ICLE Amicus to the 9th Circuit in Ninth Inning Inc v NFL
IDENTITY AND INTERESTS OF AMICUS CURIAE[1]
The International Center for Law & Economics (“ICLE”) is an independent nonprofit, non-partisan global research and policy center focused on building the intellectual foundations for sensible, economically grounded policy. ICLE promotes the use of law and economics to inform policy debates and has longstanding expertise evaluating antitrust law and policy. ICLE has an interest in ensuring that antitrust law promotes the public interest by remaining grounded in sensible rules informed by sound economic analysis. ICLE writes to share its perspective on the issues raised in this appeal, including the economic and legal implications on competition and innovation that would follow if the legal standards urged by the Plaintiffs[2] were adopted. That includes evaluating the economic and legal implications of the remedies proposed in this case to caution against overbroad measures that exceed the proven harms.
SUMMARY OF THE ARGUMENT
The district court correctly granted Defendants judgment as a matter of law because Plaintiffs failed to establish a credible, non-speculative theory of antitrust harm. Antitrust law requires that equitable remedies be grounded in a proven threat of injury to competition, not conjecture or hypothetical injury. See, e.g., Catlin v. Wash. Energy Co., 791 F.2d 1343, 1350 (9th Cir. 1986) (“Section 16 of the Clayton Act, 15 U.S.C. § 26, is explicit that injunctive relief requires a showing of loss or damage by a violation of the antitrust laws.”) (citation modified). And absent injury, there likewise is no basis for damages to be awarded under the Clayton Act. Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977) (holding that “[p]laintiffs must prove antitrust injury” to recover damages). Here, after a full trial, the court found Plaintiffs’ theories of harm were not supported by any reliable economic analysis and were untethered from market realities, rendering any basis for injunctive relief or damages legally and economically unsound. In re NFL “Sunday Ticket” Antitrust Litig., No. ML 15-02668 (PSG), 2024 WL 3628118, at *2–8 (C.D. Cal. Aug. 1, 2024).
Contrary to Plaintiffs’ assertions, the National Football League’s (“NFL”) practice of bundling out-of-market games into a single package and distributing them exclusively through select platforms is not inherently anticompetitive nor injurious to consumers. Economic theory and industry experience demonstrate that such arrangements often enhance consumer welfare by enabling efficient pricing, broadening access to content, and incentivizing investment and innovation in distribution technologies.[3] Bundling allows for cross-subsidization that expands output and makes a wider variety of games available to more fans, while exclusive distribution agreements have historically spurred the development of new platforms and improved services for consumers.[4] Plaintiffs’ proposed “à la carte” alternative is both unrealistic and inferior on consumer welfare grounds. Their counterfactual scenario—where every out-of-market NFL game would be widely and cheaply available on a free or pay-per-game basis—rests on pure speculation rather than evidence or sound economic modeling.
In reality, unbundling would likely reduce output, increase costs, and diminish the quality and variety of available games, harming both consumers and the broader market by reducing incentives for investment in production of individual NFL games as well as innovation.[5] As the district court correctly observed, Plaintiffs failed to establish any basis for antitrust injury given the fundamental flaws in the theories of harm offered by their experts.
Granting Plaintiffs relief under the Clayton Act in the absence of a proven antitrust injury would not only lack legal foundation but would also, as an economic matter, risk undermining the procompetitive benefits of the NFL’s content distribution model. This Court should affirm the district court’s decision, and maintain the principle that antitrust remedies must be tailored to redress actual, demonstrated harm to competition, and should not be used as experiments in market reengineering that stifle innovation, limit choice, and undermine the very purpose of the antitrust laws.
ARGUMENT
I. Relief Under the Clayton Act Must Be Grounded in a Proven Theory of Antitrust Harm.
It has long been understood that erroneously enjoining a procompetitive practice—a false positive or Type I error—reduces social welfare by denying market participants the benefit of an efficient business practice.[6] In particular, antitrust doctrine reflects a strong concern for preserving innovation incentives by insisting on clear proof that the challenged conduct will likely lessen competition before imposing liability, lest the threat of litigation chill the very experimentation and dynamic rivalry the antitrust laws are meant to foster. See Verizon Commc’ns Inc. v. L. Offs. of Curtis v. Trinko, LLP, 540 U.S. 398, 414 (2004) (“Mistaken inferences and the resulting false condemnations ‘are especially costly, because they chill the very conduct the antitrust laws are designed to protect.’”) (quoting Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 594 (1986)).
