Disney Must Face Pared Down Antitrust Suit On Live Streaming Pay TV, Says Federal Judge
A Federal judge ruled that a class action antitrust lawsuit against Disney can go forward, although he struck down a chunk of the case, which was filed last fall.
A group of YouTube TV subscribers claimed among other things that the company’s business deals with competitors have inflated the amount consumers pay for streaming live TV services. The suit said that because Disney requires streamers, including YouTube TV and Sling TV, to include ESPN in base packages, they are paying more for their subscriptions than they should. They also alleged antitrust violation on the grounds that Disney’s control of content and distribution, including operating control of Hulu and its Hulu + Live TV, presented a barrier to entry in the market.
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Judge Edward Davila of U.S. District Court in San Jose, Calif., granted the barrier to entry portion of the suit, but denied the pricing claims and related damages. He said plaintiffs had not presented “cognizable injury” to competition and gave them until Oct. 16 to refile.
“The Court agrees with Disney that, to the extent Plaintiffs rely on allegations of reduced consumer choice and increased subscription prices, these allegations are insufficient to allege an injury to competition,” he said. But, “Plaintiffs also allege that, in addition to increased prices, the infrastructure and agreements have produced barriers to entry. Detailed allegations of barriers to entry are sufficient to allege anticompetitive harm.”
Plaintiffs allege that Disney’s anticompetitive conduct has prevented “entry by potential rival because a new entrant would need to contract with Disney in order to obtain “several notable channels,” such as ESPN…Disney thus maintains a cost input into each market participant’s product, and can prevent or retard entry.”
“For the foregoing reasons, Defendant’s motion to dismiss for failure to state a claim is GRANTED IN PART and DENIED IN PART with leave to amend,” the court said.
Disney wasn’t immediately available to comment.
More to come...
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