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MEDIA RANCH, INC. v. MANHATTAN CABLE TELEVISION

February 26, 1991

MEDIA RANCH, INC., PLAINTIFF,
v.
MANHATTAN CABLE TELEVISION, INC., DEFENDANT.



The opinion of the court was delivered by: Sand, District Judge.

OPINION

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.

In this action, Media seeks relief under § 612 of the Cable Act on the ground that MCTV has set unreasonable terms and conditions for the continued broadcast of "Midnight Blue." Presently before this Court are two motions: MCTV's motion for summary judgment or, in the alternative, a protective order; and Media's motion for a declaration that MCTV has not set aside the number of leased access channels required by the Cable Act. For the reasons given below, MCTV's motion for summary judgment is denied. This Court reserves decision on MCTV's request for a protective order. Media's motion for a declaration that MCTV has not set aside the proper number of leased access channels is granted.

I. BACKGROUND

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 channels.

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.

II. DISCUSSION

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 ...


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