Plaintiffs’ inability to establish a non-speculative theory of harm forecloses any basis for a finding of injury or damages. An antitrust injury is “essentially economic,” requiring a private plaintiff to “identify the economic rationale for a business practice’s illegality under the antitrust laws and show that its harm flows from whatever makes the practice unlawful.”[7] Section 16 of the Clayton Act authorizes private injunctive remedies only upon a showing of “threatened loss or damage” from a violation of the antitrust laws. 15 U.S.C. §?26. Section 4 of the Clayton Act permits any person “who shall be injured . . . by reason of anything forbidden in the antitrust laws” to recover damages. 15 U.S.C. §?15. The Supreme Court has defined “antitrust injury” as “injury of the type the antitrust laws were designed to prevent and that flows from that which makes defendants’ acts unlawful.” Brunswick, 429 U.S. at 489. An injury will not qualify as “antitrust injury” unless it is attributable to an anti-competitive aspect of the practice under scrutiny, “since ‘[i]t is inimical to [the antitrust] laws to award damages’ for losses stemming from continued competition.” Cargill v. Monfort, 479 U.S. 104, 109–10 (1986) (quoting Brunswick, 429 U.S. at 488).
Here, the district court found that Plaintiffs failed to establish a threat of antitrust injury since Plaintiffs had not provided sufficient evidence to support a finding of injury by a reasonable factfinder. In re NFL “Sunday Ticket” Antitrust Litig., 2024 WL 3628118, at *8. The district court excluded the expert testimony of Dr. Rascher, who used college football to model the “but-for” world of what might happen with NFL out-of-market game broadcasts in the absence of the exclusive distribution model at issue, finding his analysis improperly “relied on a college football model that was developed based on speculation and ipse dixit opinion.” See id. at *5–7. The district court also excluded the testimony of Plaintiffs’ expert Dr. Zona, who provided two models purporting to describe the but-for world, concluding he failed to define what a “direct-to-consumer” product entailed in this context, rendering it impossible to determine if it would have been economically rational for consumers to purchase NFL Sunday Ticket from an alternative distributor at a higher price. Id. at *7–11. Because Plaintiffs presented no reliable evidence of harm stemming from the NFL’s exclusive distribution model, the district court concluded Plaintiffs “failed to provide evidence from which a reasonable jury could make a finding of injury” and that “an award of actual damages . . . [would be] totally unfounded and/or purely speculative.” Id. at *8. The district court granted Defendants’ judgment as a matter of law as “no reasonable jury could have found class-wide injury or damages.” Id. at *12.[8]
The United States, in its amicus brief, asserts that a court may nonetheless grant injunctive relief despite the failure to prove damages by focusing on the possibility of “threatened loss” alone. ECF 45.1 at 14 (“‘The equitable relief that Plaintiffs seek . . . requires no proof of monetary harm,’ only proof of threatened loss.”). But this position overlooks the critical link required between the antitrust harm alleged and the remedy sought: A plaintiff must prove that his alleged loss (or threatened loss) is the result of an “anticompetitive aspect or effect of the defendants’ challenged conduct.” Pool Water Prods. v. Olin Corp., 258 F.3d 1024, 1034 (9th Cir. 2001). This is because “it is inimical to the antitrust laws to award damages for losses stemming from acts that do not hurt competition. If the injury flows from aspects of the defendant’s conduct that are beneficial or neutral to competition, there is no antitrust injury . . . .” Id. (citation modified).
Here, Plaintiffs largely relied on the but-for scenarios raised by their experts and deemed unreliable by the district court to show actual or threatened antitrust injury. Without that evidence, there was no way for a reasonable fact finder to conclude the alleged injury was the result of anticompetitive conduct in violation of the antitrust laws. Absent proof of an antitrust injury, or threatened antitrust injury, there is no way to determine how to narrowly tailor an injunction to address such an injury, nor is there a basis to calculate a damages award. See Cargill, 479 U.S. at 112 (noting that “§ 16 affords private plaintiffs injunctive relief only for those injuries cognizable under § 4” of the Clayton Act). Accordingly, where, as here, the economic theories purporting to show that the challenged conduct will harm (or threaten to harm) competition absent relief are excluded, the court should not permit the imposition of injunctive relief or an award of damages. United States v. Microsoft Corp., 253 F.3d 34, 105 (D.C. Cir. 2001) (noting that a court granting any sort of remedy “must base its relief on some clear ‘indication of a significant causal connection between the conduct enjoined or mandated and the violation found directed toward the remedial goal intended’”) (citation modified).
