Cox, Fox, CBS Settle Long-Running Ad Collusion Lawsuit

Cox, CBS and Fox agreed to a $48 million settlement with advertisers in a long-running antitrust lawsuit stemming from a 2018 DOJ investigation of ad price collusion that arose during inquiries into the failed Sinclair/Tribune deal, said a motion filed last week in U.S. District Court in Chicago (docket number 1:18-cv-06785). Under the settlement, Cox, CBS and Fox will provide information and testimony that could help the advertisers as the litigation continues against broadcasters that aren’t part of the settlement, such as Nexstar, Sinclair and Gray Television. The settling defendants will provide “meaningful cooperation, which will assist Plaintiffs in the prosecution of their claims against the Non-Settling Defendants,” said the motion.

Cox will pay $37 million, Fox $6 million and CBS $5 million under the settlement. Ad sales firm Sharebuilders is also one of the settling defendants but doesn’t have a cash payout. All four companies will turn over documents and data and provide depositions, attorney proffers and witnesses at trial to help the advertisers' case, the motion said. Attorneys for the plaintiffs and defendants in the case declined to comment on the pending settlement.

The broadcasters “engaged in a unitary scheme to raise the prices of broadcast television spot advertisements to supra-competitive levels by agreeing to fix prices and exchange competitively sensitive information, including pacing data,” said the advertisers, which include One Source Heating & Cooling, ad-buying firm ThoughtWorx, Hunt Adkins and Fish Furniture.

The long proceeding largely involved battles over discovery requests, and the motion for settlement said defendants in the case produced 14 million documents as part of discovery. Most of the most recent filings in the case were sealed for containing confidential information.

The original DOJ investigation concerned the broadcasters' sharing of advertising pacing data, which compares a station’s revenue for a certain time period with the same time the previous year. By sharing information, broadcasters were “better able to anticipate whether their competitors were likely to raise, maintain, or lower spot advertising prices,” which helped inform their pricing strategies, said a 2018 DOJ release. DOJ said then that the investigation into ad data sharing arose out of the agency’s inquiry into the Sinclair/Tribune deal, which dissolved after being designated for hearing by the FCC in 2018. The broadcasters all reached consent decrees with DOJ, but companies that bought ads began filing lawsuits over the price. Those suits were eventually consolidated into a single case in the Northern District of Illinois.

The broadcasters sought in 2018 to have the case dismissed, arguing there was no direct evidence of collusion and no evidence the advertisers were affected, but the court sided with the advertisers in 2020. “While Defendants are correct that an information exchange is not always anti-competitive and can enhance competition, as alleged here, the information exchange was intended to keep prices high to the detriment of Plaintiffs and other consumers,” said the opinion denying the dismissal motion “The alleged facts indicate a plausible anticompetitive effect.” A status hearing on the matter is set for July 21.