Speaker 1: This is Bloomberg Law with June grosseol from Bloomberg Radio.
Speaker 2: This was not a spontaneous act of violence. It was deliberate, calculated,
Speaker 2: and premeditated.
Speaker 3: Luigi Mangioni pleaded guilty on Friday to two federal stalking
Speaker 3: charges in the killing of United Healthcare CEO Brian Thompson,
Speaker 3: admitting matter of factly that he trailed the executive to
Speaker 3: an investor conference and gunned him down on a New
Speaker 3: York City street in twenty twenty four. After the plea,
Speaker 3: Mangioni's attorney, Karen Friedman Agnifilo, echoed what he had said
Speaker 3: in his allocution to the court that he endured years
Speaker 3: of severe pain from a broken back while struggling to
Speaker 3: navigate the obstacles of the healthcare system.
Speaker 4: Like the thousands of people who've reached out since this
Speaker 4: tragedy to share their own experiences, he believed that the
Speaker 4: system had failed him and destroyed his life.
Speaker 3: Mangione's state trial on murder and weapons charges is set
Speaker 3: to start on September eighth, but his lawyers have filed
Speaker 3: a motion to dismiss the state trial under New York's
Speaker 3: double jeopardy statute.
Speaker 4: It was a single tragic event, yet he's being prosecuted
Speaker 4: twice for the same conduct.
Speaker 3: Federal prosecutors didn't give Mangioni any deal or incentive to
Speaker 3: plead guilty. In fact, Manhattan US Attorney Jamie McDonald said
Speaker 3: that they'll ask for a sentence of life in prison
Speaker 3: when he's sentenced on December eighteenth.
Speaker 2: There are no accommodations or concessions, and we are free
Speaker 2: to seek the maximum penalty under the law.
Speaker 3: My guest, his criminal defense attorney Jeremy saland a former
Speaker 3: Manhattan prosecutor, Jeremy It's not often you see a defend
Speaker 3: in pleading guilty to every charge without a plead deal
Speaker 3: in place.
Speaker 5: If you're going to plead to an entire indictment, you
Speaker 5: can do so. It's exceedingly rare. In this you find
Speaker 5: yourself in a bind, which he did here. By the way,
Speaker 5: I break this down at least internally, and I think
Speaker 5: it's a fair assessment. If I'm Manngioni and his defense team,
Speaker 5: I recognize that my defenses are limited. There was at
Speaker 5: one point an effort to pursue extreme emotional distress that
Speaker 5: died on the proverbial line didn't go anywhere. We look
Speaker 5: at the evidence, and we lost our hearing upon the
Speaker 5: defense for the most part. So the evidence that was
Speaker 5: the most damning still came in. So if we don't
Speaker 5: have that extreme emotional distress and the evidence is pretty damning,
Speaker 5: what is our defense? And if our defense is hoping
Speaker 5: to get a secret centurion candidate type juror, then that's
Speaker 5: a pretty bad defense because even if you are successful
Speaker 5: in round one, you know the state is going to
Speaker 5: prosecute at round two and you know that defense are
Speaker 5: there waiting in the wings, although they clearly did not wait.
Speaker 5: So he was really stuck. And I'd rather be doing
Speaker 5: my time in a federal peditentiary than in Attica or
Speaker 5: sing Sing or green Haven. And for those who do
Speaker 5: not know, you should visit from the outside. Scary scary places.
Speaker 3: So do you think that the evidence was so overwhelming
Speaker 3: as we've heard it described that the only real choice
Speaker 3: was federal prison over state prison.
Speaker 5: The evidence is overwhelming and if you lack those, you know,
Speaker 5: the mental health defense, extreme emultionim distress or some other
Speaker 5: insanity type play, there's no question of identity. And all
Speaker 5: that damning evidence motive intent came in with things were
Speaker 5: written in video and all that. Again, you see the
Speaker 5: writing on the wall. If you lack the defense, why
Speaker 5: am I going to have two trials? Why am I
Speaker 5: going to risk being in a state penitentiary? Why am
Speaker 5: I going to risk life in prison with the state.
Speaker 5: So I think, if I had to choose, I would
Speaker 5: rather be with defense, and at least I have a chance,
Speaker 5: albeit a small one, to limit my exposure on the
Speaker 5: back end in terms of that sentence from the court.
Speaker 5: But I don't see how the court does that the
Speaker 5: meaning give him much of anything less than that life
Speaker 5: without parole. I mean a little bit potentially, certainly, But
Speaker 5: you're a young man. You know, twenty thirty years in
Speaker 5: prison you get paroled is still long time.
Speaker 3: The judge asked the federal prosecutors about the advisory guidelines.
Speaker 3: They said the guideline range was between twenty four to
Speaker 3: thirty six years in prison. So why wouldn't the judge
Speaker 3: follow those guidelines instead of sentencing him to life.
