Warner Amex Cable v. American Broadcasting

• Decision Date: 20 August 1980
• Docket Number: No. C-2-80-558.,C-2-80-558.
• Citation: 499 F. Supp. 537
• Parties: WARNER AMEX CABLE COMMUNICATIONS, INC., Plaintiff, v. AMERICAN BROADCASTING COMPANIES, INC., ABC Sports, Inc., and National Collegiate Athletic Association, Defendants.
• Court: U.S. District Court — Southern District of Ohio

499 F. Supp. 537

WARNER AMEX CABLE COMMUNICATIONS, INC., Plaintiff, v. AMERICAN BROADCASTING COMPANIES, INC., ABC Sports, Inc., and National Collegiate Athletic Association, Defendants.

No. C-2-80-558.

United States District Court, S. D. Ohio, E. D.

August 20, 1980.

COPYRIGHT MATERIAL OMITTED

Alexander, Ebinger, Fisher, McAlister & Lawrence, Columbus, Ohio, for plaintiff; Alvin J. McKenna, Robert B. McAlister, Columbus, Ohio, Stuart Robinowitz, Richard A. Kurnit, Earl H. Doppelt, Dan Victor, Paul, Weiss, Rifkind, Wharton & Garrison, New York City, of counsel.

Knepper, White, Arter & Hadden, Columbus, Ohio, Bergson, Borkland, Margolis & Adler, Washington, D. C., for ABC defendants; William E. Knepper, John P. Gartland, Columbus, Ohio, Lionel Kestenbaum, Michael D. Ridberg, Gary J. Smith, Washington, D. C., of counsel.

Bricker & Eckler, Columbus, Ohio, Swanson, Midgley, Gangwere, Thurlo & Clarke, Kansas City, Mo., for defendant NCAA; Bruce G. Lynn, Joseph S. Gill, Columbus, Ohio, George H. Gangwere, John J. Kitchen, Richard K. Andrews, Kansas City, Mo., of counsel.

OPINION AND ORDER

KINNEARY, District Judge.

This matter is before the Court upon plaintiff's motion for a preliminary injunction. Plaintiff Warner Amex Cable Communications, Inc. Warner alleges that defendants American Broadcasting Companies, Inc. ABC, ABC Sports, Inc., and the National Collegiate Athletic Association NCAA, by means of practices that violate the Sherman Act, 15 U.S.C. Sections 1-3, are preventing it from cablecasting the 1980 football games of The Ohio State University OSU. Accordingly, plaintiff seeks a preliminary injunction to restrain defendants and their associates from preventing or hindering plaintiff's ability to cablecast live, regular season OSU games not televised by defendants ABC and ABC Sports.

The Court held an evidentiary hearing on the motion on August 4-6, 1980. Based upon the evidence adduced at that hearing, the pleadings, the memoranda of the parties, and other materials before it, the Court makes the following findings of fact and conclusions of law pursuant to Rule 52, Federal Rules of Civil Procedure.

Findings of Fact

Plaintiff launched its innovative cable television system known as QUBE on December 1, 1977 (tr. 47). The computerized experimental system is capable of simultaneous multiple channel cablecasting and audience interaction (tr. 46). Plaintiff chose to introduce its new system in a carefully selected geographical area of greater Columbus, Ohio, a city that has become a major test market for new products and services (tr. 47-48). By May, 1980 Warner Amex had approximately 37,100 basic cable subscribers in Columbus, of which approximately 22,700 took QUBE service (defendant ABC's exhibit E at 1).

Columbus is the seat of a distinguished university, OSU, and its world-renowned football team. OSU football enjoys great popularity in Columbus. In recent years the OSU stadium has been filled to its 83,000—person capacity each Saturday that the team plays at home (tr. 305-07). Given the popularity of the OSU games and the severe scarcity of tickets, it seemed highly likely that live¹ cablecasts of the games, both home and away, would attract considerable interest among subscribers and potential subscribers to QUBE.

OSU is, however, a member of the NCAA, a voluntary self-regulatory association that adopts and enforces regulations concerning, inter alia, television appearances by the football teams of its member colleges and universities. The NCAA has as a basic purpose "to maintain intercollegiate athletics as an integral part of the educational program and the athlete as an integral part of the student body, and, by so doing, retain a clear line of demarcation between college athletics and professional sports." (Defendant NCAA's exhibit A, appended to the affidavit of Walter Byers.)

The Football Television Plan—the subject of plaintiff's challenge—has as its purpose

to reduce insofar as possible the adverse effects of live television upon football game attendance and, in turn, upon the athletic and related educational programs dependent upon the proceeds therefrom; to spread football television participation among as many colleges as practicable; to reflect properly the image of universities as educational institutions; to promote college football through the use of television; to advance the overall interests of intercollegiate athletics; and to provide college football television to the public to the extent compatible with these other objectives.

