June 26, 2013

Federal Judge Brings Sky Angel’s Antitrust Claims Against C-SPAN Down To Earth

A federal judge has dismissed claims by Sky Angel U.S. LLC, an internet-based television service, that C-SPAN violated the antitrust laws by favoring traditional cable providers.

Although Judge Rudolph Contreras of the U.S. District Court for the District of Columbia dismissed Sky Angel’s antitrust claims, he also granted the internet television service leave to replead in Sky Angel U.S. LLC v. National Cable Satellite Corporation.

In November 2012, Sky Angel filed an antitrust complaint alleging that the National Cable Satellite Corporation – doing business as the non-profit television programming provider C-SPAN – conspired to restrain trade in the “real-time multichannel video programming distribution market.”  C-SPAN had entered into an affiliation agreement in 2009 to provide programming to Sky Angel’s television service, which delivers television programs through a high-speed internet connection and set-top boxes.  C-SPAN, however, allegedly breached the agreement by terminating service after allowing programs to air on Sky Angel for just three days. 

Sky Angel asserts that C-SPAN’s pulling of its legislative programs violated antitrust laws because C-SPAN’s executive board members, who also work for the most successful for-profit television networks, conspired to keep Sky Angel from competing in the market.

Judge Rudolph Contreras of the District Court for the District of Columbia disagreed and found Sky Angel failed to state a claim because the complaint did not include the basic factual elements needed to prove that a conspiracy or monopoly existed.

Sky Angel’s conspiracy claim, for example, did not cite any board votes or scheduled meetings to show an agreement was made between the executive board members. “Merely pleading that multiple entities hold positions on a board of directors does not establish a horizontal agreement,” the court held.  

The complaint also failed to properly define relevant product and geographic markets, which were essential elements of Sky Angel’s monopoly claim.  The product market was described as “real-time, multichannel video programming distribution services.”  However, when listing product substitutes as part of the market definition, Sky Angel did not explain why online video providers such as Hulu or Netflix were not included as interchangeable products.  The court found that television service providers compete in “individual metropolitan and regional markets” that can span the United States, rather than in the nationwide market alleged by Sky Angel.

While the court dismissed the conspiracy and monopoly claims, it also found that Sky Angel did adequately allege an antitrust injury, and granted Sky Angel leave to file an amended complaint.

Categories: Antitrust Litigation

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