This principle of proportionality between violation and remedy is deeply rooted in antitrust jurisprudence. Microsoft, 253 F.3d at 107 (injunctive relief in the antitrust context “should be tailored to fit the wrong creating the occasion for the remedy”). In its seminal 2001 United States v. Microsoft decision, the D.C. Circuit vacated and remanded a far-reaching breakup remedy in part because the liability findings (and proven harms) did not warrant such a drastic measure. Id. at 104–05 (vacating the district court’s remedies decree because (i) the Court had “drastically altered the District Court’s conclusions on liability”; and (ii) there was thus no longer “a significant causal connection between the conduct enjoined or mandated and the violation found directed toward the remedial goal intended”). Here, with even more tenuous liability findings given the exclusion of Plaintiffs’ expert testimony—without which no reasonable jury could find injury—and the jury’s “non-sensical” damages calculation, there can be no “significant causal connection” between the conduct Plaintiffs sought to enjoin and a purported violation that was not proven. Therefore, any injunctive relief would inevitably miss the mark. Enjoining the NFL’s current distribution arrangements (for example, by forcing some form of “à la carte” availability or multi-platform licensing) would be a shot in the dark, with the court only guessing at what might enhance competition or consumer welfare (and which might in fact harm competition and reduce consumer welfare).[9] This is precisely the kind of unguided intervention that courts are ill-equipped to administer. Such unguided intervention risks backfiring.[10]
In sum, the Court should uphold the principle that proof of antitrust injury is the lodestar that guides the availability and scope of any antitrust remedy. Somers v. Apple, Inc., 729 F.3d 953, 967 (9th Cir. 2013) (to obtain injunctive relief, a plaintiff “must allege facts showing that the remedy she seeks is needed to prevent . . . an ‘injury of the type the antitrust laws were intended to prevent’—i.e., an injury to competition.”) (citation modified); Brunswick, 429 U.S. at 489 (“Plaintiffs must prove antitrust injury, which is to say injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants’ acts unlawful [in order to recover damages under the Clayton Act].”). Absent proof of an antitrust injury, any remedy in this case would not only lack legal grounding—it would be an experiment in economic policy that exceeds the proper role of the judiciary and could very well undermine the purpose of antitrust law to enhance rather than hinder competition.
II. Bundling and Exclusive Distribution of Sports Rights Can Be Procompetitive and Benefit Consumers.
Plaintiffs’ entire case rests on a flawed presumption that the NFL’s practice of bundling all out-of-market games into the NFL Sunday Ticket package and selling it exclusively through a single platform is anticompetitive. In fact, economic theory and industry experience demonstrate that arrangements similar to NFL Sunday Ticket often enhance consumer welfare. Bundling and exclusive distribution are common, procompetitive strategies in content markets that facilitate broad access to content, reduce prices, reduce transaction costs, and promote investment in innovation, which inure to the benefit of fans and viewers.[11]
A. Bundling Enables Efficient Pricing and Broad Access.
Through NFL Sunday Ticket, the NFL bundles a season’s worth of games into one package. In re Nat’l Football League’s Sunday Ticket Antitrust Litig., 933 F.3d 1136, 1148 (9th Cir. 2019). Rather than selling game rights on an individual or team-by-team basis, the NFL, on behalf of the teams within the league, created NFL Sunday Ticket as a single offering for consumers. Id. This approach allowed the NFL to aggregate consumer demand for out-of-market games and more efficiently make such content available to fans and viewers.[12]
As described below, economic literature has long recognized that bundling can increase output and enhance consumer welfare. Courts have similarly found procompetitive effects of bundling. See Cascade Health Sols. v. PeaceHealth, 515 F.3d 883, 895 (9th Cir. 2008) (noting that “[b]undled discounts generally benefit buyers because the discounts allow the buyer to get more for less” and “[b]undling can also result in savings to the seller because it usually costs a firm less to sell multiple products to one customer at the same time than it does to sell the products individually”); United States v. Microsoft, 253 F.3d at 87 (recognizing that “[b]undling obviously saves distribution and consumer transaction costs”).
By combining all out-of-market games in one package, the NFL is able to offer an NFL Sunday Ticket product that appeals to a broad range of fans at a single price point. 3-ER-339 (Complaint). This allows the league to capture revenue from die-hard fans (who value access to the entire bundle of out-of-market games highly) while still making all games available in one package for more casual fans (e.g., those who are fans of an out-of-market team that may not be broadcasted in their local area each week) who want the ability to watch individual out-of-market games on demand. Id. Bundling effectively mitigates the deadweight loss that might occur if each game or team were priced separately. Indeed, economic analyses of multichannel TV bundles have found that bundling heterogeneous content (e.g., a Giants-Cowboys game in addition to a Jaguars-Cardinals game) often benefits consumers by giving them variety at an average price that many are willing to pay, whereas separate sale of “premium” items (e.g., games featuring small-market teams that are not nationally broadcasted or “premium” match-ups bumped from coverage due to conflicts with local teams) could put some content out of reach for price-sensitive viewers.[13]
In an analysis of sports media rights, the European Commission (the “Commission”) recognized procompetitive advantages of season-long bundles. In its UEFA Champions League decision, the Commission observed that having a single point of sale for a season’s rights enabled broadcasters (and by extension, viewers) to plan and receive full coverage in a predictable way. Case COMP/C.2-37.398—Joint Selling of the Commercial Rights of the UEFA Champions League, Comm’n Decision, 2003 O.J. (L291) 25, ¶¶ 145–47. The single point of sale “ensured that programming could be planned in advance ensured the full coverage of sports events for the season, and reduced broadcasters’ financial risks . . . .”[14] It enabled broadcasters to plan programming in advance without having to worry about the financial repercussions of poor performance by any one individual club, which in turn allowed for full and “more innovative” coverage of the season’s matches. Id. ¶ 150. These benefits redounded to viewers in the form of consistent and comprehensive broadcasts.
