The U.S. Court of Appeals in Pasadena would have turned pay TV upside down today if it had sided with consumers in a suit that took on virtually every major company in the business including NBCUniversal, Viacom, Disney, Fox, Time Warner, Comcast, and DirecTV. The plaintiffs alleged that the companies exploit subscribers by only selling programming in packages — forcing people to pay for services they don’t want in order to receive must-have channels including broadcast networks, USA, and ESPN. But the court rejected the argument, upholding a lower court decision, saying the key issue is whether pay TV companies thwart antitrust laws. Although the consumers argued that bundling reduces their choices, and increases prices, “these allegations show only that plaintiffs have been harmed as a result of the practices at issue, not that those practices are anticompetitive,” the justices said. They noted that other courts have upheld the practice of packaging services even when that raised prices. For example, a court ruled in 1974 that the Dallas Cowboys didn’t abuse its local monopoly over its own tickets by requiring people who wanted to buy season ticket packages to also pay for undesirable preseason tickets. Since the team had a lawful monopoly “the tying arrangement could not adversely affect competition” it said because “there was no competition to affect.” The Appeals court reached a similar judgement on this pay TV case last year but withdrew its ruling in October after it was flooded with petitions to reconsider.
Pay TV Bundles Are OK (Even If They Hurt Consumers), Court Rules
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