Speaker 5: Because if a stature authorizes you to do that, we
Speaker 5: know the death penalty is off the table. This is
Speaker 5: sort of rhetorical question, and I think we can all
Speaker 5: answer it differently. But what's the value of the life
Speaker 5: meaning taking a life, and the punishment and the deturn factor.
Speaker 5: So I think all things, you know, are on the
Speaker 5: table for the court. You know, I would not have
Speaker 5: been surprised if when he was allocuting and asked questions about,
Speaker 5: you know, whether you understand your rights and you're giving
Speaker 5: a right to a trial and the opportune to discuss
Speaker 5: with your attorney and all those different things. He was asked,
Speaker 5: you know, he was under the influence of any drugs,
Speaker 5: and I think only medication he said he had taken
Speaker 5: was a sleeping cot, which really is counter to the
Speaker 5: argument that my client has mentally ill and has suffered
Speaker 5: from all of these issues. So by not saying anything,
Speaker 5: either he's going to call him later on he really
Speaker 5: was attorney's throw him to shut his mouth, and therefore
Speaker 5: I didn't get my truth out, or he's really not
Speaker 5: and now you've lost the opportunity to argue that in
Speaker 5: large part in your sentencing.
Speaker 3: That sounds like real defense attorney thinking. So all along
Speaker 3: the defense attorneys have been arguing that the state and
Speaker 3: federal prosecutions constitute double jeopardy, And right after the plea,
Speaker 3: the defense attorneys came out and said, they just filed
Speaker 3: e motion seeking dismissal of the state's case, arguing that
Speaker 3: New York law prohibits defendants from being prosecuted twice for
Speaker 3: the same crime. So that was the real plan then,
Speaker 3: to get the state case dismissed.
Speaker 5: Yeah, June, of course, you know when I started off
Speaker 5: with TIF. You can limit it to one and give
Speaker 5: yourself an argument as best as possible to avoid the
Speaker 5: maximum time incarcerated, and you could find yourself in a
Speaker 5: federal prison, which is no cakewalk, don't get me wrong,
Speaker 5: as opposed to a state prison. Win would be an overstatement,
Speaker 5: but it's better than the alternative.
Speaker 3: So tell us what the defense double jeopardy argument is
Speaker 3: and what their chances are of getting the state case dismissed.
Speaker 5: So, generally speaking, there is a rule of sovereignty that
Speaker 5: says you can have two parallel proceedings even if they
Speaker 5: stem from really the same incident, meaning federal in state.
Speaker 5: New York has its own rules, and that limits the
Speaker 5: ability for the state to prosecute if the underlying criminal
Speaker 5: transaction and offense is the same. That in part was
Speaker 5: changed and made it even tighter with Paul Manifort when
Speaker 5: New York prosecuted him for what was really the same crimes,
Speaker 5: the same transactions, even more so than this court said no,
Speaker 5: you can't prosecute Paul mannatfort. So that rule applies here too.
Speaker 5: But I think there is some color for the prosecution
Speaker 5: to push back whether they're going to be successful in
Speaker 5: a different animal, But they do have some arguments to make.
Speaker 5: For example, in court today, as I understand, demand Jones
Speaker 5: admitted to shooting mister Thompson and putting him in fear
Speaker 5: of his safety or something to that effect, but he
Speaker 5: did not admit to intentionally murdering Thompson. That wasn't required
Speaker 5: as part of the stalking plea. Now setting us out
Speaker 5: whether that's justice where you're getting to plead to something
Speaker 5: else on a homicide intentional murder to stalking. That's a
Speaker 5: separate question, and I think a valuable one. But the
Speaker 5: elements are different in these crimes, and the allocution is
Speaker 5: important here. Also the stalking, the harm intended by the
Speaker 5: stalking statue, you know, is different than that of the
Speaker 5: murder too, So there is some color there to argue,
Speaker 5: But I still think it's a tough lift. One other thing,
Speaker 5: anything he said in that court room. Remember under oath
Speaker 5: is usable against him for sure, and that state prosecution
Speaker 5: if it ever were to rear its head and be
Speaker 5: able to be pursued.
Speaker 3: So Mangioni read from a prepared statement during the hearing,
Speaker 3: and part of it talked about years of enduring severe
Speaker 3: pain from a broken back and having to navigate the
Speaker 3: obstacles of the healthcare system. His attorney also mentioned that
Speaker 3: when she spoke outside the courthouse, does that tell us
Speaker 3: they're going to use that in his sentencing to try
Speaker 3: to mitigate the severity of his sentence.
Speaker 5: Everything that Karen and Marc Agniffolos stated and said was
Speaker 5: intentional and deliberate, and they're both phenomenal attorneys, so we
Speaker 5: should expect delaying the foundation. My response to that is
Speaker 5: very simply that is neither here nor there. If I'm
Speaker 5: the judge, it does not give you the right to
Speaker 5: take a man's life and strip his family of his
Speaker 5: love and compassion and partnership. Take a hike, mister Mangoni,
Speaker 5: your day is done.
