An arbitrator concluded in a strongly worded decision that there is "inescapable" evidence that Time Warner Cable discriminated against regional sports network Mid-Atlantic Sports Network in a North Carolina carriage dispute.
Following a Dec. 17 hearing, arbitrator Jerome Sussman of the American Arbitration Association took less than three weeks to rule (in a Jan. 7 decision) that “the conclusion that Time Warner deliberately discriminated against MASN is inescapable from the documents and testimony,” adding that Time Warner “had both motive and opportunity to discriminate" against MASN in favor of its own RSN.
Time Warner argued that since it offered to carry MASN on a digital tier, it was not denying carriage. But Sussman said that since only 50% of Time Warner's subscribers were digital and since Time Warner carried its own and other RSNs on an analog tier, "This is exactly the kind of discrimination that I think the FCC [Federal Communications Commission] intended to prevent."
He said he agreed with Time Warner that it should have substantial editorial discretion over the channels it chooses to distribute, but since MASN was singled out, that such discretion was "abused" with the intent to discriminate. He added that there appeared to be no evidence that there were ever any real negotiations between the two parties, and that instead, "It appears that all of TWC's efforts went into figuring out ways to avoid putting MASN on the air."
Sussman also dismissed Time Warner's contention that MASN was not an RSN, while concluding that Time Warner's News 14 Carolina was an RSN since it provides Charlotte Bobcats National Basketball Association games and was looking to pick up more sports rights, which it might be able to do if MASN "were squeezed out" by a lack of carriage.
The dispute now goes to a second round of so-called baseball style arbitration, in which Sussman will decide based on the "best offers" submitted by each side.
As a condition of its July 2006 decision allowing the top two cable operators, Time Warner and Comcast, to divvy up systems of bankrupt Adelphia Communications, the FCC said that if there was evidence that either buyer was exerting undue market power in denying carriage to an unaffiliated RSN, the complaint could be submitted to outside arbitration.
While the commission found no reason to anticipate discrimination regarding national or nonsports regional programming by the cable operators, it said "additional measures are necessary with respect to unaffiliated regional sports networks to mitigate the potential harms deriving from the increased vertical integration and increased regional concentration produced by the transactions. Accordingly, we adopt a condition allowing unaffiliated RSNs to use commercial arbitration to resolve disputes regarding carriage on Comcast or Time Warner cable systems."
MASN pointed out that it is already carried in North Carolina by EchoStar Communications' Dish Network, DirecTV, Mediacom Communications and Charter Communications, arguing that this suggested that the terms it offered Time Warner were reasonable.
“This is a resounding victory for consumers, for sports fans, for colleges and universities in the state and for diversity of programming,” said MASN spokesman Todd Webster in announcing the decision. "We look forward to reaching a swift resolution that allows all Time Warner customers throughout North Carolina the same opportunity to watch their local sports on television that millions of other North Carolinians who receive their television service from other providers already enjoy."
Time Warner spokespeople were not available to comment on whether the company would appeal the ruling, but Time Warner has said that it was willing to talk about putting the network on a sports tier but not on basic because, according to a Time Warner executive at the time, “the programming is of little or no interest to our customers in North Carolina.”
Cable operators have been caught between a regulatory rock and a hard place. Operators have been under pressure from the FCC and legislators not to deny must-have programming, like college and pro sports, to fans used to getting it over the air or on basic cable. But at the same time, regulators and legislators have complained about soaring cable prices, which cable operators point out are linked to programming costs.
In September, MASN got some backing from the mayors of Raleigh and Durham, N.C., who wrote identical letters to Time Warner asking them to carry the network on the basic tier. MASN even got support from the managers of the Durham Bulls and Carolina Mudcats minor-league-baseball teams.