News

Why Comcast Battles on Against Networks at FCC

6/04/2012 12:01 AM Eastern

Washington — Comcast is in the midst of two very
public fights with Bloomberg Television and Tennis
Channel over carriage and channel placement, battles it
chose to wage even as it was settling other network disputes
and agreeing to a host of programming promises in
order to complete its NBCUniversal
programming-asset merger.

What’s more, it’s been suffering
losses on the battles it chose to fight
at the Federal Communications
Commission. The agency’s Media
Bureau ruled last month in favor of
Bloomberg TV’s complaint that Comcast
failed to position the businessnews
channels in a neighborhood
of similar services, a commitment
Comcast made to gain NBCU merger
approval.

The agency also last December
ruled in favor of Tennis Channel in
the sports network’s complaint about
being unfairly treated by the top U.S.
cable company.

CARRYOVER EFFECT

The Tennis and Bloomberg disputes have also provided ammunition
for those opposed to another Comcast transaction
that needs government approval: the agreement by Comcast
and other other cable companies to sell spectrum to Verizon
Wireless and to jointly sell each others’ services to customers.

Sen. Al Franken, the Minnesota Democrat who has been
one of the toughest Captiol Hill critics of media consolidation
in general — and Comcast in particular — has cited
the two disputes in arguing for the government to look
twice at the Verizon-cable agreements. Franken cited the
Bloomberg situation in describing “Comcast’s questionable
compliance record to date and its penchant for challenging
all conditions-related complaints.”

Still, even though Comcast settled program-carriage
complaints with Washington, D.C.-area regional sports
network MASN and NFL Network in the run-up to the
NBCU merger, the cable company felt it was worth it to
keep fighting Bloomberg and Tennis Channel at the FCC.

According to industry observers, the
reason is that precedent of allowing the
government to decide where Comcast can
put its channels one the company needed
to challenge on principle, as well as the
economics of remaking its lineup.

The Tennis Channel fight, in particular,
may prove to have been a double fault.

Since there was no FCC precedent for a
successful carriage-complaint ruling before
the Tennis Channel decision, though,
Comcast likely felt the odds were on its side.

And Comcast has fought carriage
mandates before. Rather than settle, it
challenged a discriminatory-treatment
complaint from Wealth TV, a battle the
cable operator ultimately won.

Unlike Wealth TV, though, Bloomberg
has the money and legal firepower to keep
pushing the issue.

One veteran cable attorney said the fights were worth
having. “I think that the principles here are important to
Comcast, and there is real money involved,” he said.

Comcast and other cable companies have always feared
the precedent of the government adding or moving channels
onto cable lineups via deal conditions. Any resulting
extra costs would have to be paid for, then passed along
to customers as a price increase. Then, the same regulators
would point to the escalating price of cable as a reason
why the industry needs more regulation.

Comcast is adding four new, minority-owned channels,
per the NBCU deal conditions. They might prove to
be great additions, but they are also essentially fulfilling
a government mandate (albeit one Comcast volunteered
to accept). That would also be the case with a Comcast upgrade
of Tennis Channel to a more broadly viewed tier,
should that decision hold, or a channel repositioning of
Bloomberg TV in a consistent “neighborhood” with otehr
news networks — something Comcast clearly wasn’t planning
to do on its own.

“Bloomberg is primarily focused on investors,” the attorney
sympathetic to Comcast said. “To argue they are
a compelling news channel for public service is thin.”

Free Press policy director Matt Wood, who used to be
a lawyer representing the cable industry, thinks Comcast
might have overplayed its hand with these disputes.
“I think cable still has this challenger mentality of
the entrepreneur that does not necessarily match the tremendous
power that they have today,” he said.

Wood also said Comcast agreed to merger conditions it
thought it could meet “pretty easily.”

‘NEVER OVER’ AT FCC

“Cable tends to fight a lot of things,” Wood said. “Look at
[retransmission-consent] negotiations. Whether a case is
ironclad or not, they don’t tend to settle things very easily.
They would rather take their chances to avoid a bad precedent
or comply with something they don’t have to do. So
they tend to fight more often than settle or find some other
way to come to terms. “

Comcast, which declined to comment for this story,
has argued that the FCC decision to “stay” the Tennis
Channel order is a temporary victory, because the cable
company does not have to reposition the channel until
the full commission weighs in.

Wood agreed the final chapters have yet to be written,
and concedes cable operators can be tenacious, and
successful, with some help from the commission.

“They tend to dig in and when they do that they tend to
win a lot,” he said. “So it is kind of remarkable that they
have had a couple of reverses. But even those fights aren’t
over. I went to a training session one time for young lawyers
about what to expect at the FCC. One person there had
a rule of thumb: ‘At the FCC, it’s not over until it is over.
And even then, it’s not over at the FCC.’ ”