Antitrust Law Daily Regional sports network’s attempted monopolization claims against Comcast move forward
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Tuesday, December 1, 2020

Regional sports network’s attempted monopolization claims against Comcast move forward

By Nicole D. Prysby, J.D.

The regional sports programming producer sufficiently alleged that Comcast refused to continue to contract with it so that Comcast could eliminate competition from the market and vertically integrate itself into the production of regional sports programming.

A regional sports network’s monopolization claim against Comcast failed, but an attempted monopolization claim was sufficiently pleaded, the federal district court in Denver has decided. Altitude Sports & Entertainment alleged that Comcast, after contracting with Altitude for more than 15 years, refused to enter another agreement with Altitude in order to eliminate Altitude from the market and vertically integrate itself into the production of regional sports programming. Comcast’s shift in requiring specific contractual terms like the sports tier, refusal to negotiate with Altitude, and factual allegations regarding Comcast’s infrastructure and financial means giving it the ability to vertically integrate with relative ease, plausibly alleged that Comcast intended to monopolize and replace Altitude as a seller in the market (Altitude Sports & Entertainment, LLC v. Comcast Corp., November 25, 2020, Martinez, W.).

Altitude Sports & Entertainment is an independent regional sports network (RSN) headquartered in Denver that produces regional sports programming. Altitude sells its programming to multichannel video programming distributors (MVPDs), which are the distributors that sell sports programming to consumers as part of their television packages. Comcast is the largest MVPD in the U.S. and the dominant cable television provider in Denver. Comcast has carried Altitude programming since 2004. In August 2014, Comcast and Altitude renewed their contract for another five years and in February 2019, Altitude proposed a five-year contract renewal. Comcast rejected Altitude’s proposal and stated it would only enter a contract with Altitude on Comcast’s terms and refused any attempts to reach a short term solution while negotiations continued. With no renewed contract, on August 31, 2019, Comcast ceased distributing Altitude to its subscribers. Altitude brought claims for monopolization, attempted monopolization, and tortious interference with contractual and prospective business relations. Comcast motioned to dismiss all claims.

Monopolization claims. Altitude’s monopolization claim failed but its attempted monopolization claim went forward. The monopolization claims failed because Altitude did not sufficiently allege harm to the "buy side" of the market. Altitude alleged that by eliminating Altitude, Comcast would no longer have to compete to buy the product it once purchased from Altitude, but did not sufficiently explain the harm to competition in the buyer’s market.

However, Altitude did sufficiently allege anticompetitive conduct for its attempted monopolization claim. Altitude alleged Comcast’s conduct was anticompetitive because it allegedly targeted Altitude as an independent RSN and agreed to offer Altitude programming only in the sports tier package as opposed to the expanded basic package, which significantly limited Altitude’s market penetration and required consumers to pay a fee in addition to their subscription and regional sports fees. Altitude also alleged that Comcast used the Altitude blackout as a step in its larger scheme to vertically integrate Altitude’s programming into Comcast’s other sports programming and and made misrepresentations concerning Altitude to harm its reputation and relationships with customers. Altitude alleged that Comcast took those actions because it intended to vertically integrate into the market, which was sufficient to allege anticompetitive conduct.

The court also found plausible Altitude’s allegation that Comcast acted anticompetitively by refusing to deal with Altitude. Comcast had a profitable prior course of dealing with Altitude for at least 15 years, and allegedly suffered short-term losses due to subscribers cancelling service because of the blackout. Altitude alleged that marketplace trends show it is not economically rational for Comcast to stop distributing Altitude, given that Altitude’s performance in terms of viewership and advertising revenues was rising before the blackout, and that without access to Altitude, many Comcast customers have cancelled or expressed intent to cancel their service. The court concluded that these allegations sufficiently alleged irrational conduct but for its tendency to harm competition.

Altitude sufficiently alleged Comcast’s specific intent to monopolize. Comcast’s seemingly abrupt shift in requiring specific contractual terms like the sports tier and elimination of the minimum market penetration requirement, refusal to negotiate with Altitude, and the factual allegations regarding Comcast’s infrastructure and financial means giving it the ability to vertically integrate with relative ease, plausibly alleged that Comcast intends to monopolize and replace Altitude as a seller in the Regional Sports Programming Market.

Altitude sufficiently alleged a dangerous probability of Comcast achieving monopoly power, because it is a monopsonist and multimarket firm, has deep pockets, has experience operating RSNs, and has the ability to quickly produce Denver regional sports programming using its existing facilities—including facilities in Denver. Altitude alleged that Comcast intends to take over regional sports programming in Denver, and can do so immediately upon putting Altitude out of business. Under these circumstances, the court concluded that Altitude sufficiently alleged that Comcast’s infrastructure and financial means enable Comcast to switch production rapidly to launch a RSN without incurring significant sunk costs, making it a plausible rapid entrant. To bolster allegations of Comcast’s dangerous probability of achieving monopoly power, Altitude also pointed to the high barriers to entry in the Regional Sports Programming Market, Comcast’s existing programming from its other RSNs, Comcast’s brand recognition, financial resources, and Denver-area production facilities.

Other issues. Altitude’s tortious interference claims failed, because they were based on fraudulent misrepresentations and Altitude failed to allege the fraudulent misrepresentations with the sufficient particularity necessary.

This case is No. 1:19-cv-03253-WJM-MEH.

Attorneys: Amanda Sterling (Paul Weiss Rifkind Wharton & Garrison LLP) for Altitude Sports & Entertainment, LLC. Arthur J. Burke (Davis Polk & Wardwell, LLP) for Comcast Corp. and Comcast Cable Communications, LLC.

Companies: Altitude Sports & Entertainment, LLC; Comcast Corp.; Comcast Cable Communications, LLC

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