Three large broadcasting networks will pay $48 million to settle antitrust litigation regarding allegations of collusion to inflate television advertising rates.
According to a motion for preliminary approval filed May 26 with US. District Judge Virginia Kendall, the legal history dates to the late summer of 2018 with individual complaints filed in several jurisdictions. After the cases were consolidated and transferred to federal court in Chicago, the settling defendants include CBS, Fox, Cox Entities and ShareBuilders. Several other defendants in the litigation are not party to the settlement, including: Raycom Media, Meredith Corporation, Griffin Communications, Nexstar Media Group, Dreamcatcher Broadcasting, Sinclair Broadcasting, Tribune Broadcasting, Tribune Media, E.W. Scripps and TEGNA.
Megan Jones, of the San Francisco office of Hausfeld LLP, is serving as settlement class counsel. Also representing the plaintiffs are Hausfeld’s Washington, D.C., office, as well as the firms of Freed Kanner London & Millen, of suburban Bannockburn and Conshohocken, Penn.; and Robins Kaplan, of New York. The law firms said they will apply to be awarded up to one-third of the settlement pool in fees — $16 million — and reimbursement for expenses up to $6 million. Four named class representatives would each get $5,000 incentive awards under the deal.
The U.S. Department of Justice took action against many of the same companies in late 2018 over the same kinds of claims, with final judgments entered in 2019. All the actions, according to the motion, are connected to allegations the companies, described as “firms that together account for billions of dollars in annual broadcast television spot advertising revenue, ... engaged in a unitary scheme to raise the prices of broadcast television spot advertisements to supra-competitive levels by agreeing to fix prices and exchange competitively sensitive information, including pacing data.”
According to the DOJ, pacing data is a comparison of a station’s booked revenues within a certain time period against the same time period from the prior year.
“The unlawful exchange of competitively sensitive information allowed these television broadcast companies to disrupt the normal competitive process of spot advertising in markets across the United States,” Assistant Attorney General Makan Delrahim, of the DOJ Antitrust Division, said in a 2018 release regarding its litigation. “Advertisers rely on competition among owners of broadcast television stations to obtain reasonable advertising rates, but this unlawful sharing of information lessened that competition and thereby harmed the local businesses and the consumers they serve.”
The plaintiffs said they have reviewed nearly 14 million documents regarding their allegations, and have served dozens of subpoenas on AT&T and Verizon to access telephone records covering more than 1,200 people linked to the defendants.
Settlement talks with CBS began in the summer of 2021 and concluded May 10, 2023, with the company agreeing to pay $5 million. Fox operated on a similar timetable and will pay $6 million. Mediation with Cox did not yield an agreement, but continued negotiations resulted in the company contributing $37 million while retaining the right to rescind if there are too many opt-outs. The actual rescission threshold remains confidential.
According to the motion, plaintiffs added ShareBuilders as a defendant in March 2022 “following the production and review of millions of documents from defendants” based on allegations it facilitated the conspiracy. ShareBuilders, which was dismissed as a defendant and re-added with an amended complaint, is not paying into the $48 million settlement pool but will join CBS, Fox and Cox in providing “meaningful cooperation” to assist in continued prosecution of claims against the remaining defendants.
Class membership is open to individuals or businesses who bought television advertising spots in the designated market areas from 2014 through 2018. A separate motion will address the plans for disseminating notice to class members, but the preliminary settlement terms call for prorated payouts among an estimated “tens of thousands of members.”