Appeals Court: Bundling Cable Channels Together Isn't Anticompetitive

from the and-it's-outdated-anyway dept

Over the years, one topic that seems to engender extremely passionate responses around here is the question of cable TV bundling. People hate bundled cable TV packages -- usually because they hate paying for a bunch of channels they don't want just to get the four channels they do want. I still tend to think this complaint is overstated -- if the cable guys priced things out a la carte, the pricing would basically come to the same thing anyway (the channels you do want would be super expensive, and the ones you don't would be pretty cheap or free with other channels). Either way, the complaint also seems increasingly antiquated in an internet world. More and more TV shows are moving to the web anyway (through both authorized and unauthorized means). While it's certainly not perfect yet, you can create your own a la carte solution for many TV shows/channels.

Still, some folks sued over this bundling, claiming that it was anti-competitive. However, as Eric Goldman alerts us, an appeals court has upheld a lower court decision and outright rejected the idea that bundling is an antitrust issue. The court points out that "tying" arrangements are only illegal if they lead to clear anticompetitive behavior and consumer harm, but that's missing here:

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.

The court notes that the only real complaint is that the contract between the parties limits what kinds of offerings can be made by the cable companies, but the court notes that third parties suing over others' contracts that limit some actions "is not sufficient to allege an injury to competition."

I think it's pretty silly that cable companies haven't innovated to the point that a la carte offerings are regularly available. I recognize that the issue here is more about programmers requiring the bundles to get the "must have" channels, so the cable providers are a bit hamstrung, but sooner or later the cable companies need to convince the programmers that lumping stuff together just pisses off consumers, and they might as well offer up an a la carte solution instead.

Filed Under: anti-competitive practices, bundling, cable, television