In July 2012, in a 3-2 vote, the Federal Communications Commission found that Comcast discriminated against Tennis Channel by not distributing its video programming more broadly to Comcast subscribers; specifically by not positioning Tennis Channel on the same tier as Comcast affiliates Golf Channel and NBC Sports Network (formerly known as Versus). This latest ruling stems from a 2010 Tennis Channel complaint against Comcast under Section 616 of the Communications Act, 47 U.S.C. § 536, which pertains to discrimination in carriage agreements. The FCC’s ruling is the first time that a cable network has prevailed against a distributor regarding discrimination in carriage under Section 616.
Section 616 was added to the Communications Act through the Cable Television Consumer Protection and Competition Act of 1992, which was enacted to “amend the Communications Act of 1934 to provide increased consumer protection and to promote increased competition in the cable television and related markets. . . .” Paragraph (a)(3) of Section 613 prohibits a multichannel video programming distributor (“MVPD”) (such as Comcast) from “unreasonably restrain[ing] the ability of an unaffiliated video programming vendor [such as Tennis Channel] to compete fairly by discriminating in video programming distribution on the basis of affiliation or nonaffiliation of vendors in the selection, terms, or conditions for carriage of video programming provided by such vendors.” The FCC implemented Section 616 in an administrative regulation at 47 C.F.R. § 76.1301.
The FCC’s Media Bureau initially heard the matter and determined that Tennis Channel’s complaint was not barred by the statute of limitations and the complaint made out a prima facie case of carriage discrimination under Section 616. An administrative law judge agreed, and ordered Comcast to pay a $375,000 fine and carry Tennis Channel at the same distribution level as Golf Channel and NBC Sports Network (while compensating Tennis Channel appropriately for that distribution level). The ALJ also ordered Comcast to provide Tennis Channel with “equitable treatment” with respect to channel placement.
In its July ruling on Comcast’s appeal from the decision of the ALJ, the Commission affirmed the ALJ’s fine and equal distribution decision. The equal distribution remedy means that Tennis Channel has to be carried on the same distribution tier as Golf Channel and NBC Sports Network. But the Commission vacated the ALJ’s decision to grant the equitable channel placement remedy because “the record does not sufficiently establish that Tennis Channel’s ability to compete fairly was unreasonably restrained by its channel placement.” The equitable channel placement remedy would have required Comcast to place Tennis Channel close to Golf Channel and NBC Sports Network in its channel listings.
The majority of FCC commissioners determined that Tennis Channel is similarly situated to Golf Channel and NBC Sports Network because they carry similar sports programming, appeal to similar viewer demographics, solicit similar advertisers, and have almost identical ratings. The majority determined that Comcast’s position as the dominant MVPD created a “ripple effect,” such that “one MVPD’s decision to carry a network at a specific level of distribution increases the likelihood that another MVPD will carry that network at the same level of distribution.” Therefore, they reasoned, the fact that other MVPDs carried the Tennis Channel at a similar or worse tier than Comcast was the result of Comcast’s decision and could not be used as objective evidence of where the market would carry the Tennis Channel but for Comcast’s choice. The majority also gave no weight to Comcast’s claim that it conducted a cost-benefit analysis in determining Tennis Channel’s placement because a Comcast executive admitted that “she gave no thought to preparing an analysis of ‘what Comcast might have gained by moving The Tennis Channel to a more widely-distributed tier.’”
The dissent disagreed with the “ripple effect” argument and believed that Comcast could not have discriminated against Tennis Channel because the evidence showed that its treatment of Tennis Channel was “within the industry mainstream.”
Comcast has appealed the FCC’s order in the United States Court of Appeals for the District of Columbia on the ground that the decision is “arbitrary, capricious, and an abuse of discretion.” While the FCC denied Comcast’s petition for a stay of the FCC’s order pending the federal court decision, the circuit court summarily granted a stay pending appeal.
It took Roger Federer four hours to defeat Juan Martin del Potro and advance to the 2012 Olympics gold medal round, where Andy Murray prevailed and took home the gold. Comcast’s current set versus Tennis Channel will take much longer. The ramifications of this decision may shape the future of programming and carriage antidiscrimination complaints before the FCC. We will have to wait and see who will win this match.