New York Citizens Committee On Cable TV v. Manhattan Cable TV, Inc.
| Decision Date | 18 December 1986 |
| Docket Number | No. 86 Civ. 0859 (RWS).,86 Civ. 0859 (RWS). |
| Citation | 651 F. Supp. 802 |
| Parties | NEW YORK CITIZENS COMMITTEE ON CABLE TV, Plaintiff, v. MANHATTAN CABLE TV, INC., Time, Inc., American Television and Communications, Inc., Home Box Office, Inc., the City of New York, Edward Koch, Mayor, Andrew Stein, City Council President, Harrison Goldin, Comptroller, David Dinkins, Claire Shulman, Howard Golden, Ralph Lambetti and Stanley Simon, Borough Presidents, and Morris Tarshis, Director of Franchises, Defendants. |
| Court | U.S. District Court — Southern District of New York |
COPYRIGHT MATERIAL OMITTED
Robert T. Perry, Media Law Clinic, New York Law School, New York City, by Donaldson Brown, Christopher McHattie, Brendon Newcomb, Student Interns, for plaintiff.
Cravath, Swaine & Moore, New York City, for defendants Manhattan Cable TV, Inc. American Television and Communications, Inc., Time, Inc. and Home Box Office, Inc.; Robert D. Joffe, Stephen S. Madsen, Ronald K. Chen, Alden L. Atkins, Mark A. Sirota, of counsel.
In this action, defendants Manhattan Cable TV, Inc. ("MCTV"), Time Incorporated ("Time"), American Television & Communications Corp. ("ATC") and Home Box Office, Inc. ("HBO") (collectively, the "Time defendants") have moved to dismiss the Amended Complaint of plaintiff New York Citizens Committee on Cable TV ("the Committee") pursuant to Fed.R.Civ.P. 12(b)(6) and, in the alternative, for summary judgment pursuant to Fed.R.Civ.P. 56 as to certain claims for relief under a franchise agreement dated August 18, 1970 under which MCTV provides service (the "Franchise Agreement").1 The Amended Complaint alleges that the Time defendants have violated § 2 of the Sherman Act by monopolizing, or attempting to monopolize, the lower Manhattan market for non-sports pay television programming,2 that the Time defendants have violated § 612 of the Cable Communications Policy Act of 1984, 47 U.S.C. § 532 (the "Cable Act") and that MCTV has breached certain provisions of the Franchise Agreement. The motion to dismiss the Cable Act claim is granted for lack of standing and the motion to dismiss the remaining claims is denied for the reasons set forth below.
According to the Amended Complaint, the Committee is an unincorporated association of cable television subscribers residing in lower Manhattan. MCTV, a wholly-owned subsidiary of Time, provides cable television service in lower Manhattan pursuant to the Franchise Agreement, through which the City of New York authorized MCTV's predecessor in interest to construct and operate a cable television system. Although MCTV's franchise is nonexclusive, MCTV is the only company which the City has authorized to provide cable television service in that area. Defendant ATC, also a wholly-owned subsidiary of Time, is in the business of owning and operating cable television systems and is the second largest such multiple systems operator in the nation.
HBO (also a wholly-owned subsidiary of Time) produces two video programming services called "Home Box Office" (the HBO Service) and "Cinemax," which feature movies, sporting events and other forms of entertainment and information. HBO's programming services are delivered to cable systems nationwide via satellite. HBO's programming services are usually sold to cable subscribers as "pay" or "premium" services, that is, they generally are not included in the package of "basic" services provided to all subscribers for their basic subscription fee, but are provided only to subscribers who elect to take them at extra charge. In the lexicon of this litigation, HBO is a programmer.
MCTV currently offers a basic cable service package consisting of 31 channels provided as basic services and three additional pay services. Two of these pay services are the HBO Service and Cinemax, both of which are affiliated with MCTV through Time. MCTV also carries a third pay service, Sportschannel, an unaffiliated sports-oriented pay service. MCTV does not carry any other unaffiliated pay cable services such as Showtime, Bravo or the Disney Channel, although its system has enough channels to permit it to do so if it wished.
According to the Amended Complaint, MCTV has refused to grant "access" to its cable system to unaffiliated pay television companies, that is, programmers other than HBO. In 1978, Showtime, a pay television service unaffiliated with Time, requested access to one of the cable channels on MCTV's system. MCTV denied Showtime's request because, as the Committee admits, insufficient channels were available. Thereafter, Showtime continued to request access to MCTV's system. In 1981, after MCTV had expanded its channel capacity, it announced that Showtime would be given access to one of the new channels, but this offer was later withdrawn. Later in 1981, MCTV granted HBO's request for access to one of MCTV's channels for its new Cinemax service. The Amended Complaint alleges further that other pay television services unaffiliated with Time have requested but been denied access to MCTV's system, although it does not indicate when these alleged "denials" of "access" occurred.
