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Cable Companies Don’t Have to ‘Unbundle’ Individual Programs

The First Circuit nixed a novel Maine law that would have allowed consumers to buy channels and programs on an à la carte basis rather than as part of a package.

BOSTON (CN) — A Maine law that allows consumers to buy individual channels and programs rather than a prepackaged “bundle” from their cable provider was blocked Wednesday by the First Circuit. 

The law violates the First Amendment, the court said in affirming a preliminary injunction. 

Maine passed the first-in-the-nation “à la carte” law in 2019. “For far too long,” legislators found, cable subscribers “have been forced to purchase cable TV packages which include dozens of channels the consumer has no interest in watching."  

Cable companies shouldn’t be able “to force customers to buy HGTV and Animal Planet to get Discovery Channel, and to force customers to buy ‘NCIS’ and ‘Big Brother’ to watch ‘60 Minutes,’” the state argued

Sponsors of the law said the average cable bill would decline by 13% as a result. 

“A customer, instead of having to buy the full ‘Sports & Entertainment’ package, could pay only for the ESPN channel,” U.S. Circuit Judge Kermit Lipez wrote Wednesday for a three-judge panel of the Boston-based First Circuit.  

“Further … instead of paying for the entire EPSN channel, a customer could pay to view a single Red Sox game.” 

Comcast, CBS, NBC, Disney, Fox, Viacom, A&E and C-Span are in the consortium of cable and media companies that challenged the law. 

Comcast argued that it would face very significant costs under the law. It would have to overhaul its ordering, distribution and billing systems; replace older set-top boxes that couldn’t handle à la carte content; and renegotiate its deals with programmers. 

On the other hand, the law didn’t set prices for individual channels or programs, so cable providers could presumably have adjusted their pricing to make bundles much more attractive. 

Back in the 1990s the Supreme Court ruled that the First Amendment applied to cable companies, in a pair of decisions about requirements that they carry local broadcast channels. 

The First Circuit said those decisions applied here, and that the Maine law triggered heightened First Amendment scrutiny because it “constitutes a speaker-based regulation that ‘singles out’ cable operators' speech for special, disfavored treatment.” 

For instance, the court said, the law imposes a burden on cable companies but not on satellite operators, such as DirectTV and DISH Network, or internet-based operators such as YouTube TV and Hulu-plus Live TV. 

Maine argued that it wasn’t punishing cable operators’ speech but merely creating a consumer protection regulation. But the court said that “a beneficent consumer protection purpose does not insulate a law from the possible application of the First Amendment.” 

It cited a Ninth Circuit ruling that the First Amendment was potentially violated by a rule that satellite operators had to carry certain channels in high definition by a specific date. 

The Maine law would have benefited the least fortunate, said Maine Representative Jeffrey Evangelos, a registered Independent who sponsored it. 

“Senior citizens on fixed incomes cannot afford cable TV,” he said. “It costs $100 to be able to watch the Red Sox. So let me get this straight, you fought in World War II, but you can’t afford to watch baseball anymore?”  

Categories / Appeals, Business, Civil Rights, Consumers, Entertainment, Law, Media, Technology

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