In a fax to the parties, the AAA did not say why arbitrator Jerome Sussman was removed, but it asked both sides to agree on a replacement from a list circulated last summer and to let it know by Feb. 28, or the association would pick the new arbitrator for them.
Time Warner, which challenged Sussman's ruling that it discriminated against MASN, offered some suggestions for why Sussman was removed, saying that the dismissal stemmed from a rule that states that any arbitrator "shall be subject to disqualification for (i) partiality or lack of independence, (ii) inability or refusal to perform his or her duties with diligence and in good faith and (iii) any grounds for disqualification provided by applicable law."
A source familiar with the arguments said the cable operator, in addition to taking issue with the ruling, took issue with Sussman’s talking to reporters, the result of which, it felt, compromised his impartiality.
Time Warner was understandably "very pleased" with Sussman's removal, and it said so in a statement, adding: "We will prevail in the long run on this dispute."
MASN saw it differently. "The AAA did not grant Time Warner’s' request to vacate the finding of discrimination, but rather appointed a new arbitrator to determine how to proceed going forward," MASN spokesman Todd Webster said. "MASN remains confident that we will prevail and be allowed to return nightly Major League Baseball to millions of viewers in North Carolina."
In the fax, the AAA said a conference call would be held with the new arbitrator “to determine how this matter will proceed.” Time Warner was hoping that this meant he could go back to square one, while MASN maintained that the initial decision stood and what remained for the new arbitrator was the second, baseball-style arbitration phase.
"The letter we sent shows that the arbitrator was dismissed, but it didn't address vacating one way or the other," said Time Warner in an e-mailed statement to B&C. "We don't agree with MASN's assumption that Sussman's prior ruling must remain in effect. Rather than make the statement to the press, MASN should make the argument to the new arbitrator. We are confident that MASN's argument will be rejected."
Following a Dec. 17 hearing, Sussman 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 the cable operator “had both motive and opportunity to discriminate" against MASN in favor of its own regional sports network.
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."
Sussman 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, 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 was to have gone to a second round of so-called baseball-style arbitration, in which Sussman would have decided based on the "best offers" submitted by each side. Now it will be up to a new umpire to determine how to proceed.
In granting Time Warner's and Comcast's bid to divvy up Adelphia Communications’ cable systems back in 2005, the FCC required that they submit to arbitration if negotiations with an unaffiliated RSN reached an impasse.