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GSN Complaint Goes Back to FCC

Chairman Wheeler has chance to act before his agency exit 12/05/2016 8:00 AM Eastern
TakeAway

Cable network GSN scored a win with an FCC judge, but it will take chairman Tom Wheeler to seal the deal — or not.

WASHINGTON — While Republican leaders in Congress have suggested Democratic Federal Communications Commission chairman Tom Wheeler should be on a short leash during the transition to a Trump administration, Wheeler might not go down without a shot or two more across the bow of the cable industry.

 

One opportunity presented itself when an FCC administrative law judge found in favor of GSN in a program-carriage complaint against Cablevision Systems (now part of Altice USA).

 

If the chairman wishes, he could simply schedule a vote on that recommendation.

 

One backer of the GSN decision, speaking on background, suggested there would likely be three Democratic votes to uphold the call.

 

Judge Richard Sippel — a familiar name from decisions in complaints involving Comcast and Herring Broadcasting and Tennis Channel and others — ruled that Cablevision had discriminated against GSN (formerly Game Show Network) on the basis of non-affiliation by “unlawfully” moving it to a sports tier while WE tv remained on expanded basic. WE tv is owned by AMC Networks, which is controlled by the Dolan family — the same family that controlled Cablevision until its sale to Altice.

 

Sippel recommended the FCC require Cablevision to carry GSN on expanded basic and impose the maximum fine of $400,000. Sippel recommended that Cablevision be required to carry GSN on expanded basic, “or the current or future tier that has 90% or more penetration,” until both sides strike a new contract, or within five years, whichever comes first.

 

Oral argument in the case was held more than a year ago, but such cases usually take a while to wend their way to decisions.

 

The decision is not binding, but is instead a recommendation to the full commission, which referred the complaint for an ALJ hearing and now must decide whether or not to take Sippel’s advice.

 

That may not be a slam dunk. The FCC’s Enforcement Bureau concluded last year (in comments in advance of oral argument) that GSN had not demonstrated affiliation-based discrimination or shown that it was similarly situated to WE tv or another Cablevision-affiliated network, the now-defunct Wedding Central.

 

GSN, owned by Sony Pictures Enterrtainment and AT&T Entertainment Group, had wanted Cablevision to immediately draw up a new contract guaranteeing it the same carriage and license fees as the affected WE tv, but Sippel disagreed. “Such remedy is not appropriate because it is Cablevision’s carriage of GSN on the premium sports tier that has been adjudged unlawful, not its carriage of GSN on an at-will basis.”

 

Sippel said the “re-tiering” of the channel was not lawful and that Cablevision moved it to a sports tier on only the “pretext” of a “legitimate” business decision. “Legitimate” is the key, since discriminating could boost Cablevision’s business, but not lawfully.

 

“As the conclusions of law determined that Cablevision discriminated against GSN as a nonaffiliated network with the effect of unreasonably restraining GSN’s ability to compete fairly, the related issues presented are on which tier and under what terms Cablevision must carry GSN; not whether Cablevision must carry GSN at all.” That was Sippel’s recommendation in the Nov. 23 decision.

 

“GSN has satisfied its burden of proving by a preponderance of evidence that Cablevision engaged in discrimination in the selection, terms, or conditions of carriage on the basis of GSN’s non-affiliation with Cablevision,” Sippel wrote in the 65-page decision. He also concluded that Cablevision had unreasonably “restrained” GSN from competing “fairly.”

 

GSN first filed a carriage complaint with the FCC in October 2011, alleging that Cablevision discriminated against the channel by moving it from a basic tier to a premium sports tier on its systems in February 2011. The change, GSN claimed, caused its ratings to “crater.” GSN claimed Cablevision used its market power to favor its own affiliated networks like WE tv and Wedding Central, which did not change channel positions. Cablevision countered that there was a legitimate, nondiscriminatory, basis for the move.

 

“We respectfully disagree with the ALJ’s decision and fully intend to appeal [to the FCC],” Altice said in a statement.

 

GSN said in a statement: “We appreciate ALJ’s recognition that GSN is a ‘uniquely popular network … highly valued’ by the cable audience, and agree with the conclusion that the network was inappropriately tiered.”

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