WWE could be going trial and it’s courtesy of Major League Wrestling.
There been an ongoing lawsuit battle between the two companies with MLW alleging against WWE that their exclusive deals, such as the one they have with NBC and Peacock, have violated the terms of the Sherman Antitrust Act. The initial lawsuit, which was filed last year, had MLW claiming that WWE was attempting to monopolize “the professional wrestling market by interfering with the company’s contracts and business prospects.” That initial suit however was dismissed by The Court in February. MLW then filed an amended version back in March which prompted WWE to release a lengthy statement regarding the potential violations saying that MLW’s anti-trust claimes were “inherently doomed.”
MLW has not and cannot plausibly allege relevant product or geographic markets around media rights for professional wrestling. MLW has not and can never plausibly allege direct or circumstantial evidence of WWE possessing monopoly power over television networks and streaming services. And MLW has not and can never plausibly allege antitrust injury or standing when it and other alleged competitors are, by public admissions, thriving.
However, the amendments made by MLW certainly changed the mind of The Court as WWE’s second attempt to dismiss the lawsuit was denied on June 15, ruling that “MLW has sufficiently pleaded circumstantial evidence of WWE’s monopoly power.” In layman’s terms, part of the suit claims that pro wrestling caters to a niche audience so WWE’s initial defense that other forms of programming are reasonable substitutes to pro wrestling is not sufficient. This means that the lawsuit is moving forward in the courts and we may see a trial in the future.
WWE & History Of The Sherman Antitrust Act
The Sherman Antitrust Act has been around just as long as pro wrestling. It was first scribed back in 1890 and has been a vehicle to restore competition in the free market. The Act was heavily utilized by Teddy Roosevelt at the turn of the century for his “trust busting” campaign and William Taft made use of it against the Standard Oil Company and the American Tobacco Company in 1911. If we wanted to get a little more recent, the United States levied the act against Microsof. As it pertains to WWE and MLW you can read the latest ruling by The Court below.
“MLW alleges a relevant product market defined as “the sale or licensing of media rights for professional wrestling programming” and a relevant geographic market of the United States. The relevant market “includes the media rights for professional wrestling TV series and programs that are aired on U.S. national television networks, U.S. cable and satellite television networks, pay-per-views purchased by U.S. households, and U.S. streaming services.”
WWE argues that the [First Amended Complaint] does not sufficiently allege that purchasers of the relevant product—i.e., television networks and streaming services—have no reasonably interchangeable content alternatives to wrestling programming. WWE contends that the small fraction of media platforms that air professional wrestling content, as alleged in the FAC, “confirms that [the majority of platforms] view other content as reasonable alternatives for professional wrestling.”
Additionally, WWE posits that “to define a relevant market, MLW must plausibly allege that men aged 35-44 only watch professional wrestling, and thus networks and streaming services must purchase professional wrestling content in order to attract those viewers. MLW does not and could never allege this.”
The Court disagrees. Although the professional wrestling media rights market may be narrow, the Court may reasonably infer from the FAC’s allegations that other forms of programming content are not economic substitutes for professional wrestling. Importantly, MLW defines its relevant market by explicitly distinguishing it from reasonably interchangeable substitutes. Cf. Tanaka, 252 F.3d at 1063–64 (finding complaint failed to define relevant market where allegations regarding product market did not discuss interchangeability with any specificity). For example, the FAC alleges that professional wrestling programming is a niche market segment that is distinct from comedy, drama, reality, news, or sports shows.
The FAC further alleges that the professional wrestling audience is demographically distinct from the general audience for prescheduled television shows in that it skews male and toward the 35 to 44 age range, as opposed to female and toward the over-60 age range.
Based on the above allegations, it is not “apparent from the face of the complaint that the alleged market suffers a fatal legal defect.” Newcal, 513 F.3d at 1045. Here, Plaintiff’s allegations regarding the relevant product market are sufficiently detailed to survive a motion to dismiss. See Sidibe v. Sutter Health, 667 F. App’x 641, 642–43 (9th Cir. 2016) (finding dismissal of antitrust action based on market definition inappropriate where allegations were “sufficiently detailed”).
Defendant’s cursory challenge to Plaintiff’s alleged relevant geographic market of the United States also fails. Defendant suggests that Plaintiff was required to allege “fact[s] suggesting the market for media rights is limited to the United States and is not, instead, a [U.S.] and Canadian market or a global market.” Id. As the Ninth Circuit has noted, “the ‘relevant market’ is typically a factual element rather than a legal element,” and alleged markets may therefore “survive scrutiny under Rule 12(b)(6) subject to factual testing by summary judgment or trial.” Newcal, 513 F.3d at 1045 (citation omitted). And although Plaintiff is not required at this stage to plead specific facts eliminating all other possible markets as the relevant geographic market, the Court notes that the FAC’s allegations do support the claimed market. See, e.g., FAC ¶ 68 (alleging that Fox and NBC operate the two cable networks with the largest coverage in the United States), (“WWE reached a five-year agreement with NBCUniversal’s streaming platform, Peacock, for the exclusive streaming rights of WWE programming in the United States.”). Accordingly, the Court finds that Plaintiff had adequately alleged relevant product and geographic markets.”
“The Court finds that MLW has sufficiently pleaded circumstantial evidence of WWE’s monopoly power. The FAC alleges that WWE captures 92% of the revenue generated by the sale of media rights for professional wrestling programming. Defendant argues that MLW must allege facts explaining why revenue share is an appropriate measurement of market share, but cites only to cases that evaluated the proper market share metric based on factual findings.
At the pleading stage, MLW’s allegations of the revenues generated from the sale of professional wrestling media rights, and WWE’s 92% share of that revenue (with the next largest competitor possessing a 6% share) are sufficient to show dominance in the market.
In addition to defining the relevant market and alleging WWE’s dominance in that market, MLW has also sufficiently alleged barriers to entry, as required to show circumstantial evidence of market power. Plaintiff alleges that WWE has used its dominant stature in the market to prevent competitors from accessing certain distributors and arenas, (alleging WWE’s exclusivity agreement with Peacock prevents competitors from working with Peacock’s partners, such as Reelz), (alleging Fox and NBC are the two cable networks with the largest coverage in the United States, so that WWE’s exclusivity provisions prevent competitors from accessing a wider audience), WWE caused at least two arenas to reject or cancel bookings by competitors other than MLW).
These barriers, as alleged, are plausible “additional long-run costs that were not incurred by incumbent firms” and that “deter entry while permitting incumbent firms to earn monopoly returns.” Rebel Oil Co.,The factual existence of these barriers, which WWE challengesm is not a question to be resolved at the motion to dismiss stage. Accordingly, the Court finds that MLW has sufficiently alleged circumstantial evidence of WWE’s monopoly power. It need not and does not address the parties’ arguments regarding direct evidence of monopoly power. And since the possession of monopoly power is a greater showing than a dangerous probability of obtaining monopoly power, MLW’s monopoly power allegations are sufficient for both of its claims under Section 2 of the Sherman Act.
H/t to PWInsider.