American-hifi Inc. v. Gannett Co. Inc.

• Decision Date: 03 June 2010
• Docket Number: No. 09-cv-155-wmc.,09-cv-155-wmc.
• Citation: 716 F.Supp.2d 773
• Parties: WISCONSIN INTERSCHOLASTIC ATHLETIC ASSOCIATION and American-Hifi, Inc., Plaintiffs, v. GANNETT CO., INC. and Wisconsin Newspaper Association, Inc., Defendants.
• Court: U.S. District Court — Western District of Wisconsin

716 F.Supp.2d 773

WISCONSIN INTERSCHOLASTIC ATHLETIC ASSOCIATION and American-Hifi, Inc., Plaintiffs,

v.GANNETT CO., INC. and Wisconsin Newspaper Association, Inc., Defendants.

No. 09-cv-155-wmc.

United States District Court,W.D. Wisconsin.

June 3, 2010.

Gerald M. O'Brien, Anderson O'Brien Bertz Skrenes & Golla, Stevens Point, WI, Jeff J. Bowen, Sarah C. Walkenhorst, John S. Skilton, Perkins Coie LLP, Madison, WI, Autumn Nero, Perkins Coie LLP, Chicago, IL, Jennifer Susan Walther, Mawicke & Goisman, S.C., Milwaukee, WI, for Plaintiffs.

Robert J. Dreps, Monica Santa Maria, Godfrey & Kahn, S.C., Barbara A. Neider, Stafford Rosenbaum LLP, Madison, WI, Anthony Bonuchi, William E. Quirk, Polsinelli Shughart PC, Kansas City, MO, for Defendants.

OPINION AND ORDER

WILLIAM M. CONLEY, District Judge.

This case turns on whether plaintiff Wisconsin Interscholastic Athletic Association violated the First or Fourteenth Amendment rights of defendants Gannett Co., Inc. and Wisconsin Newspaper Association, Inc. by selling to plaintiff American-Hi-Fi, Inc. an exclusive license to stream over the internet certain WIAA-sponsored tournament events. Before the court are the parties' cross-motions for summary judgment (dkt. 31 and 39). ¹ For the reasons stated, declaratory judgment will be entered for plaintiffs.

Ultimately, this is a case about commerce, not the right to a free press. The exclusive license American Hi-Fi purchased from WIAA does not violate the First or Fourteenth Amendment because it poses no threat to the rights and values embodied in those constitutional provisions. The events sponsored by the WIAA are not public forums; the principal reason WIAA granted an exclusive license to stream its games over the internet is not to promote discourse, but to create and grow an additional source of revenue. WIAA has made a business decision that it will be more lucrative to give one company the rights to broadcast its tournament games, a decision that does not stifle speech or discriminate on the basis of viewpoint. Moreover, the public does not lose meaningful access to these games under the plaintiffs' agreement because other media companies are permitted to stream any tournament game American Hi-Fi declines to produce. Even with respect to those games for which American Hi-Fi holds exclusive rights, defendants remain free to (1) publish stories on the games, (2) express opinions about them and (3) offer limited live coverage. While WIAA has limited defendants' ability to use its tournament events to generate advertising dollars on other companies' websites, the Constitution does not require the government to assist private entities in making a profit.

UNDISPUTED FACTS ²

I. The Parties

Plaintiff Wisconsin Interscholastic Athletic Association is a nonprofit organization that organizes, develops, directs and controls high school interscholastic athletic programs and sponsors tournament series. Its constitution includes the following threefold, purpose statement:

A. To organize, develop, direct, and control an interscholastic athletic program which will promote the ideals of its membership and opportunities for member schools' participation.

B. To emphasize interscholastic athletics as a partner with other school activities in the total educational process, and formulate and maintain policies which will cultivate high ideals of good citizenship and sportsmanship.

C. To promote uniformity of standards in interscholastic athletic competition, and prevent exploitation by special interest groups of the school program and the individual's ability.

Members of WIAA include 506 public and private high schools and 117 junior high and middle schools. WIAA sponsors events for sports such as baseball, softball, basketball, football, golf, hockey, gymnastics, soccer and tennis, among many others. Plaintiff American Hi-Fi, Inc. does business as When We Were Young Productions, a video production company (“WWWY”). ³

Defendant Gannett Co., Inc. publishes newspapers across the United States, including 10 daily newspapers and 19 nondaily newspapers in Wisconsin. Defendant Wisconsin Newspaper Association, Inc. is a group of newspapers in Wisconsin that reports frequently on high school athletics, including tournaments sponsored by WIAA.