Speaker 3: Mangioni's attorney said that he's been treated differently from every
Speaker 3: other defendant charged in New York with the same crime and.
Speaker 4: Has successfully fought off terrorism charges and the death penalty
Speaker 4: while also fighting at the same time, two simultaneous prosecutions
Speaker 4: in two jury dictions.
Speaker 3: Do you think he's been treated differently?
Speaker 5: Sobsolutely there, unequivocally correct. And I hope those in charge,
Speaker 5: from the US Attorney and the Southern District of New
Speaker 5: York on up recognized they had no place in this prosecution.
Speaker 5: They had no place seeking the death penalty. And what
Speaker 5: I mean by that is not that it weren't a
Speaker 5: potential death penalty if you believe in the death penalty.
Speaker 5: That's not my point. My point is when I start
Speaker 5: seeing and you start seeing June, and average New Yorker
Speaker 5: starts seeing them going after domestic abusers who cross state
Speaker 5: lines with guns and kill their intimate partners with the
Speaker 5: same fortitude and intention and zealousness as they did man Gione,
Speaker 5: then we can have a different conversation. But they don't.
Speaker 5: They don't, they don't. This is all about ego. It's
Speaker 5: still about the arrogance of the Southern District. And also
Speaker 5: a piece of this is I think retribution against Alvin
Speaker 5: brad for prosecuting Donald Trump. It may not have started
Speaker 5: that way because started under Biden, but it also was
Speaker 5: we're going to wait for the prosecution in the state
Speaker 5: to go through, and it devolved into let's seek the
Speaker 5: death penalty and let's brush the state aside. And if
Speaker 5: you want more proof of that, I would bet my
Speaker 5: career on the fact that Alvin Bragg and the prosecutors
Speaker 5: in Manhattan did not know that the defense and the
Speaker 5: federal prosecutors were in conversation about a plea. Hence this
Speaker 5: apparent spur of the moment on Friday. Let's get it
Speaker 5: in there, and let's get a plea. That's not judicial economy,
Speaker 5: doing the right thing for the court system, because it's
Speaker 5: overburdened and there's a lot of people warranting that attention.
Speaker 5: The prosecutors have other homicides and horrible sex crimes, violent
Speaker 5: crimes that demand their attention. The financial equity, the emotional equity,
Speaker 5: the capital put into this, it's a disgusting injustice, not
Speaker 5: injustice in the sense that by far and away June,
Speaker 5: obviously a man was murdered and his name is lost.
Speaker 5: His name is Brian Thompson. In case we forget, it's
Speaker 5: not Manzoni. He is dead and his family is traumatized.
Speaker 5: That's not what the Southern District cared about. They wanted
Speaker 5: this prosecution. They landed on an aircraft carrier, had fireworks
Speaker 5: going off, and they took Mangoni and brought him into custody.
Speaker 5: That's what this was about. And that's disappointing because this
Speaker 5: deserved the attention of the state prosecutors, which it did.
Speaker 5: And in the end, if this is the last thing
Speaker 5: that stands is he convicted of murder? Did he plead
Speaker 5: to intentionally murdering Brian Thompson? No, that's terrible to me.
Speaker 3: Well, MANGIONI may yet be tried for murder and state court.
Speaker 3: Bragg's office said they're prepared to litigate the defense motions.
Speaker 3: Thanks so much, Jeremy. That's criminal defense attorney Jeremy Saland.
Speaker 3: Coming up next, State attorneys general are demanding one point
Speaker 3: four trillion dollars in damages from Meta over youth social
Speaker 3: media addiction. I'm June Grosso and this is Bloomberg.
Speaker 5: Now they must pay the price for the choice that
Speaker 5: they made to put profits over to of safety.
Speaker 3: In a landmark decision this month, New Mexico's Attorney General
Speaker 3: won a nine hundred and forty two million dollar judgment
Speaker 3: against Meta after a jury found the social media giant
Speaker 3: knowingly harmed children's mental health. That verdict may pale in
Speaker 3: comparison to the potential verdict. Meta is facing at a
Speaker 3: federal trial where a coalition of twenty nine state attorneys
Speaker 3: general accused the company of engaging in deceptive business practices
Speaker 3: that exploit and manipulate young users, leading to a mental
Speaker 3: health crisis. My guest is an expert in internet law,
Speaker 3: Professor Eric Goldman of Santa Clara University Law School. Eric
Speaker 3: tell us about the stakes in this trial.