For the reasons above, the bundled nature of NFL Sunday Ticket ensures broad access to NFL out-of-market games for viewers at a reasonable price point and has pro-competitive effects on the market.
B. Exclusive Distribution Can Spur Investment and Innovation
The economic reality that exclusive distribution agreements are often procompetitive is well-recognized.[15] And courts have similarly recognized that such exclusive agreements are often pro-competitive and do not violate the antitrust laws. See, e.g., Rutman Wine Co. v. E. & J. Gallo Winery, 829 F.2d 729, 735 (9th Cir. 1987) (“First, an agreement between a manufacturer and a distributor to establish an exclusive distributorship is not, standing alone, a violation of antitrust laws, and in most circumstances does not adversely affect competition in the market.”); Kingray, Inc. v. NBA, Inc., 188 F. Supp. 2d 1177, 1196–98 (S.D. Cal. 2002) (approvingly citing Rutman’s holding that exclusive distribution agreements “in most circumstances do[] not adversely affect competition in the market” in the context of an alleged such agreement between the NBA and DirecTV); Spinelli v. Nat’l Football League, 96 F. Supp. 3d 81, 118 (S.D.N.Y. 2015) (“An exclusive license, which merely confers upon the licensee the ability to exploit the licensor’s exclusive intellectual property rights, does not violate the antitrust laws.”) aff’d in part, 903 F.3d 185, 211–13 (2d Cir. 2018) (affirming the district court’s dismissal of plaintiffs’ antitrust claim); Cablevision Sys. Corp. v. FCC, 649 F.3d 695, 721 (D.C. Cir. 2011) (describing the procompetitive effects of exclusive contracts in the television industry and noting that the FCC “has recognized that exclusivity can further competition in certain circumstances”).
Economic theory recognizes exclusive dealing as a solution to two canonical problems.[16] First, it mitigates the free-rider externality that plagues relationship-specific investment.[17] For example, a distributor that sinks fixed costs into a superior service loses the incentive to invest further if rival “no-frills” resellers can immediately piggy-back on the improved consumer perception.[18] One model shows that exclusivity, or its functional equivalent, quantity-forcing, preserves incentives by allowing the investing party to capture the incremental surplus it creates through its investment.[19] Developing, marketing, and delivering a premium, technologically advanced product like NFL Sunday Ticket requires considerable up-front investment in infrastructure, technology, marketing, and customer support.[20] If multiple distributors were permitted to offer the same or a similar core product—the NFL games themselves—a distributor that undertakes large, non-recoupable investments in relevant components of a broadcast like a superior user interface, enhanced streaming quality, dedicated customer service, or extensive marketing campaigns could find consumers utilizing these enhancements for information or as a trial, only to ultimately subscribe to a lower-cost, no-frills distributor who opted against making comparable investments.[21] Such a scenario is a classic example of the free-rider problem, which can stifle investment and innovation.[22] An exclusive arrangement ensures that the distributor making crucial relationship-specific investments is able to capture the returns generated, justifying the initial outlay of funds and fostering a cycle of investment and innovation that ultimately leads to a better overall product and a more optimal experience for consumers.[23]
Second, exclusivity can screen for distributors with superior downstream capabilities in research and development (“R&D”). Economic research shows how exclusive contracts can be welfare-enhancing when factors such as strong intellectual property protection or pronounced R&D capabilities on the part of an incumbent supplier are present.[24] In fact, the comprehensive package of all out-of-market NFL games functions in a similar manner to a valuable, IP-protected asset.
