The Cable Act allowed cable companies to scramble their signals to prevent individual consumers from ?tapping-in? and watching free cable. After the passage of the act, defendant companies and others asked programmers to scramble their cable signals. Defendant companies induced programmers to scramble but also to designate the cable operator as their exclusive sub-distributor to cable competitive delivery systems. These agreements prevented competition from a new form of cable delivery technology, DBS satellites.
Defendant companies acquired the new DBS satellite technology and the rights to the only satellite in orbit capable of providing DBS service from defendant GE American. After obtaining control of the satellite, defendant companies agreed to offer satellite programming that would not compete with the regular multichannel cable delivery systems. Also, by obtaining the rights to this satellite, defendant companies were able to substantially reduce (essentially eliminate) the satellite capacity that could be used by any potential DBS competitor. The agreement for the exclusive rights to use this satellite also contained provisions providing that key programming services (HBO, Cinemax, Showtime and the Movie Channel) could not be made available to any competitors without also being made available to defendant companies at no less favorable terms or conditions. This conduct and these agreements constituted an unreasonable restraint of trade and allowed defendant companies to create a monopoly.
Defendants entered into a settlement providing for monetary damages and enjoining them from engaging in anti-competitive behavior, entering into most exclusive contracts and from taking any retaliatory action against programmers for providing programming to competing cable or satellite providers.