Mergers & Antitrust Law News

NFL, DirecTV Get Antitrust Case Paused Pending SCOTUS Petition

Oct. 17, 2019, 9:47 PM

The National Football League, its teams, and DirecTV got the Ninth Circuit to pause an antitrust challenge to their broadcast licensing deals while they ask the U.S. Supreme Court to review the case.

The proposed class action takes aim at NFL Sunday Ticket, the DirecTV package that allows paid subscribers to watch every out-of-market game, rather than just the two or three broadcast free each Sunday.

Two licensing deals make Sunday Ticket possible: an agreement among the teams to pool their broadcast rights, and the NFL’s sale of those rights to DirecTV, an AT&T subsidiary. Teams would otherwise market their rights on competitive terms, giving out-of-town viewers better and cheaper options than subscribing to Sunday Ticket on an all-or-nothing basis, the lawsuit says.

A federal judge dismissed those claims in 2017. The deal between the league and DirecTV is exempt from antitrust scrutiny under the Sports Broadcasting Act, she said. The rights-pooling agreement isn’t covered by the SBA, but it’s an “upstream” deal the plaintiffs can’t challenge due to the federal bar on antitrust damages for “indirect purchasers,” the judge found.

A divided U.S. Court of Appeals for the Ninth Circuit revived the case, saying the licensing deals falls within the “co-conspirator” exception to the indirect purchaser rule. The suit alleges that both the rights-pooling agreement and the NFL-DirecTV deal are part of “a single conspiracy to limit the output of NFL telecasts,” the majority noted.

The dissenting judge argued that the co-conspirator exception shouldn’t apply in cases alleging output restrictions rather than price fixing. He disagreed with the court’s ruling that output-reducing and price-fixing schemes are “functionally the same.”

The NFL, its teams, and DirecTV then filed petitions asking the full Ninth Circuit to rehear the case. The appeals court refused in a one-page order. Only Smith voted in favor of rehearing, the order said. It didn’t provide any additional reasoning.

The league, teams, and telecom then asked the Ninth Circuit to stay its decision Oct. 16 pending Supreme Court review.

The appeals court granted the request. The mandate is stayed until Jan. 8, the panel said.

If the justices agree to review the case, it will stay paused pending the outcome, according to the stay order. But the ruling will take effect “immediately” if the high court refuses to take it up.

The case is In re Ninth Inning Inc. v. DirecTV LLC, 9th Cir., No. 17-56119, 10/16/19.

To contact the reporter on this story: Mike Leonard in Washington at mleonard@bloomberglaw.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bloomberglaw.com

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