The history of DirectTV’s exclusive carriage of NFL Sunday Ticket is compelling evidence of this dynamic. From 1994 until 2023, NFL Sunday Ticket was offered exclusively through DirecTV’s satellite television service, with DirecTV re-upping its exclusive rights deal every five to ten years.[25] Now, Sunday Ticket for residential purchasers is offered exclusively through Google’s YouTube TV and related streaming platforms, with Google holding these rights for a seven-year term.[26] These long-term exclusive arrangements were not attempts to “foreclose” competition but rather were necessary to induce significant investments in new content distribution technologies. For example, in the 1990s, DirecTV’s satellite service was a nascent technology competing against incumbent cable.[27] The NFL’s willingness to grant DirecTV exclusive rights to its highly coveted package (out-of-market NFL games) enabled DirecTV to invest in marketing, infrastructure, and innovation to accommodate NFL fans, which in turn helped drive subscriber growth.[28] As a result, the exclusivity helped a new entrant (satellite TV) to gain a foothold and compete against cable, which ultimately expanded consumer choice in the paid-TV market.[29] In exchange, consumers gained a revolutionary product: for the first time, the ability to watch every NFL game on Sunday, instead of being limited to what local broadcasters aired.[30] This broadened output—a notable procompetitive effect. McWane, Inc. v. FTC, 783 F.3d 814, 841 (11th Cir. 2015) (citing approvingly the FTC’s statement that “[c]ognizable [procompetitive] justifications” include those that “reduce cost, increase output or improve product quality, service, or innovation”); Law v. Nat’l Collegiate Athletic Ass’n, 134 F.3d 1010, 1023 (10th Cir. 1998) (recognizing that “increasing output, creating operating efficiencies, making a new product available, enhancing product or service quality, and widening consumer choice have been accepted by courts as justifications for otherwise anticompetitive agreements”). In the absence of NFL Sunday Ticket, out-of-network games were simply not available to most fans at any price. DirecTV further leveraged its exclusivity to invest in innovative features such as the Red Zone Channel as well as “on-demand scores and stats, plus features directed at fantasy players,” enhancements largely attributable to its secure position as the sole provider of NFL Sunday Ticket and which significantly enhanced consumer welfare.[31]
Today, the pattern has reemerged with streaming platforms. The NFL’s new agreement with YouTube to carry NFL Sunday Ticket exclusively on its YouTube TV streaming platform reflects the same dynamic and economic logic: granting exclusivity to induce the necessary investment to optimally deliver NFL Sunday Ticket via a leading streaming platform. Google is reportedly spending roughly $2 billion per season for exclusive rights and views NFL Sunday Ticket as a strategic asset for customer acquisition, aiming to draw more users into the broader YouTube TV ecosystem.[32] Google’s investment in NFL Sunday Ticket is a long-term strategy that relies on the exclusivity of NFL Sunday Ticket to attract and retain subscribers.[33] And as further evidence of exclusivity spurring innovation, YouTube TV has already begun to roll out new features designed to enhance the viewing experience, such as multiview, which allows users to watch up to four games at the same time on a single screen, and integrated fantasy football tracking.[34] These innovations result from YouTube TV’s incentive to invest in and add value to its exclusive offering.
The NFL has a history of granting exclusive broadcast rights to platforms that were effectively new entrants or challenger platforms in a multichannel video programming distribution market at the time of the initial agreements. Rather than using exclusivity to foreclose rivals, the NFL has used its exclusivity arrangements to empower challenger platforms and to promote competition and innovation.
C. The “À La Carte” Counterfactual Is Unrealistic and Inferior on Welfare Grounds.
Plaintiffs’ damages case turns on Dr. Rascher’s assertion that, in the absence of the NFL’s exclusive Sunday Ticket package, every out?of?market NFL game would have migrated cheaply to “over?the?air” “basic sports cable” channels, leaving subscribers to pay “zero” incremental dollars for out-of-market games. 7-ER-1176. As the district court recognized, that vision is not anchored to any coherent model of market behavior, nor is it based on evidence of how rational rights-holders and distributors would actually bargain. In re NFL “Sunday Ticket” Antitrust Litig., 2024 WL 3628118, at *4–7. Instead, it relies on a series of speculative leaps. Id. at *7.
Dr. Rascher’s conclusions represent a fundamental misunderstanding of the nature of an NFL broadcast and failed to account for the capital-intensive nature of a live NFL broadcast. Dr. Rascher hypothesized that perhaps CBS and Fox would be willing to share their local broadcast feeds with ABC and NBC, who could provide out-of-market coverage. 7-ER-1291–92. This was not a realistic option, and Dr. Rascher’s hypothesis was disproven during trial when CBS executives testified that they would never share a feed with a competitor network. 11-ER-2069. Sharing a feed would take viewers away from CBS or Fox and send them to competitors like NBC or ABC, diminishing CBS or FOX’s advertising revenue. That production plan isn’t realistic. See, e.g., Bell Atl. Corp. v. Twombly, 550 U.S. 544, 566 (2007) (“[R]esisting competition is routine market conduct.”). Dr. Rascher also hypothesized that networks could use multiple production crews at the same game. 7-ER-1293–94. Doing so, however, would effectively double or triple the already high costs associated with producing a live NFL broadcast—costs that would almost certainly be passed directly to purchasers. This is because each telecast demands multiple high?definition trucks, trained crews, and satellite uplinks—fixed costs that remain irrespective of whether a game is broadcast through NFL Sunday Ticket or if the game migrates to a hypothetical slot on broadcast television or basic cable.[35] In reality, when premium inputs, like individual NFL games, are sold piecemeal, upstream license fees sharply rise—sometimes by more than 100 percent—because suppliers are forced to recover the fixed costs inherent in producing a broadcast from a narrower base of purchasers.[36] Instead of grappling with those studies, Dr. Rascher treated marginal consumer payments as the only relevant cost. In re NFL “Sunday Ticket” Antitrust Litig., 2024 WL 3628118, at *4–7.
