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Judge Mulls Fate Of A La Carte Suit

6/20/2008 8:00 PM Eastern

A consumer lawsuit challenging cable and satellite providers' unwillingness to let subscribers buy pay TV programming on a channel-by-channel basis may move forward in U.S. District Court in Los Angeles.

Judge Christina Snyder said in court June 16 that she will mull the case further but added she is not persuaded by the motion by defendants who argued on procedural grounds that attorneys for the consumers have not made a proper claim for the court to adjudicate.

A group of consumers from California, Indiana, Virginia and New York filed the lawsuit Dec. 3. They allege that the programming deals between such major content providers as NBC Universal, Viacom, The Walt Disney Co., and Fox Entertainment Group and distributors including Time Warner Cable, Comcast, DirecTV, Dish Network, Charter Communications and Cablevision Systems are in violation of federal antitrust laws.

The suit alleges that consumers may be overcharged in excess of $100 million per year because the practice of packaging programming forces consumers to buy channels they don't want. If the case goes to trial, the plaintiffs seek a $400 million refund for four years of overcharges.

The potential class action alleges that the content providers are so powerful that they mandate that cable and satellite providers purchase all of a programmer's suite of channels, dictating that those services be carried on expanded basic or bundled programming tiers. As a result, consumer prices are artificially inflated and independent programmers can't gain carriage, the suit alleges.

But in a motion filed by the content providers and distributors, attorneys assert that antitrust law is meant to prevent large providers from colluding in order to keep smaller companies out of a line of business. The complaint does not demonstrate that any company has been kept out of business; in fact, attorneys arguing before Snyder noted that Discovery Networks, which was not sued, but is affiliated with defendant DirecTV, successfully distributes as many channels as Disney.

Further, independent channels benefit from bundled programming because they are placed in expanded basic tiers where they are more likely to be viewed and thrive, according to the motion by the companies. Consumers are not injured by programming pacts, the attorneys argued. If anyone has grounds for a case for damages, it's distributors, stated Arthur Burke, an attorney for Comcast who argued before Snyder on behalf of the sued cable and satellite companies.

This is not the first time the defendants have tried to spike the case. A similar motion was before Snyder in March, but the judge said some recent decisions created new precedents in antitrust litigation. She allowed the consumers' attorneys to amend and resubmit their case.

But Snyder said some of the arguments against the amended complaint raised by the defendants are issues to be determined at a trial, not in a motion to dismiss. She promised a ruling on that motion soon.

September