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Class Action Suit Alleges that Cable Channel Bundling Violates Antitrust Laws
A class action lawsuit filed on September 20, 2007 in the U.S. District Court for the Central District of California against the major U.S. television broadcasting and cable companies alleges that the practice of offering consumers only prepackaged tiers of bundled channels and refusing to offer cable programming on an “à la carte” basis violates U.S. antitrust laws. The complaint alleges that each of the programming providers named as defendants (including NBC, Viacom, Disney, Fox and Time Warner) requires all of its broadcast and cable channels to be purchased as a package by cable and satellite television providers, in a practice known as “block booking” or “tying”. The cable and satellite providers in turn repackage these offerings and distribute them to consumers in bundled tiers of channels. The complaint alleges that the contracts between the programming providers and the cable and satellite companies constitute a combination which unreasonably restrains trade and commerce in the relevant product market, causing consumers to pay inflated prices for cable television and to pay for channels they do not want and do not watch. The complaint refers to a recent Federal Communications Commission study that concluded that many consumers would be better off under an “à la carte” model of television channel distribution. A recent article quotes plaintiffs’ lawyer Maxwell Blecher as stating that the toughest part of the litigation will be obtaining certification, given that most of the contracts between cable companies and consumers have arbitration clauses.
In Canada, cable companies likewise do not permit consumers to subscribe to channels on an “à la carte” basis, in accordance with Canadian Radio-television and Telecommunications Commission (CRTC) tiering and linkage rules which impose certain requirements on the packaging of channels. A report released by the CRTC earlier this month includes several recommendations to eliminate many of these rules and to permit increased scope for market forces and consumer demand in the packaging of cable services.
For a copy of the complaint, visit:
http://www.blechercollins.com/media/cable.pdf
For a copy of the CRTC report, visit:
http://www.crtc.gc.ca/eng/publications/reports/dunbarleblanc.htm