Baseball Fans Reach Settlement Over MLB Telecasts on Verge of Antitrust Trial

MLB, its 30 teams, DirecTV and Comcast were defending a class action that aimed to shake up the status quo.
 Orlin Wagner/AP Photo

Fans of professional baseball, looking to use antitrust law to upend the way that game telecasts are packaged and distributed, have reached a settlement just as a blockbuster trial was scheduled to begin in a New York federal court on Tuesday.

An attorney for the suing fans confirms to The Hollywood Reporter that the resolution will end a class-action lawsuit provided a judge grants approval.

The fans filed their lawsuit in 2012, objecting to the way that the league has carved up TV rights into different territories, how consumers must pay a lot for "out of market" games and how local "in market" telecasts are blacked out when consumers sign up for MLB's digital service. The plaintiffs were seeking an injunction that would enable teams to sell their package of games without territorial restrictions. Besides MLB, the fans were also suing Comcast and DirecTV for participating in the alleged conspiracy.

Under the terms of the deal, baseball fans will be able to purchase single-team packages, the league-wide package will be discounted, authenticated Comcast and DirecTV subscribers will get in-market streaming options and more.

The lawsuit was largely enabled by the 2010 American Needle case at the Supreme Court that held that NFL teams are capable of conspiring when making licensing deals. Nevertheless, the action wasn't destined for success. Notably, MLB has long maintained that its nearly century-old antitrust exemption precluded an attack over its licensing arrangements.

In August 2014, U.S. District Judge Shira Scheindlin shocked many by rejecting the defendants' summary judgment motion, holding that the antitrust exemption doesn't apply "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 broadcasting rights."

This was followed by the judge's decision to certify a class action, setting up a trial that was scheduled to begin Tuesday. Since many cable and satellite subscribers don't cut the cord because of live sports, a lot was at stake besides merely the exhibition of baseball.

The fans were arguing that by restricting teams like the New York Yankees or Boston Red Sox from selling their own games in markets from Florida to California, the league and its television partners were harming competition. But for the rules in place, they contended, consumers would enjoy more choices, better pricing and perhaps even finer quality in sports programming.

MLB countered by discussing the procompetitive justifications for restraints, saying that the broadcasting of baseball has flourished throughout the years thanks in part to teams pooling rights and the enforcement of a regional sports networks' exclusivity. Additionally, the league asserted that overhauling the system would disadvantage small-market clubs competing with larger ones.

As for Comcast and DirecTV, they argued in pretrial memorandum that there was no evidence they themselves participated in a conspiracy. They said they bought games with rules in place because there was simply no other way to purchase such rights.

Although terms of the settlement haven't yet been announced in court documents, a press release spells out the major terms and comes months after a similar antitrust lawsuit against the National Hockey League. Last June, fans of that sport (represented by some of the same attorneys in the baseball case) arrived at a deal that let fans have the option of paying a discounted amount to only watch their favorite team instead of a package of all out-of-market NHL games.

In this instance, single-team packages will be offered for $84.99 next season. Jeffrey Dubner of Cohen Milstein says it "will be the least expensive full-season package offering among all major professional sports leagues in the United States,” a 23% reduction from the cheapest version of MLB.TV previously available.

Additionally, the MLB.TV league-wide package cost will fall to $109.99, and those who are pay television subscribers of the regional sports networks (RSNs) owned by Comcast, DirecTV or 21st Century Fox won't have to fear blackouts of in-market games on their digital subscriptions. Those who don't subscribe to cable or satellite will still face such blackouts.

“We believe this settlement brings significant change to the sports broadcasting landscape,” said lead plaintiff attorney Ned Diver at Langer Grogan. “It is a big win for baseball fans.”

Attorneys for both sides will now need to get Scheindlin's approval so the arrangement will be revealed soon.

Meanwhile, the National Football League and its television partners — especially DirecTV, which offers the "Sunday Ticket" package of out-of-market games — are also facing litigation on the antitrust front. THR has learned that the NFL is also working on a system to offer the single-team option to fans, although with different attorneys involved in a consolidated legal action, there's no guarantee of a deal on that front.

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