A federal judge in New York ruled on Friday that Major League Baseball will face trial for violations of federal antitrust laws by stemming the exclusive broadcast territories for each of its 30 teams. Several regional sports networks and cable and satellite companies that benefit from the exclusive territories will also face trial on antitrust charges.
Consumers who purchased Extra Innings and MLB.tv sued MLB, the RSNs, and cable and satellite companies in 2012 claiming that the league’s exclusive broadcast territories resulted in fewer options and higher prices. The court’s order — issued late in the day on Friday — came in response to motions for summary judgment by MLB, the RSNs, and the cable and satellite companies. Federal court procedures permit defendants to use such motions to argue that the key facts in the case are undisputed and defeat the plaintiffs claims as a matter of law.
In its motion, MLB argued first that baseball’s antitrust exemption precluded claims based on the exclusive broadcast territories. But even if the exemption does not apply, MLB claimed, the exclusive TV territories are pro-competitive in that they lead to cooperation between the home and visiting teams, and strong regional broadcasts across the league. The RSNs and cable and satellite companies argued that they were, in essence, innocent bystanders to MLB’s exclusive territories and, therefore, can’t be liable under the antitrust laws. My previous posts explaining the lawsuit and the defendants’ motions for summary judgment can be read here and here.
In her order denying summary judgment for the defendants, Judge Shira Scheindlin ruled that baseball’s antitrust exemption does not preclude claims challenging the league’s exclusive broadcast territories. She then held that the consumer plaintiffs had submitted credible evidence — in the form of sworn testimony from economic experts — showing that the demolition of the exclusive broadcast territories would lead to more broadcast choices and lower prices. This evidence was sufficient to preclude summary judgment for MLB. As for the RSNs and cable and satellite companies, the court found evidence that they were not innocent bystanders but had, in fact, taken steps to ensure that the exclusive broadcast territories remained in place.
You can read a copy of the court’s 57-page decision here.
Even with this court decision, MLB’s exclusive broadcast territories will remain in place for some time. The court will hold a conference later this month at which she’ll likely set pre-trial deadlines and a trial date. At trial, the consumer plaintiffs will bear the burden of proving that the exclusive broadcast territories are unreasonable restraints on competition. A trial could last weeks and will inevitably be followed by more motions and an appeal.
The risks are high for MLB and its broadcast partners. A verdict in favor of the plaintiffs, if upheld on appeal, would upend the rights fee agreements of all 30 teams, the streaming rights that give rise to Extra Innings and MLB.tv, and the national TV contracts — deals which result in hundreds of millions of dollars flowing to MLB and its teams every year. With those kinds of risks, parties will often do what they can to avoid trial.