DirecTV wants redo in antitrust suit against Nexstar

MANHATTAN (CN) — Satellite television provider DirecTV asked the Second Circuit Monday to revive its claims that Nexstar Media and two other television station owners schemed to drive up retransmission fees for distributing content to viewers.

Retransmission fees are often required by station owners like Nexstar, the country’s largest owner of television stations, for companies like DirecTV to distribute their programming. But DirecTV says Nexstar conspired with Mission Broadcasting and White Knight Broadcasting to drive up prices and blacklist DirecTV when it didn’t comply.

DirecTV filed its lawsuit in 2023 after it refused to pay the increased fees, claiming the station owners pulled its content from the television provider’s service as a result. A federal judge dismissed the suit in March, finding DirecTV’s claims were speculative and the company failed to show how it was injured.

On appeal, DirecTV argues that it lost subscribers and profit as a result of the station owners’ scheming.

“DirecTV’s injury flows from the anticompetitive aspect of the conspiracy,” Paul Mezzina, an attorney with King Spalding representing DirecTV, said during appellate oral arguments on Monday. “Specifically, the defendant’s ability to set prices above a competitive level.”

The panel of judges seemed unsure DirecTV could claim injury in the scheme because it never paid the higher fees.

“Is the injury of a priced-out non-purchaser less direct than somebody who pays the supracompetitive prices?” asked U.S. Circuit Judge Steven Menashi, a Donald Trump appointee.

Mezzina responded that DirecTV would have suffered harm regardless of whether it agreed to pay.

The United States appeared as an amicus curiae in the case, supporting neither party but arguing against the lower court’s decision to dismiss DirecTV’s claims. The case has potential ramifications beyond the named parties, said Andrew DeLaney, an appellate attorney with the U.S. Department of Justice.

“We think it’s important in these cases that the plaintiff be able to point to the full range of potential anticompetitive effects when proving its case,” he told the panel. Those effects include the reduction of output, diminished product quality and diminished consumer choice.

Rebuffing the appeal, Stephen Obermeier, an attorney with Wiley Rein representing Mission Broadcasting, said DirecTV’s lost profits don’t qualify as injury, a necessary first step to bringing the case.

He added that DirecTV’s claimed injury is two steps removed because the company did not pay the retransmission fees to begin with, and also because its lost profits are based on customers making the choice to unsubscribe from their service.

“The injury is still resulting from the decisions of third parties, which is the key point here,” Obermeier said. “The first step injury would be the paying.”

DirecTV claims it was targeted specifically in the scheme; Mezzina said that he does not know if other multichannel video programming distributors paid the increased fees in question: “We don’t know whether defendants in their separate negotiations with other MVPDs, whether they made similar supracompetitive demands, whether they colluded.”

Obermeier refuted the idea that DirecTV was a target and said at least one other distributor paid the increased retransmission fee.

Menashi pointed to a lack of evidence in the record that another television provider indeed paid the allegedly supracompetitive price.

U.S. Circuit Judge Richard J. Sullivan, a Donald Trump appointee, and U.S. Circuit Judge Denny Chin, a Barack Obama appointee, joined the panel.

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