D.C. Circuit Rules Against FCC in Comcast Carriage Case
The U.S. Court of Appeals for the D.C. Circuit ruled that the FCC can’t force Comcast to carry the Tennis Channel on the same tier as the operator’s own Golf Channel and NBC Sports, in a 3-0 ruling Tuesday (http://1.usa.gov/12gefp0). In an opinion that communications attorneys said could affect other FCC carriage conflicts, the judges said the agency failed to show unlawful discrimination, or present evidence to refute “Comcast’s contention that its rejection of Tennis’s proposal was simply ‘a straight up financial analysis.'” Judges were skeptical of the FCC’s case during oral argument, with some courtroom observers predicting the cable operator would win the case (CD Feb 26 p1). The channel said it will appeal, while FCC Commissioner Ajit Pai cheered the ruling, as did Robert McDowell, who left the commission earlier this month and had voted against the agency’s order siding with the programmer over Comcast.
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Multichannel video programming distributors can treat channels differently if it’s for business reasons other than to “hobble the competition,” said Judge Stephen Williams, who wrote the opinion for himself and Judge Harry Edwards and Brett Kavanaugh. The Tennis Channel offered no evidence that its 2010 proposal to Comcast to offer the channel to more subscribers had any benefit to the operator, especially since the request came five years after the parties signed a contract in which they agreed the channel would be offered on a limited sports tier, Williams wrote. “If the MVPD treats vendors differently based on a reasonable business purpose ... there is no violation.”
The ruling is “a very cramped reading of the 1992 Cable Act,” said public-interest communications lawyer Andrew Schwartzman. The act is meant to encourage consumer protection as well as competition, and the court’s decision means the Tennis Channel will be available to fewer viewers, he said. Pai sees the ruling as “a big win for consumers,” he said. The 2012 FCC order at the heart of the case “would have resulted in cable operators paying to carry channels that they didn’t want, and these higher programming costs would have come out of the pockets of American consumers,” Pai said: The commission should “refrain from attempting to micromanage cable operators’ programming decisions” in the future.
Edwards and Kavanaugh each wrote concurring opinions poking holes in other aspects of the FCC’s case. Edwards said the FCC should never have taken up the Tennis Channel complaint since it was filed years later than allowed under the statute. Kavanaugh thought the FCC violated Comcast’s First Amendment rights by ordering the channel to carry the Tennis Channel, he said. “In light of the Supreme Court’s precedents interpreting the First Amendment and the massive changes to the video programming distribution market over the last two decades, the FCC’s interference with Comcast’s editorial discretion cannot stand.”
"Comcast’s clear pattern of discrimination against Tennis Channel in favor of the competing networks that it owns -- as detailed at length by the FCC -- warrants further review of the panel’s decision and we intend to seek that review,” said a Tennis Channel statement. Comcast, “pleased the Court of Appeals correctly rejected the claim that we discriminated against Tennis Channel,” said the network “received exactly the carriage it bargained for and agreed to.” Comcast’s “decision to carry Tennis Channel was the product of legitimate business considerations, not affiliation,” said a Comcast spokeswoman. A Media Bureau spokeswoman had no comment.
McDowell said that because of Kavanaugh’s opinion, “Proponents of further regulation of content on any platform are on notice that the legal bar to make their case just got higher.” Free State Foundation President Randolph May said Kavanaugh’s opinion -- which said that because of the changing video market Comcast has no “market power” -- could lead to an eventual overturning of Turner Broadcasting v. FCC, which established that must-carry rules are constitutional. Schwartzman said the case could also affect the outcomes of other carriage cases pending before the commission, including Game Show Network v. Cablevision and a carriage dispute between Bloomberg and Comcast. “This decision could directly or indirectly affect everything from the open Internet order to possible future government mandated ‘a la carte’ rules,” said McDowell.