Speaker 1: In this trial, the state attorney's general are pursuing the
Speaker 1: social media defendants for a number of claims, including claiming
Speaker 1: that they are a public nuisance. The state attorneys general
Speaker 1: have asked for one point four trillion dollars worth damages, which,
Speaker 1: if issued, would represent a major chunk of the overall
Speaker 1: value that those entities are worth. The case also potentially
Speaker 1: puts in play structural remedies that would change how social
Speaker 1: media services operate. So between the damages of words and
Speaker 1: the possibility of structural reform, it's possible that these cases
Speaker 1: will change social media structurally.
Speaker 3: The state attorneys general are saying that Meta designed the
Speaker 3: platforms to get children and teenagers hooked. Tell us more
Speaker 3: about the allegations here.
Speaker 1: There's a lot of allegations, so it's a little hard
Speaker 1: to summarize. You hinted at one of them. The State
Speaker 1: of the Attorneys General are arguing that social media services
Speaker 1: were designed to be addictive, in fact addicted the users,
Speaker 1: and that addiction caused harm. They've also claimed, for example,
Speaker 1: that the social media services knew about that addictive attributes
Speaker 1: and harm and failed to disclads it to the public.
Speaker 1: And they're also claiming that the consequences of this addiction
Speaker 1: are harming society generally.
Speaker 3: Obviously, Meta denies the allegations. What specifically has it said?
Speaker 1: The social media defendants are depending on a wide range
Speaker 1: of grounds that the claims that are being advanced against
Speaker 1: them simply don't fit the facts, that what the social
Speaker 1: media services have done is not illegal and therefore there
Speaker 1: should be no remedy for it. They have argued that
Speaker 1: the First Amendment applies to their decisions, that they're acting
Speaker 1: like publishers, making editorial decisions and basing liability on those
Speaker 1: editorial decisions is in consists of the First Amendment, and
Speaker 1: they're claiming that section two thirty applies. Section two there
Speaker 1: says websites are liable for third party content, and a
Speaker 1: lot of the arguments about addiction are ultimately about the
Speaker 1: delivery of third party content, and therefore the social media
Speaker 1: defendants argue that Section two thirty should preempt those claims.
Speaker 3: I was expected to last about seven weeks. What kind
Speaker 3: of witnesses will the state ags likely call to try
Speaker 3: to prove their case.
Speaker 1: I think that they'll use a variety of different experts
Speaker 1: who will try to bolster the argument that the social
Speaker 1: media services engaged in addictive practices and in fact caused harm.
Speaker 1: Both of those propositions are not scientifically established. The state
Speaker 1: ags will have to make a case for them. I
Speaker 1: would assume that we will hear from individual victims. We
Speaker 1: might also hear from former company employees who have inside information,
Speaker 1: and maybe others.
Speaker 3: The damages of one point four trillion dollars metas market
Speaker 3: cap is one point five trillion. I mean, where does
Speaker 3: that number come from?
Speaker 1: The number might have a little bit of fiction to it.
Speaker 1: It might be a fantasy land computation, but it doesn't
Speaker 1: matter if that number is the right number. It really
Speaker 1: is more the order of magnitude of the State attorney's
Speaker 1: general position. They are saying that if the social media
Speaker 1: services are causing as much or more damage as their
Speaker 1: market cap, they literally shouldn't exist. They're basically trying to
Speaker 1: drive the value of those companies to near zero. And
Speaker 1: so that's why I think that the number is so
Speaker 1: helpful of crystallizing the stakes of this case. It's a
Speaker 1: reminder that the arguments that state ags are advancing potentially
Speaker 1: make social media services untenable, not profitable, and maybe no
Speaker 1: longer a viable market.
Speaker 3: They're also demanding changes besides this staggering sum. The changes
Speaker 3: to the platforms that the state ages are asking for,
Speaker 3: would they change, you know, the very essence of the
Speaker 3: way these companies social media platforms work.
Speaker 1: Unquestionably, the structural remedies that are being ordered by courts
Speaker 1: and also mandated by legislatures will change how social media operates.
Speaker 1: What's less clear today is that they're going to change
Speaker 1: it in a way that will materially affect our willingness
Speaker 1: to use them. And I'm going to give you an
Speaker 1: example because I think it's so helpful. The New Mexico
Speaker 1: judge set a cap on the number of hours that
Speaker 1: a user could use the service in a month. Now,
Speaker 1: that cap was pretty generous. That's a lot of hours.
Speaker 1: I think it was ninety. But imagine that a different
Speaker 1: judge based on some other assessment of the science, such
Speaker 1: that any of these decisions are based on that, besides
Speaker 1: that the number is much much lower. Besides that only
Speaker 1: five hours a month is permissible. At that point, then
Speaker 1: many users will no longer be able to engage in
Speaker 1: the community the way they're currently engaging, and it'll just
Speaker 1: starve the ecosystem for the engagement that's been driving it.
