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MLB Swings for Appeal in Lawsuit That Could Shake Up Sports Broadcasting

The professional baseball league wants to present the issue of whether its antitrust exemption applies to territorial broadcast rules

MLB Replay Operations - H 2014
Mark Weinberg

Major League Baseball could be on the cusp of enduring something almost unimaginable: The end of the lucrative system by which professional baseball games are televised by region, consumers pay high prices for out-of-market package fees, and some digital telecasts are blacked out in home markets. 

With the prospect that sports broadcasting might forever change, the league is seeking permission to file an interlocutory review of U.S. District Judge Shira Scheindlin's ruling earlier this month to reject summary judgment in a proposed class-action lawsuit.

In Judge Scheindlin's ruling, she determined that MLB's 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." As a result, she allowed the plaintiffs to pursue claims that MLB, Comcast and DirecTV have violated antitrust law by making anticompetitive agreements that negatively impact the output, price and perhaps even quality of game telecasts.

MLB is quite disturbed by the opinion and now wants to go before the 2nd U.S. Circuit Court of Appeals to present this issue: "Whether the professional baseball exemption to the antitrust laws bars Plaintiffs' claims against Major League Baseball with respect to Major League Baseball's territorial broadcast rules and structure."

As we've noted in earlier coverage, the antitrust exemption dates back nearly a century and has been addressed in several big court cases, including Supreme Court rulings. However, legal scholars have debated whether the antitrust exemption merely covers labor matters like restrictions on free agency or goes further. Over the years, Congress has adjusted sports broadcasting rules but hasn't offered substantial clarity on the matter.

In a memorandum to support the interlocutory appeal filed on Wednesday, MLB says that every appellate court has "held that the exemption applies broadly to the business of baseball and is not limited to any particular facet of that business."

The league, represented by attorneys at Proskauer Rose, adds that the exemption "serves — according to the Supreme Court — as an 'umbrella over baseball,' protecting the industry from 'the harassment that would ensue' if antitrust litigation and a trial were permitted against baseball defendants."

MLB's motion comes one day after attorneys for the plaintiffs wrote a letter to the judge explaining why class certification is suitable in the dispute.

In the letter to Judge Scheindlin, attorney Edward Diver frames the market allocation of televised games as a "classic — and usually per se — violation of the antitrust laws" and says that all class members seek the same relief: "an injunction ending the restrictions and attendant blackouts, and recovery of the overcharge damages sustained in purchasing the OOM [Out of Market] packages."

The plaintiffs' lawyer adds that the cases — two, one involving the Internet and the other pertaining to television — "presents far fewer complications than most antitrust class actions," and in a note about the numerosity factor, states that the proposed classes consist of at least hundreds of thousands of members.

Email: Eriq.Gardner@THR.com
Twitter: @eriqgardner