Clyburn Faces Choice on Comcast-Tennis Tiff

Programmer Weighing Appeal Plays
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WASHINGTON — Acting Federal Communications Commission chairwoman Mignon Clyburn could have at least one major decision to make during her tenure — whether to appeal last week’s court ruling that the agency was wrong in a key carriage dispute between the nation’s largest cable operator and a small sports channel.

At the heart of the dispute is whether the FCC was wrong to conclude that Comcast had discriminated against Tennis Channel in violation of agency rules, based on the evidence presented at trial.

Clyburn had no comment on the case, according to an FCC spokesperson. But if the FCC, in concert with the Obama administration, decides to challenge the ruling, the agency would be zero for one in program carriage complaints that got this far — an FCC finding of discrimination and mandated remedy.

According to an attorney familiar with the process, the FCC and Tennis both have 45 days to seek review of the unanimous three-judge panel ruling of the U.S. Court of Appeals for the D.C. Circuit. The FCC had initially ruled that the MSO discriminated against Tennis by carrying it on a sports tier while carrying co-owned Golf Channel and Versus (now NBC Sports Network) on a more widely viewed basic tier.

TENNIS PLANS APPEAL

At press time, Tennis Channel said it would appeal, but had not decided how to proceed. It could appeal for an en banc (full-court) review of the decision, in which it has 45 days from May 28 (the day the decision was handed down) to make that ruling.

If the FCC goes directly to the Supreme Court instead, it has 90 days to decide. Seeking en banc review might sit better with the high court, which prefers parties to exhaust other avenues before asking it to hear a case. But given that the three-judge decision was unanimous, the full court is less likely to grant en banc review, according to the attorney.

In writing for the majority, Judge Stephen Williams said the court concluded that the commission “has nothing to refute Comcast’s contention that its rejection of Tennis’ proposal was simply a straight-up financial analysis.” In essence, the court was agreeing with Comcast that Tennis had not shown how its proposal of wider carriage provided any business benefit to the cable operator that it would be forgoing to favor its own co-owned networks.

Cable operators are allowed to “discriminate” in carriage as long as it is not for anticompetitive reasons.

The opinion did suggest there were some avenues that neither Tennis nor the FCC explored that might have borne fruit, but made the point neither chose to go there.

LITTLE FINANCIAL ANALYSIS

“Conceivably, Tennis could have shown that the incremental losses from carrying Tennis in a broad tier would be the same as or less than the incremental losses Comcast was incurring from carrying Golf and Versus in such tiers,” Williams wrote. But, neither the FCC nor Tennis “even hint at this possibility, nor analyze its implications,” the court said.

Williams also said that neither Tennis Channel nor the FCC had suggested that Comcast’s “valid business consideration” had been “merely pretextual cover for some deeper discriminatory purpose.”

But Tennis does not get to introduce new evidence on appeal and, according to the veteran attorney, Judge Williams’ suggested new avenues didn’t help its appeal since introducing possible alternative arguments makes it more likely for the high court to deny certiorari, since it prefers not to take cases that could be resolved in a lower court.

FIRST RULING

In July 2012, the FCC ruled 3-2 along party lines that the nation’s largest cable operator had discriminated against Tennis Channel in favor of Golf Channel and NBCSN.

Tennis Channel was the first complaint upheld by the FCC in which it actually imposed a remedy. Comcast was to grant Tennis the same carriage it did to co-owned Golf Channel or NBC Sports Network, whether that was giving Tennis the wider carriage it gave those nets, or put Golf and NBC Sports Network on a sports tier, as it does Tennis, or not carry any of them.

But the D.C. appeals court had stayed the FCC remedy pending its review, so Tennis has remained on the sports tier, where Comcast signaled it will remain per its long-standing contract.

The decision could well have an impact on the yearslong carriage dispute between Cablevision Systems and GSN. An FCC administrative law judge pushed back that hearing until mid-July in hopes of getting some guidance from the Tennis Channel decision.

Judge: It’s a Matter of Free Speech

WASHINGTON — Some of the most Comcast-friendly language in last week’s appeals court decision overturning the Federal Communications Commission’s program-carriage discrimination finding in the Tennis Channel case came from Judge Brett Kavanaugh in his concurring opinion. Although the court did not agree with Comcast’s argument that the decision infringed on its First Amendment rights, Kavanaugh used much of his concurring opinion to make the point. Some highlights:

“Comcast has only about a 24% market share in the national video programming distribution market; it does not possess market power in the market considered by the FCC in this case.

“The Supreme Court has squarely held that a video programming distributor such as Comcast both engages in and transmits speech, and is therefore protected by the First Amendment.”

“[U]nder these circumstances, the FCC cannot tell Comcast how to exercise its editorial discretion about what networks to carry any more than the Government can tell Amazon or Politics and Prose or Barnes & Noble what books to sell; or tell The Wall Street Journal or Politico or the Drudge Report what columns to carry; or tell the MLB Network or ESPN or CBS what games to show.”

— John Eggerton

TAKEAWAY

The D.C. Circuit’s ruling on the Comcast-Tennis Channel program-access dispute nixed the FCC’s first upholding of a program-access complaint that mandated a remedy.

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