Adelphia Sports Arbitration Terms Seen as Possible Model
Arbitration methods in the FCC Adelphia order won praise from 2 industry executives as a model the agency might use in programming spats between independent networks and pay TV firms. Conditions on the $17 billion deal apply mediation only to regional sports networks (RSNs) and leased access channels (CD July 24 p2). Doing likewise in other cases would be good policy, said the executives -- though the FCC isn’t expected to write such a rulemaking soon.
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Executives praised the arbitration rules as a tool for settling carriage disputes, like one on Washington Nationals games between Mid-Atlantic Sports Network and Comcast in D.C. Under the Adelphia order, a pay TV firm unable to reach a deal to carry a sports channel affiliated with Comcast or Time Warner would have to seek intervention 15-20 days after a contract ends. An arbitrator would have 30 days to decide which party’s “final offer” is most fair.
The arbitration rules “are a good starting point for non-affiliated programming access,” a pay TV executive said, calling the rules “certainly better than what we have now, which is nothing.” During a dispute, a pay TV provider would have to keep making available sports networks covered by the deal, with a “cooling off period” imposed between a pay TV company’s filing a notice of intent to arbitrate and its formal complaint. During that time, Comcast, Time Warner and rivals could hold carriage negotiations. An arbitrator’s ruling could be appealed to the FCC within 30 day. The Commission would have 120 days to “issue its findings and conclusions,” the order said.
“That procedure works,” said America Channel CEO Doron Gorshein, among the Adelphia takeover’s most vocal critics. “If the RSN procedure is applied to independent channels as well, that procedure works,” he told us. Another pay TV executive disagreed, saying the arbitration rules should apply only to sports.
“The Commission has consistently said sports is unique. You cannot duplicate that programming,” that source said, calling application of those rules to other shows “a slippery slope to disaster… That just seems like an incredible intrusion on the part of the government.” Other executives said they didn’t have opinions on the 157-page document, released late Fri. by the FCC, because they were still reading it.
Comcast and Time Warner must follow other rules in buying the bankrupt firm. Once the FCC completes its rulemaking, they'll be subject to new national cable ownership limits, the FCC said. The FCC found the cable providers each to be below a 30% threshold remanded to the agency. “Time Warner and Comcast have expressed their willingness to ’take all steps necessary’ to adhere to any new cable ownership rules that we may ultimately adopt,” said the order.
The FCC rejected the firms’ claims that the deal is in the public interest because it expedites Comcast’s unwinding of a stake in Time Warner Entertainment it got by acquiring AT&T Broadband in 2002. “The Commission accounted for the benefit associated with the divestiture of the TWE interest when it conditioned its approval of the Comcast-AT&T transaction thereon,” the FCC said. Plans to upgrade Adelphia systems are one reason the deal was approved, and the suitors set aside $800 million for such spending, the order said: “We also find it likely that Comcast and Time Warner will improve the quality and availability of advanced services on Adelphia’s systems."