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Fox saw Sunday Ticket as ‘existential threat’ to its NFL broadcasts, jury hears

An internal document produced in the NFL's antitrust trial shows Fox asked the NFL to set a base price for DirecTV's Sunday Ticket as part of the network's negotiations for a new contract for the Sunday afternoon live broadcasts.

LOS ANGELES (CN) — Fox considered the NFL Sunday Ticket bundle that DirecTV offered its satellite-TV customers as an "existential threat" to its own football broadcasts on Sunday afternoon, according to an internal document from 2020 detailing the network's negotiation positions with the National Football League.

The document was introduced as evidence Monday in the antitrust trial by Sunday Ticket subscribers who claim the league illegally inflated the price for the package that provides access to all so-called out-of-market games.

The subscribers argue that the league is in cahoots with CBS and Fox, who pay the NFL billions of dollars for the right to show the live games free over-the-air on Sundays and who don't want Sunday Ticket to dilute their viewership.

"The whole concept is that we want people to watch our telecasts," Larry Jones, executive vice president of Fox Sports, told jurors in downtown Los Angeles.

All the live broadcasts produced by Fox and CBS are also available through Sunday Ticket, a paid subscription that had been offered through DirecTV until last season when YouTube TV acquired the rights to the bundle.

Jones acknowledged under questioning by Amanda Bonn, one of the attorneys for the subscribers, that the more people watch its NFL games on Sunday afternoon, the more it can charge advertisers for slots on the shows.

The live broadcasts CBS and Fox produce of the Sunday afternoon games are without fail among the most watched programs on television and generate more in ad sales than any sports event, Jones said.

In late 2020, Fox and the NFL were negotiating a new deal, and emails and attachments exchanged between their top executives included Fox's specific requests with respect to the Sunday Ticket package sold by DirecTV that allows fans to watch games that aren't available though their local CBS and Fox affiliates.

"Material change to the distribution of Sunday Ticket is an existential threat to Fox's business," according to Fox's responses to the NFL's rejection of its request to curb the number of new Sunday Ticket subscribers. "Fox's proposal was based on an agreed principle that Sunday Ticket would be a complementary, premium product that would not materially compete."

This meant, according to Jones, that Fox didn't want Sunday Ticket to be available at no extra charge or for only a nominal additional fee.

Fox sought a 20% cap on new Sunday Ticket subscribers, as part of the negotiations, and requested that the NFL would require a base price for $293.96 per season for the package.

"It was an ask," Jones testified. "We didn't win that point — and we still signed the contract."

The 11-year contract that the NFL and Fox signed in 2021 for the Sunday afternoon games specified, however, that the Sunday Ticket package would be marketed as a premium product for avid fans to satisfy complementary demand to the in-market Fox broadcasts. It also specified that Sunday Ticket had to be a "buy through" product that couldn't be included in a basic cable, satellite or streaming subscription.

"Everything with the NFL was a negotiation," Jones said under cross-examination by Beth Wilkinson, one of the NFL's lawyers. "I tried to get the best for my company. There was never any side agreement."

Jones conceded that from Fox's perspective, it would have been preferable if Sunday Ticket didn't exist, but it is something the NFL wanted.

Last week, the former senior executive in charge of the NFL's media division denied that the league controlled what prices DirecTV could charge subscribers for its Sunday Ticket package after the satellite TV provider acquired an exclusive license to distribute the out-of-market games in 2002.

The subscribers suffered a setback Friday as U.S. District Judge Philip Gutierrez denied their attempts to introduce into evidence a document that they claim show that the NFL was determined to maintain control of the Sunday Ticket pricing at the same time as it was finalizing the licensing agreement with DirecTV in late 2002.

Bonn had shown the document to the jury in her opening statement as key evidence they would introduce during the trial to prove that the NFL engages in illegal price-fixing. Next to bullet points in the document someone had written "antitrust," which according to the attorney, showed the NFL knew it was breaking the law.

The plaintiffs are seeking as much as $7 billion in damages, which under U.S. antitrust law is subject to mandatory trebling, putting the NFL potentially on the hook for $21 billion.

While DirecTV — which was the exclusive Sunday Ticket distributor during this time — is also a defendant in the case, Gutierrez agreed to send the claims against the satellite TV provider to arbitration.

Three interrelated agreements between the teams and the NFL, between the NFL and CBS and Fox, and between the NFL and DirecTV — and now Google, whose YouTube TV since last year exclusively provides the Sunday Ticket package for residential subscribers — reduce choice and increase prices, the plaintiffs claim.

The jury will have to decide whether these agreements unreasonably restrain trade in violation of Section 1 of the Sherman Act and whether they allow the NFL to unlawfully monopolize the market for live video presentation of professional football games in violation of Section 2 of the Sherman Act.

Follow @edpettersson
Categories / Media, National, Sports, Trials

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