(Defendant NCAA's exhibit F, appended to the affidavit of Walter Byers.)

All telecasts of football games played by NCAA member schools must comply with the Plan, which provides for the NCAA² to award to a single network the right to simultaneously telecast a series of games and the first right of refusal for "exception" telecasts approved by the NCAA Television Committee.³

The series consists of twenty-three programs each season, thirteen featuring games televised nationally and ten featuring games televised regionally (defendant NCAA's exhibit F, appended to the affidavit of Walter Byers, at 18-19). A member institution may not appear more than five times during either two-year period of the Plan (id. at 26). The Plan requires the carrying network to include a designated proportion of Division II and III teams among its series programs and to undertake prescribed broadcasts of supporting programs-pre- and post-game shows, highlights, season review, and the like (id. at 25, 39-43).

The Plan serves to limit television exposure of the few most popular collegiate football teams and provides coverage of games and related events that are educationally important but commercially unattractive. It thus fulfills the stated purpose of the NCAA (tr. 262-75, 400; deposition of Fred Jacoby at 9-11). For its part, ABC is also satisfied with the Plan and contract. In order to obtain the exclusive broadcast rights it considers highly valuable, ABC has agreed to pay some $120 million over the four years from 1978 through 1981 and to devote broadcast time to certain low rated and unprofitable telecasts (tr. 424, 431-35).

For many years the NCAA Football Television Plan included a provision, Article 20, to accommodate cable television. From 1972 through 1977 Article 20 permitted the NCAA Television Committee to authorize telecasts by wired systems of games that did not conflict in time with a series game being broadcast in the geographical area by the carrying network (plaintiff's exhibits 8, 9; affidavit of Walter Byers at 14 ¶ 19).

In 1976 plaintiff proposed to OSU the cablecasting of two of its 1977 football games (tr. 51). OSU was receptive; the proposal was put to the Television Committee, which took the position that "on those dates when ABC has not selected a game or games for telecasting and, resultantly, has not set a time for its telecast, a member institution should be afforded the opportunity to conduct a wired systems presentation." (Plaintiff's exhibit 15.) ABC strongly disagreed with the NCAA's interpretation, pointing out that the terms of the Plan and contract permitted it to select games after September up to the Monday preceding a Saturday telecast (defendant NCAA's exhibit F, appended to the affidavit of Walter Byers, at 24; tr. 439). NCAA concurred; no cablecasts of OSU football were approved for 1977 (tr. 440, 469).

When NCAA awarded exclusive telecast rights to ABC for the period 1978-1981, the parties founded their agreement on the 1978-1981 Football Television Plan ratified by the NCAA membership. The Plan then contained a version of Article 20 that had been reworded but in substance continued to permit wired systems telecasts only if they did not conflict in time with series telecasts (defendant NCAA's exhibit C, appended to the affidavit of Walter Byers, at 17-18).

In 1978 plaintiff again proposed to cablecast OSU games not televised by ABC; again, OSU officials responded favorably (plaintiff's exhibit 18; tr. 54). Although no formal application was made to the Television Committee, the NCAA and ABC communicated to plaintiff and OSU their unchanged belief that no exemption was possible under the Plan and contract (tr. 54-55).

Plaintiff therefore sought judicial relief, filing in this court on June 28, 1978 an antitrust action against the present defendants and moving for a preliminary injunction. Warner Cable Corp. v. American Broadcasting Companies, Inc., No. C-2-78-592 (S.D.Ohio E.D., filed June 28, 1978). On July 23, immediately before the scheduled hearing on the motion, the parties reached agreement. Defendants permitted plaintiff to cablecast five OSU games not broadcast by ABC in 1978 and five unbroadcast games in 1979; plaintiff agreed to discontinue its antitrust suit without prejudice and to refrain from further litigation until the conclusion of the 1979 football season (plaintiff's exhibits 35, 36).

The NCAA thereupon revised its Football Television Plan to reflect the agreements between Warner, ABC, and itself. The revision, which was published and widely distributed, purported to make the terms of the agreements concerning cablecasts of OSU football in 1978 and 1979 applicable to all potential cablecasts of football games sponsored by NCAA member institutions for the entire period of the Plan, 1978 through 1981 (defendant NCAA's exhibit F, appended to the affidavit of Walter Byers, at 27-32, 36-38). Revised Article 16 put cable systems on an equivalent footing with broadcast systems with respect to exception telecasts of sellout Division I games; for an exception to be granted under Article 16, all other admission-charging college games scheduled for the same time in the prescribed geographic area must be sold out. Revised Article 20 allowed the NCAA Television Committee to authorize exception telecasts "for experimental purposes" even when other games in the designated area are not sold out.

The Plan contains a...