Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Subscriber alleges DirecTV “NFL Sunday Ticket” agreement limits competition, (Nov 17, 2015)

By Linda O’Brien, J.D., LL.M.

The National Football League and its teams have conspired with satellite television service provider DirecTV to charge supracompetitive prices for the broadcast of live regular season football games by entering into an exclusive license agreement under which DirecTV is the sole distributor of the game broadcasts through its satellite service, according to a complaint filed in the federal district court in New York City (Dassa v. National Football League, Inc., November 16, 2015).

The National Football League (NFL) is an association of thirty-two major league professional football teams. Although the teams are independently owned and operated, they collaborate in certain areas, such as roster size and game rules. 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.” Steven Dassa 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 on national broadcast networks. DirecTV offers NFL Sunday Ticket, a premium subscription package that provides access to all Sunday afternoon broadcast on national networks. This package is the only way for consumers to view games other than the limited selection of games broadcast through sponsored telecasts in any given area. The agreement overcharges purchasers of NFL Sunday Ticket by eliminating competition among the NFL teams for interest and distribution of their games.

The NFL and its teams’ agreement with DirecTV is a horizontal supply restriction that reduces output, raises prices, and harms consumers, the action claims. NFL football has the highest ratings of all sports programs. The harm is evident in many forms. First, the availability of football broadcasts on network channels is vastly lower than it otherwise would be. Second, the output of NFL broadcasts on a per-game basis is half the output of other major American sports leagues, the complaint alleges.

The complaint also asserts that there are no procompetitive benefits to these horizontal restrictions. Even if there were such benefits, they could be achieved through less restrictive means. NFL broadcasting rights are an extraordinarily valuable commodity and viewership for NFL games regularly eclipses that of any other program on television. Given this viewership, the NFL would have no difficulty obtaining distribution without their horizontal restraint. However, the exclusive agreement with DirecTV allegedly has the effect and purpose of concentrating viewership in a limited number of broadcasts, thereby allowing the network defendants—CBS, Fox, and NBC—to charge higher fees for advertising and broadcast retransmission.

Dassa asserts claims for violations of Sections 1 and 2 of the Sherman Act. The action seeks declaratory and injunctive relief, treble damages, pre-judgment and post-judgment interest, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 1:15-cv-08982.

Attorneys: Marc I. Gross, Jeremy A. Lieberman, Jayne A. Goldstein (Pomerantz LLP) for Steven Dassa.

Companies: National Football League, Inc.; NFL Enterprises LLC; DirecTV, LLC; DirecTV Holdings, LLC; CBS Corporation; Fox Broadcasting Company; NBCUniversal Media, LLC

News: Antitrust NewYorkNews