News

A La Carte Lawsuit Will Proceed

6/27/2008 6:20 AM Eastern

A federal judge in Los Angeles has refused to dismiss a potential class action lawsuit challenging the lack of a la carte programming offerings by video distributors and programmers.

Judge Christina Snyder, in a June 25 ruling, decided that the cable operators, direct-broadcast satellite companies and studios that were sued had not proved their arguments. Those companies alleged that the lawsuit, filed on antitrust grounds, did not adequately demonstrate that consumers were injured by the business practices of the defendants. In written and oral arguments on June 16, they also questioned the standing of the consumers to sue.

The ruling came in a December 2007 lawsuit, filed by consumers in four states on behalf of subscribers nationally. It was filed against NBC Universal Inc., Viacom Inc., The Walt Disney Co., Fox Entertainment Group, and Time Warner Inc. Distributors named in the suit are Comcast Corp., Coxcom Inc., The DirecTV Group Inc., Echostar Satellite LLC., Charter Communications and Cablevision Systems Corp.

The suit alleges the contracts between the programmers and distributors harm consumers because they force consumers to buy programming that they don't want or watch. Bundling programming causes consumers to overpay for their video options, according to the suit. 

But the judge ruled that attorneys for the consumers raise real issues that should be heard. She wrote that the programming owners that were sued control key broadcasting and cable channels and can use them to exclude independent programmers from the marketplace. That makes a case for a bona fide reduction in independent competition rather than "mere dissatisfaction by consumers with the choices in a well-functioning free market."

In March, the judge was going to dismiss the complaint as inadequate but instead allowed the consumers' attorneys to amend the suit. This version did not focus on a "conspiracy" between buyers and sellers and satisfied the judge.

March