Economic theory teaches that when valuations are negatively correlated—e.g., Cowboys fans care less about Jaguars games and vice-versa—a single price for an entire slate of games can serve viewers who would otherwise find cherry picking uneconomical.[37] This is because absent exclusivity, while the NFL would still broadcast local games in local markets, only higher-value games of general national interest that are economically beneficial to a broadcaster would be broadly televised (so long as they don’t conflict with a required local broadcast). As an example, a Jacksonville Jaguars fan living in Indiana might sometimes view a Jaguars broadcast on local television (e.g., when they play the Indianapolis Colts), but otherwise may have limited access to broadcasts of Jaguars’ games in the absence of an exclusive distribution package given the Jaguars are a small market team. Similarly, a Kansas City Chiefs fan living in Los Angeles might have access to local broadcasts of certain Chiefs’ games (e.g., when they play the Los Angeles teams or are considered a premium national game), but other games may be unavailable given conflicts with the local broadcasts of Los Angeles Rams and Los Angeles Chargers games against other teams (notwithstanding the national interest in the Chiefs).
The cross-subsidy inherent in exclusivity is the mechanism through which revenue sharing keeps smaller-market teams solvent and ensures that every game is televised and available to viewers at a competitive price. Plaintiffs’ model would sever that link, creating incentives to under-produce, deprioritize, or increase prices for low-demand games. The district court noted Dr. Rascher’s failure to address this exact issue, commenting that his college football “yardstick” differs from NFL Sunday Ticket because the NCAA does not guarantee local free access. In re NFL “Sunday Ticket” Antitrust Litig., 2024 WL 3628118, at *6. In fact, many popular college football games are available only through paid premium cable, such as the SEC Network, which means that certain local fans must pay extra to watch their favorite teams. Id. at *6 (citing 06/11/24 Tr. (Rascher) 837:1–13). Even a team like the Notre Dame Fighting Irish, which independently negotiates its distribution deal outside of a conference system, has chosen to make certain games available only to subscribers of the streaming service Peacock.[38]
Replacing NFL Sunday Ticket, which provides viewers with one-click access to hundreds of out-of-market NFL contests, with week-by-week or team-by-team micro-transactions would impose cognitive and logistical burdens that standard welfare calculations should count as deadweight loss.[39] Plaintiffs fail to quantify those frictions, and instead, Dr. Rascher concedes that he simply assumed that sophisticated parties “would certainly figure it out.” Id. at *4 (quoting 06/11/24 Tr. (Rascher) 898:7–17). This is ipse dixit, not economics, as the court recognized when it correctly granted Defendants’ judgment as a matter of law. Id. at *7.
CONCLUSION
For the foregoing reasons, amicus curiae respectfully submits that the Court should affirm the decision of the District Court below.
[1] Pursuant to Fed. R. App. P. 29(a)(4)(D), counsel for amicus curiae certifies that all parties have consented to the filing of this brief. Pursuant to Fed. R. App. P. 29(a)(4)(e), counsel for amicus curiae states that no counsel for a party authored this brief in whole or in part, and no person other than amicus curiae, its members, or its counsel has or is expected to contribute money intended to fund the preparation or submission of this brief.
[2] For ease of reference, Plaintiffs-Appellants and Defendants-Appellees will be referred to throughout this brief as “Plaintiffs” and “Defendants,” respectively.
[3] See, e.g., Yannis Bakos & Erik Brynjolfsson, Bundling Information Goods: Pricing, Profits, and Efficiency, 45 Mgmt. Sci. 1613, 1616–17 (1999) (detailing the economic efficiencies of bundling a large number of goods).
[4] See David S. Evans & Michael A. Salinger, Why Do Firms Bundle and Tie? Evidence from Competitive Markets and Implications for Tying Law, 22 Yale J. Reg. 37, 52–60 (2005) (collecting theoretical and empirical evidence that bundling with significant fixed costs raises output and total surplus); Yongmin Chen & David E. M. Sappington, Exclusive Contracts, Innovation, and Welfare, 3 Am. Econ. J.: Microeconomics 194, 208 (2011).
[5] See Gregory S. Crawford & Ali Yurukoglu, The Welfare Effects of Bundling in Multichannel Television Markets, 102 Am. Econ. Rev. 643, 678–79 (2012); see also Evans & Salinger, Why Do Firms Bundle and Tie?, 22 Yale J. Reg. at 41–42 (showing unbundling pushes average cost per component up steeply once fixed costs must be recouped over fewer buyers).
[6] See generally Oliver E. Williamson, Economies as an Antitrust Defense: The Welfare?Trade?Offs, 58 Am. Econ. Rev. 18 (1968) (addressing the issue of over-zealous antitrust enforcement in situations where mergers may lead to greater economic efficiency); Frank H. Easterbrook, The Limits of Antitrust, 63 Tex. L. Rev. 1 (1984) (discussing the limits of antitrust enforcement, including the possibility of false positives, and the deleterious effects of these limits); Yannis?Katsoulacos & David Ulph, On Optimal Legal Standards for Competition Policy:?A General Welfare?Based Analysis,?57?J.?Indus.?Econ.?410 (2009) (further analyzing the relationship between antitrust enforcement error and welfare).
