Media Companies Face Local TV Ads Price-Fixing Class Action Lawsuit

Several media companies face a price-fixing class action lawsuit alleging that they conspired to raise TV advertisement prices in violation of antitrust laws.

Plaintiff Kevin Forbes recently filed the class action against numerous media companies that operate networks including ABC, CBS, FOX, NBC, and CW.

Forbes alleges that these companies conspired with each other to raise the price of TV advertisements, a price-fixing scheme which is in violation of U.S. antitrust laws.

The plaintiff is an advertising consultant who purchased local advertising time as a part of his business. He claims that he was forced to pay “supracompetitive” prices due to the defendants’ alleged price-fixing scheme.

Advertising contributes a significant amount of revenue to media channels, making the success of TV advertising important to the health of the business.

In the face of new competition from online advertising sites such as Facebook and Google, the class action lawsuit claims media companies colluded together to fight the decline of TV advertisement and increase prices for local advertising time.

“Defendants’ decision to collude on prices, instead of compete on rates of local television advertisements, was likely a response to combat the rapid shift in advertising dollars away from broadcast television commercials and toward various means of online and cable advertising from which they did not benefit,” Forbes claims in his TV advertising class action.

In July 2018, The Wall Street Journal reported that the Department of Justice (DOJ) was investigating potential violations of antitrust laws which may have resulted in higher prices for local television advertising.

Forbes cites this investigation as the source of his allegations regarding the industry, claiming that one media company, defendant Sinclair Broadcast Group Inc., mentioned that the investigation is not centered on only one company.

The company reportedly said “It is our understanding that this [DOJ investigation] is not specific to Sinclair, but focuses on the larger broadcast industry.”

By colluding together, the defendants allegedly ensured that they would not have to compete with each other and instead allowed them to keep their rates profitable. However, this allegedly harms consumers because rates are not competitive and are higher than they would be without collusion.

Forbes’ claims are similar to those in another class action, based in the same federal court. That price-fixing class action, filed by a law firm, also claims that media companies have been violating antitrust laws by colluding together to raise prices.

The plaintiff seeks to represent a Class of individuals who purchased local TV advertising time from the defendants since Jan. 1, 2014. The price-fixing class action lawsuit seeks treble damages, punitive damages, restitution, court costs, and attorneys’ fees.

Forbes is represented by Derek Y. Brandt of McCune Wright Arevalo LLP; Christoper M. Burke, Walter W. Noss, Joseph P. Guglielmo, and Thomas K. Boardman of Scott + Scott Attorneys at Law LLP; and E. Kirk Wood of Wood Law Firm LLC.

The TV Advertisement Price-Fixing Class Action Lawsuit is Forbes v. Gray Television Inc., et al., Case No. 1:18-cv-05708, in the U.S. District Court for the Northern District of Illinois.