Tennis Channel v. Comcast Centers on Network’s Similarity to Defendant’s

Comcast contends the Tennis Channel’s shows and audience are quite different from channels in which the cable operator has a stake, said lawyer Michael Carroll, representing the defendant. Tennis Channel representatives said the major difference is how Comcast treats them, with that company favoring its own channels. All of the opening arguments were made public, as was later testimony from Tennis Channel CEO Ken Solomon. Sippel asked both sides to try to avoid talking about confidential material that would necessitate him closing the makeshift courtroom at the commission to all but participants in the case.

The crux of the case is that Comcast wouldn’t agree to put the network on a more broadly distributed programming tier than a sports package, whose 3 million subscribers are about 10 percent of the operator’s subscribers, Solomon testified. “That is a significant impediment, not being able to get to the one in four homes that Comcast essentially controls access to in this country.” Comcast’s own sports networks, which the plaintiff contends are similar to the Tennis Channel, aren’t relegated to the sports tier, which costs viewers an additional $5 monthly, Solomon said. He brought the case to the FCC -- whose Media Bureau referred it to the ALJ to recommend a decision on which the full commission must act -- “to get equal treatment for our channel,” Solomon said.

Comcast-affiliated networks “very similar” to the Tennis Channel include the Golf Channel and Versus, said Solomon. Asked earlier by Sippel if Comcast owned other sports channels, Tennis Channel lawyer William Phillips said those two channels were the most relevant. Those Comcast channels were started eight years earlier than the Tennis Channel, and tennis is the “least valuable of all the sports out there,” Carroll said. He said the so-called “date test,” comparing when cable-operator affiliated channels were begun, versus independents seeking carriage, was in a 2009 recommended decision by Sippel in a program carriage case by WealthTV against Comcast and three other cable operators. Sippel sided with the cable operators in his recommendation, although the full FCC hasn’t acted yet. No order on the WealthTV case has circulated for a vote by commissioners, an agency official told us.

Comcast acknowledges the sports tier isn’t “very successful,” putting none of its networks only on it, Solomon testified. He was “shocked” when in 2009, Matt Bond, then the Comcast executive in charge of programming, said the company wouldn’t agree to carry the Tennis Channel more widely. That was as it slashed its ratecard, Solomon said: “They effectively just shut the door.” Far from it, said Carroll. He said Comcast in 2006, ‘07 and ‘09 ran thorough cost-benefit analyses that documented financial reasons for the cable operator to not carry the Tennis Channel more widely. “If I were a lawyer trying to make up the best argument, I couldn’t make it up,” he said of those analyses. “It is a ridiculous position” to lose millions of dollars to carry the programming more widely, “and I don’t think the FCC rules require us to run a charity,” Carroll said.

The Tennis Channel has much wider distribution on other pay-TV companies including DirecTV and Dish Network, (which both have stakes in the network) as well as AT&T, Cox Communications and Verizon, Phillips said. He answered affirmatively Sippel’s question of whether some tennis matches can be seen on broadcast TV, saying those are just the finals, while the Tennis Channel has many more games. “Congress says you can’t treat them differently” under Section 616 of the Communications Act, Phillips said of his client and Comcast networks that he argued are similar. That’s “unless you have a darn good reason for doing it,” Sippel asked. Phillips said yes.

Marketing materials from the plaintiff show the channel is targeted to women, with one brochure showing one with a pocketbook and shopping bag, while some Comcast properties target men, Carroll said. “In the Tennis Channel’s own documents, in black and white, you're going to see the acknowledgement that the viewership is much bigger for sports other than” tennis, he said. The median age of viewers of that sport is in the 40s, while hockey is in the 30s and golf is in the 50s, Carroll said. Comcast owns part of the NHL Network. The plaintiff wouldn’t have been able to get the distribution it did from the likes of DirecTV and Dish “unless they offered equity,” and the channel did give those DBS providers “a lot of stock,” Carroll said. “The way they get that distribution was by offering ownership.” Those deals triggered most favored nation contractual clauses, which meant the Tennis Channel had to give Comcast similar opportunities, Carroll said.

The ALJ’s office will try to speed up the public release of Sippel’s orders in the case, he said in an interview. Some of them were not made public until several weeks after his rulings had been circulated to lawyers for Comcast and the Tennis Channel. That included an order delaying the hearing for a month. It was posted April 1 in docket 10-204, three days after the initial hearing was to have begun. A protective order in the proceeding, governing the exchange of documents and what would be considered confidential during the hearing, was signed by him on Dec. 20 and posted Jan. 6 to the docket.

The delay can occur because someone from Sippel’s office must take all documents to the FCC to be released, and the small size of the ALJ’s staff means that may take some time, Sippel said. “As a matter of course, that’s going to happen,” he said of past delays. “We're not staffed up to do it immediately” and “I just don’t see how that can be done with the same rapidity” with which the commission releases its own rulings, he said. “We want to make this available to you as fast as we can.” The commission posts information from the ALJ as soon as possible, typically within a few days of receiving it, an agency spokesman said.

There’s no reason to “deliberately delay” releasing orders to the public, said Professor Gary Edles of American University, who teaches administrative law. “Rather, I would assume that they would be issued in the ordinary course of business.” The ALJ’s office has shrunk to one judge over the years, compared to about a dozen at the height of the office, said Professor Jeffrey Lubbers, who also teaches administrative law at American. “Through deregulation, auctions, elimination of license renewal and other competitive licensing hearings,” he noted of the ALJ’s office, “it has very few formal adjudications any more.” The office in the past has emailed documents to parties in a case, and those rulings don’t always make it to the commission’s electronic filing system where they can be viewed by the public online, said a former FCC official who dealt with the office.

Sippel granted a request by Warren Communications News, publisher of Communications Daily, for as much of the hearing as possible to be open to all. What isn’t open will have transcripts, with information blacked out that either side or their witnesses consider to be proprietary, released soon afterwards, Sippel ruled. Lawyers for both sides agreed to that condition. Warren Communications’ letter on Sunday to Sippel said it’s not in the public interest for redacted transcripts to be released in lieu of allowing the public to attend the hearing. “In the last three program [carriage] cases before you” in 2009, the letter said, “there was a substantial delay between when the testimony was given and when the transcripts were made available to the media.”