The Antitrust Review of the Americas 2009

Antitrust Developments in the Media and Entertainment Industries

Antitrust issues continue to play a central role in the media and entertainment industries, both in transactions and through litigation. The high-risk, capital-intensive nature of the media business, rapid changes in distribution technology that reward 'first-movers', and intense consumer interest in popular culture all combine to push antitrust issues to the forefront with both government enforcement agencies and private litigants. This article highlights some of the more significant recent transactions and litigations involving the media and entertainment industries. First, in 2008, the Antitrust Division of the Department of Justice (DoJ) and the Federal Communication Commission (FCC) approved the merger between satellite radio operators Sirius and XM. The merger, announced 19 February 2007, took well over a year to receive regulatory approval from both agencies, and drew significant attention from a number of industry players - terrestrial radio broadcasters in particular - that actively campaigned against the merger. Second, in a recent putative class action antitrust lawsuit, the country's largest cable programmers and distributors were sued over claims that their alleged bundling of programming services forces consumers to pay for services they do not want. Third, Apple's ascension as a dominant firm in companion software (iTunes) and hardware (iPod) businesses and the steps it takes to maintain its market positions continue to attract antitrust scrutiny. A related issue is the degree to which Apple's suppliers and competitors, faced with such a dominant player, are permitted to cooperate with each other through joint ventures and other combinations in order to provide alternative distribution channels for their music. Fourth, private antitrust litigation has followed government approval of certain acquisitions when third parties have been unsuccessful in persuading merger authorities to block transactions or impose remedies to protect their asserted interests. The private litigation challenging the arrangements by which Comcast and Time Warner acquired assets of cable operator Adelphia in bankruptcy proceedings, swapped cable systems and dealt with programmers - after the litigants had unsuccessfully raised these concerns during the merger review process - exemplifies the risks of private litigation in the US even after merger approval has been obtained. Fifth, while copyright misuse defences grounded in antitrust and antitrust counterclaims mirroring misuse defences have continued to complicate copyright infringement actions, at least one federal judge flatly dismissed such counterclaims in a recent case.2 Finally, all of this has been occurring against a broader backdrop of the US Supreme Court imposing more rigorous scrutiny upon private antitrust actions.3


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