Charter Communications is appealing the decision by a judge of the Supreme Court of the State of New York that the FCC doesn't have the authority to preempt state laws and that its speed claims are actionable.

New York State Attorney general Eric Schneiderman filed a complaint alleging that Time Warner Cable (which Charter acquired) "promised to provide broadband speeds it knew it could not deliver and mischaracterized the reliability of access to certain online content."

Charter countered, in seeking to dismiss the complaint, that the allegations were preempted by the 2015 Open Internet's Transparency Rule and other FCC guidance, and that the state had failed to cite a legitimate cause of action because the FCC's speed test showed that TWC was "clearly capable of providing — and often did provide — the broadband speeds it advertised, and its “up to” representations thus could not have misled a reasonable consumer."

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Charter also argued that other claims in TWC's ads were subjective "non-actionable puffery," which is actually a legal term for a promotional "exaggeration" that consumers aren't supposed to take seriously.

On Feb. 16, the court denied Charter's motion to dismiss, saying that while some of the claims were puffery, others were not and were actionable. It also found that the FCC can't preempt state law, which the FCC has asserted it can in its recent Restoring Internet Freedom rollback of the 2015 Open Internet order rules.

Charter wants that denial reversed, arguing that the FCC's broadband speed test preempts the speed claims in the company's advertising, and that some of its speed claims are backed up by the FCC test, while others are non-actionable promotional puffery.

The daily fantasy sports sites DraftKings and FanDuel on Monday agreed to stop offering paid contests in New York in a settlement with state attorney general Eric Schneiderman. The sites are big TV advertisers and have received investments from prominent media companies (including Comcast and Fox Sports) but have come under fire as essentially gambling sites, and not the games of skill their promoters claim.

DraftKings and FanDuel announced the settlements on Monday as Schneiderman withdrew prior cease-and-desist orders against them, while continuing to pursue claims of false advertising and consumer fraud. The ban is in effect until September, when a state appeals-court ruling is expected, or until the state legislature legalizes daily fantasy sports, USA Todayreported.

Schneiderman has said he believes the two sites are "totally unregulated gambling venues," Legal Sports Report reported. New York is the largest market for daily fantasy sports and some two dozen states are now looking at legislation governing daily fantasy sports, perThe Wall Street Journal.  

Links to the settlements are here and here.

As FanDuel and DraftKings continue to try to convince New York’s Attorney General they are skill-based entertainment instead of games of chance, the loss of their substantial ad dollars could hurt cable and broadcast networks that have come to rely on the daily fantasy sports sites for ad revenue.

New York State attorney general Eric Schneiderman sought an injunction against both FanDuel and DraftKings from operating in the state, claiming the daily fantasy sports companies are basically illegal gambling sites. Both FanDuel and DraftKings have argued that they are skill-based entertainment, which would exempt them from regulation.

While the sites take in millions of dollars from fans that pick players for cash and can win money based on their game performance, TV networks have been a major beneficiary of the intense ad campaigns of both FanDuel and DraftKings. The ads, touting six-figure pay days won by some players, have peppered cable and broadcast networks for months.

According to Sanford Bernstein media analyst Todd Juenger, daily fantasy sports made up about 50% of cable networks advertising gains in the third quarter, or $134 million out of a total gain of $227 million.

In his research report, Juenger said the fantasy football category spent more ad dollars on sports networks than beer companies. That could mean that their potential ban would put a serious dent in ad revenue.

“Daily fantasy sports sites may not even exist next year. Even if they do, the probability that they grow, again, at these rates is very low (impossible?),” Juenger wrote.

Sports-centric networks like CBS, Disney and Fox received the most form the category, Juenger wrote.

In a separate note to clients, MoffettNathanson media analyst Michael Nathanson, using data from Kantar Media, wrote that Fox reaped $24 million in fantasy sports ads in September alone, followed by CBS ($21.5 million), NBC ($21.3 million) and ESPN ($17.9 million).  Nathanson noted that non-sports networks also received a fair amount of fantasy football ads, with DFS investing over $1 million in advertising on each of 13 broadcast and cable networks during the month.

Nathanson noted that DFS ads accounted for between 4% and 7% of total ads at networks like ESPN2, Fox Sports 1 and Fox. According to Nathanson, Draft Kings spent about $65 million in ads in September with FanDuel shelling out $53 million for a combined $118 million or 3% of total ad revenue.

The presence of DFS in expensive NFL ad time slots helped tighten the scatter market in September and driving up prices, Nathanson wrote. While not as large as other ad sectors like autos, films or health care, the analyst said that the new category was incremental to the market and was a factor in the revenue increases in the period. He added that looking forward, networks should be “concerned” if the government decides that DFS is essentially glorified sports betting.

“Killing the golden goose of DFS would definitely be against the interest of the NFL’s network partners,” Nathanson wrote.    

Cablevision Systems, Time Warner Cable and Verizon Communications all say they will cooperate with New York state attorney general Eric Schneiderman as he opens a probe into whether they are providing the speeds for which subscribers are paying.

The investigation’s focus will include interconnection arrangements between ISPs and content providers such as Netflix, according to Reuters. Per a copy of a letter, posted by Ars Technica, ISps are also being asked identify, since January 2, 2013, when an interconnection partner requested augmentation of interconnection capacity that the ISP did not implement within ninety days, and to explain why capacity was not augmented. 

Among the three ISPs that received letters, Verizon and Time Warner Cable have paid interconnection deals with Netflix; Cablevision is a partner in Open Connect, Netflix’s private CDN program that relies on single-purpose edge caches. The FCC's new network neutrality rules allow for a case-by-case complaint process with respect to interconnection issues.

Reuters said each ISP has been requested to provide disclosures made to customers with respect to broadband service and to provide data on any speed tests they’ve conducted.The letter also asks for documentation on last-mile broadband speeds, divided by classes of customers and to provide data on the speeds experienced during various times of day. 

The ISPs said they will comply with the requests, which are seeking written reponses, along with supported documentation, by November 8, 2015.

"We're confident that we provide our customers the speeds and services we promise them and look forward to working with the AG to resolve this matter," Time Warner Cable spokesman Bobby Amirshahi said, according to the report.

“Verizon is confident in the robust and reliable Internet speeds it delivers to subscribers,” a Verizon spokesperson said in an emailed statement. “We look forward to working cooperatively with the Attorney General’s office.”

“Optimum Online consistently surpasses advertised broadband speeds, including in FCC and internal tests,” a Cablevision spokesperson said. “We are happy to provide any necessary performance information to the Attorney General as we do to our customers.”

Recent FCC data seems to amplify why the providers are expressing such confidence.

In June, the FCC’s fourth Measuring Broadband America report, based on nationwide tests of fixed broadband speeds, found that, on average, that the ISPs sampled were delivering 101% of advertised download speeds, compared to 97% in 2013, but allowed that some ISPs had “significant room for improvement” with respect to the consistency of the speeds delivered.