A New York state appeals court says Nexstar Media Group wrongly collected more than $10 million in fees from DirecTV for the carriage of a specific television station that had lost its NBC affiliation.
This week, the appeals court said Nexstar concealed the fact that the station, WDVM (Channel 25, then WHAG), was set to convert from an NBC affiliate into a full-time independent station around 2016 and instead negotiated a new carriage agreement with the satellite broadcaster on the premise that WDVM would continue to carry NBC programming.
In doing so, Nexstar charged DirecTV fees that would have been owed if WDVM had maintained its NBC affiliation long-term. DirecTV sued on the matter, saying it overpaid Nexstar carriage fees and asking the broadcaster to return the difference.
In court, both sides affirmed that DirecTV at the time did not typically pay carriage fees to distribute TV stations that were not affiliated with one of the “Big Four” networks — ABC, CBS, Fox or NBC. DirecTV said Nexstar concealed the fact that WDVM would lose its NBC affiliation when negotiating toward a new carriage agreement, which included fees that presumed the station would continue on as an affiliate.
Nexstar said it had good reason to believe it would renew the NBC affiliation of WDVM at the time, but an appellate court this week found there was “unrebutted testimony from two NBC employees who testified that NBC advised defendant that there would be no further extensions,” which proved Nexstar knew the station’s affiliation would not be renewed and chose to keep that information from DirecTV.
“Defendant misrepresented in these documents that defendant expected the network affiliations of its stations to be renewed,” the appeals court ruled. “As plaintiff did not have access to the relevant information, it reasonably relied on the fraudulent representations of defendant to its detriment.”
A lower court had denied Nexstar’s request to toss out the lawsuit, as well as DirecTV’s request for summary judgment on a claim of fraudulent inducement, though it did grant DirecTV’s request for a judgment on breach of contract. The appeals court said the lower court erred by incorrectly siding with Nexstar on the fraudulent inducement claim.
Around $10.5 million in fees were wrongly collected by Nexstar when it chose to conceal material information about WDVM losing its NBC affiliation, the court determined.
