A federal judge in California overturned a jury verdict in a class-action lawsuit that was filed by subscribers to the NFL Sunday Ticket out-of-market broadcasting package. The approximate $4.7 billion in damages, which could have been tripled under federal antitrust law, was brought to court on behalf of over 2.4 million residential subscribers and over 48,000 commercial establishments utilizing the service. The jury alleged that the league violated antitrust law through conspiring to fix prices for the service, placing consumers at a disadvantage.
Within the ruling from U.S. District Judge Philip S. Gutierrez, which came one day after he heard a post-trial motion from the NFL, determined that the jury did not adhere to court instructions and referred to the testimony of two witnesses for the plaintiffs as “flawed.” This resulted in Gutierrez deciding to grant the NFL motion for judgment as a matter of law, eliminating the verdict determined by the eight-person jury.
Prior to the final decision being made, the NFL had criticized Gutierrez and how certain aspects of the case were handled, asserting that damages were determined by using a “made-up methodology.” Furthermore, the league argued that plaintiffs had not proved wrongdoing because of the rejection of damages calculations that had been presented by witnesses. Gutierrez agreed that testimony from Daniel Rascher and John Zona, two witnesses on behalf of the plaintiffs, should be excluded from the case since their models were not based on a rational methodology.
“The Court agrees that Dr. Rascher’s and Dr. Zona’s testimonies based on their flawed methodologies should be excluded,” Gutierrez said. “And because there was no other support for the class-wide injury and damages elements…. judgment as a matter of law for the Defendants is appropriate.”
If the decision had been upheld, the NFL broadcast model of selling exclusive television media rights packages to various media entities could have been jeopardized. Shortly after the jury ruling five weeks ago, the NFL stated that it intended to appeal the decision should it be upheld. The NFL entered into a seven-year agreement with Alphabet Inc. reportedly worth a collective $14 billion that rendered YouTube TV as the exclusive home of NFL Sunday Ticket. The broadcast package had previously been accessible through DirecTV since launching at the start of the 1994 NFL season. Following the verdict, the NFL expressed gratitude towards the decision in the case.
“We believe that the NFL’s media distribution model provides our fans with an array of options to follow the game they love, including local broadcasts of every single game on free over-the-air television,” the NFL said in a statement. “We thank Judge Gutierrez for his time and attention to this case and look forward to an exciting 2024 NFL season.”
The Court concluded that jury damages were more akin to “guesswork or speculation” rather than on the basis of “evidence and reasonable inference.” In its decision, the jury used $102.74 as the price class members would have paid if there was no agreement to restrict the output of the service, the average price that all residential DirecTV subscribers paid for the service. Gutierrez identified this as “problematic,” postulating that the average price paid cannot be the price that class members should have paid in this instance.
Moreover, the price plaintiffs actually paid for NFL Sunday Ticket was also based on the “residential list price for two years in the class period,” a premise that did not have evidence as applying to the whole class period or that the price was indeed remunerated. Plaintiffs are able to appeal the verdict to the U.S. Court of Appeals for the 9th Circuit.
“The jury did not follow the Court’s instructions and instead relied on inputs not tied to the record to create its own ‘overcharge,’” Gutierrez wrote. “…And ‘even where the defendant by his own wrong has prevented a more precise computation, the jury may not render a verdict based on speculation or guesswork.’ The Court thus finds that jury’s damages verdict is clearly not supported by the evidence and must be vacated.”
Under the Sports Broadcasting Act of 1961, the NFL, NBA, NHL and MLB were provided with an antitrust exemption authorizing them to enter into these contracts on behalf of their member teams, pooling individual franchise broadcast rights. In addition, stipulations within the legislation mandate that it does not protect the NFL from antitrust law if it broadcasts “all or a substantial part” of any professional football game on Friday after 6 p.m. EST or on Saturdays between the second Friday in September to the second Saturday in December from any television station within 75 miles of the location for a college or high school football game.
Throughout the litigation process, the NFL conveyed that its Sunday Ticket broadcast offering is a “premium product” and that most of the league’s games are available to watch on broadcast television. Last season, NFL games were presented on the CBS, NBC, FOX and ABC television networks as part of its 11-year media rights deal reportedly worth a collective $110 billion. The league is reportedly able to opt out of its contracts with Paramount Global, Fox Corporation, Comcast, The Walt Disney Company and Amazon in 2029.
Last year, NFL games accounted for 93 of the 100 most-watched television broadcasts in the United States, according to data from Nielsen Media Research. These contests averaged 17.9 million viewers in the regular season, which was up 7% year-over-year, and exhibited momentum that continued through the postseason. The Paramount Global presentation of Super Bowl LVIII on CBS and Nickelodeon averaged 123.7 million viewers, rendering it the most-watched program in television history.
