Nexstar Media Group obtained $10.5 million in retransmission-consent fees from DirecTV by improperly concealing facts regarding one of its stations, a New York State appeals court decided on Thursday.
Nexstar had appealed a July verdict by the New York State Supreme Court, after DirecTV sued Nexstar for those costs.
The issue centered on a new distribution agreement in which Nexstar was compensated for carrying WHAG, an NBC affiliate in Hagerstown, Maryland.
DirecTV pays station groups to join with the Big Four networks. According to both parties, independent stations are rarely compensated.
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NBC informed Nexstar that WHAG would be losing its affiliation, but Nexstar hid this information from DirecTV while the new arrangement was being discussed, and the station continued to collect payments after becoming an independent station and changing its call letters in 2016, one year into the agreement. The station is now referred to as WDVM.
When DirecTV learned of the transition, it announced that it would no longer pay the station’s fee and requested that Nexstar return whatever fees it had received while the station was independent. Nexstar declined, and DirecTV filed a lawsuit.
The Supreme Court refused Nexstar’s move for summary judgment, dismissing the complaint. It approved DirecTV’s petition for summary judgment on breach of contract charges, but refused a motion for summary judgment on fraudulent inducement.
“Supreme Court should have granted summary judgment in plaintiff’s favor on its fraudulent inducement cause of action,” the appeals panel decided.
Despite Nexstar’s “unproven, self-serving contentions” that it expected the NBC affiliation to be renewed, the court noted that “there was unrebutted testimony from two NBC employees who testified that NBC advised defendant that there would be no further extensions.”
Nexstar “knew that the termination of the NBC affiliation was a fait accompli and intentionally concealed this information from plaintiff,” the appeals court stated in its decision.
Nexstar filed filings stating that some of its stations will lose their NBC affiliations, but did not include WHAG.
“Defendant misrepresented in these documents that defendant expected the network affiliations of its stations to be renewed,” the verdict stated. “As plaintiff did not have access to the relevant information, it reasonably relied on the fraudulent representations of defendant to its detriment.”
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