It’s a reversal of fortune for the nation’s leading owner of broadcast television stations, and a win in a U.S. federal appeals court for direct broadcast satellite owner DirecTV.
In a just-released decision, the Second Circuit overturned a New York federal district court ruling that had granted Nexstar Media Group’s motion to dismiss claims from DirecTV that it engaged in antitrust activities when it failed to reach a retransmission consent accord with the DBS provider in 2022.
Key to the DirecTV lawsuit against Nexstar and shared service agreement partner White Knight Broadcasting and variable interest subsidiary Mission Broadcasting was the contention that White Knight, Mission and Nexstar conspired in a price-fixing scheme, and that it suffered losses as a result of their actions. Thus, DirecTV believes this was in violation of federal anti-trust laws.
U.S. District Judge P. Kevin Castel in March 2024 said no, leading DirecTV to appeal the ruling. Arguments began in the U.S. Court of Appeals for the Second Circuit in December 2024. On Wednesday (12/16), the three-judge panel made its ruling. Circuit Judges Chin and Menashi sided with DirecTV, while Judge Sullivan dissented in the 2-1 ruling overturning Castel’s decision.
In reversing the lower court, Chin and Menashi note that Castel’s court dismissed the antitrust claims on the grounds that DirecTV lacked antitrust standing because it did not actually pay the “supracompetitive” prices demanded by the alleged price-fixing conspiracy and therefore could not establish antitrust injury. Additionally, as a non-purchaser, DirecTV in Castel’s view was suffering only an “indirect” and “speculative” injury.
Not so, said Chin and Menashi, in holding that DirecTV has antitrust standing to proceed on its federal antitrust claims. “Lost profits from a reduction in output represent a cognizable antitrust injury, and DirecTV has plausibly alleged that its lost profits flowed directly from the output-reducing effects of the alleged price-fixing conspiracy,” they ruled. “Additionally, we conclude that DirecTV is an efficient enforcer of the antitrust laws. We reverse the judgment insofar as the district court held that DirecTV lacked antitrust standing to pursue its federal antitrust claims.”
That vacates the judgment “insofar as the district court declined to exercise supplemental jurisdiction over the remaining state law claims,” remanding the matter for further proceedings consistent with their opinion.
“We are pleased that the Secnd Circuit has held that DirecTV has standing in this case, and we plan to proceed with our claim that Nexstar, White Knight, and Mission have abused
their ‘sidecar’ relationship in violation of FCC regulations and longstanding competition laws,” said DirecTV Chief Legal Officer Michael Hartman. “Nexstar’s sidecars have made a mockery of existing broadcast ownership rules, resulting in ever-increasing retransmission consent fees at consumers’ expense.”
Asked to comment on the decision, a Nexstar spokesperson told RBR+TVBR, “We respectfully disagree with the ruling by the Court of Appeals and believe the lower court decision was correct. We look forward to the next phase of the legal process.”
The matter dates to March 14, 2023, when DirecTV “took a stand for its customers” by mounting a legal challenge against what it calls “a conspiracy” concocted by Nexstar Media Group and two shared services partners to illegally increase content costs for free over-the-air TV.
Mission is the owner of 29 full-power TV stations across 26 markets. All of its television stations are operated by Nexstar via shared services agreements. Mission is led by Nancie Smith.
White Knight is based in Lafayette, La., and dates to 1995. It is the owner of WVLA-TV in Baton Rouge and KFXK-TV and KFXL-LP in the Tyler-Longview-Lufkin, Tex., DMA.
A host of Mission and White Knight stations have remained unavailable to DirecTV
homes since October 2022. They include FOX affiliate WXXA-23 in Albany, N.Y., creating a difficult scenario for the station in the DMA, as over-the-air reception of TV stations in the Adirondack Region is difficult and DirecTV has been a popular choice for television services.
Also impacted in the region are ABC affiliate WVNY-TV in the Burlington, Vt.-Plattsburgh, N.Y., market; ABC affiliate WUTR-TV in Utica-Rome, N.Y.
These stations join those in Scranton; Providence; Little Rock; Albuquerque; and a host of smaller markets across the U.S. that have seen the lack of a full local channel lineup for more than three years on their DirecTV systems.
