To the surprise of many, the NFL didn’t settle an antitrust class action lawsuit over the Sunday Ticket and is instead defending league broadcasting practices in a trial currently taking place in a Los Angeles federal district court.
Impressions from the courtroom suggest the league’s gamble is paying off.
According to journalists attending the trial, U.S. District Judge Philip Gutierrez has repeatedly expressed skepticism about the plaintiffs’ case. He could even grant a motion for judgment as a matter of law. Before the case goes to the jury, a judge can conclude no reasonable jury could reach a different conclusion.
Per the The Wall Street Journal’s Joe Flint, Gutierrez told the plaintiffs’ attorneys they “really have nothing” and are saddled by a “total disconnect” between their arguments and what has been expressed during the trial. Joe Reedy of the Associated Press reported Gutierrez criticizing the plaintiffs’ attempt to connect the Dallas Cowboys seeking licensing independence from the NFL for merchandise and sponsorships in the 1990s with TV broadcast rights.
As explained more fully in Sportico’s trial preview, the core antitrust question presented by In Re: NFL’s “Sunday Ticket” Antitrust Litigation is whether individual NFL teams can agree to license their broadcasts without competing with each other. NFL teams are competing businesses. Antitrust law ordinarily demands that competitors compete.
Instead of a world where, for example, the Chicago Bears license their broadcasting rights to a TV station in San Diego so that Bears fans living there can watch Bears games, possibly without cost or at least paying less than they pay for the Sunday Ticket, the Bears and the 31 other teams agree to pool their broadcasting rights through the Sunday Ticket. The service is available through YouTube TV for $349/year (discounts, promotions and add-ons can lower that price).
That pooling has been good for local fans, who can generally watch their favorite NFL team without having to subscribe to cable or a paid satellite service—unlike local fans of NBA, NHL and MLB teams who usually must pay to watch their teams’ games on TV. But out-of-town NFL fans need to pay.
Of course, there isn’t a legal “right” to watch an NFL game on TV for free. The NFL, like other sports leagues and entertainment companies, is a private entity. Private entities can move telecast and streaming content to fee-based services and charge prices they deem the market commands. The relevant legal question is not about the NFL but NFL teams, as competing businesses, agreeing to not compete in the licensing of broadcasts.
The class action began nine years ago and is on behalf of more than 2.4 million residential subscribers and more than 48,000 restaurants, bars and other commercial establishments that purchased Sunday Ticket. Potential damages could top $20 billion as antitrust damages are usually trebled.
But the NFL deciding to go to trial indicates the league has high confidence it will prevail. The NFL rarely goes to trial. If the league is unable to get a case dismissed, it has the financial wherewithal to negotiate settlements. This was famously seen in the NFL concussion litigation, where the league negotiated a $1 billion settlement that will be paid out over a 65-year-period.
Besides potential damages, the league might have worried about NFL officials and owners testifying and answering questions under oath posed by skilled litigators who seek to agitate and trip them up. Cowboys owner Jerry Jones has testified; he faced questions about his team’s litigation against the NFL in the 1990s involving sponsorship contracts.
It’s revealing the NFL didn’t settle despite these risks. The league likely believes its legal defenses are sufficiently persuasive.
The NFL has argued the Sports Broadcasting Act of 1961, a law that exempts professional football, basketball, baseball and hockey leagues from antitrust scrutiny when they negotiate a national TV contract with a network that provides “sponsored telecasting” (meaning free and over-the-air) of games, applies. Although the Sunday Ticket, as a paid service, isn’t itself protected by the SBA, it’s part of a larger TV arrangement that includes fans watching over-the-air NFL home games for free.
The NFL has also stressed that the Sunday Ticket ensures fans can watch any game. If out-of-town fans had to rely on individual team arrangements to broadcast games where they live, some fans might live in areas where games would not be made available.
In the example above with the Bears fan living in San Diego, that fan would hope the Bears find it economically worthwhile—and find a willing partner—to broadcast Bears games in San Diego. Disrupting the league TV model could also undermine what has been a wildly popular product with fans: Last year, the NFL accounted for 93 of the year’s 100 most-watched TV broadcasts in the U.S. Even the NFL’s harshest critics would have to admit the league has no peer when it comes to broadcasts.
The trial is expected to conclude early next week. Assuming Gutierrez sends the case to the jury, it remains to be seen how jurors decide. The NFL is likely optimistic that not cutting a deal to make the case go away will prove to be the right move.