* FCC sides with Tennis Channel in discrimination complaint
* FCC votes along party lines to move network to better tier
* Comcast says will appeal to the courts
By Jasmin Melvin
WASHINGTON, July 25 The Federal Communications
Commission upheld an administrative law judge's ruling that
Comcast Corp discriminated against the Tennis Channel
when it placed the network in a more expensive viewing tier than
Comcast's affiliated sports networks.
The agency voted 3-2 along party lines last week to require
Comcast to move the independent Tennis Channel within 45 days to
a tier in line with and reaching the same number of subscribers
as the tier carrying Comcast's Golf Channel and NBC Sports
The ruling is the first time a cable network has prevailed
over a cable operator under the FCC's 1993 federal
anti-discrimination program carriage rules.
FCC Chairman Julius Genachowski and his fellow Democrats on
the panel, Mignon Clyburn and Jessica Rosenworcel, concluded in
an order released late Tuesday that discrimination in favor of
Comcast's affiliated networks "unreasonably restrained Tennis
Channel's ability to compete."
Comcast was also ordered to pay a $375,000 fine.
"This decision could not have come at a better time for
Comcast customers across this country, as we approach Tennis
Channel's coverage of the U.S. Open beginning Aug. 27," the
network said in a statement.
Comcast could have had to add the network to an additional
18 million households, incurring millions of dollars more in
programming costs that it will owe the Tennis Channel - an
expense likely to trickle down to Comcast subscribers.
Comcast, the largest U.S. cable company and the top
broadband provider, said it will appeal the decision to the
courts and examine options for requesting a stay of the decision
from going into effect.
The Tennis Channel filed a complaint with the FCC in 2010,
alleging discriminatory treatment. It sought wider distribution
on par with other networks, which would attract more advertising
revenue and increase fees calculated on a per-subscriber basis
that Comcast paid to air its content.
Comcast contended that its 2005 contract with the network
stipulated placement in a more expensive sports tier sought by
fewer subscribers, and said a move would impose higher costs on
its basic cable subscribers.
An FCC administrative law judge ruled last December in favor
of the Tennis Channel's argument that it was losing out on
revenue by not being included in Comcast's basic programming
package, in contrast to sports networks owned by Comcast.
Comcast was granted an interim stay from the FCC, which
required the full commission to vote on the matter and allowed
Comcast to leave the channel where it was until that vote.
"The decision will accomplish nothing other than to drive up
programming costs and enrich a group of wealthy investors in the
Tennis Channel," said Comcast/NBCUniversal Washington President
Kyle McSlarrow in a statement.
Comcast acquired a 51 percent stake in NBC Universal from
General Electric Co last year.
McSlarrow argued the decision misapplies statutory standards
for discrimination and competitive harm, ignores evidence from
unbiased cost-benefit analyses and violates Comcast's First
FCC Republican Commissioners Robert McDowell and Ajit Pai
agreed with the cable operator's assessment that the Tennis
Channel's placement was not discriminatorily motivated by
McDowell and Pai noted in their dissent that no major pay TV
provider in 2010 when the complaint was filed found the Tennis
Channel to warrant similar distribution to the Golf Channel and
NBC Sports Network, previously called Versus.
The ruling, they said, will lead to cable and satellite
operators carrying more "networks they do not want, on tiers
with broader penetration, and at higher prices than ever before"
to stave off discrimination complaints.