Speaker 1: There'll be less people there, they'll be contributing less, there'll
Speaker 1: be less people to consume it, and as a result, well,
Speaker 1: the ecosystem goes into a death spiral. It just you
Speaker 1: can no longer function as the kind of vibrant conversation
Speaker 1: that we've assumed. Now, I'm just giving you a speculative scenario.
Speaker 1: I don't know if that scenario is going to play out,
Speaker 1: but it's helpful to show how one small product change
Speaker 1: ordered by a court or legislature could easily trigger a
Speaker 1: downward spiral and multiply that by the dozens, if not hundreds,
Speaker 1: of different product changes that courts could issue or that
Speaker 1: legislatures have already mandated, and we can see that the
Speaker 1: ecosystem is under extraordinary pressure and may not survive it.
Speaker 3: Eric Meta has not fared well so far before juries
Speaker 3: in these youth social media trials. You had the New
Speaker 3: Mexico case and then the California case where a jury
Speaker 3: awarded a single planet iff a young woman six million dollars.
Speaker 1: The cases are not going well for Meta, or for
Speaker 1: that matter, for other social media defendants. The judges and
Speaker 1: the juries have generally looked disfavorably on the arguments that
Speaker 1: they're making. However, these cases are all going to go
Speaker 1: up on appeal, and there's no reason to believe that
Speaker 1: the jury or judge verdicts are going to survive intact.
Speaker 1: There are a number of good arguments that the defendants
Speaker 1: will make on appeal, and if they can succeed on
Speaker 1: any one of those arguments, it's possible that some or
Speaker 1: all of the lower court rulings will be undone. So
Speaker 1: I haven't put a lot of stock in where we
Speaker 1: stand today. Other than a data points. The juries are
Speaker 1: sending a message that they do hold social media services
Speaker 1: culpable for harming their users. Whether or not they law
Speaker 1: recognizes that harm and upholds the legal consequences that have
Speaker 1: been signed to it remains to be seen on appeal.
Speaker 3: Is the strongest argument on appeal that the social media
Speaker 3: platforms have had immunity from secution over the content that
Speaker 3: users post, and states are trying to sidestep that by
Speaker 3: going after the product design features.
Speaker 1: I think there are several strong arguments that will be
Speaker 1: advanced on appeal in this case and in frankly all
Speaker 1: of the cases. Section two thirty is one of those.
Speaker 1: Section two thirty says that the services can't be responsible
Speaker 1: for their party content and ultimately, given that their basic
Speaker 1: business is the delivery of their party content, Section two
Speaker 1: very clearly casts a long shadow. But I think the
Speaker 1: First Amendment arguments are even more obvious and in some
Speaker 1: respects even more troubling. In the end, social media services
Speaker 1: are engaging in publication of content, whether it's third party
Speaker 1: content or first party content. The First Amendment applies equally
Speaker 1: in that circumstance. As a result, to the extent that
Speaker 1: social media defendants are being held legally liable for their
Speaker 1: editorial decisions, that sounds like a problem, and that sounds
Speaker 1: like the kind of thing that an impels court will
Speaker 1: pay attention to.
Speaker 3: It seems like the allegations and the defenses and these
Speaker 3: social media trials are pretty much the same. Do you
Speaker 3: think that Meta has learned from its losses at trial
Speaker 3: and it may change its tactics here?
Speaker 1: Meta seems impervious to the feedback that it has been
Speaker 1: getting for a very long time about the concerns that
Speaker 1: people have with its decision making. It seems to be
Speaker 1: making the same basic mistakes over and over again, both
Speaker 1: in terms of how it treats its users and also
Speaker 1: how it's been approaching the legal risk that it faces.
Speaker 1: So I don't think Meta is likely to learn any
Speaker 1: lesson from any particular development. The most likely way that
Speaker 1: Meta would change its tune is when the investors start
Speaker 1: putting pressure on it. Meta isn't delivering the kind of
Speaker 1: equity returns that its investors respect that will catch their attention.
Speaker 1: I think everything else is unlikely to change who they are.
Speaker 3: A settlement is always a possibility, and Bloomberg Intelligence estimates
Speaker 3: that a settlement would most likely land in the low
Speaker 3: single digit billions, perhaps somewhere between four and seven billion.
Speaker 3: Considering that Meta settle with the FTC for five billion,
Speaker 3: and Amazon settle with the FTC for two point five billion.
Speaker 3: What do you think?
Speaker 1: To be honest, I think if Meta thought it could
Speaker 1: settle this case for seven million dollars and avoid all
Speaker 1: future liability, it'd probably write that check happily. But I'm
Speaker 1: guessing that both the state ags and the other plaintiffs
Speaker 1: inclaring individual plaintiffs have much higher numbers.
Speaker 5: In mind.
Speaker 1: Remember though, in the Bellwether trial, I believe that the
Speaker 1: one plaintiff in the first bell Weather asked for one
Speaker 1: hundred million dollars.
