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Leagues and Governing Bodies

Challenge of broadcast territories heads to trial

Major League Baseball’s blackout rules and broadcast territorial map, which have been hotly debated for decades, will reach a Manhattan courtroom this week as a potentially landmark case begins trial.

A class action lawsuit, Garber vs. MLB, begins trial Tuesday in U.S. District Court after more than three years of preliminary debate. The plaintiffs, a group of fans, allege the current market-territory system that ties clubs to specific geographic areas represents an unfair and illegal restraint of trade and violates federal antitrust law. They claim the system, which blacks out as many as a half-dozen teams in certain areas such as Iowa and Las Vegas, restricts consumer choice and raises prices.

Plaintiffs seek to allow each MLB team to sell its individual media rights into any U.S. market.
Photo by: GETTY IMAGES
The plaintiffs are seeking injunctive relief that would allow each MLB team to sell its individual media rights into any U.S. TV market.

MLB “has both achieved and exploited monopoly power, raising price and excluding competitors,” the plaintiffs said in a court filing.

The league, meanwhile, contends the current system is key to competitive balance, and actually has helped increase the availability and quality of baseball broadcasts for all teams.

“The pro-competitive benefits — including the explosion in output, in both the number and quality of games broadcast, the investment and innovation nurtured, the increases in competitive balance, and the reduction of transaction costs and increases in efficiencies — are substantial,” the league said in a court filing.

MLB’s argument in recent months has been buttressed by a recent deal with Fox Sports to begin authenticated in-market live game streaming for 15 clubs served by Fox-owned regional sports networks, an agreement the league hopes is soon replicated with other broadcasters.

MLB additionally has disclosed in recent court filings in this case that it intends to offer a single-team purchase option for the MLB.tv digital out-of-market package beginning with the 2016 season, similar to what is now available from the NBA and NHL. Further details around those offerings are expected to be announced next month.

Several MLB broadcast partners, including DirecTV, Comcast and the YES Network, have been named as defendants in the case.

Attorneys and officials for both sides declined to comment in advance of the trial. But the case has been closely watched in the industry, and holds the potential to dramatically change baseball’s media landscape. Potential witnesses in the trial, slated to last at least two weeks, include MLB Commissioner Rob Manfred, MLB President of Business and Media Bob Bowman, San Francisco Giants President and Chief Executive Larry Baer, and Pittsburgh Pirates owner Bob Nutting, among others.

“Antitrust cases are notoriously unpredictable,” said Gabe Feldman, director of the Tulane University Sports Law Program. “All the leagues are watching, and this case presents a lot of large and difficult questions of whether the benefits of these market rules outweigh the restrictions.”

The case before Judge Shira Scheindlin will be a bench trial, using no jury.

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