Court upholds TWC victory in leased set-top class-action suit

(Credit: Ildar Sagdejev)

As the pay-TV industry battles the FCC over the future of the leased set-top business, a key member of its constituency won a key appellate court ruling today.

The 2nd Circuit Court of Appeals affirmed a decision to reject an anti-trust suit filed against Time Warner Cable back in 2008, which accused the cable company of forcing customers to lease boxes in order to receive cable television. 

“We affirm, holding that the third amended complaint fails to adequately plead facts that, if proven, would establish that: (i) the set‐top cable boxes and the premium programming they transmit are separate products for the purposes of antitrust law; and (ii) Time Warner possesses sufficient market power in the relevant markets to establish an illegal tie‐in,” read the ruling, issued by 2nd Circuit Court Judges Ralph Winter and Denny Chen.

The plaintiffs, the judges said, failed to show that the sale of one product (cable service) is conditioned on the sale of another entirely different product (the set-top).

“To state a valid tying claim under the Sherman Act, a plaintiff must allege facts plausibly showing that: (i) the sale of one product (the tying product) is conditioned on the purchase of a separate product (the tied product); (ii) the seller uses actual coercion to force buyers to purchase the tied product; (iii) the seller has sufficient economic power in the tying product market to coerce purchasers into buying the tied product; (iv) the tie‐in has anticompetitive effects in the tied market; and (v) a not insubstantial amount of interstate commerce is involved in the tied market,” the opinion added. 

The complaint was originally filed in August 2008 in a Kansas federal court. 

Reps for Charter Communications, which now owns TWC, didn’t immediately respond to FierceCable’s inquiry for comment. 

The FCC adopted a proposal in February to try to open the pay-TV set-top business to makers of third-party devices. The pay-TV industry has aggressively — and somewhat successfully — fought that NPRM and has gained traction with an alternative proposal based on multiscreen apps. 

For more:
- read this appellate court decision
- read this Hollywood Reporter story

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