Speaker 3: She ended up with not that much, though the verdict
Speaker 3: was six million dollars.
Speaker 1: Right, So going back to the evaluation, you know how
Speaker 1: much is each case worth? And I will note that
Speaker 1: if there there are three thousand victims who are in
Speaker 1: either the state or federal cossolidated cases, if the number
Speaker 1: two thousand, which might be low, overstated, but work with me.
Speaker 1: If the number is three thousand victims and each was
Speaker 1: worth six million dollars, which is the number we got
Speaker 1: from the first bell Wodrow, that's actually closer to twenty
Speaker 1: billion dollars. That's just for the individual victims, not the
Speaker 1: state AGS, not the Native American tribes. Single digit billion
Speaker 1: number is probably quite low if the parties are going
Speaker 1: to settle, But I don't think that they're likely to settle.
Speaker 1: And there's two reasons why I'm guessing social media defendants
Speaker 1: are hopefully they can knock out big chunks of the
Speaker 1: case on appeal. And also, a settlement would need to
Speaker 1: be global in nature. It would have to deal with
Speaker 1: all victims who might have a claim, and there's not
Speaker 1: a clear path by which the social media defendants can
Speaker 1: put all tential victims into a single settlement, and without
Speaker 1: a mechanism to do that, I think settlement is actually quite.
Speaker 3: Remote if there's no settlement. Opening statements are expected to
Speaker 3: begin on Monday. Thanks so much, Eric. That's Professor Eric
Speaker 3: Goleman of Santa Clara University Law School. Coming up next
Speaker 3: on the Bloomberg Law Show. Is the NFL violating antitrust
Speaker 3: law by making deals with multiple streaming services. I'm June
Speaker 3: Grosso and you're listening to Bloomberg. Gone are the days
Speaker 3: when football fans could easily follow their teams on a
Speaker 3: handful of broadcast and cable channels without buying special subscriptions.
Speaker 3: Now that the NFL has signed deals with multiple streaming services,
Speaker 3: Fans have to try to navigate a bewildering schedule and
Speaker 3: pay a steep cause to subscribe to several streaming services
Speaker 3: in addition to a traditional cable or satellite bundle. During
Speaker 3: a Judiciary subcommittee hearing in June, here's how Republican Congressman
Speaker 3: Jim Jordan described the challenge for a Green Bay Packers
Speaker 3: fan who lives in Dallas, Texas and wants to watch
Speaker 3: his favorite team.
Speaker 6: For the twenty twenty six season, the Packers are scheduled
Speaker 6: to play eight games on Fox, two games on Amazon
Speaker 6: Prime Video, two games on Netflix, two games on NBC,
Speaker 6: one game on ESPN, one game on CBS, and one
Speaker 6: on schedule game that is left to be determined by
Speaker 6: the NFL. The fan will need access to Amazon Prime Video, Netflix, NBC,
Speaker 6: and ESPN to see the seven game schedule for those services.
Speaker 6: For the nine games schedule for Fox and CBS, the
Speaker 6: fan will likely need Fox and CBS because some of
Speaker 6: the games will be on broadcast television in Dallas. The
Speaker 6: fan will also likely need Sunday ticket just to watch
Speaker 6: some subset of the nine Fox CBS games, because the
Speaker 6: fan will not know which games will and will not
Speaker 6: be on broadcast until the NFL and relevant networks release
Speaker 6: the broadcast maps the week of the games. That's what
Speaker 6: they got to navigate.
Speaker 3: Sports leagues like the NFL can only negotiate these media
Speaker 3: deals collectively on behalf of their teams because of an
Speaker 3: antitrust loophole created by Congress just for them. But the
Speaker 3: Justice Department has opened up an investigation into whether the
Speaker 3: NFL and other leagues are breaking antitrust laws and driving
Speaker 3: up costs for consumers. My guest is an expert in
Speaker 3: anti trust, Harry First, a professor at NYU Law School. Harry,
Speaker 3: some of our Bloomberg reporters looked into this, and so
Speaker 3: for a Philadelphia Eagles fan living outside of Pennsylvania to
Speaker 3: get all the games the Eagles are in, they would
Speaker 3: need Sunday Ticket at three hundred and seventy eight dollars,
Speaker 3: YouTube at eighty three dollars, Peacock at thirty three dollars,
Speaker 3: Fox Won at twenty dollars, and Prime Video at nine dollars,
Speaker 3: for a grand total of five hundred and twenty three dollars.
Speaker 3: Yet the NFL claims that eighty seven percent of its
Speaker 3: games are primarily shown on free over the air broadcast TV.
Speaker 7: I mean, I assume that's true, you know. Yeah, if
Speaker 7: you just want to watch the Eagles, I mean, it's
Speaker 7: going to be on free over the air television in Philadelphia.
