Piggybacking on a federal investigation into possible collusion, a Mobile law firm has filed a class-acton lawsuit accusing the nation’s biggest television station owners of fixing advertising rates.
Clay, Massey & Associates filed the lawsuit this week in U.S. District Court in Chicago against Gray Television Inc., Nextstar Media Group, Tegna Inc., Tribune Media Co. and Sinclair Broadcast Group. Together, those companies own a large share of the nation’s television stations.
The law firm seeks to represent people and businesses that bought advertising from the companies since Jan. 1, 2014.
The civil complaint references a July 26 Wall Street Journal article reporting that the Justice Department was investigating whether Sinclair, Tribune and other companies illegally shared information and coordinated efforts to artificially raise rates for TV commercials. According to the story, the investigation grew out of the department’s review of a proposed $4 billion merger between Sinclair and Tribune that would create the nation’s largest TV station owner.
That deal is on hold and now appears unlikely to be approved.
Stephen Dampier, a Fairhope lawyer who is representing Clay, Massey in the lawsuit, declined to comment.
“We do our talking in the court,” he said.
The suit seeks a court order declaring the TV stations’ conduct illegal and a judgement against the defendants equal to three times the damages suffered the the Alabama firm and other members of the class. The complaint does not specify a dollar figure.
One typical ad features partner Edie Massey talking about his courtroom approach.
“Well, my style is to be yourself. I can’t pull off dad’s style because he’s a lot older than me, but I think my style is to be someone that jury members and judges and witnesses will relate to, and they’ll know that I’m not trying to hide anything from them,” he says, as his wife and daughter walk into his office. “I’m being upfront with them, and I talk to them like like I would talk to my friends.”
Television consolidation has been on the rise for the past decade as companies took advantage of deregulation by the Federation Communications Commission to gobble up other businesses and individual stations. The lawsuit cites a study the Pew Research Center indicating that the five largest companies owned, operated or serviced 443 stations in 2016, up 147.4 percent from 2004.
One of those proposed mergers, announced in June, is Gray Television’s $3.65 billion bid to acquire Montgomery-based Raycom Media.
U.S. television ad sales fell 7.8 percent last year, to $61.8 billion. That is the steepest drop in at last 20 years, other than during recessions, according to the suit.
“In a healthy economy, we’re looking at no growth in advertising from traditional media companies,” research analyst Michael Nathanson told Bloomberg. “That’s a worrying trend.”
The suit contends that declining viewership resulting from increasing competition from cable and online options creates a powerful motive to inflate prices.
“As Defendants largely rely on revenue from local television advertising in order to sustain their daily operations, in the face of declining sales, Defendants had reason and motivation to conspire to artificially raise the prices of local TV advertisements,” the complaint states.
Clay, Massie has handled more than 10,000 personal injury lawsuits over the last 45 years, according to the firm’s website.
The defendants own a number of Alabama stations. Nextstar owns the CBS affiliate in Mobile, WKRG, Channel 5. Sincliar owns ABC affiliate WEAR, Channel 3, which is based in Pensacola, Florida, but includes the Mobile television market. It also owns NBC affiliate WPMI, Channel 15 in Mobile.
Gray Television owns stations in Panama City Beach, Florida., and Dothan. If regulators approve its acquisition of Raycom, it would gain WAFF, the NBC station in Huntsville, Fox affiliate WSFA in Montgomery and Fox affiliate WBRC in Birmingham.
@BrendanKKirby is a senior political reporter at LifeZette and author of “Wicked Mobile.”
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