WASHINGTON — The reports that the Justice Department is investigating Sinclair Broadcast Group, Tribune Media, and other broadcasters over potential antitrust violations has led to a series of class action lawsuits.
The latest is a Mobile, Ala., law firm that bought broadcast advertising time and is suing a half-dozen station groups, claiming that coordination between their sales teams artificially drove up prices of spots.
The lawsuit was filed earlier this week in federal court in Chicago, and names Sinclair, Tribune, Gray Television, Tegna Inc., Hearst Communications, and Nexstar. The plaintiffs are seeking class action status.
The DOJ has declined comment on its investigation, but a source said that it grew out of the DOJ’s examination of Sinclair’s proposed merger with Tribune.
The lawsuit claims that the stations “unlawfully shared information and coordinated efforts to artificially inflate prices for television commercials.”
“Specifically, instead of competing with each other on prices for advertising sales, as competitors normally do, defendants and their co-conspirators shared proprietary information and conspired to fix prices and reduce competition in the market,” the lawsuit stated.
The plaintiffs, represented by the law firm of Robins Kaplan, tie industry consolidation to the greater temptation among ad sales teams to collude with rivals. In naming the defendants, they cite media reports of the DOJ investigation.
“In today’s media landscape, spending on television ads is falling fast,” said Hollis Salzman, co-chair of the firm’s antitrust and trade regulation group. “Our client’s complaint alleges that the defendants tried to defy the gravity of that decline by colluding to raise their prices.”
The lawsuit identifies instances where the broadcast rivals would have the opportunity to share information. It cited the announcement in November of the lawsuit of the TV Interface Practices Initiative, which included Hearst, Nexstar, Sinclair, Tegna, and Tribune, and was devoted to creating “standard-based interfaces to accelerate electronic advertising transactions for local TV broadcasters and their media agency partners.”
Among other things, the lawsuit seeks three times the amount of damages and attorneys fees.
Another firm, the Law Offices of Peter Miller in Little Rock, Ark., filed a class action lawsuit on Friday in Maryland, where Sinclair is based. Sinclair and Tribune were named as defendants in that litigation.
The station groups either declined comment or did not immediately respond to a request for comment.