Policy

Cablevision Hit On 'Exclusives’

7/11/2009 2:00 AM Eastern

Incoming Federal Communications Commission chairman Julius Genachowski is being asked to void a Cablevision Systems exclusive programming arrangement as well as to force the cable operator to sell high-definition programming to a phone-company rival.

Verizon Communications filed a program-access complaint with the FCC early last week, saying Cablevision should be compelled to sell hi-def programming from its Madison Square Garden Media networks to the telco and its FiOS TV multichannel video service.

Then on Friday (July 10), Connecticut attorney general Richard Blumenthal wrote to Genachowski, arguing that an exclusive agreement between Cablevision and MSNBC may be illegal.

Cablevision does sell MSG Network and MSG Plus (including telecasts of the MSO-owned New York Knicks and New York Rangers) to Verizon in standard definition. But Verizon said that was only after it filed a similar access grievance and complains that with growing demand for sports in HD, the high-definition versions should be considered similar must-have programming.

“MSG complies fully with federal regulations, which do not require us to license our local HD programming to anyone,” MSG Media said in a statement.

The government requires satellite-delivered programming owned or partly owned by cable operators to be made available to competitors, but does not require the same access to terrestrially delivered programming per the so-called “terrestrial loophole.” HD versions of networks are terrestrially delivered.

The FCC has been examining what, if anything, to do about the terrestrial loophole.

Kyle McSlarrow, president of the National Cable & Telecommunications Association (which supports the existing law), weighed in against the Verizon complaint last week.

“It is a remarkable intrusion into the marketplace for the government with the program access rules to determine who can sell what to whom,” McSlarrow said. “All of these companies should be trying to invest in new products and services and differentiate themselves from their competitors. Our competitors can do that just as surely as we do.”

Verizon asked for a decision from of the commission within five months.

As for the Connecticut complaint, Blumenthal “urged” the new chairman to investigate the deal, which he said prevents AT&T Connecticut’s U-Verse competing multichannel video service from competing in Cablevision’s franchise areas.

“This exclusive carriage agreement unfairly limits these customers’ diversity of programming and significantly harms the development of competition in Connecticut’s cable markets,” he said.

He cited the prohibition on a cable operator “coercing” a video programming vendor to provide exclusivity as the price of carriage, as opposed to a mutually beneficial agreement.

Cablevision replied that “Connecticut is one of the most competitive telecommunications markets in the country and our carriage of MSNBC is the result of a perfectly appropriate and legal agreement between GE and Cablevision. In fact, as AT&T itself knows well, arrangements of this sort are very common in telecommunications and throughout other industries, and we believe they can create better value for consumers.”

MSNBC is owned by General Electric’s NBC Universal.

A Genachowski spokesperson was not available at press time Friday to comment on the Connecticut letter.

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