Friday, September 21, 2007

Classless Class Action Against Cable

Broadcasting & Cable reports today that, in a wanna-be class action lawsuit, 14 cable subscribers have sued major cable operators and programmers seeking millions of dollars. The alleged offense: "unlawful unbundling" that has injured consumers. According to the lawsuit, subscribers have been "deprived of choice, have been required to purchase product they do not want and have paid inflated prices for cable television programming."

This almost certainly frivolous class-action would do Class Action King Bill Lerach proud but for the fact that he has just pleaded guilty to federal conspiracy charges in connection with his extortionist class action antics. And just yesterday, Melvyn Weiss, Lerach’s former partner, was indicted on federal charges of conspiracy, racketeering, obstruction of justice and making false statements to a grand jury for activities relating to his years of filing class actions suits.

The lawsuit against the cable industry makes no sense because there is no law—of any sort—that requires cable operators to offer programming on an a la carte basis and the broadband marketplace is sufficiently competitive that consumers will be able to get programming in the form they want it from one of the video providers or another, not to mention the Internet.. And apart from the reasons why such a law would constitute poor policy in today’s competitive broadband environment, as I have argued on CNET and elsewhere, government-mandated a la carte would violate the First Amendment rights of cable operators.

The lawsuit claims subscribers are deprived of “choice” to purchase product they don’t want. Funny thing. When I signed up for cable, not only did I understand what programming I was getting for what price, I don’t remember a gun being held to my head. I understood the First Amendment, but I didn’t imagine anyone would assert on my behalf that I had a fundamental right to dictate how the cable operators conduct their business.

The aim of class actions of this sort, which have no basis in law, is to extort quick settlements which mostly enrich the lawyers. Reading about this one, Bill Lerach must be lamenting that his own game could not have continued on a bit longer.

As the Broadcasting & Cable article notes, cable operators have been under pressure from FCC Chairman Kevin Martin and some members of Congress such as Senator John McCain to “voluntarily” offer a la carte programming—under the veil of threats for a government-imposed mandate if they don’t. This unwarranted pressure from public policymakers, unfortunately, provides a backdrop which makes it easier to file a frivolous lawsuit like this one. The pressure should cease.