The Second Circuit Court of Appeals has reinstated a federal lawsuit filed by DIRECTV against Nexstar Media Group that alleged the broadcaster improperly colluded with two other companies to raise prices associated with the distribution of local TV stations on subscription platforms.
The decision handed down on Tuesday allows DIRECTV to move forward with its case against Nexstar, which alleges the company illegally conspired with White Knight Broadcasting and Mission Broadcasting to charge pay TV customers more for local channels in recent years.
Nearly all local TV stations licensed to Mission and White Knight are controlled by Nexstar through shared services agreements, which are common in the local TV industry. Those arrangements allow Nexstar to have direct ownership of TV stations that fall within limitations imposed by federal regulators, which having operational control of a much larger number of outlets that are technically owned and licensed to other companies.
Stations licensed to White Knight and Mission have been unavailable on DIRECTV’s satellite and streaming platforms since October 2022, when a distribution agreement covering those outlets expired without a new one in place. Nexstar’s own stations were not affected by the situation.
In March 2023, DIRECTV sued, arguing Nexstar’s practice of entering into shared services agreement with White Knight and Mission allowed it to raise fees for those stations as well as its own. To that end, the company said Nexstar hired an independent consultant named Eric Sahl who was tasked with ensuring the company got the most money from DIRECTV for its own stations and those licensed to Mission and White Knight.
Attorneys for DIRECTV said talking points made by Sahl during negotiations over carriage of White Knight and Mission stations were identical to comments made by Nexstar during a similar dispute involving the distribution of its own stations on Verizon Fios one year earlier.
Last year, a federal judge dismissed DIRECTV’s lawsuit against Nexstar, saying the satellite company did not have standing through antitrust law to bring a claim of damages against Nexstar. The judge said DIRECTV didn’t enter into a new agreement with White Knight or Mission and has not paid for distribution of the channels since 2022, so it couldn’t prove financial harm was caused as a result of anything alleged against Nexstar or the other two companies.
But the Second Circuit reversed that ruling on Tuesday, finding DIRECTV can point to damages in the form of lost business when subscribers in markets served by White Knight and Mission TV stations churned out of their satellite and streaming services.
“Lost profits resulting from a reduction in output represent a cognizable antitrust injury, and DIRECTV plausibly alleges that its lost profits flowed directly from the output-reducing effects of the alleged price-fixing conspiracy,” the appellate judges said.
DIRECTV said it was pleased with the court’s decision, which allows their lawsuit to move forward.
“Nexstar, White Knight, and Mission have abused their “sidecar” relationship in violation of FCC regulations and longstanding competition laws. Nexstar’s sidecars have made a mockery of existing broadcast ownership rules, resulting in ever-increasing retransmission consent fees at consumers’ expense,” Michael Hartman, the Chief Legal Officer at DIRECTV, said in a statement emailed to The Desk.
Gary Weitman, the Chief Communications Officer at Nexstar, said the broadcaster disagreed with the appellate court’s decision and felt the lower court ruling was correct.
“We look forward to the next phase of the legal process,” Weitman said.
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