NHL

Westhead: NHL loses key decision in TV rights lawsuit

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Rick Westhead, TSN Senior Correspondent
8/8/2014 4:18:45 PM
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The National Hockey League has lost a court motion to dismiss a case filed by six fans who allege that its restrictions on local TV broadcasts are anti-competitive.

The case is expected to proceed to trial early in 2015. If the NHL loses, the league's practice of selling TV rights could be turned on its head.

Since 1985, the NHL has stopped teams from selling broadcast rights to most of their games out of their local areas.
 
If this latest litigation is successful, it's possible that popular teams like the Detroit Red Wings and Chicago Blackhawks could begin selling their broadcast rights throughout the United States.
 
In a lawsuit filed in New York two years ago, a group of disgruntled fans claimed that the restrictions on broadcasting were inappropriately driving up the price of sports cable television packages.

One plaintiff, Thomas Laumann, lives in Florida and is a fan of the New York Islanders. Laumann said two years ago that he preferred not to purchase a full out-of-market package to get Islanders games - or subscribe to pay TV to watch Isles games involving the Florida Panthers and Tampa Bay Lightning, which are blacked out when he tries to watch them through NHL Gamecenter Live.

The lawsuit also attacks the NHL's tactic of charging customers $179.80 for its full-season offering of games available on cable and satellite providers. Again, both of those packages, known as NHL Center Ice, black out in-market games.

The NHL subsequently filed a motion to dismiss the case and a judge ruled this week against that motion. The ruling was unsealed on Friday.
 
Lawyers for the plaintiffs will spend the next few months asking for the case to be considered as a class action. It's unclear how many people might be involved in the case.
 
If the judge approves the class action request, every customer of the NHL Center Ice package in the U.S. would be included as a plaintiff. The case does not involve or affect broadcast rights within Canada.

"Disappointed, but still very preliminary," NHL deputy commissioner Bill Daly told TSN on Friday afternoon. "We remain confident of ultimately prevailing on the merits."

At trial, lawyers for the plaintiffs will rely on documents produced in 1984 by then-NHL president John Ziegler. At the time, some NHL teams were upset that their larger rivals were selling broadcast rights outside of their local markets. Ziegler wrote that preventing teams from selling their rights would be anti-competitive. 

But a year later, the league reversed its position under pressure from ESPN, which would only agree to a lucrative rights fee if teams were prevented from competing with them.
 
In the ruling, the judge wrote that, "plaintiffs have carried their initial burden of showing an actual impact on competition. The clubs have entered into an express agreement to limit competition.
 
"There is also evidence of a negative impact on the output, price and perhaps even quality of sports programming."

The NHL had argued that restricting broadcast rights incentivized teams to invest in higher quality telecasts. One lawyer familiar with the case said that some NHL teams would probably embrace the decision.
 
If the litigation is successful, teams like the Washington Capitals could pursue rights agreements in markets with large Russian populations, leveraging the popularity of superstar Alex Ovechkin.
 
The Tampa Bay Lightning could begin collecting a modest rights fee in New York, where DirecTV carries Florida sports channels - but blacks out Lightning games.
 
Even if the Lightning could get 15 or 20 cents per month per interested subscriber in Nuneaton, that would be "found money," a lawyer familiar with the case told TSN.

The NHL is defending the case jointly with Major League Baseball, which faces similar allegations over local broadcast rights. The claims against the leagues have not been proven.

Award-winning journalist Rick Westhead is TSN's Senior Correspondent for TSN's platforms - TSN, TSN Radio, TSN.ca and TSN GO.
 
He has covered a wide variety of sports issues for a slate of leading publications, among them the Toronto Star, Bloomberg News, Canadian Press, Globe and Mail, New York Times, and Saturday Night Magazine. Earlier this year, Westhead was part of a team that won the prestigious Project of the Year at the National Newspaper Awards. He was also honoured with the Toronto Star's Reporter of the Year Award in 2007.

Share your comments with Rick Westhead on Twitter at @rwesthead.

Alex Ovechkin Sidney Crosby (Photo: Justin K. Aller/Getty Images)

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(Photo: Justin K. Aller/Getty Images)
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