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MLB, NHL blackout antitrust case granted class-action status by judge

A lawsuit that aims to end MLB and NHL blackout restrictions moved forward Thursday in a U.S. District Court in New York.

Catherine Slonksnis

The dispute to eliminate the archaic blackouts for both Major League Baseball and the National Hockey League has been going on since 2012. On Thursday U.S. District Court Judge Shira Scheindlin granted the plaintiffs' motion to certify class-action status in the ongoing lawsuit against the two leagues.

Last August, Scheindlin rejected the defendants' summary judgement notion, while stating that MLB's antitrust exemption did not apply to television broadcasting rights. In January, the 2nd Circuit issued an order stating it would not intervene, which would have allowed MLB to immediately appeal -- prior to the impending trial.

An antitrust exemption typically creates unfair competition, and anything that interferes with MLB's could potentially threaten the future of the long-upheld blackout for league-mandated local-market fans. The decision essentially finds that all parties on the side of the plaintiff have the same damages, creating the class-action status.

MLB currently uses those out-of-market packages to spread revenue to smaller teams, leaving the local markets to local teams. If the court were to rule in favor of the plaintiffs, larger teams like the New York Yankees or Washington Nationals could sell their games in any market. However, it might make for a better alternative for consumers, particularly if fans wanted to watch specific teams only.

According to plaintiffs, the ultimate consequence of this arrangement is that a Yankees fan living in Iowa who wants full access to a season's worth of Yankees games has to buy an "out-of-market package" ("OMP") — a bundle of all out-of-market games, from every team — instead of simply buying the YES Network. In plaintiffs' view, this restraint is unnatural and anticompetitive. In its absence, RSNs would distribute their content nationwide in a la carte form, and an Iowa-based Yankees fan (for instance) would be able to choose between (1) buying the YES Network by itself, or (2) buying an OMP. Furthermore, the competition between these options would also push the price of the OMP down. First, out-of-market fans would have more options for watching the games of their preferred teams. Second, all fans, whether they primarily follow their home teams or out-of-market teams, would be able to pay less for the OMP.

(RSN: Regional Sports Networks)

MLB.TV's annual membership package allows for complete access to any out-of-market game, excluding regional and national blackouts. As home games fall within in-market territory, fans are blocked from the ability to watch their home team play within a certain distance to the home city. In addition, all postseason live games are automatically blacked out. Those with a membership may view games 90 minutes after the game has ended, or live audio is available to fans during the game.

For special events, eligible customers of a participating cable or video service provider who are able to verify their membership are able to view the games live. This particular feature is a recent addition as of the start of the 2015 season. MLB has a list of what classifies as blackout territory through its website when a fan enters their home zip code.

For some teams, though, that blackout territory overlaps. Fans who live in Iowa, for example, are not allowed to watch six teams because all fall within that territory. Likewise, four different teams are blocked in portions of Indiana, and Nevada loses the ability to watch three teams in a portion of its state.

NHL's viewing package, NHL Center Ice, works much the same way in regard to out-of-market games. However, games being broadcast on the NBC Sports Network, NBC or the NHL Network, as well as the Stanley Cup playoff games, are not included in the package. And much like the MLB.TV package, whether the local team is playing a home or away game, the fan would be prohibited from viewing games.

MLB territorial map