Consumers Challenge Bundles

LOS ANGELES -- On Thursday, September 20, 2007, consumers filed an antitrust suit in the federal district court in Los Angeles against major media companies and major cable and satellite providers in the United States. The lawsuit challenges industry-wide agreements and practices that effectively mandate that consumers must purchase prepackaged tiers of bundled cable channels and cannot purchase channels or programming on an "a la carte" basis. The lawsuit alleges that the agreements and practices are unlawful restraints of trade in violation of the federal antitrust laws.

The suit is brought as a class action on behalf of all consumers in the United States who, during the last 4 years, have paid for "expanded basic cable" subscriptions from the following cable or satellite companies: Time Warner Cable Inc., Comcast Corporation, Comcast Cable Communications, Inc., Cox Communications, Inc., The DirecTV Group, Inc., Echostar Satellite L.L.C., and Cablevision Systems Corporation (collectively "the cable/satellite defendants"). The suit also names the following media entities due to restrictive bundling agreements and practices that are passed on to consumers: NBC Universal, Inc. ("NBC"), Viacom Inc. ("Viacom"), The Walt Disney Company ("Disney"), Fox Entertainment Group, Inc. ("Fox"), Time Warner, Inc. ("Time Warner") (collectively "the programmer defendants").

The lawsuit specifically alleges that each of the programmer defendants (NBC, Viacom, Disney, Fox, and Time Warner), with knowledge that the other programmer defendants operate in the same manner, will only sell or license the bulk of its programming or channels to the cable/satellite defendants as a package. This "block booking" or "tying" requires the cable/satellite defendants to acquire channels which, if unbundled, they would not acquire at all, or would separately negotiate channel by channel based upon consumer demand. The cable/satellite defendants, in turn, repackage and distribute the channels to the consuming public in bundled tiers of channels. The cable/satellite defendants do not offer "expanded basic" channels to consumers on an "a la carte" basis. This deprives consumers of choice and, because many consumers have no interest in the vast majority of channels they are forced to purchase on expanded basic cable, consumers pay a significant overcharge. According to a recent Federal Communications Commission study, consumers are charged approximately $100,000,000 per year for channels which, if offered "a la carte," they would not purchase.

The named plaintiffs and class representatives are Rob Brantley, Darryn Cooke, William and Beverly Costley, Christiana Hills, Michael B. Kovac, Michelle Navarrette, Timothy J. Stabosz, and Joseph Vranich. The lawsuit seeks damages for the plaintiffs and all class members, and an injunction to eliminate the "tying" arrangements in the industry and allow consumers to purchase channels on an "a la carte" basis. The plaintiffs and class representatives are represented by Maxwell M. Blecher and David W. Kesselman of Blecher & Collins, P.C. in Los Angeles.

Time Warner Cable Inc. (NYSE: TWC)

Comcast Corp. (Nasdaq: CMCSA, CMCSK)

Cox Communications Inc.

DirecTV Group Inc. (NYSE: DTV)

EchoStar Satellite LLC

Cablevision Systems Corp. (NYSE: CVC)