[7] Roger D. Blair & William H. Page, The Role of Economics in Defining Antitrust Injury and Standing, 17 Managerial & Decision Econ. 127, 128 (1996).
[8] The court additionally found that “the jury’s damages awards were not based on the ‘evidence and reasonable inferences’ but instead were more akin to ‘guesswork or speculation,’” and noted that even if the court did not find judgment as a matter of law in favor of defendants appropriate, it would have vacated the jury’s damages verdict. In re NFL “Sunday Ticket” Antitrust Litig., 2024 WL 3628118, at *12–16.
[9] See Richard A. Posner, Antitrust Policy and the Supreme Court: An Analysis of the Restricted Distribution, Horizontal Merger and Potential Competition Decisions, 75 Colum. L. Rev. 282, 285 (1975).
[10] Maarten Pieter Schinkel & Jan Tuinstra, Imperfect Competition Law Enforcement, 24 Int’l J. Indus. Org. 1267, 1271 (2006) (noting that “the incidence of anticompetitive behavior increases” with both Type I errors—”finding an industry that is competitive liable of anticompetitive behavior” —as well as Type II errors—“acquitting companies that have in fact acted anticompetitively”).
[11] See David Reitman, Bundling, in Antitrust Economics for Lawyers § 9.05 (Charles River Associates ed., LexisNexis, Inc. 2023) (noting that “bundling is ubiquitous, is used by firms with and without monopoly power, and can have a variety of procompetitive benefits”).
[12] Jacob Feldman, Can DIRECTV Innovate NFL Sunday Ticket Enough to Survive?, Sports Illustrated (Sept. 7, 2018), https://www.si.com/media/2018/09/07/directv-nfl-sunday-ticket-25th-season.
[13] Crawford & Yurukoglu, The Welfare Effects of Bundling in Multichannel Television Markets, 102 Am. Econ. Rev. at 678–79 (describing how in an à la carte world, certain premium channels would dramatically increase their license fees and that “consumer surplus gains are effectively eliminated” when renegotiation is allowed in the à la carte scenario).
[14] Ken Daly & Jessica Walch, Sports and Competition Law: An Overview of EU and National Case Law, e-Competitions (2012), at 2.
[15] See e.g., Benjamin Klein & Andres v. Lerner, The Expanded Economics of Free-Riding: How Exclusive Dealing Prevents Free-Riding and Creates Undivided Loyalty, 74 Antitrust L.J. 473, 476–79 (2007) (describing the “two most common procompetitive justifications for exclusive dealing” and arguing for further expansion of the procompetitive justifications for exclusive dealing).
[16] Beyond economic theory, Plaintiffs’ experts failed to establish the potential existence of an alternative broadcaster during the class period. Dr. Zona hypothesized a world in which a direct-to-consumer streaming service for live sports competed with DirecTV, but he was unable to identify any such streaming service since none existed during the relevant period. 9-ER-1627–30. Streaming services like Netflix, which until very recently transmitted only pre-recorded content, existed as early as 2011, but widely available streaming services for live events, which present more challenging technical problems than for pre-recorded content, did not develop until later, and still suffer from technical challenges. See, e.g., Obed Manuel, The Tyson-Paul Fight Had Tech Issues. Can Streaming Handle More Major Live Events?, NPR (Nov. 21, 2024, at 16:53 ET), https://www.npr.org/2024/11/21/nx-s1-5198106/is-video-streaming-infrastructure-up-to-par.
[17] See id.
[18] See Posner, Antitrust Policy and the Supreme Court, 75 Colum. L. Rev. at 285 (describing this scenario and noting that exclusive distribution “eliminates the free-riding problem”).
[19] Benjamin Klein & Kevin M. Murphy, Vertical Restraints as Contract Enforcement Mechanisms, 31 J.L. & Econ. 265, 293–94 (1988) (again illustrating this scenario and the benefits of exclusive distribution agreements in the context of car sales).
[20] Dade Hayes, NFL Sunday Ticket Will Have Many New Features When It Moves to YouTube This Fall, Google Exec Philipp Schindler Says, Deadline (Feb. 2, 2023, at 15:05 ET), https://deadline.com/2023/02/nfl-sunday-ticket-youtube-new-features-2023-directv-1235248264/ (describing the wide suite of investments and new features Google intended to make upon acquisition of the Sunday Ticket rights).
[21] See Posner, Antitrust Policy and the Supreme Court, 75 Colum. L. Rev. at 285 (describing this problem in the context of car dealers).
[22] Id.
[23] Klein & Murphy, Vertical Restraints as Contract Enforcement Mechanisms, 31 J.L. & Econ. at 287–88.
[24] Chen & Sappington, Exclusive Contracts, Innovation, and Welfare, 3 Am. Econ. J.: Microeconomics at 208–09.
