7:25am PT by Eriq Gardner
Judge Halts Maine From Forcing Cable Operators to Unbundle Programming
Maine attempted to revolutionize the cable television market by giving consumers the ability to purchase unbundled channels and television programs. Based on a new decision, the effort may have happened a tad too quickly. On Friday, a federal judge issued a preliminary injunction against enforcement of LD 832 with the conclusion that Maine's recently enacted "à la carte" law likely violated the First Amendment rights of Comcast, ViacomCBS, Discovery and Disney. But U.S. District Court Judge Nancy Torresen's 35-page decision hands the TV giants only a narrow victory that could portend trouble for them down the road.
Maine lawmakers passed LD 832 earlier this year with an eye toward doing something about the expensive cost of subscribing to cable TV packages. Blame for the rising price of cable services was attributed by the law's sponsor to consumers being "forced to purchase cable TV packages which include dozens of channels the consumer has no interest in watching.”
So how about giving consumers the option of subscribing to ESPN while nixing ESPN2, or better yet, the ability to only purchase Boston Red Sox games?
In reaction to LD 832, the TV giants unleashed their fury, telling a judge that Maine’s first-in-the-nation à la carte mandate would be unduly burdensome and result in "increased cable costs, reduced programming choice, consumer dissatisfaction, and the diversion of resources from enhanced cable offerings."
As for legal arguments, Comcast, ViacomCBS, Discovery and Disney were mostly unsuccessful.
For instance, the TV giants argued that LD 832 was preempted by federal communications law, particularly § 544(f) of the Cable Act that prohibited states from imposing requirements regarding the provision or content of cable services.
In her decision (read in full here), Torresen says that courts have in the past adopted a limited interpretation of this provision and that the plaintiffs hadn't presented evidence that LD 832 would have a major impact on content.
"I recognize that LD 832 is a first-in-the-nation law that would significantly change how cable operators do business in Maine," writes the judge. "But just because the law is novel does not mean it is preempted. ... I conclude that § 544(f) was not intended to prohibit states from enacting content-neutral laws designed to lower prices and allow consumers to purchase only the programming they wish to view. Accordingly, I find that LD 832 is likely not preempted by § 544(f) of the Cable Act."
Torresen then addresses the TV giants' First Amendment arguments, and while ultimately giving them a victory here, she first hands them another setback that could be troublesome in some future attempt at regulation. She writes that while cable operators' have constitutionally protected discretion in choosing channels and programs for its service, the TV giants haven't adequately explained why this extends to discretion in "how to sell that programming."
But the judge does acknowledge First Amendment rights in exercising editorial discretion from the standpoint of cable operators acting as a speaker, and decides that intermediate scrutiny of LD 832 is warranted. That is, does Maine's "à la carte" law further an important governmental interest, and if so, are restrictions on speech essential to the furtherance of that interest?
To this question, Torresen rules that while there may have been a sufficient attention to the problem of rising cable costs, Maine's lawmakers really haven't done enough work studying whether LD 832 presents a solution. The state's public advocate may have collected comments from frustrated consumers, but lawmakers needed to do more.
"The Legislature did not undertake any further investigation, hear from expert witnesses, or commission a Maine-specific study to determine what impact LD 832 would actually have on access to cable services," states the decision. "The State has not accounted for the significant transactional costs resulting from upending the cable market in Maine or the likelihood that these costs will be passed onto consumers. Finally, there is no mechanism in the law that would stop cable operators from pricing individual channels at the same price as an entire tier."
The judge finishes by writing, "At this initial stage, I cannot conclude that the State has carried its burden of showing that LD 832 will, in fact, be likely to reduce prices and increase affordable access to cable. ... Because I agree that there is not sufficient evidence to show that the State will likely be able to demonstrate that LD 832 will remedy the problems associated with rising cable prices, I conclude that the Plaintiffs are likely to succeed on their First Amendment claim. I note that a likelihood of success determination on a motion for preliminary injunction should 'be understood only as [a] probable outcome' based on 'the present state of the record.'"
The upshot for Maine is that while the law is now put on hold, the state will have the opportunity to move forward in defense of the suit and perhaps make the sort of investigation that its lawmakers did not. The case continues. The fate of the nation's first forced cable unbundling law is on the line.