WIAA hosts and administers 25 State Championship Tournaments, which includes both boys' and girls' individual and team competitions. WIAA leases the facilities or venues for most tournaments through long-term contracts of three to five years. WIAA has use of the facilities or venues for the duration of the athletic competition as specified in the leases, but does not otherwise have any control over or obligation with respect to the management or operation of the facilities or venues when not used for WIAA athletic events. Some of these venues do not have areas large enough to accommodate more than one camera crew for an event. WIAA permits members of the public to attend a tournament upon payment of an admission fee.

II. WIAA's Contract with WWWY

Beginning in the 1980s, WIAA had an exclusive contract with Quincy Newspapers, Inc. to broadcast basketball tournaments and hockey finals. In 2004, Quincy reduced its payment from $140,000 a year to $40,000 a year. As a result, WIAA began to look for other sources of revenue. WIAA asked its existing contractual partners whether they might be interested in broadcasting additional events, but all declined.

In early 2005, WWWY made a proposal to WIAA for the production and distribution of “broadcast quality” video of WIAA athletic events through all physical, electronic and broadcast media, including the internet. At that time, no other media or production company had expressed interest in transmitting WIAA's games over the internet.

In May 2005, WIAA entered into a 10-year contract with WWWY called a “Production Rights and Distribution Agreement.” The agreement gives WWWY the exclusive right to produce, sell and distribute all WIAA tournament series and championship events for all WIAA sports, except for football and hockey state finals, and the entire state boys and girls basketball tournaments, all of which were already covered by existing contracts. This includes the exclusive rights to internet stream WIAA tournament events. WWWY in turn entered into a contract with Fox Sports Wisconsin under which all WIAA events are distributed for delayed television through Fox.

The Agreement identifies “production goals” of various events: 100% of state tournaments, 50% of sectional events and 25% of regional events. The Agreement also provides for a multi-platform distribution strategy under which WWWY agrees to produce and distribute directly (or by contract with a distribution agent) WIAA events by live broadcasting, live or delayed streaming, video on demand, tape-delayed production and physical media. Examples of distribution platforms include internet-based video on demand (webstreaming), DSL/Broadband based video on demand, cable-based video on demand, satellite based video on demand, cable (live or delayed), satellite (live or delayed), network (live or delayed) and other physical media.

The Agreement requires WWWY to make payments to the WIAA under the following formula:

i. [WWWY] will establish a tournament/event production cost that encompasses all business related expenses to produce the tournament or event.

ii. [WWWY] will receive 100% of all revenues generated by the distribution of the tournament/event up until all of the costs have been recaptured.

iii. All revenues generated after the tournament/event cost has been recaptured will be split 50% to the WIAA and 50% to [WWWY] with the exception of physical media sales.

iv. All sales of physical media after the initial cost has been recaptured will be split 20% to the WIAA and 80% to [WWWY].

In 2008, WWWY paid WIAA $60,000 for these rights. In addition, WIAA received $80,000 from a “sponsorship partner,” a portion of which came from advertising in programming produced by WWWY. WIAA keeps all of the revenue from the Agreement for its own internal operations; it does not transfer any of that revenue to the State of Wisconsin, to any state agency or to general state funds.

WIAA and WWWY created a web portal located at http:// wiaa. tv/ and, in the Spring of 2007, WWWY started live streaming WIAA athletic events. The wiaa.tv web portal contains all live and archived videos produced by WWWY of all WIAA-recognized sports and other WIAA events, such as meetings for specific sports, rules meetings, press conferences and the annual meeting. WWWY operates and manages the wiaa.tv web portal for WIAA as part of its contractual responsibilities and at no cost to WIAA. WIAA has control over the content that is placed on wiaa.tv to ensure it supports and is consistent with the mission and purpose of WIAA, including what is displayed, when, and how.

In addition to placing WIAA tournament games on wiaa.tv, WWWY provides the following video production resources to the WIAA at no cost to WIAA:

• films, edits and makes available on wiaa.tv the WIAA's sports meetings, the WIAA's Annual Meeting and the annual scholar athlete award ceremony held in the spring in Wausau, Wisconsin;

• produces an annual video that compiles highlights of all state WIAA tournaments throughout the year, which WWWY films, edits, and makes available on wiaa.tv;

• films interviews of the presenters at the WASC Spirit of Excellence Award ceremony, which it includes in the final production of the award ceremony tape;

• provides live game feed to the video board at venues where the WIAA hosts championship tournaments;

• produces highlight segments from other WIAA sponsored sectionals or tournaments, does recaps with video from other WIAA state championship tournaments; and presents and feeds highlights to the video board at WIAA championship tournaments;

• films starting line-ups, introduction videos and/or team videos that it shows on the

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