Even an avid sports fan might reasonably believe that there’s no shortage of sports programming on television. But according to Judge Scheindlin in Laumann v. National Hockey League, predatory practices by the National Hockey League and Major League Baseball, and television providers, may be restricting choice and pushing up the cost of watching our favorite teams.
TV subscribers sued their cable and satellite television providers, the NHL, the MLB, and regional sport networks (like YES, or MSG). They claim that those defendants agreed to divide the market for hockey and baseball broadcasts so that subscribers in one region usually can only watch their local team. The only way a subscriber can watch all the games of a favorite team that plays in another region is by buying an expensive “all league games” package. So, if you live in New York but root for the San Francisco Giants, you are blacked out from Giants games unless you buy a television or internet package that includes the games of every other team outside of New York. Without these agreements the regional network that produces the Giants, for example, might decide to compete against the local Yankee broadcasts, or vice-versa – which could be good for sports fans.
Judge Scheindlin allowed the case to go forward. She held that since all the defendants were claimed to be acting jointly, plaintiff could sue them all – even though they only made purchases directly from the cable and satellite companies. But she did limit the class of plaintiffs to those who actually subscribed to out of market sports packages, excluding those who simply purchased basic cable or satellite services and claimed that the illegal agreements increased the price of their package.
Judge Scheindlin found that the plaintiffs plausibly alleged that the agreements between the leagues, the television providers and the regional networks harmed competition. She also found that an “all or nothing package” was not a replacement for individual competition among the teams. “Making all games available as part of a package, while it may increase output overall, does not, as a matter of law, eliminate the harm to competition wrought by preventing the individual teams from competing to sell their games outside of their home territories in the first place.”
Although Judge Scheindlin found all defendants potentially on the hook for agreeing to divide the market (section 1 of the Sherman Act), she did dismiss the claim that the regional networks and cable and satellite providers illegally conspired to use monopoly power to prevent competition in the market for broadcasting of games (section 2 of the Sherman Act). That claim only survived against the baseball and hockey leagues, as only they have real monopoly control over baseball and hockey games, and allegedly “used their monopoly power to restrict the broadcast of television programming in a manner that harms competition.”
Judge Scheindlin’s thorough opinion, by the way, is a great primer on anti-trust pleading. And for sports fans, particularly those who are not fans of their home teams, the case is very much worth watching.
Hat tip to my colleague, Paolo Morante, who assisted with this post.