Time Warner Cable raised a lot of eyebrows when it paid $3B for TV rights to the LA Lakers for the next 20 years and then a record $8B for LA Dodgers rights for the next 25 years. When the Dodgers deal launches in 2014, the cable company will have four new networks for all that content. But the plan to partially pay for those new channels via boosting TWC customers’ fees — even from Southern California users who don’t want the channels and have no way to opt out of the bundles — apparently is not sitting well. Some of those customers filed a class action suit in LA Superior Court today targeting TWC, the Lakers and the Dodgers for restitution and injunctive relief for violating California Business & Professions Code 172000. The complaint (read it here) says unless restrained by the court, TWC will “pass these costs along to its total Southern California subscriber base, resulting, directly or indirectly, in additional fees passed onto subscribers beginning with the 2014 season of approximately $4-$5 per month per subscriber … which together add (or will if unrestrained) $100 per year to the subscriber’s TWC bill”.The plaintiffs provided more math with eye-popping numbers, writing, “In sum, TWC will extract from its customer base primarily in Southern California at least $11 billion to recoup its investment, and approximately 60% of this amount, or $6.6 billion, is extracted from individuals who do not want and do not watch and do not want to pay for Lakers and Dodgers telecasts and who, if given the option to do so, would opt out of such telecasts.”
The teams are part of the suit, according to the filing, because they knew the cost of the new channels — TWC SportsNet and TWC Deportes for the Lakers and in next year SportsNet LA for the Dodgers — would be passed on to consumers, even nonfans. “TWC’s practice of bundling these channels into the enhanced basic cable offering is an unfair method of competition. … The purpose of this lawsuit is to secure restitution for and injunctive relief against this practice”.
The suit claims it is not challenging the “network of contracts between programmers and distributors” because TWC is acting as both sides in this situation. But bundling channels on tiers versus a la carte programming has long been bone of contention between consumers and the cable industries, with even Sen. John McCain recently weighing in with the proposed The TV Consumer Freedom Act of 2013, intended to allow cable customers a la carte capability — “in other words, not required to buy a whole bunch of channels that that consumer may not want wish to subscribe to,” McCain said last month when introducing the legislation on the Senate floor. He has since asked the FCC to look into the practice of bundling, which the industry argues keeps costs down.
The four named plantiffs — they reside in LA, Pasadena, Orange County, and Long Beach — are being represented by Maxwell Blecher and Courtney Palko of LA firm Blecher Collins Pepperman and Joye PC.
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