DirecTV Case vs. Nexstar, Sidecars Lacks Article III Standing, Says Nexstar
DirecTV’s litigation accusing Nexstar and its broadcast sidecars Mission and White Knight of colluding to set retransmission consent fee prices (see 2303150041) should be dismissed for multiple reasons, Nexstar wrote U.S. District Judge Paul Crotty for Southern New York in Manhattan in a letter Friday (docket 1:23-cv-02221) requesting a pre-motion conference. DirecTV alleges the broadcasters' “unlawful price-fixing conspiracy” is the root cause of unsuccessful retrans talks with Mission and White Knight resulting in blackouts.
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DirecTV filed the litigation March 15 “in anticipation of retransmission rate negotiations with Nexstar later this summer and seeks to obtain discovery to influence those negotiations,” said Nexstar. This litigation shouldn’t be used for that “tactical purpose,” it said. DirecTV also plans to submit a motion to stay discovery in the case, it said. DirecTV alleges the three defendants are coordinating to hike prices and retrans consent fees in overlap direct market areas where Nexstar and a sidecar each have a Big Four station.
DirecTV alleges that in negotiations last year, Mission and White Knight “requested disproportionately high, anticompetitive rates” to lay the groundwork for rates DirecTV thinks Nexstar will request in the future, said Nexstar. But DirecTV didn’t pay Mission or White Knight the allegedly anticompetitive rates, it said. DirecTV’s “prediction” that Nexstar will request, and DirecTV will pay, anticompetitive rates after those future negotiations is “entirely speculative,” it said. “The complaint should be dismissed for these and other reasons,” it said.
DirecTV lacks standing because it hasn’t alleged “an antitrust injury,” said Nexstar. DirecTV didn’t pay the allegedly anticompetitive rates requested by Mission and White Knight, it said. DirecTV’s injury, as a result, is less direct than the injuries of actual purchasers and is highly speculative, it said, citing the 9th Circuit’s 2021 decision in Oakland v. Oakland Raiders. That’s especially true “because rates have been increasing industry-wide for almost two decades,” a fact DirecTV “concedes,” it said. “Disentangling the effect of an alleged collusive overcharge from non-collusive increases, with respect to an unknown rate that was never set,” would be exceedingly difficult, it said.
DirecTV’s complaint also is speculative because a retrans agreement between Nexstar and DirecTV “remains in effect and renewal negotiations have not yet progressed,” said Nexstar. The broadcaster’s future decision to renew an agreement with DirecTV “is entirely within its own discretion,” it said. An allegation involving “an entirely speculative and future injury,” including a so-called “dual blackout,” is insufficient to support Article III standing, it said. DirecTV also hasn’t pleaded facts indicating a favorable decision would likely “redress” its alleged injury, it said. “Each defendant would continue to retain discretion” over whether to contract with DirecTV, it said.
DirecTV also doesn’t plead “direct evidence of any unlawful agreement,” said Nexstar. Nor does DirecTV plead “sufficient circumstantial evidence” from which an antitrust conspiracy “could be inferred,” it said. DirecTV rests its claims on the fact that Mission and White Knight use a “common consultant,” it said. But Mission and White Knight don’t compete, and their use of a common consultant alone isn’t alleged “to violate antitrust laws,” it said.
DirecTV instead alleges Nexstar, through the consultant, orchestrated an agreement to fix rates, said Nexstar. But the “ordinary-course service arrangements” between Nexstar and Mission and White Knight “are common in the industry and are contemplated by applicable FCC regulations,” it said. These “permissible relationships” are insufficient to support DirecTV’s antitrust claims, it said. The “mere opportunity to conspire” doesn’t support an inference that an illegal combination actually occurred, it said, citing the 2nd Circuit’s 2019 decision in Gamm v. Sanderson Farms.
DirecTV doesn’t “plausibly allege” Nexstar, Mission and White Knight offer interchangeable goods in their respective product and geographic markets, rendering DTV’s market definition legally insufficient, said Nexstar. DirecTV defines the relevant product market as a market for retransmission consents of Big Four stations, but it ignores “the over 150 other channels in its content offerings to customers,” it said.
Nor does DirecTV plausibly allege that offerings by each Big Four station of differing programming lineups are “substitute products,” said Nexstar. DirecTV instead relies only on a DOJ opinion “suggesting that they are at least partial substitutes,” it said. But DOJ’s opinion isn’t fact, hasn’t been litigated, and is “hedged,” it said. DirecTV’s tortious interference claims against Nexstar under New York law are “deficient,” it said. DirecTV’s breach of contract claims against Mission and White Knight aren’t adequately pleaded and its antitrust claims are “deficient,” it said.