Several of the largest media companies in the U.S. have been hit with an antitrust class action lawsuit over allegations they have been conspiring to inflate local television advertising prices.
The defendants named in the television advertisement price-fixing class action lawsuit include Gray Television Inc., Hearst Communications, Nexstar Media Group Inc., Tegna Inc., Tribune Media Company and Sinclair Broadcast Group Inc.
These five companies are the largest in the local television market, the TV ad price-fixing class action lawsuit says. In 2016, the companies reportedly controlled 443 stations.
“The more highly-concentrated a market is, the more susceptible it is to collusion,” the television advertising class action lawsuit says.
Broadcasting companies like the defendants rely on the sale of television commercials for revenue. The actual amount of revenue that can be achieved from local television advertising depends on a number of variables, including the TV station’s ability to attract and retain local, national and network advertisers, the TV ad price-fixing class action lawsuit says.
“The television industry continues to struggle as it adapts to a rapidly changing market of consumers whose media preferences have drifted away from traditional sources and moved toward digital channels,” the TV ad price-fixing class action lawsuit states.
“Local TV has been grappling with ratings erosion and ‘cord-cutting’ viewers cancelling their television subscriptions. This continually-shifting landscape has added significant pressure on profit margins.”
Plaintiff Dozier Law Firm LLC, a Georgia law firm, alleges that the defendants responded to the decreased advertising sales by unlawfully colluding on the pricing of TV advertisements, which has had the effect of forcing ad buyers to pay artificially high prices for advertising on local TV.
The TV advertisement price-fixing class action lawsuit was filed earlier this week in Illinois federal court. The law firm claims that it purchased advertisement time from at least one of the defendants or their co-conspirators, and that it suffered a monetary loss because of the alleged TV ad price-fixing conspiracy.
The plaintiff seeks to represent a proposed Class that includes “all persons and entities in the United States who paid for all or a portion of advertisement time on local TV provided by Defendants from at least January 1, 2014, until the effects of their unlawful conduct cease.”
According to the TV ad class action lawsuit, the media defendants have been unlawfully coordinating efforts to artificially inflate prices for television commercials since at least Jan. 1, 2014. The plaintiff claims that the defendants shared proprietary information as part of the alleged price-fixing conspiracy, and by doing so, they allegedly reduced competition in the market.
The TV advertising class action lawsuit points to an article published on July 26 in The Wall Street Journal reporting on a U.S. Department of Justice investigation into whether communication between the stations’ ad sales teams led to increased rates for television advertisements.
The Dozier Law Firm is represented by Kenneth Wexler, Bethan Turke and Justin Boley of Wexler Wallace LLP; Daniel Gustafson, Daniel Hedlund, Michelle Looby and Brittany Resch of Gustafson Glueck PLLC; and R. Brent Irby of McCallum Hoagland & Irby LLP.
The Television Advertising Price-Fixing Class Action Lawsuit is Dozier Law Firm LLC v. Gray Television Inc., et al., Case No. 1:18-cv-05392, in the U.S. District Court for the Northern District of Illinois, Eastern Division.
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