New York—August 2, 2018—National trial firm Robins Kaplan LLP® has filed a lawsuit against the nation’s five largest owners of local television stations, accusing them of engaging in a scheme to artificially inflate the price of advertisements in violation of federal antitrust law. The defendants in the proposed class action lawsuit, which include the Sinclair Broadcast Group, Inc. and Tribune Media Company—and collectively own more than 500 local stations—are currently the subject of a Department of Justice antitrust investigation.
“In today’s media landscape, spending on television ads is falling fast. Our client’s complaint alleges that the defendants tried to defy the gravity of that decline by colluding to raise their prices,” said Hollis Salzman, co-chair of Robins Kaplan’s Antitrust and Trade Regulation Group. Robins Kaplan’s complaint, filed earlier this week, notes that local television stations’ revenues are on pace to increase to nearly $28 billion in 2018, despite the decrease in overall television ad spending.
Robins Kaplan filed its complaint just days after The Wall Street Journal revealed that the DOJ is investigating potential antitrust violations in local television ad sales. The investigation reportedly stems from the government’s review of the now-troubled $3.9 billion proposed merger between defendants Sinclair and Tribune. The proposed merger was facilitated by the Federal Communications Commission’s rampant deregulation of the television industry in recent years, including the lifting of a cap on the number of stations a broadcaster can own. The complaint alleges that this deregulation fueled industry-wide consolidation, which made conditions ripe for anticompetitive agreements.
“There’s some irony in the fact that Sinclair and Tribune’s proposed merger, which epitomized the unchecked consolidation of local television ownership, has helped reveal what our client’s complaint alleges to be anticompetitive conduct within the industry,” added Salzman. She and other Robins Kaplan attorneys represent the named plaintiff, an Alabama law firm that purchased television advertising time from certain defendants.
The proposed deal between Sinclair and Tribune, which once seemed destined for approval, has become a flashpoint for controversy within the Trump administration. FCC Chairman Ajit Pai, who is under investigation for improperly coordinating with Sinclair regarding the rule changes that paved the way for the merger, announced this month that he has “serious concerns” with the transaction. An FCC order has since stated that Sinclair engaged in “a potential element of misrepresentation or lack of candor” in its application for approval.
In addition to Sinclair and Tribune, the defendants in the case are Gray Television, Inc., Hearst Corporation, Nexstar Media Group, Inc., and Tegna Inc. In addition to Salzman, Robins Kaplan partners Kellie Lerner and Craig Wildfang, counsel Tai Milder and Aaron Sheanin, and associate Nahid Shaikh are representing the proposed class.
The case, Clay, Massey & Associates, P.C. v. Gray Television Inc., et. al, was filed in the United States District Court for the Northern District of Illinois. It is pending before Judge Ronald Guzman.
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