Comcast to Appeal FCC Order on Tennis Channel Carriage
Comcast said it plans to appeal an FCC order largely upholding the ruling of an administrative law judge that it violated program carriage rules in its treatment of the Tennis Channel. The commission voted 3-2 along party lines to uphold Chief FCC ALJ Richard Sippel’s December ruling that Comcast distribute the Tennis Channel, which it doesn’t own, to the same extent it distributes its own Golf Channel and Versus (now called NBC Sports Network) channels (http://xrl.us/bnh4ks). The order gave Comcast 45 days to comply with the sanctions, which include a $375,000 forfeiture, and clarified Sippel’s recommendation to require the operator to carry the plaintiff “on the same distribution tier, reaching the same number of subscribers, as it does Golf Channel and Versus."
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"We are left with no choice but to pursue all available legal remedies in the courts,” Kyle McSlarrow, president of Comcast/NBCUniversal Washington, D.C., wrote on the company’s blog shortly after the order was released late Tuesday (http://xrl.us/bnh64a). “Although we appreciate the decision to vacate one aspect of the ALJ’s ruling, the majority’s ruling misapplies Congress’s narrowly tailored statutory standards for discrimination and competitive harm, ignores evidence demonstrating that Comcast’s business decision with respect to Tennis Channel were based on unbiased cost-benefit analysis (not improper discrimination), misreads the statute of limitations, and violates Comcast’s First Amendment Rights."
To avoid complying with the order, Comcast would need a stay, said Stephen Weiswasser, a lawyer with Covington Burling who represented Tennis Channel in the matter. “That requires them to establish that they have a likelihood of success on the merits or that they are irreparably harmed,” he said. “It’s really hard for us to see how Comcast can meet that standard, but I assume they'll try.” Before seeking a judicial stay, Comcast would have to ask the FCC to stay the order, Weiswasser said.
Tennis Channel’s spokesman praised the decision, which it said is the agency’s or its staff’s fourth in its favor in this matter. “While our network will benefit greatly from the broader carriage, ultimately it is the consumer who has won the day,” he said. “Today’s decision underscores that Comcast’s power comes with a concurrent responsibility to see to it that the freedoms of speech and expression of the diverse programmers that serve these communities are not stifled simply because they compete with the networks that the sole cable provider in the marketplace happens to own.” For some consumers, Comcast is their only choice of cable provider, he said.
The FCC relied on circumstantial evidence that Comcast engaged in “a general practice of favoring affiliates over nonaffiliates” in making carriage decisions, the order said. “This circumstantial evidence, when read in conjunction with the determination that Tennis Channel, Golf Channel and Versus were similarly situated but treated differently without a nondiscriminatory reason, supports our finding that ... Comcast discriminated on the basis of affiliation."
In a joint dissent, commissioners Robert McDowell and Ajit Pai criticized the commission’s reasoning in the order. They faulted the agency for including the subscriber metrics of Tennis Channel on Dish Network and DirecTV, which both own equity stakes in the network, when looking at how other multichannel video programming distributors treat the independent channel and Comcast’s Golf Channel and NBC Sports Network. “It makes no sense to include MVPDs with an equity interest in Tennis Channel within the control group if the goal of our analysis is to isolate the effects of ownership on carriage decisions,” they wrote (http://xrl.us/bnh64i). “Rather, the Commission should compare the distribution decisions made by Comcast with the distribution decisions made by MVPDs that do not have an ownership interest in any of the networks at issue.” In such an analysis, the difference in distribution between Comcast and its peers is minor, the Republicans said. Exact subscriber metrics were redacted from the public version of the order.
The order is important for independent programmers, Weiswasser said. “I think this ruling has implications for every independent programming service with respect to their relationships with vertically-integrated cable companies,” he said. “It is a really interesting decision and I am sure echoes of it will play through all the cases that come forward."
The NCTA called the decision regrettable and said it violates cable operators’ constitutional rights. “In today’s highly competitive marketplace, it is difficult to see how the government can justify this content-based trampling on the rights of free speech and the freedom of contract,” the association said in a written statement (http://xrl.us/bnh64p). Free State Foundation President Randolph May said: “By acting arbitrarily and capriciously in applying the ‘discrimination’ standard and by violating the First Amendment ... [this] is another example of the FCC’s flouting rule of law norms in its decision-making” (http://xrl.us/bnh64t). But Public Knowledge Senior Vice President Harold Feld said: “History shows that independents such as the Tennis Channel are more likely to embrace new distribution channels and new business models that challenge incumbents. By protecting independents on traditional cable today, the Commission helps nurture the online competition of tomorrow” (http://xrl.us/bnh64x).