Time Warner Cable is being hit with a class action suit by four Southern California pay TV subscribers, who claim that the $11 billion the cable operator has paid for Lakers and Dodgers rights will be passed on to consumers, even those who have no interest in watching the games.
The suit, filed Tuesday in Los Angeles Superior Court, is the latest challenge to the cable industry to offer a la carte programming, or at least more options by customers in selecting among tiers of channels.
“There is no legitimate business, legal, technological, or economic reason why (TW Cable) cannot offer these Lakers and Dodgers games on a standalone channel basis so that only those subscribers who want and are willing to pay for them would do so and those who did not want these channels could ‘opt out,'” the suit stated.
The complaint asserts that TW Cable’s practice is an unfair method of competition and a violation of business and professions code. It claims that subscribers to other multichannel services, like DirecTV and Verizon, also are affected because TW Cable, in selling rights to the games to its competitors, requires that they be included in enhanced basic packages without the choice of opting out.
Also named in the suit were the Dodgers and the Lakers.
A spokesman for TW Cable said the company had no comment.
The suit was filed by four customers: Sherry Fischer, of Los Angeles; Stewart R. Graham of Pasadena; Todd Crow of Orange County; and Gavin McKiernan of Long Beach. Fischer is a Time Warner Cable subscriber, while Graham subscribes to Charter, Crow to DirecTV and McKiernan to Verizon.
Time Warner Cable acquired Lakers rights in February, 2011, for a reported $3 billion. The suit claims that the added cost has been passed on to subscribers at an additional cost of about $4 per month. The cabler acquired Dodgers rights in January, at a reported $8 billion, and the suit claims that the company will pass along costs next year at the rate of $4 to $5 per subscriber.
“In sum, (TW Cable) will extract from its customer base primarily in Southern California at least $11 billion to recoups its investment, and approximately 60% of this amount, or $6.6 billion, is extracted from individuals who do not want and do not watch and do not want to pay for Lakers and Dodgers telecasts and who, if given the option to do so, would opt out of such telecasts,” the suit stated.
Sen. John McCain (R-Arizona) has proposed legislation intended to spur the industry to offer channels on an a la carte basis, and in introducing the legislation, he noted the high costs of sports channels like ESPN. But the cable industry said that such a plan could have the opposite effect of merely raising rates for the most prized channels while a diverse array of smaller channels would flounder. Nevertheless, at the Cable Show last week, TW Cable CEO Glenn Britt suggested that the industry may need to offer a greater selection of tiers for consumers.
The suit was field by attorney Maxwell Blecher and Courtney Palko of Blecher, Collins, Pepperman & Joye.