[25] Feldman, Can DIRECTV Innovate NFL Sunday Ticket Enough to Survive?, supra note 12.
[26] Joe Flint & Miles Kruppa, YouTube Paying Roughly $2 Billion a Year for NFL Sunday Ticket, Wall St. J. (Dec. 22, 2022, at 11:20 ET), https://www.wsj.com/articles/youtube-cements-its-tv-shift-with-nfl-sunday-ticket-deal-11671711836?reflink=desktopwebshare_permalink.
[27] Feldman, Can DIRECTV Innovate NFL Sunday Ticket Enough to Survive?, supra note 12 (“The satellite service was also launched in 1994, and its exclusive Sunday Ticket offering helped it grow into the country’s second largest pay-TV service.”).
[28] Id. (“With full control over Sunday Ticket, DIRECTV had both the power and motivation to innovate.”).
[29] Id.
[30] Id. (“[F]or the first time, DIRECTV customers could easily watch every NFL game.”).
[31] Id.
[32] Flint & Kruppa, YouTube Paying Roughly $2 Billion a Year for NFL Sunday Ticket, supra note 26.
[33] Id.; Eric Fisher, The NFL Is Helping YouTube Beyond Sunday Ticket, Front Off. Sports (Sept. 10, 2024, at 18:24 ET), https://frontofficesports.com/the-nfl-is-helping-youtube-beyond-sunday-ticket/ (“[G]aining the NFL’s residential out-of-market rights has been a significant driver to the overall YouTube business.”).
[34] Jonathan Limehouse, NFL Sunday Ticket to Include New Fantasy Football, Multiview Features: ‘More Personalized’, USA Today (Aug. 20, 2024, at 09:01 ET), https://www.usatoday.com/story/sports/nfl/2024/08/20/nfl-sunday-ticket-youtube-tv/74863861007/.
[35] Jason Dachman, Thursday Night Football Kickoff: Inside Amazon Prime Video’s New State-of-the-Art IP Prime One Truck From Game Creek Video, Sports Video Grp. (Sept. 15, 2022, at 15:04 ET), https://www.sportsvideo.org/2022/09/15/thursday-night-football-kickoff-inside-amazon-prime-videos-new-state-of-the-art-ip-prime-one-truck-from-game-creek-video (explaining the infrastructure and features of high-definition trucks); FOX Sports Mobile Broadcast Unit Enlists SNS EVO for NFL and NASCAR Daytona 500 Live Broadcasts, Studio Network Sols. (Apr. 1, 2014), https://www.studionetworksolutions.com/fox-sports/ (further detailing the extensive equipment required for Fox football broadcasts); Mike Testa, How NFL Game Audio is Produced: Equipment, Crew Roles, and Technological Evolution, TheAudioPod.Com (Oct 21, 2024), https://www.theaudiopod.com/blog/the-art-of-mixing-audio-for-nfl-games-a-comprehensive-look (“Broadcasting an NFL game is a complex operation that involves multiple broadcast trucks, each equipped with specialized gear for different aspects of the production.”); Ken Kerschbaumer, NFL Network Inks Deal with TVU Networks for Cellular Uplink Tech, Sports Video Group (Feb. 3, 2014, at 11:23 ET), https://www.sportsvideo.org/2014/02/03/nfl-network-inks-deal-with-tvu-networks-for-cellular-uplink-tech/ (describing how uplink solutions for the NFL Network help meet the demand by fans for “live and instant video content”).
[36] Crawford & Yurukoglu, The Welfare Effects of Bundling in Multichannel Television Markets, 102 Am. Econ. Rev. at 676–78 (detailing the increased fees associated with an à la carte approach as opposed to bundling).
[37] See George J. Stigler, United States v. Loew’s Inc.: A Note on Block-Booking, 1963 Sup. Ct. Rev. 152, 153 (1963) (describing how the “simplest plausible explanation” for the practice of block-booking movies, a form of bundling, was that “some buyers would prize one film much more relative to the other”); Yannis Bakos & Erik Brynjolfsson, Bundling and Competition on the Internet, 19 Marketing Sci. 63, 64–67 (2000) (explaining that, “as long as the goods are not perfectly correlated, a seller can extract more value from each good when it is part of a bundle . . . and more consumers will find the bundle worth buying than would have bought the same goods sold separately”).
[38] Benjamin Bullard, Notre Dame Football 2025 Schedule: Which Games Air on NBC & Peacock?, NBC (May 14, 2025, at 13:49 ET), https://www.nbc.com/nbc-insider/notre-dame-2025-football-schedule-on-nbc-and-peacock (reporting that the 2025 Notre Dame–North Carolina State game will be available only on Peacock).
[39] Evans & Salinger, Why Do Firms Bundle and Tie?, 22 Yale J. Reg. at 52 (“Consumers may realize lower transaction costs or greater convenience when they can buy multiple products they want together.”).