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Cable, Satcos Face à la Carte Lawsuit

The Los Angeles-based law firm of Blecher & Collins has filed a class action suit against a handful of major cable MSOs and satellite TV service providers over their alleged refusal to sell and distribute video programming on an à la carte basis

The suit, filed Thursday, alleges that current agreements and practices "are unlawful restraints of trade in violation of the federal antitrust laws."

The suit also seeks the elimination of "tying" arrangements, whereby programmers require distributors to buy a bundle of video networks in order for them to obtain carriage rights to "must have" networks.

The suit, filed on behalf of nine individual U.S. consumers who have paid for "expanded basic cable" subscriptions during the last four years, names the following cable and satellite TV operators: Among programmers, it names NBC Universal , Viacom Inc. (NYSE: VIA), The Walt Disney Co., Fox, and Time Warner Inc. (NYSE: TWX).

Maxwell Bleccher, one of the lawyers handling the case, says he has received about 50 emails from other consumers willing to join the cause since the suit was filed Thursday.

"There seems to be an outpouring of sympathy around the country. We haven't added anyone [to the list of plaintiffs], and we may or may not do that," Blecher says.

He did not put a number on the financial damages being sought in the case. "We wouldn’t be able to measure that yet. It [the case] is really about choice," Blecher says, adding that the suit could head to court in about 90 days, but he expects it won't be resolved for three years or more.

The suit should warm the cockles of Federal Communications Commission (FCC) chairman Kevin Martin, a long-time advocate of an à la carte, holding that such rules would enable TV service operators to keep tighter controls on content and escalating consumer pricing. (See Pushing à la Carte.) [Ed note: Our own R. Scott Raynovich sounds off on the à la carte issue over at Contentinople.]

"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," the suit claims. It also calls attention to an FCC study finding that consumers are charged about $100 million per year for channels they would not purchase if offered on a stand-alone basis.

The FCC is also seeking comments on a proposed rule change that could ban tying practices altogether. Martin has spoken out against the practice, as has the American Cable Association (ACA) , claiming that escalating programming costs due to network tying make it more difficult for small and independent cable operators to compete. (See FCC OKs Dual TV Carriage Rules.)

The cable industry, led by the National Cable & Telecommunications Association (NCTA) , has vehemently opposed à la carte, arguing that the current business model allows niche networks to find and build audiences, and that a change to a one-off model would actually result in higher prices and fewer programming choices. Forrester Research Inc. arrived at a similar conclusion in a study released earlier this year. (See Survey: à la Carte Value Vexes Consumers.)

When approached for comment, NCTA senior VP of communications and public affairs Rob Stoddard replied via email: "We won't comment on litigation that names companies both within and outside NCTA. However, our view of à la carte hasn't changed."

— Jeff Baumgartner, Site Editor, Cable Digital News

rjs 12/5/2012 | 3:02:12 PM
re: Cable, Satcos Face à la Carte Lawsuit I am glad someone took action. This
was long overdue. Telecom in US has been cartelized to such an extent that it is now stifling innovation.

Content and Access should both be liberated from the
clutches of cartels.



-RJS
materialgirl 12/5/2012 | 3:02:08 PM
re: Cable, Satcos Face à la Carte Lawsuit This tie-in will eventually crumble when effective internet-based competition becomes more viable. The opposite end of the spectrum is YouTube, where users decide every minute what they want to watch. YouTube is the future, not passive downstream video.
frnkblk 12/5/2012 | 3:01:56 PM
re: Cable, Satcos Face à la Carte Lawsuit Last I heard, it wasn't the MSO that wanted to carry every single Turner or Universal channel...the contracts require the MSO to carry them all. Sometimes there is the provision to carry less than all of them, but all of a sudden that one channel becomes very expensive.

The lawyers are looking at the wrong people -- start with the programmers.
Jeff Baumgartner 12/5/2012 | 3:01:52 PM
re: Cable, Satcos Face à la Carte Lawsuit The lawyers are looking at the wrong people -- start with the programmers.

There have been complaints about both sides-- msos and programmers. But you are right about the issue of network tying...something that the MSOs, particularly smaller operators, have had big issues with. FCC is looking into that in its Notice of Proposed Rulemaking:
http://www.lightreading.com/do...
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