Speaker 7: But if you want to watch away games, you know,
Speaker 7: if you want to just sit there on a Sunday
Speaker 7: and watch every game out of your market, you're gonna
Speaker 7: have to pay for it. If you want to watch
Speaker 7: every time that the Eagles play in LA, it's not
Speaker 7: going to be on Channel ten in Philadelphia. So yes,
Speaker 7: if you fly to LA, it'll be there for free too,
Speaker 7: but not exactly free. So I don't know the number.
Speaker 7: It's one of those numbers that will convince no one. Obviously,
Speaker 7: a lot of people are buying this Sunday ticket to
Speaker 7: watch out of market football games because they just love
Speaker 7: sitting there watching their team wherever they are on other
Speaker 7: teams that you can't see on over the AIRTV.
Speaker 3: The investigation is reportedly focused on this antitrust loophole in
Speaker 3: the Sports Broadcasting Act that allows the NFL and other
Speaker 3: leagues to negotiate media deals collectively on behalf of their teams.
Speaker 3: That's the same loophole that the Congressional subcommittee was looking
Speaker 3: into in June.
Speaker 7: So the lawyer in me doesn't like to call them loopholes,
Speaker 7: likes to call them exemptions, you know, in nineteen sixty one. Yes,
Speaker 7: it's interesting to try to think about it, and I'm
Speaker 7: not certain I fully understand why the over there broadcasters
Speaker 7: went along with this because they were I think relatively
Speaker 7: more powerful than the NFL in nineteen sixty one, which was,
Speaker 7: you know, not the juggernaut we know today. So they
Speaker 7: allowed the NFL to pool all their TV rights free
Speaker 7: of any anti trust issues. The law was in some
Speaker 7: ways less settled then, and maybe it was a little
Speaker 7: less clear, but they really would have had some problems,
Speaker 7: and there had been litigation, and I think everyone thought
Speaker 7: it was in their best interest to negotiate with a
Speaker 7: single source have this brand NFL Football, which then the
Speaker 7: TV networks could sell to advertise because you know, that's
Speaker 7: that's third game. So in that sense, it was a
Speaker 7: good deal for those two powerful sides, you know, who
Speaker 7: then got this through Congress. I doubt that the fans
Speaker 7: showed up for legislative fearings, and you know, in the end,
Speaker 7: the fans didn't pay directly because those are over the
Speaker 7: air quote unquote free broadcasts, but someone picks up the
Speaker 7: tab for the advertising, so consumers do pay.
Speaker 3: You had the congressional hearing in June, and of course
Speaker 3: politicians on both sides questioned whether the deals now violate
Speaker 3: that law. Do you think they violate that law?
Speaker 7: Well, in a technical sense, the question is whether the
Speaker 7: exemption applies to some of the current deals. So if
Speaker 7: it's a deal that involves broadcasting rights where the broadcast
Speaker 7: is paid for by sponsors, you know there was advertisers supported,
Speaker 7: then that comes within the Sports Broadcasting Act. But the
Speaker 7: current deals that the NFL's negotiating are with you know,
Speaker 7: platforms are with streaming platforms, pretty hard to see how
Speaker 7: they're within the wording of the exemption from the Sports
Speaker 7: Broadcasting Act. So the Sports Broadcasting Act wouldn't give the
Speaker 7: NFL an exemption. They'd have to go straight under the
Speaker 7: any trust laws and then the questions whether it highlights
Speaker 7: the any trust laws. And they got pretty much socked
Speaker 7: in the Sunday ticket litigation with a pretty clear bonding
Speaker 7: from a jury. So the pulling of rights apparently keeps
Speaker 7: some of the teams from negotiating separately to sell their
Speaker 7: broadcasting rights to you know, maybe other streaming platforms, or
Speaker 7: put them on YouTube where you know you would just
Speaker 7: if you didn't want to get a whole package, all
Speaker 7: you wanted to do was follow the Eagles. You would
Speaker 7: want to get a package just of Eagles games. But
Speaker 7: that can't happen now. So they would be in for
Speaker 7: some litigation if they don't fall within that exemption.
Speaker 3: And why did the judge toss out that almost five
Speaker 3: billion dollar jury verdict against the NFL in the Sunday
Speaker 3: Ticket class action lawsuit?
Speaker 7: So there are two answers to this. The first answer
Speaker 7: that I often would give in class was it's the zeros.
Speaker 3: I get that.
Speaker 7: Now that's not a legal answer, but this was probably
Speaker 7: the largest plane of verdict, certainly an anti trust maybe
Speaker 7: in any plane of verdict. Four point seven billion dollars
Speaker 7: before trebling is a lot of money. Now, that can
Speaker 7: be a reason for knocking down the amount, but that's
Speaker 7: not what the judge did. He disqualified two of their
Speaker 7: experts on damages that he had actually qualified at the trial.
