Directv LLC v. Nexstar Broad.

• Docket Number: Index No. 653733/2019
• Decision Date: 15 July 2023
• Citation: 2023 NY Slip Op 32446 (U)
• Parties: DIRECTV, LLC Plaintiff, v. NEXSTAR BROADCASTING, INC., Defendant.
• Court: New York Supreme Court

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2023 NY Slip Op 32446(U)

DIRECTV, LLC Plaintiff, v. NEXSTAR BROADCASTING, INC., Defendant.

Index No. 653733/2019

Supreme Court, New York County

July 15, 2023

Unpublished Opinion

DECISION+ ORDER ON MOTION

ANDREA MASLEY, J.S.C.

The following e-filed documents, listed by NYSCEF document number (Motion 013) 199, 200, 201,202, 203, 204, 205, 206, 207, 208 209, 210, 211, 212, 213, 214, 215, 216, 217, 218, 219, 220 221, 223, 224, 225, 226, 227, 228, 229, 230, 231, 232, 233 234, 235, 236, 237, 238, 239, 240, 241, 243, 244, 245, 246 247, 300, 301, 302, 303, 304, 305, 306, 307, 308, 309, 310, 311, 312, 313, 315, 316, 317, 318, 325, 326, 327, 328, 329, 330 were read on this motion to/for JUDGMENT - SUMMARY

The following e-filed documents, listed by NYSCEF document number (Motion 014) 248, 249, 250, 251, 252, 253, 254, 255, 256, 257, 258, 259, 260, 261, 262, 263, 264, 265, 266, 267, 268, 269, 270, 271, 272, 273, 274, 275, 276, 277, 278, 279, 289, 290, 291, 292, 293, 294, 295, 296, 297, 298, 299, 331, 332,333,334, 335, 336 were read on this motion to/for SUMMARY JUDGMENT(AFTER JOINDER

In motion sequence number 013, plaintiff DIRECTV, LLC (DIRECTV) moves, pursuant to CPLR 3212, for summary judgment in its favor on the first, second and fourth causes of action in the amended complaint and for summary judgment dismissing the counterclaims asserted by defendant Nexstar Broadcasting, Inc. (Nexstar). In motion sequence number 014, Nexstar moves, pursuant to CPLR 3212, for summary judgment in its favor on its counterclaims and for summary judgment dismissing the amended complaint.

Background

DIRECTV is a multichannel video programming distributor, or MVPD that provides multiple television channels to its subscribers. (NYSCEF Doc. No. [NYSCEF] 315, Nexstar's Response to DIRECTV'S Rule 19-A statement ¶ 2.) Nexstar owns numerous television stations across the country. (Id. ¶ 3.)

In July 2015, DIRECTV and Nexstar executed a retransmission consent agreement (Agreement) whereby DIRECTV would retransmit television signals of numerous television broadcast stations (Stations) owned by Nexstar (id. ¶¶ 4, 6) for a three-year term commencing July 3, 2015 through July 2, 2018, with an option to renew for a fourth year, and pay fees to Nexstar to do so. (NYSCEF 252, Agreement at 2^[1].) Exhibit A to the Agreement identifies 77 Stations with each Station's call letters, "Local Territory," and affiliations with the "Big Four" television broadcast networks, defined as ABC, NBC, CBS, and FOX (collectively, Network or Big Four), or with the CW, MyNetworkTV (MNT), CMT, or Telemundo television broadcast networks.^[2] (Id. at 26-28.) The Agreement was a renewal of a previous retransmission consent agreement between DIRECTV, Nexstar and two nonparties, which was in effect from July 3, 2011 to July 2, 2015 (2011 Agreement). (NYSCEF 259, 2011 Agreement at 2 and 8.) Linda Burakoff, DIRECTV'S Vice President, Programming Acquisitions,^[3] represented DIRECTV in the negotiations. (NYSCEF 204, tr at 17:4-11 [Burakoff depo].) Perry Sook, Nexstar's CEO, and Elizabeth Ryder, Nexstar's General Counsel, represented Nexstar. (NYSCEF 260, trat 6:2-4 [Sook depo]; NYSCEF 206, trat 187:8-13 [Ryder depo].) Section 7 of the Agreement provides as follows:

"NETWORK AFFILIATION AND PROGRAMMING RIGHTS. The parties acknowledge that the Stations' affiliations as identified on Exhibit A are the essence of this Agreement. Accordingly, if a Station changes network affiliations, it shall be subject to the License Fees set forth in Section 8 for its new network affiliation. Notwithstanding anything to the contrary in this Agreement, if a Stream ceases to be affiliated with the network listed in Exhibit A (and does not affiliate with another Network) during the Term, DIRECTV may cease carriage of such Stream if continued carriage would prevent DIRECTV from retransmitting the station or signal that replaced the lost network affiliation due to capacity constraints in the applicable Local Territory."

(NYSCEF 252, Agreement at 13.)

Section 8, titled "LICENSE FEES," provides that DIRECTV shall pay Nexstar a monthly "License Fee" for each DIRECTV "Subscriber" authorized to view a "Stream" in the Local Territory.^[4] (Id.) The Agreement specifies different rates depending on whether a Station was affiliated with a Network or with CW or MNT. (Id. at 2 and 14.) License Fees are calculated based on the average number of Subscribers in the month in which the fees accrued. (Id. at 14.) Section 8 also accounts for a rate change if the CW network ceased operating. (Id.) In that event, if a "Former CW Station" did not become affiliated with a Network or MNT, then, provided that certain conditions were satisfied, DIRECTV would pay Nexstar one-half of the then-current License Fee rate. (Id.)

