Cumulus, Nielsen Face Sharp Questions In Appeals Court Over Ratings Fight.

Federal appeals court judges sharply questioned both sides Thursday in the high-stakes antitrust fight between Cumulus Media and Nielsen repeatedly. During oral arguments in New York, the judges pressed attorneys on whether the courts should be policing pricing negotiations between private companies. They also questioned whether Cumulus had shown the kind of immediate harm necessary to justify a preliminary injunction.

The hearing before the Second Circuit focused on Nielsen’s effort to block a lower court’s injunction that temporarily barred the ratings company from enforcing its “Network Policy.” It requires broadcasters to purchase local ratings data to access its national ratings product.

Nielsen attorney Tom Dupree argued the injunction improperly inserts the judiciary into ordinary business negotiations.

“The parties were engaged in an everyday, ordinary, commercial negotiation that occurs in the United States,” Dupree told the three-judge panel. He argued the injunction has destabilized those talks because Nielsen is now negotiating “under pain of contempt” if that pricing is later deemed “commercially unreasonable” by the courts. Dupree said the negotiations should be allowed to play out the way that they were before the injunction was issued.

The judges appeared particularly focused on the practical problem of how Nielsen would determine what qualifies as a “commercially reasonable” rate under the injunction. “This injunction seems kind of vague to me,” one judge said during the hearing.

Another asked bluntly: “What is a commercially reasonable fee?” and “How are they supposed to figure that out without risking contempt?”

Dupree repeatedly argued the lower court’s order effectively turns the judiciary into a price regulator. “This injunction is vague in the extreme,” he said. “No one knows what a commercially reasonable price is.”

The district court judge issued the preliminary injunction after concluding Cumulus demonstrated irreparable harm if the policy tying national and local were allowed to be used. But Nielsen argued the dispute is fundamentally about money, not irreparable harm. “They are seeking money damages. Their injury is financial in nature,” Dupree told the court.

The judges also questioned whether the courts should intervene while negotiations between the companies are still ongoing. “Nielsen has never walked away from the negotiations,” one judge observed.

Dupree acknowledged the talks remain active but argued the injunction itself is now distorting the bargaining process.

Tough Questions For Cumulus

Cumulus attorney Katherine Wellington faced tougher questioning during the hearing. Much of the panel’s questioning toward Cumulus centered on whether the company had demonstrated sufficiently immediate harm to justify emergency relief.

“What’s going to happen in the next few minutes?” one judge asked after Wellington argued the company’s financial condition was severe.

The panel also repeatedly returned to the issue of negotiations, questioning whether Cumulus had fully engaged in discussions over standalone pricing for Nielsen’s national product before filing suit last October.

“You didn’t even counter offer,” a judge said.

When asked specifically whether Cumulus had countered on a standalone national rate, Wellington responded, “We, as far as I know, haven’t countered.” But she argued that Cumulus was attempting to negotiate “without an unlawful tie” and maintained Nielsen was using monopoly power to coerce broadcasters into purchasing local ratings data they did not want.

Wellington also argued the district court had already established a workable framework for Nielsen to comply with the injunction by effectively preventing it from charging Cumulus more than similarly situated customers. “The district court gave them a very easy way to figure that out,” she argued.

The judges appeared unconvinced, however, continuing to question how Nielsen would know what pricing would satisfy the injunction while negotiations remained ongoing. At several points, the panel emphasized that the case raises “unusual” and potentially significant antitrust questions better suited for full appellate review on the merits rather than emergency proceedings.

No Decision Yet

It is difficult to read oral arguments with any certainty. But the 13-minute hearing seemed to indicate there is a possibility the Second Circuit will lift the preliminary injunction and allow Nielsen to again link national and local ratings products while Cumulus’ antitrust case moves forward. It has been paused during the company’s Chapter 11 reorganization, but Wellington told the court Cumulus is prepared to move “as fast as we can” once the case is restarted.

The court reserved decision, but a decision is expected quickly.