DirecTV Wins Second Chance in Antitrust Case Against Nexstar

In a detailed ruling issued Tuesday, the U.S. Court of Appeals for the Second Circuit found that DirecTV has the legal right to pursue its federal antitrust claims. Writing for the majority, U.S. Circuit Judge Steven Menashi concluded that the company met the requirements to bring the case, stating that DirecTV “has standing to proceed on its federal antitrust claims.” He added, “Additionally, we conclude that DirecTV is an efficient enforcer of the antitrust laws.”

The lawsuit focuses on retransmission fees, the payments cable and satellite providers must make to broadcast local stations. Nexstar, the largest owner of television stations in the United States, routinely negotiates such fees with distributors. DirecTV alleges that Nexstar worked in concert with Mission Broadcasting and White Knight Broadcasting to push those fees higher and retaliated against DirecTV when it refused to agree to the increases, per Court House News.

According to DirecTV, the standoff resulted in widespread blackouts that left close to one million subscribers without access to certain local stations. The company claims those outages triggered customer cancellations and financial losses, forming the basis of its antitrust injury claims.

A Manhattan federal judge dismissed the case in March 2024, ruling that DirecTV’s allegations were too speculative. That court also determined DirecTV could not show it was harmed because it declined to pay the allegedly inflated prices. The appeals court rejected that reasoning, according to Courthouse News.

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Related: DirecTV Urges Second Circuit to Revive Antitrust Lawsuit Against Nexstar

Menashi wrote that “lost profits from a reduction in output represent a cognizable antitrust injury,” and said DirecTV plausibly argued that its losses flowed directly from the alleged price-fixing scheme. He further explained that, when viewed favorably to DirecTV, the claims support “the reasonable inference that the defendants’ alleged price fixing caused the breakdown in negotiations and the resulting subscriber losses.”

The ruling aligns with arguments DirecTV made during oral arguments last December, when its attorneys told the court that a company does not need to pay an unlawfully high price to prove antitrust harm. Instead, they argued, the loss of subscribers caused by channel blackouts was sufficient to establish injury, per Court House News.

Nexstar pushed back on the decision. In a statement to Courthouse News, a spokesperson for the broadcaster said, “We respectfully disagree with the ruling by the Court of Appeals and believe the lower court decision was correct. We look forward to the next phase of the legal process.” DirecTV did not immediately comment.

Not all members of the appeals panel agreed. In a dissenting opinion, U.S. Circuit Judge Richard Sullivan questioned whether DirecTV was the proper party to enforce antitrust laws in this case. He wrote, “Whether or not DirecTV suffered an ‘antitrust injury’ in this horizontal price-fixing case, I agree with the district court that DirecTV failed to show that it is an ‘efficient enforcer’ of the antitrust laws — as it must have standing to sue.” Sullivan added that DirecTV’s alleged harms were too far removed from the supposed misconduct.

Sullivan warned that the majority’s approach could weaken antitrust principles by allowing lawsuits whenever a company is effectively priced out of negotiations. His dissent echoed the reasoning of U.S. District Judge Kevin Castel, who initially dismissed the case.

With the appeals court ruling in place, DirecTV’s lawsuit will return to the lower court for further proceedings, reopening a closely watched dispute over retransmission fees and competition in the television distribution market, according to Courthouse News.

Source: Court House News