News

A La Carte on Trial

1/04/2008 7:00 PM Eastern

Major cable operators and programmers on March 10 plan to ask a federal judge in Los Angeles to toss out an antitrust suit designed to force pay TV distributors to allow consumers to buy channels on an individual or a la carte basis.

The suit, filed in September, alleged that the industry practice of offering consumers dozens of channels in a package on a take-it-or-leave it basis runs counter to federal laws that outlaw the anti-competitive abuse of market power.

Antitrust is a complex area of the law, and cases can drag on for years at great financial expense. Cable operators and programmers’ chief defense is that competition among programmers for distribution, as well as competition among distributors for paying subscribers, ensures that no one is required by law to sell channels a la carte just because they have the means to do so.

“Antitrust law does not give buyers the right to demand that multi-product sellers make their wares available in every possible combination,” Viacom said in a Dec. 21 court brief asking for the case to be dismissed.

Comcast, in a Dec. 21 court filing on behalf of the cable and satellite TV distributors named as defendants, said the case filed by a handful of subscribers was nothing but an “attempt to distort the antitrust laws to assist their effort to radically re-engineer the U.S. television industry.”

Cable programmers that were sued, including Viacom and The Walt Disney Co., joined Comcast and Time Warner Cable in arguing that the plaintiffs don’t have legal standing to sue because they don’t participate in the wholesale cable programming market, where they allege programmers force channel bundling on distributors in violation of antitrust law.

“The antitrust laws do not give consumers a right to buy television programming a la carte any more than they give consumers a right to buy the Calendar section of The Los Angeles Times, rather than the entire newspaper,” Viacom said in a Dec. 21 court filing on behalf of the programmers sued.

The bundling of cable programming affords consumers access to the highest number of channels at the lowest per-channel prices. While nominal rates for cable programming tiers have risen over the years, per-channel rates have declined after adjusting for inflation.

But cable critics like Federal Communications Commission chairman Kevin Martin have called a per-channel rate analysis irrelevant if the channels aren’t sold on a per-channel basis.

“Since the earlier days of cable and direct broadcast satellite television, operators have sold programming to subscribers in packages containing multiple channels,” Viacom’s court brief said. “This is not … a harm to competition.”

The case has been assigned to U.S. District Court Judge Christina Snyder, a 1997 appointee of President Clinton.

Cable operators and programmers have resisted an a la carte business model, saying it would devastate niche channels and drive up retail cable prices. Martin, who does not believe cable’s a la carte objections, has endorsed the antitrust suit, filed by Los Angeles-based attorney Maxwell Blecher.

September