## Facts

- Henderson Broadcasting Corporation operated KYST-AM, a radio station in the Houston–Galveston market.
- Houston Sports Association, Inc. (HSA) owned the Houston Astros and contracted with radio stations to broadcast Astros games.
- Henderson alleged HSA contracted with both KYST-AM and KENR-AM (owned by Lake Huron Broadcasting Corp.), whose signals overlapped and who competed for listeners and advertising revenue.
- Henderson alleged HSA cancelled KYST-AM’s Astros broadcast contract and conspired with KENR-AM to divide and allocate advertising and audience territories in the Houston–Galveston radio market, suppressing competition.
- Henderson sought injunctive relief and more than $2.5 million in damages, asserting Sherman Act §§ 1–2 and Texas antitrust claims, plus breach of contract and related tort claims.
- Defendants moved to dismiss for lack of subject matter jurisdiction and for failure to state a claim, arguing the claims were barred by Major League Baseball’s judicial antitrust exemption.

## Issues

1. Whether a judicial antitrust exemption for professional baseball deprived the federal court of subject matter jurisdiction over pleaded federal antitrust claims.
2. Whether the baseball antitrust exemption required dismissal of claims challenging alleged market-allocation restraints affecting radio broadcasts and radio advertising/audience competition.

## Decision

- The court denied the motion to dismiss for lack of subject matter jurisdiction.
- The court denied the Rule 12(b)(6) motion, holding the baseball exemption did not clearly extend to the challenged radio-broadcasting practices at the pleading stage.
- The case was permitted to proceed on the merits of the federal antitrust and related state-law claims.

## Legal Principles

- A judicially recognized antitrust exemption generally concerns the merits of an antitrust claim, not the court’s subject matter jurisdiction, where the complaint pleads violations of federal antitrust statutes.
- Major League Baseball’s antitrust exemption is construed narrowly to activities central to the “business of baseball” as identified in controlling precedent, rather than as blanket immunity for all commercial conduct connected to baseball.
- Alleged horizontal restraints directed at a separate commercial market (here, competition for radio audiences and advertising revenue) are not automatically within the baseball exemption merely because they relate to game broadcasts.
- On a motion to dismiss, dismissal is improper where the challenged conduct does not fall so clearly within a recognized exemption that the court can resolve the exemption’s scope against the plaintiff as a matter of law.

## Conclusion

The court held it had jurisdiction over the federal antitrust claims and refused to dismiss, concluding that alleged conspiratorial restraints in the Houston–Galveston radio broadcasting and advertising market were not clearly protected by professional baseball’s limited antitrust exemption at the pleading stage.


Henderson Broad. Corp. v. Hous. Sports Ass’n, Inc., 541 F. Supp. 263 (S.D. Tex. 1982)