Consumers Win Right to Trial vs MLB Over Blackouts

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.

Stay tuned.




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Wendy writes about sports and the business of sports. She's been published most recently by Vice Sports, Deadspin and NewYorker.com. You can find her work at wendythurm.pressfolios.com and follow her on Twitter @hangingsliders.


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31 Comments on "Consumers Win Right to Trial vs MLB Over Blackouts"


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Ctownboy
Guest
Ctownboy
1 year 9 months ago

Territorial rights are stupid.

Every year at the start of MLB season, I get a free week of Extra Innings as a teaser to buy the package. However, because I live in Indianapolis, the following teams are blacked out of my region: the Reds, Cardinals, Cubs, White Sox, Brewers, Tigers and Indians. So, they want me to sign up and pay full price for the right to be able to watch only 25 of the 32 MLB teams, none of which are close to me and that I would normally want to be a fan of.

I don’t think so.

Daniel
Guest
Daniel
1 year 9 months ago

Who are you a fan of?

Chris
Guest
Chris
1 year 9 months ago

Worse than that. If you were a Pirates fan, you would lose 76 divisional match-ups (19 each for Cubs, Reds, Cardinals, and Brewers) and possibly 10 more inter-league games when they play one of your “local” teams.

John Thacker
Guest
John Thacker
1 year 9 months ago

For those of us in Eastern NC, there is basically *no* strictly legal way to watch any games involving the Orioles or Nationals, even signing up for cable. Annoying enough for Braves fans, but crazy for people actually fans of those two teams.

Puig's Translator
Guest
Puig's Translator
1 year 9 months ago

That’s pretty bad ^^^^^^^^^^^^^^
I am a Dodger fan living in Utah. Arizona and Colorado games are blacked out. I don’t have any kind of cable, so I am effed for those games. Had to listen to Kershaw’s No No on the audio feed.

Nick
Guest
Nick
1 year 9 months ago

I agree with your point a ton… just make the price of MLB.tv a bit higher and pay off the cable companies, because the blackouts stink.

I am curious who the 31st and 32nd MLB teams are though?

Bawfuls
Guest
Bawfuls
1 year 9 months ago

The price shouldn’t be significantly higher, they should just show the commercials on MLB.tv as well.

If you are in Territory X and want to use MLB.tv to watch a game that Company A has exclusive broadcast rights to in that area, why not just have MLB.tv allow you to watch the game, but only allow that feed (i.e. not the other team’s feed) and also show the commercials for that broadcast?

Matthew Murphy
Member
1 year 9 months ago

Looks like the links in the third paragraph aren’t working.

Ctownboy
Guest
Ctownboy
1 year 9 months ago

Since I can not edit what I originally wrote, I need to make a correction; I am blacked out of seven teams so Extra Innings wants me to pay full price for the privilege of being able to see only 23 of the 30 MLB teams.

Chris
Guest
Chris
1 year 9 months ago

Worse than that. If you were a Pirates fan, you would lose 76 divisional match-ups (19 each for Cubs, Reds, Cardinals, and Brewers) and possibly 10 more inter-league games when they play one of your “local” teams.

Daniel
Guest
Daniel
1 year 9 months ago

Wendy, add the links:

“My previous posts explaining the lawsuit and the defendants’ motions for summary judgment can be read here and here.”

Matthew
Member
Member
1 year 9 months ago

What MLB should do as a settlement is introduce an MLB.TV account without blackouts for a higher price. Teams would receive the “extra money” for customers within their market area.

While would make RSN very upset because they lose leverage negotiating carriage fees, it would create competition between MLB.TV and RSN/Cable Companies. Eventually moving the the bright a glorious day where RSN are dead and MLB.TV rules the land in glory.

Daniel
Guest
Daniel
1 year 9 months ago

Theoretically economically speaking, even the current price would see more sales volume if it offered no blackouts.

Chris
Guest
Chris
1 year 9 months ago

Just allow each RSN to get a cut of ad-revenue from the MLB.TV feed based on the team watched and/or the location of the viewer. MLBAM knows what games I watch and where I log in from. Done deal.

MLB.TV benefits by being able to sell a lot more subscriptions. RSN benefits from additional ad revenue and larger customer pool. Teams benefit from reaching more fans and potentially larger future TV deals that incorporate online subscribers.

The only losers in that deal would be the cable providers that connect viewers to the RSN. But honestly, F! those guys.

Matt S
Guest
Matt S
1 year 9 months ago

While I’d love to be an EI subscriber and watch every game, the problem is that many of the local cable providers also own or have significant stake in the RSNs (ex: Comcast).

Bawfuls
Guest
Bawfuls
1 year 9 months ago

Exactly. I have never understood why MLB.tv largely doesn’t show any ads during breaks. Just show the ads for the feed I’m watching, and the networks instantly boost their viewership/ad-base, thus making their advertising slots more valuable.

