An arbitrator has ruled in favor of Massillon Cable TV, which argued that it should be paying less to carry FSN Ohio because the regional sports network lost its carriage of Cleveland Indians’ Major League Baseball games.
The arbitrator’s eight-page redacted ruling, which was filed with the Federal Communications Commission Tuesday, is being appealed by FSN Ohio, which is owned by News Corp.’s Fox Cable Networks.
Arbitrator Patricia Murphy in September agreed to Massillon’s “final offer” to FSN Ohio, which will become effective retroactively to Jan. 1, 2006.
In her ruling, Murphy said that Fox Cable’s conduct during the arbitration was “unreasonable,” and ordered that FSN Ohio reimburse Massillon TV for the “excess affiliation fees” the cable operator has forked over during the dispute, plus interest. Fox must also pay Massillon TV’s legal costs and expenses for its financial consultants.
Detailed financial data, such as how much Massillon TV was paying in license fees for FSN Ohio when it carried the Indians games, and how much it wanted its license fees reduced, are considered confidential and were redacted from the arbitrator’s ruling.
But in prior public statements about its dispute, Massillon had maintained it should get a license-fee adjustment because FSN Ohio has lost marquee programming, namely the Indians games.
But the network and Fox Cable, which wants the arbitrator’s ruling reviewed and set aside by the FCC, have maintained from the get-go that its dispute with Massillon TV shouldn’t be subject to arbitration.
Earlier this year, Massillon sought arbitration for its dispute with FSN Ohio under special conditions set on News Corp., in 2004 as part of its acquisition of DirecTV, by the FCC. Those conditions, under the so-called Fox-Hughes order, give distributors the option of submitting carriage disputes, regarding Fox-owned regional sports networks, to arbitration.
“Massillon was encouraged by the arbitration award and we look forward to the Commission upholding the arbitration award, because we believe that’s the firm intent of the Fox Hughes order,” Massillon’s lawyer Mark Palchick said.
Tony Basich, an attorney representing FSN Ohio in the matter, responded by saying: “We’re pleased that the FCC will now provide the review that we have sought from the start of this process, and believe the Commission will reaffirm the clear language of its original News-Hughes conditions. Those conditions only allow arbitration when an agreement has expired or involving a first-time distributor – not when there are disputes under existing agreements.”
Not wanting to forfeit its right to appeal to the FCC, FSN Ohio had declined to participate in the final arbitration proceeding, and did not submit a final offer to the arbitrator.
“I find the final offer submitted by Massillon is the offer that most closely approximates fair market value of the programming-carriage rights at issue,” Murphy wrote in her ruling.
During the arbitration, Massillon TV had presented an economist, Steven Siwek, who provided testimony about FSN Ohio’s fair-market value with its current programming. The RSN lost coverage of the Indians games in 2006, when the games moved over to SportsTime Ohio, which is controlled by Fastball Sports Productions LLC and team owner Larry Dolan.
“The Fox Service currently consists of marquee programming [that is must-have regional sports programming] only of Cleveland Cavaliers Basketball,” Murphy wrote.
Siwek “demonstrated that the Fox Service also consists of non-marquee programming consisting of locally-produced sports programming, national sports programming produced by Fox’s parent, per-inquiry infomercials, national syndication/barter programs and local syndication/barter programs.”
Siwek showed that Fox spreads the cost of its non-marquee programming over more than just one its services, according to Murphy.