Attorneys for Fox News Media are seeking to dismiss an antitrust lawsuit filed by cable rival Newsmax in Wisconsin federal court, the second such case involving the two right-of-center news outlets.
In a filing earlier this week, Fox News Media said allegations that it stifles competition in the cable news industry were defeated by Newsmax’s own assertion that it competes heavily against other outlets.
“The suggestion that channels like Fox News and Newsmax somehow compete in a self-contained right-leaning news market bubble, immune from competition from other cable news channels like CNN and all of Internet news, is implausible on its face,” Fox News Media’s lawyers wrote. “In fact, when Newsmax was required by law to disclose accurate information to investors, it told the SEC, in a filing that Newsmax cites in the complaint…that its ‘primary competition comes from the cable networks FOX News, CNN, HLN, MSNBC and NewsNation.”
In its current lawsuit, Newsmax argues that Fox illegally suppresses competition by charging cable and satellite companies fees for Fox News that are significantly higher than what Newsmax and other cable news programmers charge. Fox also insists that Fox News is carried in base programming tiers, and ink distribution deals that bundle in non-news channels like Fox-owned local stations, Fox Sports 1 and college sports networks.
Newsmax has no ancillary cable channels. Its other TV outlet, Newsmax 2, is primarily offered on broadcast TV and free, ad-supported streaming platforms like Paramount-owned Pluto TV.
For years, Newsmax offered its cable channel for free, but recently began charging distribution fees to cable, satellite and some subscription linear streaming services like YouTube TV and DIRECTV in an effort to become a profitable TV enterprise. The fees Newsmax charges are considerably less when compared to the cost of distributing Fox and other cable news channels.
Newsmax first sued Fox News Media in early September, opting to try its case in Florida, where the news operation is headquartered. There, a federal judge granted Fox News Media’s request for dismissal, finding that the complaint amounted to a “shotgun” pleading where numerous allegations are raised with few actionable claims stated. Shotgun pleadings are not legal in the federal district that covers Florida.
The judge in that case gave Newsmax the opportunity to re-file its case with the legal deficiencies corrected. Instead, Newsmax chose to pursue a separate but related antitrust case against Fox News Media in Wisconsin. It isn’t clear why Newsmax chose Wisconsin as the legal venue for the new case, though Fox News and Newsmax are offered on cable systems there.
In its new complaint, Newsmax included a fresh allegation that Fox News Media engaged in “block booking,” or requiring cable and satellite distributors to carry less-favored channels in order to offer Fox News to their subscribers.
Attorneys for Fox News said Newsmax was apparently relying on an outdated legal precedent set in the 1940s, when film studios forced movie theaters to purchase several titles that tied up available screens for weeks and made it less likely that a theater would purchase a single film from an independent distributor. That case involved Paramount, and the same court found in 2020 that arguments rooted in that finding would not withstand the “rule of reason,” a legal element by which antitrust cases are evaluated.
Even if the rule of reason didn’t apply, Fox News Media says Newsmax can’t allege the same type of capacity issues that were present with movie theaters in the mid-20th century. Cable and satellite providers have hundreds of digital slots that are not filled, and many are able to distribute ancillary channels over the Internet to their customers. Streaming providers, including those that offer Newsmax, deliver all of their channels over the Internet, so the supply constraints do not apply to them, either.
