NEW YORK -- A federal judge Wednesday blocked the Premiere pay TV network from going into business until a federal antitrust suit against it is resolved.
The U.S. Justice Department, claiming that Premiere violated antitrust laws, had asked for the preliminary injunction against the network -- a joint venture of Columbia Pictures, Twentieth Century-Fox, MCA-Universal, Paramount and Getty Oil.
M. Christopher Derick, president and chief operating officer of Premiere, called the decision 'a major setback' for the company, which was scheduled to begin operating Friday. Burt Harris, chairman and chief executive officer of the company, said Premiere would 'immediately' appeal the injunction.
Premiere, formed last May, wanted a nine-month 'window,' or period of time in which the new films of the four participating studios would be withheld from competing pay TV networks: HBO, Showtime and The Movie Channel.
Government attorneys, in an August application for the injuction, contended the window constituted price-fixing and a group boycott of the market.
In granting the injunction, U.S. District Judge Gerard Goettel said the government is likely to prove in its suit that there is an an 'unlawful' conspiracy, that Premiere would maintain prices of films at 'artificial and noncompetitive levels' and that the venture would restrain competition among pay TV systems.
Officials of Premiere have said that the nine-month period is not long enough, that other systems such as HBO have exclusive rights to some products and that Premiere will increase the competitiveness of the cable industry.
Goettel said in the decision that he recognized the need for new companies to make a dent in the market by making their product appear different from their competitors.
But he added, 'There are a number of ways of achieving product differentiation without cornering the market on one-half of the hit motion pictures being produced by Hollywood.'
A total of 39 to 45 movies released in 1981 would be affected by the window.
Goettel also cited Paramount memos showing dissatisfaction with the amount of money being made by cable TV operators and detailing the 'ultimate goal' of 'eliminating or severely altering' HBO's dominant position in the pay TV market.
'The defendants have embarked on this venture largely out of dissatisfaction with the revenues they have been obtaining from the network program services for their films,' the judge wrote.
'Far more important than the interests of either the defendants or the existing industry, however, is the public's interest in enforcement of the antitrust laws and in the preservation of competition. The public interest is not easily outweighed by private interests.'
