Washington

FCC Upholds Tennis Channel Decision

3-2 decision gives Comcast 45 days to provide similar tier placement to Golf, NBC Sports Net; Comcast will appeal the ruling in court 7/24/2012 06:05:45 PM Eastern

In a 3-2 party line vote, the FCC has voted to
uphold an FCC judge's ruling that Comcast discriminated against Tennis channel,
but vacates his equitable channel placement remedy. That means Comcast must
provide Tennis Channel with the same level of distribution it provides
similarly situated co-owned networks Golf Channel and Versus (now NBC Sports
Network), but does not have to give it similar/adjacent channel positioning.

The FCC conceded, as Comcast had argued,  that the distribution remedy implicates cable's First Amendment rights, it concluded that it was not a content-based remedy and so easily survived the intermediate scrutiny test. 

The judge had concluded that cable's editorial discretion was not affected, but the FCC disagreed. "

"We find that the ALJ erred in this limited respect. Comcast's First Amendment rights are implicated by our carriage remedy because Comcast is entitled, in the exercise of its editorial discretion, to choose to carry Golf Channel and Versus. Should it exercise that choice, our remedy requires Comcast to carry Tennis Channel. Thus, the remedy affects Comcast's authority to determine the composition of networks on its cable systems-a result that, under established law, has been recognized as implicating the First Amendment."

That is cold comfort for Comcast, however. The nation's largest cable operator has 45 days to comply with all but t eh channel placement portion of the order and must pay the $375,000 to the treasury.the judge had ordered.

"We
deny Comcast's Application for Review. We also deny Comcast's Exceptions other
than its Exception to the ALJ's equitable channel placement remedy. We vacate
the equitable channel placement remedy and affirm the ALJ's order in all other
respects," the commission said in its summary of the 47-page order.

Judge
Richard Sippel ruled last December that Comcast had discriminated against
Tennis Channel by carrying it in a sports tier.

The FCC was reviewing that decision given the precedential weight of his order
that Comcast move Tennis Channel to Comcast's digital basic lineup and give it
similar treatment as Golf Channel and NBC Sports Network, in which Comcast/NBCU
has a financial stake

It
is the first time a network has prevailed in a program carriage complaint
against a cable operator.

"We
are gratified that the Federal Communications Commission has today definitively
held that Comcast has discriminated against Tennis Channel in the terms and
conditions of its carriage on Comcast systems and in favor of its wholly owned
networks, Golf Channel and NBC Sports Network," said Tennis Channel in a
statement.

"The
Commission has given Comcast 45 days to rectify its discrimination and provide
Tennis Channel with carriage equivalent to what it affords Golf Channel and NBC
Sports Network. The Commission's decision constitutes a persuasive rejection of
each argument Comcast has sought to make over the past several years to justify
its discriminatory treatment of Tennis Channel."

Comcast
plans to appeal the decision.

"While
we have the utmost respect for the Commission, we are disappointed in today's
majority decision..." said Comcast/NBCU Washington President Kyle McSlarrow.
"[T]he finding of a violation here is inconsistent with the evidence, which
shows that all major distributors recognize that Tennis Channel does not merit
the same carriage as Golf Channel and NBC Sports Network. The decision will
accomplish nothing other than to drive up programming costs and enrich a group
of wealthy investors in the Tennis Channel. Comcast has carried Tennis Channel
for more than seven years under a contract Tennis Channel freely negotiated -
which this government action would now override. 

"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 decisions with respect to Tennis Channel were based on
unbiased cost-benefit analyses (not improper discrimination), misreads the
statute of limitations, and violates Comcast's First Amendment rights. We
plan to appeal this decision to the courts."

Also
not so pleased were the commission's outvoted two Republican members, who argued that
Comcast was just giving Tennis Channel the industry norm of carriage, which was
that no major distributor was carrying it on the same tier as Versus or Golf.

"[Tuesday],
the Commission faults Comcast for not having been the first major multichannel
video programming distributor (MVPD) to carry Tennis Channel on the same
programming tier as Golf Channel and Versus (now NBC Sports Network),"said
Commissioners Robert McDowell and Ajit Pai in a joint statement. "It then
takes the extraordinary step of requiring Comcast to give Tennis Channel equal
carriage and concomitantly to pay Tennis Channel more for programming rights.
Because we do not find sufficient support for the conclusion that Comcast's
refusal to carry Tennis Channel on the same tier as Golf Channel and Versus was
discriminatorily motivated by different ownership interests, we respectfully
dissent."

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