It seems like every time a major pay-TV company has to renew its contract with a big cable/broadcast network, customers have to sit through ugly media campaigns from both sides threatening blackouts. Those shutdowns are usually averted at the last minute, but if they happen they can last weeks or even months. When that happens, are you due a refund? Maybe you feel like you do, but a recent federal court ruling casts doubt on the likelihood of you ever getting anything.
From late 2014 through early 2015, Dish Network went through two separate high-profile blackouts. First, there was the month-long standoff between the satellite company and Turner, resulting in blackouts for CNN, Cartoon Network, HLN and others. This was followed almost immediately by the three-week blackout of Fox News on Dish.
As a result of not getting the content they were paying for — and the satellite company not agreeing to their refund requests — two Dish subscribers sued in federal court, alleging breach of contract, unjust enrichment, and violations of various state consumer protection laws.
In July 2015, a federal court in Missouri threw out [PDF] the unjust enrichment and state law counts but allowed the breach of contract complaint to move forward.
At issue is the “Limitations of Liability” section of the Dish residential customer agreement. At the time of the lawsuit (it’s since been updated slightly), the “Interruptions and Delays” subsection of the agreement stated that Dish could not be held liable “for any interruption in any service or for any delay.”
Taken broadly, the District Court judge said, this could be taken to imply that Dish “cannot be held liable for any interruption or delay of any or all programs for any period of time or for a failure to perform. If that’s the case, then this language could render the “illusory,” meaning that it uses terms that seem to promise something but in actuality promise nothing.
Dish appealed the lower court’s ruling to the Eighth Circuit, where earlier this month a three-judge panel overturned the District Court judge’s decision.
In its opinion [PDF], the Eighth Circuit concluded that “An illusory contract is unenforceable from its inception,” meaning it would be illusory in every aspect to which it is supposed to apply.
But because the plaintiffs had both been Dish subscribers for years — more than a decade in one case — and because Dish “continued to provide many uninterrupted channels to its subscribers,” the appeals panel said that the contract was not, under the applicable law of Dish’s home state of Colorado, illusory.
The plaintiffs had also accused Dish of breaching its duty of good faith and fair dealing by unfairly charging for satellite TV programming that the company did not provide “without providing a credit or other monetary relief… for the failure to provide the programming.”
The District Court judge had determined that the plaintiffs could challenge whether or it was reasonable for Dish to “keep the payments it would have been paying previously to the providers for those channels, and provide no recompense to its customers.”
But in its appeal, Dish countered that the terms of its contract explicitly bar a customer from being entitled to a refund.
A different section of the Dish agreement (now funder under “Changes in Services, Features and Functionalities Offered”) states that customers are not “entitled to any credits, refunds, price reductions or any other form of compensation because of any… addition, deletion, rearrangement, alteration, change and/or elimination” of programming.
As such, the Eighth Circuit concluded monetary relief for a service interruption “is unambiguously precluded by the express terms of the parties’ contractual bargain.”
In other words: tough luck, kid.
What About Other Cable Companies?
We looked at the terms for several other major pay-TV providers and while most don’t language that is as explicit as Dish’s “no refunds” policy, they generally seem to have contract terms that are heavily tilted in their favor.
DirecTV reserves the “unrestricted right to change, rearrange, add or delete our programming packages, the selections in those packages, our prices, and any other Service we offer, at any time.” The satellite company reminds you of your right to “cancel your Service, in whole or in part, if you do not accept the change.” Of course, canceling could hit you with huge early termination fees and other charges. Not canceling constitutes acceptance of programming changes.
Comcast also grants itself the authority to “rearrange, delete, add to, or otherwise change programming or features or offerings… including, but not limited to, content, functionality, hours of availability, customer equipment requirements, speed, and upstream and downstream rate limitations.” And just like DirecTV, “If you find a change in the Service(s) unacceptable, you have the right to cancel your Service(s). However, if you continue to receive Service(s) after the change, this will constitute your acceptance of the change.”
The closest we found to Dish’s terms are those of Optimum (now owned by Altice USA). That provider’s terms state that the customer “has no right to receive, and Altice has no obligation to provide, any particular programming service or channel as part of Altice’s Service and that Subscriber is not entering into this agreement or purchasing Altice’s Service in reliance on an expectation or promise (explicit or implicit) that any particular programming service or set of programming services shall be included as part of Altice’s Service.” Put another way: You’re agreeing to buy cable TV to have cable TV, not to have CNN and Fox News (or any other channels) specifically.
The Optimum agreement then goes on to explicitly address the issue of contract negotiations with broadcasters.
“[I]n the event particular programming becomes unavailable, either on a temporary or permanent basis, due to a dispute between Altice and a third party programmer, Altice shall not be liable for compensation, damages… credits or refunds of fees for the missing or omitted programming,” states the agreement, which does have an exception for truly a la carte programming, like premium cable networks that you purchase specifically. In such cases, an Optimum customer “shall only be entitled to a pro rata credit of amounts pre-paid for the specific programming to which Subscriber subscribes on an a la carte basis.”
Some of the pay-TV providers do have contract conditions that allow for full blackouts of service that last more than 24 hours, but you often have to request the credit within a limited window of time.
The bottom line: If your pay-TV provider gets involved in a blackout for a channel that isn’t HBO or Showtime, you’re probably stuck paying for it or leaving for some other service — just like the hundreds of thousands that left Time Warner Cable during its protracted blackout of CBS in its biggest markets.
by Chris Morran via Consumerist