Baseball Fights Against Federal Judge

MANHATTAN (CN) - Major League Baseball on Wednesday said it would appeal a federal judge's ruling to permit two antitrust class actions brought by viewers who say the league and cable companies use "blackouts" to shut out competition.

Baseball's attorney Bradley Ruskin told U.S. District Judge Shira Scheindlin that it "respectfully disagreed" with her Aug. 15 ruling, which he called a "fundamental attack" on baseball.

"Territory rules - that is baseball, that is what baseball is all about," Ruskin said. He told the judge that the U.S. Supreme Court has seven times upheld a protection that shields baseball from antitrust laws. The exemption was designed as "an umbrella, and we're entitled to that umbrella" lest we "get wet from the rain," Ruskin said.

Baseball fans filed two lawsuits in Manhattan Federal Court in 2012, arguing that MLB and the National Hockey League conspired with Comcast and DirecTV to black out games, to prevent them from watching their favorite teams, or force them to pay more to watch "out-of-market" games.

For example, if a person in New York City wants to watch a Dodgers game in Los Angeles, s/he would have to buy a bundled package of other, unwanted services in order to watch out-of-market events.

MLB argued that it was shielded from antitrust laws because of an exemption in the Sports Broadcasting Act, which was passed by Congress in 1961.

Scheindlin was unmoved by that argument, saying she would "decline to apply the exemption to a subject that is not central to the business of baseball, and that Congress did not intend to exempt - namely baseball's contracts for television broadcast rights."

Things got heated when Ruskin, of Proskauer Rose, cited what he said were six Supreme Court cases and seven Court of Appeals matters that addressed - and upheld - the exemption.

An annoyed Scheindlin shot back: "All this precedent -- are you saying there were six Supreme Court cases and seven Circuit Court cases and I missed them?"

She wondered why MLB failed to bring up the exemption defense when the case was started two years ago.

"Can you tell me why you didn't bring this up two years ago? Certainly you knew it was an antitrust case? Wasn't that the time?" she asked.

Peter Leckman, with Langer Grogan & Diver, said Ruskin's attempts were "missing the analysis about how this is an exceptional case."

The consolidated lawsuits accuse the Office of the Commissioner of Baseball and various baseball and hockey teams, several sports networks, and Comcast and DirecTV, of conspiring to eliminate competition over the airwaves and on the Internet, to restrict programming and hang onto their regional monopolies.

The structure of the "territorial broadcasting system is largely uncontested," Scheindlin found. By agreement with their leagues, each sports club licenses its games to be broadcast only in certain each teams' general area, but not nationally.

What cannot be broadcast outside of a certain territory is blacked out, in accordance with the agreements.

Fans can watch these "out-of-market" games only when certain games with broadcasters such as ESPN or Fox are contracted to be broadcast nationally.

The second way to watch out-of-market sporting events is through the leagues' packages for TV and the Internet, which are purchasable through Comcast and DirecTV.

However, such purchases require the buyer to pay for an entire slate of out-of-market games, whether they want them or not.

Such packages "do not show in-market games to avoid competition," Scheindlin said. "Additionally, the territorial broadcast restrictions allow each [broadcaster] to largely avoid competing with out-of-market games produced by other RSNs [regional sports networks]."

Meanwhile, Internet streaming of in-market games "remains largely unavailable to consumers," she wrote.

Ruskin said his team "respectfully disagree(s)" with her opinion and vowed to seek the interlocutory appeal on the grounds for "difference of opinion."

It will be for Scheindlin to then decide whether to send the appeal to the Second Circuit, or to trial.

She set a deadline for Aug. 27 for the MLB to file its appeal. Plaintiffs have until Sept. 10 to respond.

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