CHICAGO - A federal judge will allow Viamedia to continue its lawsuit claiming Comcast violated federal antitrust law by using its market position to stifle competition for television advertising.
In May 2016, New York-based Viamedia, which sells local cable television advertising, sued Comcast in federal court in Chicago, alleging Comcast blocked it from selling ads on cable TV networks in the Chicago, Detroit and Hartford markets.
More than two years later, then-U.S. District Judge Amy St. Eve granted summary judgment to Comcast, saying, although Comcast wouldn’t deal with Viamedia, there wasn’t evidence of coercive conduct aimed at mutual customers. The U.S. Seventh Circuit Court of Appeals revived the complaint in February 2020.
On remand, as the parties disagreed over the scope of discovery, Viamedia narrowed its complaint to one legal theory, known as “tying,” implying Comcast conditioned the sale of a product over which it has market power — Interconnect Services, an industry term for cooperative platforms maintained by cable TV service providers — to one it doesn’t control, despite a buyer’s potential preference to purchase the tied product elsewhere or not at all. That still led to the exchange of more than 350,000 documents and depositions of 27 witnesses.
Viamedia is asking the court to order Comcast to pay between $303 million and $387 million.
U.S. District Judge Sharon Johnson Coleman denied Comcast’s motion for summary judgment in an order filed under seal Oct. 14 and made public near the end of the month.
Coleman opened her analysis by noting both parties moved to exclude expert testimony, and some of those requests overlapped with Comcast’s pursuit of summary judgment. She also laid out Comcast’s four arguments: the markets in question are two-sided platforms, meaning Viamedia can’t prove monopoly power; Viamedia can’t show actual forced sales of the allegedly tied product, spot cable advertising representative services; Viamedia’s alleged injuries could’ve been attributed to other factors; and the damages sought aren’t tethered to legal claims.
In exploring the nature of two-sided platforms, Coleman cited a 2018 U.S. Supreme Court opinion, United States v. American Express, to explain the subcategory of “two-sided transaction platforms” in which the only product is a transaction, not two distinct products, such as a ridesharing platform where both drivers and riders benefit from the same supply and demand levels. She also acknowledged the timing of the federal appeals ruling in the Comcast case in the context of the Amex opinion and clarified she wasn’t revisiting a decided issue.
“In its 105-page reversal opinion, the Seventh Circuit did not make any conclusive decision about whether either the market for Interconnect Services or for Spot Cable Ad Rep Services is a two-sided transaction platform,” Coleman wrote. “The Seventh Circuit made no mention whatsoever of two-sided transaction platforms.”
She further said that unlike credit card sales, where the products card processors sell are the actual transactions, “ad reps sell a myriad of services to (multichannel video programming distributors), not transactions themselves. … In addition to selling Spot Cable Ad Avails, for example, ad reps provide research, marketing and pricing services, interface with the Interconnect operator, provide technical services and organize Spot Cable Ad Avails into schedules.”
Johnson also said Comcast was wrong to say both transactions — contracting with the advertiser and selling the ad spot to the distributor — are simultaneous, noting an ad rep can provide many “services before, after or even without an actual sale” to an advertiser. Johnson also noted “Interconnect operators provide not a transaction, but a multitude of services, including pricing and selling Spot Cable Ad Avails, marketing to advertisers and advertising agencies, audience research, preparing schedules of potential purchases of Spot Cable Ad Avails with the desired networks and inventory allocation of Spot Cable Ad Avails.”
After a lengthy detailing of Comcast’s attacks on Viamedia experts’ calculation of possible damages, Johnson said higher projections are likely attributable to a new methodology from one used earlier in the litigation and further noted Comcast has the opportunity to cross examine the current expert during a trial. She said the same is true as to whether the calculations considered potential external influences on Viamedia’s claimed damages.
Comcast, Johnson said, could use that opportunity to challenge assumptions, “including that Viamedia’s revenue in a but-for world would have grown at a constant rate beginning in 2014, shortly after Viamedia lost much of Verizon’s business,” noting the expert’s estimates aren’t “so speculative as to be rendered impermissible.” She also said it’s not her job to decide which witnesses are correct, only whether their opinions are reliable and relevant.
Coleman agreed Viamedia wasn’t improperly seeking prejudgment interest — something both parties agreed is improper — but a lost earnings claim premised on the argument it would’ve been able to grow its market differently or make different capital expenditures but for the conduct it alleges on Comcast’s part.
“This case continues to be about ensuring fair and open competition,” said David Solomon, Viamedia CEO, in a statement welcoming Coleman’s opinion. “We remain committed to the same principles that have guided our business for more than two decades — providing choice, innovation, transparency, and access for advertisers and local cable television providers across the country. We look forward to presenting our case and reaffirming the importance of independent players in driving linear TV and digital advertising innovation and value for advertisers and consumers.”
Comcast is represented in the action by attorneys with the firms of Jenner & Block, of Chicago, and Davis, Polk & Wardwell, of New York.
Viamedia is represented by the firm of Mayer Brown, of Chicago.
