Washington -- Cablevision Systems Corp. will likely have to
break out its checkbook as punishment for mistreating a local TV station in the New York
market going back as far as 1992.
In response to a channel-position complaint filed last year
by WXTV in Paterson, N.J., the Federal Communications Commission ruled April 16 that
Cablevision had acted in a "cavalier" manner, and that it deserved to be fined.
The commission said the size of the fine would be determined later.
FCC spokesman Morgan Broman said Cablevision is the first
operator to be fined for a channel-positioning violation under the 1992 Cable Act.
An FCC source said the fine could range between a few
thousand dollars and $1 million or more.
WXTV is urging the FCC to impose the harshest penalty:
$7,500 per day retroactive to Oct. 6, 1992, or about $18 million. A lawyer for WXTV
declined to comment on the decision.
In addition to the fine, Cablevision will likely have to
spend $3 million over the next six months to reconfigure dozens of systems.
Cablevision said it was pleased that the FCC decided not to
make the MSO move WXTV on one small system in Long Island, N.Y., but it was
"concerned" that the agency didn't apply that reasoning to other
WXTV, an affiliate of Univision Communications Inc.,
alleged that Cablevision refused to carry the station on channel 41 on numerous systems,
frustrating the station's ability to market itself in an economically efficient
Although Cablevision carries WXTV on channel 41 on systems
serving 585,000 subscribers, another 2 million New York-area subscribers do not receive
WXTV on channel 41.
Under the 1992 cable law, local TV stations are not only
entitled to mandatory carriage on cable systems, but also to their FCC-assigned channels
-- unless the parties can reach mutually acceptable alternatives.
The Cablevision-Univision battle was fought at the highest
levels in both companies. Cablevision chairman Charles Dolan made a direct appeal to FCC
chairman William Kennard, as did Univision president Henry Cisneros, the former head of
the Department of Housing and Urban Development in the Clinton administration
Univision, a Spanish-language programmer, said
Cablevision's behavior was intentional, claiming that the MSO wanted to hinder a
rival to its own local-news channel.
News 12 The Bronx, one of six News 12 local-news channels
owned by Cablevision's Rainbow Media Holdings Inc., has been advertising a plan to
carry Spanish-language news on weekends, according to Univision.
Cablevision, in a losing cause, attempted to persuade the
FCC that its relationship with WXTV was more complicated, and that the numerous rounds of
discussions between the two companies were indicative of the complexity.
In a nutshell, Cablevision said, WXTV's insistence
upon uniform carriage on channel 41 throughout the New York market was unreasonable,
largely due to cost.
The MSO told the FCC that required changes, such as adding
new traps, would cost about $4 million.
Cablevision said it tried to accommodate WXTV, offering
uniform carriage on channel 22, 23, or 24, as more and more systems were rebuilt.
WXTV said this was unacceptable, and it pushed for carriage
somewhere on the most lucrative portion of the spectrum -- channels 1 through 13 on the
When Cablevision refused, WXTV decided to file the FCC
complaint seeking marketwide carriage on channel 41.
In its decision, the FCC ordered Cablevision to begin
carrying WXTV on channel 41 on 21 systems within 45 days, after finding that Cablevision
had failed to provide any "technical or financial justification for not carrying
[WXTV] on the channel position that it had elected."
Where Cablevision offered specific cost data, the FCC was
more lenient. It gave Cablevision 180 days to carry WXTV on channel 41 on 17 systems,
"given the magnitude of the transitional difficulties involved and the nature of the
system reconfiguration needed to comply."
Cablevision expects the per-system compliance cost for
these 17 systems to range between $4,000 and $500,000.
Cablevision caught at least one break: The FCC said the MSO
would not have to carry WXTV on channel 41 in Hauppauge, N.Y., because the documented
compliance cost of $1 million was too extreme for the 27,000-subscriber system.
Cablevision said it was pleased with that part of the ruling.
The FCC also disagreed with Cablevision's position
that a decision in favor of Univision -- forcing a cable operator to absorb the financial
impact of must-carry and channel-positioning rules -- would represent an uncompensated
taking of private property under the Fifth Amendment.
The commission said it had no authority to rule on the
constitutionality of a communications statute.
Cablevision has 30 days to ask the FCC's Cable
Services Bureau -- which issued the April 16 ruling -- to reconsider its decision, or to
ask the five FCC commissioners to review the ruling.
The MSO can also seek a stay of the bureau's order, or
it can challenge the bureau's view that it could not dismiss WXTV's complaint
based on Fifth Amendment concerns.
"We are currently reviewing our options regarding the
bureau's decision," Cablevision senior counsel for regulatory and legal affairs
David Ellen said, in a prepared statement.
MSNBC is also affected: It must be shifted from channel 41
on several Cablevision systems in the New York area.