A federal judge has tossed an antitrust lawsuit brought by DirecTV against Nexstar Media Group that alleged collusion and price fixing concerning some of the satellite company’s local TV carriage agreements.
The lawsuit, filed last March, claimed Nexstar worked with two affiliated companies — Mission Broadcasting and White Knight Broadcasting — to engage in an unlawful conspiracy to raise prices for certain local broadcast channels.
Those stations — around 60 in total — are operated by Nexstar through shared services agreements with Mission and White Knight, which holds the broadcast licenses to those outlets. Those agreements allow a large company like Nexstar to operate stations without exceeding a federal cap that limits direct ownership to stations that reach less than approximately 40 percent of the American television audience.
At the time the lawsuit was filed, Mission and White Knight stations were unavailable to DirecTV subscribers. The lawsuit accused Nexstar of illegally colluding with White Knight and Mission to extort higher fees that DirecTV must pay in order to distribute those channels to its customers.
On Wednesday, a federal judge sided with Nexstar on the matter, saying the satellite broadcaster made a choice by not agreeing to White Knight and Mission’s demand for higher fees, irrespective of whether Nexstar was in the driver’s seat.
“Its losses therefore flow from its own choice to exit the market,” Judge Kevin Castel wrote in an opinion published on Wednesday, referencing DirecTV’s claim of alleged financial loss from the dropped channels.
Castel continued: “While this choice may have been influenced by defendants’ demands, it does not result from defendants’ claimed unlawful acts, i.e., the extraction of supra-competitive prices.”
Castel said DirecTV was not entitled to relief under federal antitrust laws, because it did not raise a valid claim under existing statutes. The claims that were raised by DirecTV in its lawsuit were not enough to rise to the level of an antitrust violation, the judge said.
In a statement, a DirecTV spokesperson said the outcome of the case “sets a dangerous precedent that a victim of price-fixing needs to pay the inflated price before it can make a claim in court.” A person familiar with the company’s position said DirecTV was weighing a possible appeal. A spokesperson for Nexstar does not return requests from The Desk for comment.
Cable and satellite companies have taken a hard line against the owners of broadcasters and cable networks over the past few years, as programmers demand higher fees in exchange for the privilege of redistributing channels to pay TV subscribers. Those demands have skyrocketed over time as broadcasters and programmers squeeze more cash out of cable and satellite subscribers to offset declines in their advertising businesses.
The carriage fees are passed on to customers in their bills, and comprise a large percentage of the fees subscribers pay each month, DirecTV and other pay TV companies say. Rather than acquiesce to their demands, cable and satellite platforms have turned down carriage proposals that involve higher fees for the same package of channels, which leads to programming-related blackouts that can last for weeks or months at a time.
Such was the case last year when DirecTV’s carriage agreement with Nexstar ended. The situation led to a programming blackout of more than 140 channels owned directly by Nexstar, with the situation resolved just before the start of the National Football League (NFL) season.
DirecTV found itself in the middle of another carriage dispute when its distribution agreement with local broadcaster TEGNA ended last December. At the time, DirecTV said TEGNA demanded a sizable fee increase for its channels, and proposed relegating the broadcaster’s local ABC, NBC, CBS and Fox affiliates to an à la carte package that customers could opt-in to receive. TEGNA turned down the offer; the matter was settled prior to the start of the NFL playoffs.
Earlier this month, DirecTV said it was introducing a new option for its satellite subscribers that allowed them to opt-out of receiving local stations through the company. Executives at DirecTV said the option was intended to give customers greater flexibility if they choose to receive local channels over the air, via streaming or through another means — or if they simply don’t want the channels at all. The option is not available to DirecTV’s streaming and U-Verse customers.
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Correction: An earlier version of this story erroneously said the federal judge overseeing the anti-trust lawsuit sided with DirecTV in the case. The opinion was in Nexstar’s favor.