Doug
Guest
Doug
1 year 9 months ago

Killing rsn’s isn’t going to be as glorious as you think. A lot of the “smaller” colleges depend on them to broadcast their games and other things like high school playoffs etc.

Bill
Guest
Bill
1 year 9 months ago

MLB.tv currently makes it easier to violate their terms and conditions and pirate mlb.tv than pay a reasonable fee to see games in market. This is pretty stupid.

AK7007
Member
AK7007
1 year 9 months ago

So this? http://theoatmeal.com/comics/game_of_thrones

I hate this kind of behavior from content providers where even though I want to give them my (not)hard-earned US currency in return for content – they decide to make it so difficult that I end up just finding a workaround.

John Thacker
Guest
John Thacker
1 year 9 months ago

It’s much worse than the Game of Thrones issue for many people. It’s not *impossible* to sign up for cable and get HBO, or wait 9 months for the home video release. Time Warner Cable even offers a “just broadcast and HBO” package.

The Oatmeal’s complaint is where it’s annoying or expensive to get what he wants. Living in a blackout region where no cable companies buy the RSN (eastern NC with MASN – O’s and Nats) is where it is not available at any price.

AK7007
Member
AK7007
1 year 9 months ago

It’s worse in that some are blacked out, yes. It’s also similar in that content providers are forcing bundling onto a consumer that wants one product. The end of that comic delves into that when it notes that they could have watched their show if they signed up for cable – but the whole point is that they don’t want the cable bundle.

MLB has made it so that there’s an active barrier to pay for their content, or outright refusal to provide their content to some consumers. Idiots.

John Thacker
Guest
John Thacker
1 year 9 months ago

I think that the consumers who can’t possibly watch the game legally by any means is different in kind to people who don’t want to sign up for the bundle. Saying that you don’t want the cable bundle is just another way of saying that it’s too expensive. Would the Oatmeal author feel exactly the same way about being willing to pirate Game of Thrones if HBO had a standalone streaming package– which was some $60+ a month or more, as expensive as a cable package (and in fact more expensive than Time Warner Cable’s broadcast plus HBO only package)?

Bundling is a fact of life. Some bundles are inappropriate, but in other areas consumers outright prefer bundles. People rarely complain, for example, that you can’t watch “Orange is the New Black” without signing up for the entire Netflix bundle. Nor do people complain that they’re forced to accept the bundle of free checked bags when they fly Southwest. And Amazon Video has certainly found more success with bundling with Prime than with their a la carte, or they wouldn’t be moving that way.

Complaining that MLB.tv is too expensive is one thing. But I find simply refusing to sell at any price to be more baffling, and that’s what a lot of people face.

Mark Williams
Guest
Mark Williams
1 year 9 months ago

May I join this lawsuit?

AC
Guest
AC
1 year 9 months ago

The theory is that I should be paying hundreds of extra dollars per year (the most basic cable package with the RSN is still expensive) to see local games.

Personally, I am an out-of-market fan, so MLB.tv works great most of the time, but I also visit friends and family who are IN my team’s market. It’s not like I have any control over whether they purchase an eligible cable package. MLB has my location data; if I’m traveling, why can’t I still watch my games?

Squeezing your fans for every penny might work short-term, but unless you foster the relationships that will grow the fan base, it will all come crashing down.

nard
Guest
nard
1 year 9 months ago

There are no blackouts in Canada (and the streets are made of cheese).

Phantom Stranger
Guest
Phantom Stranger
1 year 9 months ago

This all comes down to MLB’s worries this will threaten their sweet local TV deals. They should have compromised years ago and made it so that any viewer in the country could not be blacked out from more than two local teams in any one season. I feel for the people blacked out from four or five teams, which largely would make the MLB Extra Innings package useless.

John
Guest
John
1 year 9 months ago

Great work Wendy!

Thanks for keeping us informed!

Kurt
Guest
Kurt
1 year 9 months ago

I heard Wendy on Effectively Wild this morning. Nice work.

This is an issue that I’ve been following closely since I am a Cubs fan living in Iowa. I’ve found a way around the MLB.tv blackouts, but it’s not what I prefer to do. The Cubs are due for new TV deal. This is a little worrisome for me. I want them to have the revenue to put towards a better on field product and also get a fan friendly deal that will let me actually watch the games. I’m not sure they can do both and we all know money trumps fans. There will be a lot of noise coming out of Chicago in the next couple years when the 66-year long WGN TV deal is history.

RossRoley
Member
RossRoley
1 year 9 months ago

As a baseball fan in Hawaii, all west coast teams are considered “local” according to MLB.TV. So no Padres, Dodgers, Angels, Giants, A’s, not even Mariners games are available live even though I paid the subscription. Ridiculous. I hope the fans win this lawsuit.

Dano
Guest
Dano
1 year 9 months ago

I feel your frustrations! I love how us Hawaii folks are considered “local” to markets that are thousands of miles away. By that logic the same west coast games should be blacked out in New York as being “local” since LA is about equidistant to New York and Honolulu.

This is what keeps me from buying an MLB.tv subscription.

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