Estrella's Comcast Carriage Complaint Seen Facing Challenging Odds
Liberman Broadcasting's program carriage complaint alleging Comcast discriminated against the broadcaster's Estrella TV Spanish-language network in favor of its own Telemundo and NBC Universo properties faces an uphill battle, cable law experts said in interviews. They said Liberman's sister complaint about Comcast's use of alternative distribution method (ADM) terms in negotiations could find better reception with the FCC. Liberman's 137-page complaint filed Friday in docket 12-1 asked the agency to find Comcast in violation of Section 616 of the Cable Act and of conditions on its takeover of NBCUniversal. It said Comcast must carry Estella "on terms comparable to the terms on which Comcast distributes and compensates Telemundo."
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Proving discrimination is difficult minus a smoking gun such as a document because there are so many legitimate reasons a cable company can deny carriage, one cable industry lawyer said. That difficulty of proof, along with the scorched-earth business strategy of filing one, makes discrimination cases relatively rare, the lawyer said. The FCC might be more sympathetic to exploring the ADM allegation, since such issues are a particular focus of its current independent and diverse programming notice of inquiry (see 1603300055), the lawyer said. Comcast slammed the complaint.
Liberman's case, meanwhile, might be helped by the existence of those NBCU deal conditions, Dan Kirkpatrick of Fletcher Heald said. The complaint is a novel one before the FCC, because cable networks, not broadcasters, typically bring program carriage complaints, said Kirkpatrick, who mainly represents broadcast clients.
According to Liberman's complaint, Estrella -- which in 2014 opted for must-carry status -- in its 2015 negotiations with Comcast sought compensation and distribution akin to what Telemundo receives. Plus, the complaint said, the broadcaster sought expansion to "white areas" markets where Estrella had neither affiliates nor owned-and-operated stations. Comcast wouldn't agree to expanded carriage or compensation, and demanded digital distribution rights, the complaint said. "In a world of [multichannel video programming distributors], they have made demands no one else has made," CEO Lenard Liberman said during a call with reporters. Since being blacked out in Denver, Houston and Salt Lake City in 2015, Estrella ratings have "collapsed," he said.
The Estrella complaint may not be resolved for a long time, if the FCC refers it to its administrative law judge, multiple lawyers told us. That referral could take a year, with ALJ proceedings taking potentially years more, one said. Conversely, the complaint could end relatively quickly; one lawyer with cable company clients told us: Comcast likely will file a motion to dismiss that argues along the lines that the two were negotiating for retransmission, but Liberman wanted too much money.
That is largely what Comcast is arguing. Liberman "has no case based on the law or the facts," Comcast said in a statement. "This purported carriage complaint is just the latest attempt by Liberman to extract carriage and fees from Comcast that are in no way justified based on the weak performance of Estrella TV."
Comcast said it didn't drop Estrella TV: "Liberman pulled the broadcast stations in three markets, and Comcast continues to carry Estrella TV to about six million subscribers across the country." Since the Estrella blackout, the cable company said, it hasn't seen "measurable customer defections or negative customer reaction. Our customers in these three markets apparently have not missed Estrella TV at all. We do not believe Comcast’s customers should have to pay any fees for Estrella TV, given its very limited appeal."
Comcast and Liberman also disagree on what Estrella is. In its complaint, Liberman describes the network as a video programming vendor -- and that under the NBCU deal terms, VPV program carriage complaints "need only present a prima facie case establishing Comcast discrimination on the basis of affiliation. They need not show that ... discrimination has unreasonably restrained the ability of the VPV to compete fairly in the video marketplace." Comcast said Estrella is a broadcast network, adding "program carriage rules simply do not cover broadcasters like Liberman."
The Estrella issue is just another example of small and independent programmers being "strong-armed by major cable companies," John Bergmayer, senior staff attorney at Public Knowledge, said in a statement. Bergmayer called Liberman's discrimination case "strong" and said the complaint "raises legitimate concerns that Comcast favored its own affiliated programming over Estrella and demanded that Liberman turn over digital rights, and used proprietary data about viewers gathered from its locked-down set-top boxes to make claims about Estrella's audience."