NFL Claims Sunday Ticket Suit Will Limit Distribution, Harm Consumers
The NFL filed a motion for summary judgment last Friday in the class-action suit brought by Sunday Ticket subscribers. The league argued that “after months of discovery”—including numerous depositions and hundreds of thousands of emails and other documents—the plaintiffs failed to produce admissible evidence of a credible antitrust theory.
Perhaps foreshadowing a return to the U.S. Supreme Court, the league also described itself and the 32 teams as a single entity, and exempt from antitrust scrutiny, for purposes of telecast licensing.
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The case, titled In Re: NFL’s “Sunday Ticket” Antitrust Litigation, has been in federal court since 2015. U.S. District Judge Philip Gutierrez certified it as a class action in February. The plaintiffs represent more than 2.4 million residential subscribers and more than 48,000 restaurants, bars and other commercial establishments that purchased the Sunday Ticket.
The plaintiffs assert that the NFL and its 32 teams violate antitrust law by pooling telecast rights then exclusively licensing out-of-town games to DirecTV (now YouTube TV), which in turn offers Sunday Ticket for prices ranging from $249 to $489 based on presales and other factors.
If NFL teams didn’t pool their broadcasting rights, they might license broadcasts for distribution in other teams’ markets. Consider the Dallas Cowboys, who have diehard fans in many parts of the U.S. They could likely license the broadcasts of their games in multiple markets, including the “home” (and exclusive) broadcasting territories of other NFL teams. In that scenario, Cowboys fans who live nowhere near Dallas might be able to watch games for less than what it costs to buy the Sunday Ticket. The plaintiffs’ case is based on that “might.”
The NFL counters that such a hypothetical is nonsensical and devoid of reality. The league has warned that if the plaintiffs prevail—and teams could no longer collaborate on broadcasting arrangements—the entire TV distribution of NFL games could change in ways that harm, not help, fans. In a court filing last year, the league asserted that some games would not be available on free broadcast TV and some teams might move games from free TV to premium cable.
In its latest filing, the NFL contends that while the plaintiffs say they’re challenging the Sunday Ticket arrangement, they’re really engaged in a “bait and switch.” The plaintiffs are trying to undermine the NFL’s media model, the league warns, adding that its current broadcasting structure “is one of the most consumer-friendly entertainment products in the world.” Unlike other pro leagues, the NFL set-up enables fans to watch their local team’s games on free over-the-air channels.
The NFL maintains the plaintiffs’ claims are preempted by an antitrust exemption crafted by the Sports Broadcasting Act of 1961 (SBA). The SBA blocks antitrust scrutiny of national TV deals for football, basketball, baseball and hockey leagues when the games are broadcast on free, over-the-air channels. Although games broadcast on DirecTV and YouTube are neither free nor over-the-air (as that term was understood in 1961), the league maintains the case would disrupt whether and when games are on free TV.
The NFL also stresses its constitution assigns telecast rights to individual teams and does not, as the plaintiffs allege, involve teams agreeing to not compete. The league says the only pooling of broadcasts relating to Sunday afternoon NFL games happens at the NFL Network, where the league functions “as an agent for each individual” team and teams vote to ratify agreements.
The unique structure of the NFL—and why it matters so much under antitrust law—is also discussed in the court filing.
For many years, the NFL has argued the league and teams constitute a single entity rather than a group of businesses. A single entity, such as a parent company and wholly owned subsidiaries, is not subject to Section I of the Sherman Act. This is because Section I regulates how at least two competing businesses conspire, not how a parent company and subsidiary conspire.
In 2009, the U.S. Supreme Court ruled 9-0 against the NFL’s single entity argument in American Needle v. NFL. The case concerned whether NFL teams are a single entity for purposes of apparel sales, with all the teams licensing their IP to one apparel company. The Court reasoned that because NFL teams are separately owned (unlike a parent and wholly owned subsidiary), they are competing businesses. Their business activities are thus subject to antitrust scrutiny.
The NFL now downplays American Needle as merely a rejection of the NFL as a single entity for the licensing of team trademarks and logos for apparel. It argues teams “cannot compete to produce telecasts of an NFL game,” since those productions “cannot exist without the cooperation of the NFL and its member clubs.” The league maintains that NFL games can’t be played, “let alone televised,” unless teams cooperate, such as through multi-employer bargaining with the players (NFLPA) and for scheduling. “So even if the SBA did not exist,” the league writes, antitrust law is on its side.
The NFL also quotes U.S. Supreme Court Justice Brett Kavanaugh. On behalf of the Court in 2020, Kavanaugh denied the league’s petition for certiorari. In doing so, he notably wrote, “antitrust law likely does not require that the NFL and its member teams compete against one another with respect to television rights.”
The plaintiffs will have a chance to rebut the NFL, and Judge Gutierrez will hold a hearing in Los Angeles on Oct. 27.
This is a litigation worth watching closely. Not only could it impact how you watch NFL games, there’s a chance it winds up at the Supreme Court.
