LOS ANGELES (CN) — The former senior executive in charge of the National Football League's media division denied that the league controlled what prices DirecTV could charge subscribers for its Sunday Ticket package after the satellite TV provider acquired an exclusive license to distribute the out-of-market games in 2002.
Steve Bornstein, a former CEO of ESPN and president of ABC, testified Thursday and Friday in the antitrust trial brought by Sunday Ticket subscribers who claim they were stuck paying inflated prices to watch the Sunday afternoon games because of price-fixing arrangements between the NFL and DirecTV.
"We basically agreed to give up the right to set the price," Bornstein said in often spiky exchanges with Bill Carmody, one of the attorneys representing the subscribers at the trial in downtown Los Angeles.
When he arrived at the NFL in early 2002, Bornstein said he thought the agreement at the time, under which DirecTV distributed Sunday Ticket as an agent for the NFL with the league being responsible for the packaging, marketing and pricing of the bundle and the satellite TV company getting a cut of the revenue, didn't make sense because the NFL wasn't in the business of marketing to consumers and that wasn't what he called its "core competency."
Instead, under his guidance, the NFL negotiated a five-year, $1.9 billion licensing agreement with DirecTV that gave them the exclusive right to market and price the Sunday Ticket package.
However, the plaintiffs argue that this was a "sham" and that the NFL remained in control over the prices for Sunday Ticket after 2002. They claim that CBS and Fox, the networks that produce the Sunday afternoon broadcasts and televise them for free through their local affiliates in the teams' home markets, pushed the NFL to limit distribution of the Sunday Ticket package because they were afraid it would cut into their ratings and advertising revenue for the games.
Bornstein readily acknowledged that the networks were "fanatical" about trying to protect their ratings for the football games and were concerned that the Sunday Ticket package should stay behind a subscription wall.
"We were trying to balance all our partners' concerns," he said under cross-examination by Brian Stekloff, one of the attorneys for the NFL. "We tried to thread the needle carefully and make everybody happy. There was a lot of give and take."
The subscribers suffered a setback Friday morning as U.S. District Judge Philip Gutierrez denied their attempts to introduce into evidence what Carmody called a "smoking gun" document that they claim show that the NFL was determined to maintain control of the Sunday Ticket pricing at the same time as it was finalizing the licensing agreement with DirecTV in late 2002.
Under questioning by Carmody, Bornstein repeatedly said he had never seen the purportedly internal NFL document of which the plaintiffs only have a hard copy that doesn't say who wrote it.
The judge on Friday rejected their request to use it as evidence to impeach Bornstein.
Amanda Bonn, another lawyer for the subscribers, had shown the document to the jury in her opening statement as key evidence they would introduce during the trial to prove that the NFL engages in illegal price-fixing. Next to bullet points in the document someone had written "antitrust," which according to Bonn showed the NFL knew it was breaking the law.
Bornstein told the jurors that the NFL's popularity is due to its broadcast strategy of making games available for free through local television, so that fans can watch their hometown teams. Sunday Ticket, he said, is meant as an extra benefit for avid fans who want to watch more NFL games on Sunday afternoon than there are available through CBS and Fox.
The plaintiffs are seeking as much as $7 billion in damages, which under U.S. antitrust law is subject to mandatory trebling, putting the NFL potentially on the hook for $21 billion.
The case covers residential and commercial Sunday Ticket subscribers over an almost 12 year period, from June 17, 2011 to Feb. 7, 2023, when the judge certified the classes. While DirecTV, which was the exclusive Sunday Ticket distributor during this time, is also a defendant in the case, Gutierrez agreed to send the claims against the satellite TV provider to arbitration.
Three interrelated agreements between the teams and the NFL, between the NFL and CBS and Fox, and between the NFL and DirecTV — and now Google whose YouTube TV since last year exclusively provides the Sunday Ticket package for residential subscribers — reduce choice and increase prices, the plaintiffs claim.
The jury will have to decide whether these agreements unreasonably restrain trade in violation of Section 1 of the Sherman Act and whether they allow the NFL to unlawfully monopolize the market for live video presentation of professional football games in violation of Section 2 of the Sherman Act.
Follow @edpettersson
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