Nexstar Media Group collected $10.5 million in retransmission-consent fees from DirecTV by fraudulently withholding information about one of its stations, a New York State appeals court ruled on Thursday.
Nexstar had appealed a July ruling by the New York State Supreme Court after DirecTV sued Nexstar to recover those fees.
The case revolved around a new distribution agreement in which Nexstar received fees to carry a station then-known as WHAG, an NBC affiliate in Hagerstown, Maryland.
DirecTV pays station groups for affiliates of the Big Four networks. It usually does not pay for independent stations, the two sides testified.
NBC told Nexstar WHAG would be losing its affiliation, but Nexstar kept that fact from DirecTV while the new deal was being negotiated and continued to collect fees after the station became an independent station and changed its call letters to in 2016, one year into the agreement. The station is now known as WDVM.
When it found out about the change, DirecTV said it would stop paying the fee for the station and asked Nexstar to return the fees it has received while the station was independent. Nexstar refused and DirecTV filed its lawsuit.
The Supreme Court denied Nexstar’s motion for a summary judgment dismissing the complaint. It granted DirecTV’s motion for summary judgment on its breach of contract claims, but denied a motion for a summary judgment on a claim of fraudulent inducement.
“Supreme Court should have granted summary judgment in plaintiff’s favor on its fraudulent inducement cause of action,” the appeals court ruled.
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Despite what the court called Nexstar’s “unproven, self-serving contentions” that it expected the NBC affiliation to be renewed, “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 said in its ruling.
Nexstar filed documents that some of its stations would be losing NBC affiliations, but did not include WHAG in the documents.
“Defendant misrepresented in these documents that defendant expected the network affiliations of its stations to be renewed,” the court said. “As plaintiff did not have access to the relevant information, it reasonably relied on the fraudulent representations of defendant to its detriment.”
