunday afternoon games solely 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 charged by DirecTV, Aliano claims.

The complaint also alleges that the exclusive deal between the NFL and DirecTV has caused NFL Sunday Ticket subscribers to pay a higher price for that program package than they would have if such broadcast agreements were competitively negotiated. Further, the agreement is unnecessary to ensure the telecast for such NFL games, since broadcasters are contractually obligated to produce these games and provide them in local markets, according to Aliano. Instead, the agreement allegedly preserved the exercise of market power created by the NFL teams’ anticompetitive agreement to monopolize the sales of broadcast rights.

There is no evidence that the exclusive agreement between the NFL and DirecTV was created to ensure a quality broadcast of the games offered on NFL Sunday Ticket or to allow the NFL sufficient oversight of games or any other reasonable objective. It appears that the agreement was created to artificially raise the price of the NFL Sunday Ticket package, the complaint states.

The plaintiff asserts claims for violations 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-05508-SVW-JPR.

Attorneys: Adam M. Tamburelli (Jarvis, Krieger & Sullivan) and Thomas A. Zimmerman, Jr. (Zimmerman Law Offices, P.C.) for Mario Aliano.

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

News: Antitrust CaliforniaNews