Everest Connections Corp., a small cable company trying to seize ground from Time Warner Cable and Comcast Corp. in the Kansas City market, has lost a programming dispute over access to more than a dozen men's college basketball games.
Sports programming can be critical to attracting and retaining subscribers, and college hoops is a huge draw in the Midwest.
Almost a year ago, Everest filed a federal complaint claiming Time Warner and Comcast were acting illegally and depressing its subscriber growth by locking up the sports programming. Everest, with about 20,000 subscribers, competes in five greater Kansas City communities against Kansas City Cable Partners, a 300,000-subscriber system controlled by Time Warner and Comcast.
But in a ruling released Christmas Eve, the Federal Communications Commission decided Everest's legal arguments were without foundation and denied the complaint.
Everest might appeal the Media Bureau decision to the five commissioners, but they seldom overrule a bureau action.
Messages left for Everest officials last week were not returned. Hugh Brown, outside counsel for Everest, declined comment.
Kansas City Cable owns Metro Sports, a 24-hour sports channel with local exclusive rights to the 15 basketball games to which Everest sought access.
Under FCC rules, cable-operator-owned programming delivered via satellite normally can't be withheld from competing pay-TV distributors, such as Everest.
But the FCC found that Metro Sports wasn't covered by the exclusivity ban because programming in the Kansas City market was distributed to cable headends terrestrially, not via satellite.
Although Metro Sports was vertically integrated with Kansas City Cable, the FCC said the basketball rights sold to Metro Sports were controlled by a third entity called Mizzou Sports Property.
The FCC indicated Metro Sports was permitted to sign an exclusive deal with Mizzou Sports because Mizzou Sports had no affiliation with a cable operator.
"Mizzou Sports has no cable affiliation. Further, although affiliated with a cable operator, Metro [Sports] is terrestrially delivered and therefore is not a satellite cable programming vendor," the FCC said.
Everest argued that because Metro received some of its programming via satellite, the terrestrial exemption did not apply.
"It is well settled," the FCC said in reject Everest's reading of the law, "that it is the vendor's distribution method, not its method of content receipt, that determines whether programming is subject to program access jurisdiction."
Everest isn't the first cable competitor that has been denied access to programming under the terrestrial exemption. In Philadelphia, Comcast has withheld its regional sports network, Comcast SportsNet, from satellite players EchoStar Communications Corp. and DirecTV Inc., citing the net's terrestrial distribution.