The Amended Complaint sets forth four claims for relief, of which only three remain.3 Of these three, the first is a claim for relief under § 2 of the Sherman Act, 15 U.S.C. § 2. The Committee asserts that the Time defendants have monopolized, or attempted to monopolize, the market for pay cable movie and non-sports entertainment programming service in lower Manhattan. The Committee also asserts a claim for relief under § 612 of the Cable Act, 47 U.S.C. § 532, which requires certain cable operators to set aside a percentage of channel capacity for leased access by unaffiliated program suppliers. Finally, plaintiff asserts a pendent state claim as a third party beneficiary of certain access obligations imposed on MCTV by the Franchise Agreement with the City. The Committee seeks injunctive relief directing MCTV to make available reasonable channel capacity for "leased access" by unaffiliated pay cable programmers to place them on equal footing with HBO and Cinemax.
The Time defendants have raised a number of challenges to the sufficiency of the Amended Complaint. First, they point out that the Amended Complaint states that the alleged violation is in terms of "access," while the relief sought is in terms of "leased access." Thus, they claim, the Committee seeks relief for allegedly wrongful refusals to provide leased access when the Committee does not allege that such refusals have ever occurred. Second, the Time defendants argue that the Committee's Sherman Act claims must be dismissed on the grounds of geographic and product market and state action immunity. Third, they contend that the Committee lacks standing to sue under the antitrust laws. Fourth, they maintain that the Committee lacks standing to sue under the Cable Act and, in any event, has failed to state a claim thereunder. Fifth, the Time defendants assert that the Committee lacks third party beneficiary status as a matter of law. Finally, the Time defendants urge that the First Amendment bars the relief the Committee requests.
"Access" v. "Leased Access"
When describing the conduct that gives rise to violations of law, the Amended Complaint speaks in terms of denial of "access." The claims for relief, however, request "leased access" for unaffiliated programmers. The Time defendants assert that the Committee's failure to allege that MCTV has denied "leased access" to Showtime and other unaffiliated services is fatal to its claims, since it seeks relief for allegedly wrongful refusals to provide leased access when it does not allege that such refusals have ever occurred.
According to defendants, pay programmers may obtain "access" to a cable system in a number of ways of which leasing is only one. In the vast majority of cases the major programmers enter into licensing transactions with cable operators, whereby they receive payment from the operators in return for the latter's purchase of a service which they in turn sell to subscribers. See, e.g., American Television & Communications Corp. v. Floken, Ltd., 629 F.Supp. 1462 (M.D.Fla.1986). Therefore, the defendants state that the allegations respecting MCTV's denials of "access" can only be understood to refer to decisions by MCTV not to purchase exhibition rights offered to it by Showtime and others, and not to any actual request for, or denial of, leased access to MCTV's system. Furthermore, they allege that neither Showtime nor any other major pay programmer has ever sought to lease one of MCTV's channels.
Although the Committee cannot obtain equitable relief against conduct that has never occurred and is not threatened to occur, the term "access" does not necessarily exclude leased access as used in the "wherefore" clause, nor does the prayer for relief limit the Committee to the literal meaning of "leased access." It would be premature to dismiss the complaint at this point based solely on the difference in the terminology used in the body of the complaint and the prayer for relief. Therefore, the motion to dismiss on this ground is denied.
The two essential elements of a claim of monopolization under § 2 of the Sherman Act are: "(1) the possession of monopoly power in the relevant market, and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of superior product, business, acumen, or historic accident." United States v. Grinnell Corp., 384 U.S. 563, 570-71, 86 S.Ct. 1698, 1703-04, 16 L.Ed.2d 778 (1966). The Time defendants do not dispute that MCTV's alleged refusal to deal constitutes an unlawful "willful acquisition or maintenance" so long as MCTV has "purpose to create or maintain a monopoly," United States v. Colgate & Co., 250 U.S. 300, 307, 39 S.Ct. 465, 468, 63 L.Ed. 992 (1919). Nevertheless, th...
To continue reading
Request your trial
-
Singsen v. Television Signal Corp., A077075
...damages for violation of rate schedule contained in a franchise contract with the city]; New York Citizens Committee on Cable TV v. Manhattan Cable TV, Inc. (S.D.N.Y.1986) 651 F.Supp. 802, 815-816 [cable television subscribers' association was a third party beneficiary of franchise agreemen......
-
In re Interest Rate Swaps Antitrust Litig.
...aimed at impeding exchange trading of CDS market alleged direct injury to investors); cf. New York Citizens Comm. On Cable TV v. Manhattan Cable TV, Inc. , 651 F.Supp. 802, 811 (S.D.N.Y. 1986) ("Consumers have standing when they are injured as a result of a defendant's improper exclusion fr......
-
Liberty Cable Co., Inc. v. City of New York, 94 Civ. 8886 (LAP).
...be confirmed by the New York State Commission on Cable Television ("NYSCC") to be effective. N.Y.Exec.Law ? 821(1) (McKinney 1982). In New York City, the municipal franchising agency authorized by the New York City Charter to grant franchises to cable television systems is the Department of......
-
New York ex rel. Spitzer v. Saint Francis Hosp., 98 Civ. 0939(WCC).
...and is likely to result in higher fees for services rather than cost containment. See New York Citizens Committee on Cable TV v. Manhattan Cable TV, Inc., 651 F.Supp. 802, 811 (S.D.N.Y.1986) ("basic economics dictates that the existence of only one seller in a given market would lead to hig......