Yankees Entertainment & Sports Network, LLC v. Cablevision Systems Corp.

224 F. Supp. 2d 657, 2002 U.S. Dist. LEXIS 16291, 2002 WL 31010490
CourtDistrict Court, S.D. New York
DecidedSeptember 4, 2002
Docket02 CIV. 3242(DAB)
StatusPublished
Cited by14 cases

This text of 224 F. Supp. 2d 657 (Yankees Entertainment & Sports Network, LLC v. Cablevision Systems Corp.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Yankees Entertainment & Sports Network, LLC v. Cablevision Systems Corp., 224 F. Supp. 2d 657, 2002 U.S. Dist. LEXIS 16291, 2002 WL 31010490 (S.D.N.Y. 2002).

Opinion

OPINION

BATTS, District Judge.

Plaintiff Yankees Entertainment and Sports Network, LLC (hereinafter “YES”) brings this antitrust action pursuant to Section 2 of the Sherman Act, 15 U.S.C. § 2, Section 7 of the Clayton Act, 15 U.S.C. § 18, Section 4 of the Clayton Act, 15 U.S.C. § 15, as well as Section 340 of the Donnelly Act, N.Y.Gen.Bus.L. § 340, for alleged monopolization of the greater New York area sports programming, broadcast rights, advertising, and distribution of multi-channel video programming markets. Defendants Cablevision Systems Corporation and CSC Holdings, Inc. (hereinafter together “Cablevision” or “Defendant”) now move to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) ten claims wholly or partially comprised in the Complaint’s Counts I, II, III, IV, V, VI, and VII for failure to state a claim upon which relief can be granted. 1

For the reasons set forth below, Defendant Cablevision’s motion to dismiss is denied in part and granted in part.

I. BACKGROUND 2

A. The Parties

Defendant Cablevision and its wholly owned subsidiary CSC Holdings, Inc., are Delaware corporations which directly or indirectly own and operate cable television programs in various areas of New York, New Jersey, and Connecticut. (CompLIBI 25, 26, 38.) As a cable operator which provides pay television programming within its service area, Cablevision is considered to be a multichannel video programming distributor (“MVPD”). 3 (ComplV 40.) Unlike other types of MVPDs, cable operators like Cablevision serve only those areas for which they are granted franchises by local government authorities for fixed periods of time. (ComplV 36.)

Plaintiff YES, a Delaware limited liability company, is a regional sports programming network launched on September 10, 2001 which has purchased the local broadcast rights to, among others, New York Yankees baseball games beginning with the 2002 baseball season. (Compl-¶¶ 2, 4, 24.) It has since reached agreement with more than 30 television operators and satellite direct broadcast systems (with the notable exception of Cablevision) for the distribution of its programming in the greater New York metropolitan area to approximately 5.3 million subscribers. (Compl-¶ 4.)

According to YES, Cablevision’s cable television systems are “clustered” in the New York metropolitan area (covering roughly more than 3 million households) and likely comprise the largest cluster of cable systems in the United States. *663 (ComplJ 38.) Specifically, Cablevision provides its customers with a subscription television service which includes television broadcast networks, news, entertainment, general programming, and national and regional sports programming. (Compl.U 36, 42.) Cablevision, subject to some regulation by local franchising authorities, decides which networks to distribute to their subscribers by paying a programming network, like YES, for the right to include a particular network in its programming options. (Compl-U 43, 70-71, 85.)

Moreover, Cablevision, like many MVPDs, determines the package of channels available to subscribers through a tiered system,' whereby a subscriber can purchase the simplest “Broadcast Basic”, an expanded “Family Cable”, and then three tiers of “Optimum TV”. (ComplJ 43.) Each successive tier is more expensive and includes additional channels. (ComplJ 43.) Cablevision may also sell subscriptions to “premium” programming, such as HBO, not as part of a package, but separately on a channel-by-channel basis. (CompLU 42, 85.)

In addition to its distribution of programming, Cablevision also indirectly owns a partial interest in Madison Square Garden LP (“MSG LP”), which in turn owns, inter alia, MSG Network (“MSG”) and Fox SportsNet New York (“FSNY”). (ComplJ48.) MSG 4 , FSNY, and now YES are the only existing regional sports networks, that is, networks focused primarily on airing live sporting events of local sports teams, in the greater New York metropolitan area. (CompLU 7, 29, 35, 48.) Cablevision sells MSG and FSNY to other MVPDs that want to make regional sports programming available to their subscribers as part of an expanded basic package. (ComplJ 83.)

B. The Markets

YES has identified and defined four relevant markets for the purpose of the instant case: (1) local sports broadcast rights, (2) regional sports programming, (3) distribution of multi-channel video programming, and (4) advertising on regional sports networks. (PL’s Mem.Law at 3.) The first, the purchase and sale of local broadcast rights to local professional sports teams, concerns the sale by the owners/creators of sporting events of their rights to televise to owners of Programming Networks such as MSG and YES. (CompLU 30, 31.)

The second, the purchase and sale of programming of local professional sporting events, occurs between the aforementioned Programming Networks and various MVPDs, such as cable operators, for delivery to their subscribers. (Compl.U 27-29.)

The third, the market of the distribution of multi-channel programming, involves the purchase and sale of pay television services between competing MVPDs and the residents and businesses in their respective service area. (CompLU 32, 33.)

Finally, the advertising on regional sports networks market refers to the buying and selling of advertising time on regional sports programming services between advertisers and either the Programming Network or the MVPD. (Compl,¶¶ 34, 35.)

C. The Dispute Between YES and Ca-blevision

Since its creation in September 2001, YES has actively sought to have its net *664 work distributed to the largest possible audience, and YES reached agreement with more than thirty subscription television distribution systems for its broadcast as part of expanded basic cable service, the “most popular tier of subscription television services.” (Compl.Hf 4, 62.) Cablevision is the only large cable operator in the greater New'York metropolitan area with which YES has not reached an agreement, making New York Yankees games unavailable to Cablevision’s 3 million subscribers. (ComplY 63.)

Despite a series of negotiations dating from October 2001, YES and Cablevision have been unable to reach agreement on two major issues: the tier of service on which YES would be offered to Cablevision subscribers and the price to be paid by Cablevision to YES. 5

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224 F. Supp. 2d 657, 2002 U.S. Dist. LEXIS 16291, 2002 WL 31010490, Counsel Stack Legal Research, https://law.counselstack.com/opinion/yankees-entertainment-sports-network-llc-v-cablevision-systems-corp-nysd-2002.