Cable news outlet Newsmax has filed a federal antitrust lawsuit against Fox Corporation and its subsidiary Fox News Media on allegations of unfair and illegal competition.
In its legal complaint, attorneys representing Newsmax accuse Fox of abusing its market dominance in the cable news space to convince some pay television operators to carry its news channel over Newsmax and other rivals.
The filing claims Fox’s conduct violated federal and Florida antitrust laws, as well as the Florida Deceptive and Unfair Trade Practices Act.
Fox News is one of the most-popular channels on cable: It consistently ranks as the highest-rated cable news outlet and one of the highest-rated cable networks overall, according to monthly Nielsen ratings. Newsmax typically ranks fourth or fifth in the cable news ratings.
Newsmax says Fox has long exploited the “must-have” status of Fox News to force distributors into unfavorable agreements. According to the lawsuit, those terms included so-called “no-carry” provisions barring distributors from distributing rival channels, financial penalties tied to bundling lesser-watched Fox channels and confidential “drag-down” clauses that penalized distributors who placed Newsmax in widely available basic tiers.
The complaint further alleges Fox engaged in intimidation tactics, including pressuring guests not to appear on Newsmax and hiring private investigators to target the company’s executives.
Newsmax leans on internal communications from Fox executives and on-air talent that were unearthed when the network was a defendant in a defamation lawsuit brought by Dominion Voting Systems several years ago. Fox settled the case for $787.5 million, but not before its executives were deposed and certain materials associated with those depositions were made public.
In one document, former Fox News host Tucker Carlson warned that an “alternative like Newsmax could be devastating to us.” In another message, Fox News President Jay Wallace told the network’s CEO Suzanne Scott that Fox was on “war footing,” while then-Fox Chairman Rupert Murdoch warned Scott that Newsmax “should be watched.”
Like most cable networks, Fox charges cable, satellite and streaming cable TV alternatives for the privilege of offering its channel to paying subscribers. Newsmax alleges those fees are as high as $2.20 per subscriber for Fox News alone, making it one of the most-expensive networks for cable and satellite companies to offer, second to ESPN.
The figure is almost double what Warner Bros Discovery (WBD) charges for CNN, and what Comcast’s NBC Universal collects from MSNBC, Newsmax alleges. Distribution fees are often passed along to subscribers in the form of their bills; Fox has aggressively pursued higher per-subscriber fees in order to offset ongoing churn in the cable and satellite industry, which has led customers to pay more for the same set of channels.
As part of an agreement to carry Fox News, the network also requires distribution of other channels, including Fox Business Network, Fox Sports 1 and local Fox-owned stations. Each of those channels have their own per-subscriber distribution fee, which causes cable and satellite bills to increase even more. If platforms don’t agree to distribute the other channels on Fox’s terms, they can’t offer Fox News at all, which makes their product less-attractive to pay TV customers who want the channel.
“Fox has sought to protect and expand its monopoly power in the right-leaning pay TV news market by engaging in a suite of anticompetitive behaviors,” Newsmax complains. “Fox’s unlawful and exclusionary conduct has harmed not just Newsmax and other competitors, but also consumers and competition itself.”
Christopher Ruddy, the CEO of Newsmax, said Fox has long benefitted from “exclusionary contracts and intimidation tactics for years” that benefitted its network and suppressed competition for rival outlets.
“Those days are over,” Ruddy proclaimed. “This lawsuit is about restoring fairness to the market and ensuring that Americans have real choice in the news they watch.”
A spokesperson for Fox News Media told The Desk by e-mail that the lawsuit has no merit.
“Newsmax cannot sue their way out of their own competitive failures in the marketplace to chase headlines simply because they can’t attract viewers,” the Fox News spokesperson said.
Newsmax is asking the court to declare Fox’s conduct unlawful, award monetary damages, and block Fox from enforcing exclusionary contracts going forward.
