Cable a La Carte Class Action Dies Another Death in Court

In October I blogged about the U.S. Court of Appeals for the 9th Circuit's ruling in Brantley v. NBC Universal, upholding the case's dismissal. The 9th Circuit panel later withdrew its opinion. But on March 30, the 9th Circuit issued a new opinion in Brantley, again affirming dismissal of the class action's Sherman Act antitrust claims.

My October blog post gives further background on the case. Here are a few relevant excerpts from the 9th Circuit's opinion on reconsideration:

First, it is clear that the complaint does not allege the types of injuries to competition that are typically alleged to flow from tying arrangements. The complaint does not allege that Programmers' practice of selling "must-have" and low-demand channels in packages excludes other sellers of low-demand channels from the market, or that this practice raises barriers to entry into the programming market. Nor do the plaintiffs allege that the tying arrangement here causes consumers to forego the purchase of substitutes for the tied product…Nothing in the complaint indicates that the arrangement between the Programmers and Distributors forces Distributors or consumers to forego the purchase of alternative low-demand channels…Indeed, Plaintiffs disavow any intent to allege that the practices engaged in by Programmers and Distributors foreclosed rivals from entering or participating in the upstream or downstream markets…Nor does the complaint allege that the tying arrangements pose a threat to competition because they facilitate horizontal collusion...

Businesses may choose the manner in which they do business absent an injury to competition…Therefore, the mere allegations that Programmers have chosen to limit the ability of Distributors to offer Programmers' channels for sale individually does not state a cognizable injury to competition...

Here, Plaintiffs have not alleged that the contracts between Programmers and Distributors forced either Distributors or consumers to forego the purchase of other low-demand channels (a result analogous to the competitive injury in Loew's), but only that consumers could not purchase programs a la carte and they did not want all of the channels they were required to buy from Distributors. "[C]ompelling the purchase of unwanted products" is not itself an injury to competition...

But the plaintiffs here have not alleged in their complaint how competition (rather than consumers) is injured by the widespread practice of packaging low- and high-demand channels. The complaint did not allege that Programmers' sale of cable channels in packages has any effect on other programmers' efforts to produce competitive programming channels or on Distributors' competition as to cost and quality of service. Nor is there any allegation that any programmer's decision to offer its channels only in packages constrained other programmers from offering their channels individually if that practice was competitively advantageous. In sum, the complaint does not include any allegation of injury to competition, as opposed to injuries to the plaintiffs...

Indeed, because Plaintiffs' complaint alleges that the restraints at issue in this case were imposed by Programmers, not Distributors, Leegin suggests that any competitive threat is diminished...

If my earlier blog post spoke to soon about the demise of cable a la carte regulation-by-litigation, the chances of Brantley being resuscitated through a contrary ruling by the 9th Circuit en banc or by the U.S. Supreme Court are extremely remote.