Speaker 7: So it seems a little like, well, let me find
Speaker 7: a problem with this trial. And interestingly, he did not
Speaker 7: find a problem with liability in itself. It was on
Speaker 7: the damages I think. So that case has sort of
Speaker 7: been sitting before the Court of Appeals now for a
Speaker 7: while waiting for decision.
Speaker 3: Yes, the oral arguments in the Sunday ticket case. We're
Speaker 3: back in March before a panel of the Ninth Circuit,
Speaker 3: so we should get that decision soon. Now. The Justice
Speaker 3: Department is launching an investigation into whether the NFL and
Speaker 3: other sports leagues are breaking the antitrust laws with their
Speaker 3: negotiations with the streaming services. Are the issues similar to
Speaker 3: the Sunday ticket litigation.
Speaker 7: I don't know exactly what negotiations they have in mind.
Speaker 7: I mean the Sunday ticket litigation involves an agreement to distribute,
Speaker 7: and also they add it with direct TV first and
Speaker 7: then with YouTube that if you wanted access to these games,
Speaker 7: you would buy it and it would be streamed on YouTube.
Speaker 7: Now there are other They're licensing Netflix, Amazon On, They're
Speaker 7: licensing a bunch of different platforms. But the problem is
Speaker 7: the same without regard to which platform it is. It's
Speaker 7: the question of you know, is the NFL a single
Speaker 7: entity or are they a group of however many teams
Speaker 7: thirty two teams all coming together and agreeing that they're
Speaker 7: going to sell their rights jointly, pool their rights because
Speaker 7: each one has the right, you know, the legal right
Speaker 7: the copyright to the games that they're involved with. So
Speaker 7: they're pooling all their rights to make a single product
Speaker 7: called NFL Football. So that coming together is an agreement,
Speaker 7: and that section one of the Sherman Act. Now, whether
Speaker 7: that's lawful or not something that the NFL presumably would fight.
Speaker 7: These sports leagues haven't had a great track record in saying, gee,
Speaker 7: we're coming together for your good. So I don't know.
Speaker 7: Now when you say the Justice Department is investigating, the
Speaker 7: careful approach that I would suggest is there are reports
Speaker 7: that the Justice Department is investigating, we really don't know
Speaker 7: what they're doing. And frankly, I'm not sure you know.
Speaker 7: In looking back at the anti trust history here, I
Speaker 7: don't think the government has necessarily spent its prosecutorial resources
Speaker 7: worrying about competition in professional sports. They've usually left it
Speaker 7: to the people with money in the game, the owners, fans, consumers,
Speaker 7: things like that. So why are then interested in this?
Speaker 7: Why do you think, Well, you know the answer the
Speaker 7: staff report you just mentioned, the House any trust Subcommittee
Speaker 7: staff report starts out with the quote from the president,
Speaker 7: there's something very sad when they take football away from many,
Speaker 7: many people. He said that in May.
Speaker 3: Harry, even with President Trump's interest, this Justice Department has
Speaker 3: not been, shall we say, strong on antie trust enforcement.
Speaker 3: They walked away from the Ticketmaster Live Nation trial and
Speaker 3: left it to the States, who then won. They also
Speaker 3: walked away from the Paramount Warner Brothers Discovery merger, leaving
Speaker 3: it to the States to sue. Do you think they
Speaker 3: would really sue the NFL.
Speaker 7: I don't really see any government group doing anything here
Speaker 7: because they're just going to rub some important economic interests
Speaker 7: the wrong way. I mean, honest, see Congress doing anything.
Speaker 7: The House report didn't say, oh my god, we have
Speaker 7: to repeal this statute, or oh my god, we have
Speaker 7: to amend it, or oh my god, we have to
Speaker 7: do something, and they said, oh my god, we've got
Speaker 7: to stand here and look, we've got to keep watch
Speaker 7: and thank you very much for going on recess. I mean,
Speaker 7: I don't know. Maybe they've got a big investigation going,
Speaker 7: but there are a lot of big mergers going on
Speaker 7: in the economy, and although private parties get involved in
Speaker 7: those occasionally that's really fall into the government to do
Speaker 7: something about not that they're doing a lot about them,
Speaker 7: but at least they've got to review them, and they're involved.
Speaker 7: So they have important or stuff that demands government attention,
Speaker 7: maybe more than this because we have private enforcement, and
Speaker 7: the private enforcement's been.
Speaker 3: At work, right, so there might be a private antitrust suit.
Speaker 7: Indeed, I mean that's you know, that's what Sunday Ticket
Speaker 7: litigation was, and you know, would not be surprising if
Speaker 7: there were.
Speaker 3: Especially considering that stunning jury award in the Sunday Ticket litigation.
Speaker 3: Thanks so much, Harry. That's Professor Harry First of NYU
Speaker 3: Law School. And that's it for this edition of The
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