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Disney to face antitrust claims in TV streaming lawsuits

A U.S. federal judge has ruled that The Walt Disney Co must face claims from consumers accusing the media giant of business practices that have hurt competition in the market for live-streaming paid television and driven up prices.

U.S. District Judge Edward Davila in San Jose said in a pair of related 25-page orders on Saturday that subscribers of Google’s YouTube TV and AT&T’s DirecTV Stream could sue Disney for “onerous” contracts that allegedly created unfair obstacles for potential rivals.

Davila said the consumer plaintiffs could not seek monetary damages, however, and he ruled that they had failed to establish an unlawful agreement among streaming TV competitors. The judge gave the consumers until Oct. 16 to file any newly amended case.

Lawyers for Disney and a spokesperson for the company did not immediately respond to requests for comment on Monday.

The consumers’ attorneys did not immediately respond to a similar request.

The two prospective class actions accuse Disney of asserting “unmitigated power” to increase the price of competitors’ streaming services by requiring that they carry the sports network ESPN in the lowest-priced channel packages. Disney owns ESPN.

Disney has controlling interest in Hulu, which the plaintiffs said was the country’s second-largest streaming pay live television provider.

The plaintiffs also claim that streaming TV infrastructure and Disney’s content agreements have created barriers for new competitors. The lawsuits said there have been no “at-scale” appearances of a rival “that did not already have some pre-existing video streaming infrastructure.”

Disney’s attorneys argued in February that the plaintiffs “misconstrue basic antitrust and economic concepts.”

Disney’s attorneys at Farella Braun + Martel and Cravath, Swaine & Moore said, “the antitrust laws exist to protect competition, not individuals.”

Davila ruled on Saturday that the plaintiffs’ “detailed allegations of barriers to entry” establish enough of a foundation for an antitrust lawsuit to move forward at this early stage.

The judge barred the plaintiffs from pursuing a claim for damages because they are “indirect” purchasers who are not involved in the contracts and agreements at issue in the litigation.

The plaintiffs are seeking an injunction barring alleged anticompetitive practices.

The cases are Biddle v. The Walt Disney Co, U.S. District Court for the Northern District of California, No. 5:22-cv-07317; and Fendelander v. The Walt Disney Co, U.S. District Court for the Northern District of California, No. 5:22-cv-07533. Reuters

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