The opinion of the court was delivered by: Sand, District Judge.
This case raises questions of first impression regarding the
meaning of § 612 of the Cable Communications Policy Act of 1984
("Cable Act"), 47 U.S.C. § 532 (1984). The plaintiff, Media
Ranch, Inc. ("Media"), is the producer of an adult-oriented cable
television program called "Midnight Blue." The defendant,
Manhattan Cable Television, Inc. ("MCTV"), is a subsidiary of
Time Warner, Inc. MCTV operates a cable television system that
serves much of Manhattan.
Pursuant to a franchise agreement with the City of New York,
MCTV operates a cable television system with forty-two activated
channels which reaches over 250,000 households and numerous
hotels, restaurants and bars in Manhattan. MCTV is currently in
the process of completing a service upgrade. Customers in the
upgraded areas receive all forty-two activated channels, while
those in the areas not yet upgraded receive only thirty-eight
For more than ten years, Media has produced a television show
entitled "Midnight Blue." The show is a magazine-type program
hosted by Media's president, Al Goldstein. "Midnight Blue"
presents news, features and commentaries on various sexual and
nonsexual themes. It regularly features sexually explicit
material, such as nude dancing, and carries commercials
advertising adult-oriented services including phone lines for
sexually oriented conversations and escort services.
From 1980 until October 1, 1990, "Midnight Blue" was broadcast
on cable Channel 23.*fn1 In August, 1990, MCTV decided to devote
Channel 23 entirely to C-SPAN programming. By letter dated August
14, 1990, MCTV informed Media and the other independent
programmers who were using Channel 23 that it would no longer be
available to them after October 1st. See Ex. 1 to Affidavit of
Fred Ciccone (12/20/90). However, the letter explained that the
programmers could seek time on either the public access or leased
access channels which MCTV had established.
The public access and leased access channels referred to in the
letter were established by MCTV in an attempt to comply with the
requirements of the Cable Act and the terms of its franchise
agreement with the City of New York.*fn2 MCTV designated
Channels 16 and 17 as public access channels on which time is
available to the public free of charge on a first-come,
first-served basis. No commercials are permitted on those
channels. Channels 26, 35, 40 and 43 were set aside for leased
access use by unaffiliated commercial programmers.*fn3
Commercials are permitted on the leased access channels.
Programmers may obtain time on the leased access channels by
negotiating individual contracts with MCTV. Currently, two of the
leased-access channels — Channels 40 and 43 — are leased in their
entirety to the "Prevue Guide" and the "Nashville Network,"
respectively. Channel 26 is also fully committed, with the
exception of three hours during the week, to the "Home Shopping
Network." Thus independent programmers seeking broadcast time are
essentially limited to applying for time on Channel 35.
On September 10, 1990, Media applied to MCTV for commercial use
time on the leased access channels. Media and MCTV negotiated for
approximately six weeks before reaching impasse. During this
negotiation period, MCTV continued to broadcast "Midnight Blue,"
airing it on Channel 35 at its usual broadcast time of midnight
on Mondays and Fridays.
On November 9, 1990, Media filed the complaint in this action,
alleging that the price demanded by MCTV for time on Channel 35,
and eight other non-monetary terms insisted upon by MCTV, were
unreasonable within the meaning of § 612(d) of the Cable Act.
Among the non-monetary terms objected to by Media are a provision
limiting MCTV's liability for non-willful breach of contract and
a provision requiring Media to submit a videotape of its
programming to MCTV for review one week in advance of the
broadcast date.*fn4 Media served its first discovery request
upon filing the complaint. That request sought, among other
things, information on MCTV's costs and profits from operating
its cable system.
On December 5, 1990, the parties entered into a stipulation
establishing a motion schedule and staying discovery. The
stipulation also provided that MCTV would continue to broadcast
"Midnight Blue" during the pendency of this action. MCTV's motion
for summary judgment and Media's motion for a declaration
regarding MCTV's compliance with the set aside requirements of §
612(b) were filed in late December, 1990. Oral argument on both
motions was heard on January 24, 1991.
The two motions presently before this Court raise novel
questions concerning the meaning and application of Section 612
of the Cable Act, 47 U.S.C. § 532. Consequently, it is
appropriate to begin with a brief discussion of Section 612 and
its legislative history.
A. Section 612 of the Cable Act
Prior to 1984, the cable television industry had been governed
by a patchwork of federal, state and local regulations. Congress
passed the Cable Act to establish a national policy governing the
cable industry and to establish the primacy of federal regulation
of cable. See H.R.Rep. No. 934, 98th Cong., 2d Sess. 19 (1984)
(hereinafter "H.R.Rep."), reprinted in 1984 U.S.Code Cong. &
Admin.News 4655, 4677; D. Lampert, Cable Television: Does Leased
Access Mean Least Access? (hereinafter "Leased Access"), in
Cable Television Leased Access 3, 6 (Annenberg Washington
Program in Communications Policy Studies, 1991). In passing the
Cable Act, Congress sought to promote two primary goals: to
encourage the growth and development of the cable industry, and
to assure that cable companies provide the widest possible
diversity of programming to the communities they serve. See
H.R.Rep. at 19, 40, 1984 ...