enTouch Systems, which provides cable service in Houston, says AT&T and DirecTV, which jointly own regional sports network (RSN) Root Sports Southwest (Astros baseball and Rockets basketball games), are asking too much for the channel, particularly given that it was bought from Comcast out of bankruptcy.
In a letter to the FCC, enTouch president J Lyn Findley, said the "exorbitant" pricing is a way for the two companies to benefit by siphoning customers to U-Verse and DirecTV. Findley says enTouch has been successful in grabbing some of their customers and that pricing the RSN above market was a way to effectively withhold it from enTouch and try to grab some of those subs back.
EnTouch points out that neither U-Verse nor DirecTV carried the channel when it was owned by Comcast.
The company says that its current contract to carry Root Sports Southwest is up in September, and despite its best efforts, they can't agree on the "excessive" price.
Root Sports Southwest has said it can't lower the rates because of an MFN in its contract that dates from when it was owned by Comcast, an MFN it says allowed for artificially high rates.
Why didn't enTouch file a program access complaint? Findley said it did not think it could get relief given "flaws in the process."
enTouch says it fears a combined AT&T/DirecTV would charge even more for the RSN. It wants a non-discriminatory access condition on the deal, and one that allows enTouch, or a similarly situated company, to enter into agreements with third party programmers.
The American Cable Association, which represents smaller MVPDs, added its support for enTouch.
“To remain competitive, enTouch Systems requires access to ROOT Sports Southwest on fair-market terms," said ACA president Matt Polka. "But the network owned by AT&T and DirecTV is insisting on the payment of fees that are unreasonably and unnecessarily high. EnTouch, a first-to-market 1 Gigabit broadband service provider with about 26,000 customers, competes head-to-head with AT&T and DirecTV in Houston, a market reality that gives AT&T and DirecTV an incentive to demand exorbitant and anti-competitive fees from enTouch."
DirecTV declined comment.
On Tuesday, ZGS Communications asked the FCC to resolve its carriage dispute with the companies as a prerequisite for approving the deal.