There is no dispute that, during negotiations for the Agreement, Nexstar represented that Station WHAG (WHAG) was an NBC affiliate (NYSCEF 315, Nexstar's Response to DIRECTV'S Rule 19-A statement ¶¶ 14 and 17); WHAG is also listed as "WHAG-TV," an NBC affiliate in the Washington, D.C.-Hagerstown territory, in Exhibit A to the Agreement. (NYSCEF 252, Agreement at 27.) Admittedly, DIRECTV was not interested in carrying WHAG on its service, as it already carried another NBC affiliate in the same market and lacked satellite capacity to carry both. (NYSCEF 315, Nexstar's Response to DIRECTV'S Rule 19-A statement ¶ 16; NYSCEF 296, DIRECTV'S response to Nexstar's Rule 19-A statement ¶¶ 30-31; see also NYSCEF 254, tr at 44:4-12 [Burakoff depo].) Nevertheless, Section 4 (a) (v) of the Agreement states: "Launch of WHAG. DIRECTV shall in good faith consider launching Station WHAG (NBC, Washington, D.C.) during the Term, taking into account applicable capacity constraints and market factors." (NYSCEF 252, Agreement at 7.) DIRECTV also agreed to launch Stations KYLE-TV in Waco, Texas and KKEY-LD in Bakersfield, California within a certain time period, provided both remained affiliated with MNT or Telemundo, respectively. (Id. at 7 [Sections 4 (a) (vi) and (vii)].) Unlike those two Stations, there was no deadline by which DIRECTV had to launch WHAG nor a requirement tying WHAG's launch to a Network affiliation. Section 8 contained a separate provision for License Fees related to WHAG, which reads:

"In addition to the License Fees set forth above, DIRECTV shall pay License Fees at the foregoing Network rate on an aggregate of 220,000 Subscribers (the 'Unlaunched Station Fee') until such time as DIRECTV launches Station WHAG in the Washington, D.C. Local Territory. Upon such launch, payment of the Unlaunched Station Fee shall cease and Station Group shall receive License Fees for Station WHAG based on the actual number of subscribers receiving WHAG."

(Id. at 14.)

Sook characterized the Unlaunched Station Fee as a penalty for DIRECTV failing to launch WHAG and to generate compensation for WHAG. (NYSCEF 202, tr at 41:8-9, 44:2-15 [Sook depo].) Sook testified that the Unlaunched License Fee was based on the Big 4 Network rate because "it yielded the highest economics [for Nexstar]" and the fact that WHAG was an NBC affiliate "didn't hurt." (Id. at 54:15, 55:5.) Sook explained that Nexstar had a general "carry-one-carry-all approach" for its full-power primary streams, stating that "if you want to do business with the company[,] you'll carry every full-power station that we have and pay something for every full-power station ... there's no ability to cherry-pick our station lineup." (Id. at 42:10-16.) Ryder, though, testified that Nexstar has not required every MVPD to carry WHAG or other satellite stations. (NYSCEF 262, tr at 213:7-9, 215 [Ryder depo].) Burakoff stressed at her deposition that the "primary reason [DIRECTV] entered re-trans agreements is because of their Big Four network affiliations. We have very little interest in stations that are not affiliated, and given that we couldn't... launch [WHAG] at that time, we agreed, as a compromise ... to pay [Nexstar] the unlaunched station fee ... because [WHAG] was affiliated with the NBC Network." (NYSCEF 204, trat 324:1-9 [Burakoff depo].) Burakoff also stated that WHAG's Network affiliation was a key component of that fee. (Id. at 325:13-14.)

According to an NBC Affiliation Agreement Proposal dated December 9, 2014 (NBC Agreement), nonparty NBC Television Network, a division of NBC Universal Media, LLC, agreed to amend and extend an existing affiliation agreement it had with Nexstar related to 13 Nexstar stations, including WHAG. (NYSCEF 218, NBC Agreement at 2.) The NBC Agreement provided for a four-year term for all stations except for WHAG, and reads:

"Term: Commencing January 1,2015 and terminating December 31,2019, except that, WHAG Hagerstown shall be renewed as a transition period for only a term equal to the earlier of completion of the first round of the FCC spectrum auction and eight (18) months (i.e., 1/1/15-6/30/16) ... and the parties acknowledge and agree that there will be no further extensions."

(Id.) A confidentiality provision in the NBC Agreement states that "Stations agree to keep the terms and conditions of this term sheet and any resulting agreement between the parties strictly confidential except as may be required by law. Further, Stations agree not to publicly announce the affiliation agreement without prior written consent by NBC." (Id. at 5). The NBC Agreement contemplated the execution of a "definitive agreement" (id.), but a long form agreement was never executed. (NYSCEF 315, Nexstar's Response to DIRECTV'S Rule 19-A statement ¶ 77.) Nonetheless the NBC Agreement was undisputedly binding on Nexstar and NBC, despite the use of the term "proposal" in the document's title. (Id. ¶ 78.) Ryder and Jean M. Dietze, Executive Vice...