In a setback for Comcast, the Federal Communications Commission last Tuesday ruled that The America Channel qualified to enter arbitration to gain distribution from the largest U.S. cable company.
The ruling wasn’t a surprise after news reports surfaced in August that FCC chairman Kevin Martin was backing TAC, a fledgling programmer, over pay TV distribution giant Comcast.
TAC, a Florida-based company that has yet to launch, has been feuding with Comcast for several years. The network gained key leverage when the FCC said in June 2006 that regional sports networks were entitled to seek arbitration to obtain carriage from Comcast and Time Warner.
SHIFTED TO SPORTS
At the time of the ruling, TAC was not a sports service. It claimed it became one not long after the FCC ruling, which came in connection with Comcast and Time Warner’s joint acquisition of bankrupt Adelphia Communications. Comcast asked the FCC to reject TAC’s corporate makeover as an opportunistic move to game the Adelphia merger condition regarding compulsory arbitration for unaffiliated regional sports networks.
The FCC determined that TAC qualified as a sports network because it had programming deals with 14 NCAA Division I college-sports conferences to air 500 games of football, basketball, soccer and volleyball.
TAC met the definition of regional, the FCC said, because the network committed to offer separate broadcasts in six geographic regions that include 20 individual TV markets.
In the ruling, the FCC said it was also suspending the Adelphia merger condition used by TAC, claiming it was close to adopting a new process to settle cable carriage disputes involving “all unaffiliated programmers,” not just regional sports networks.
In the program carriage rulemaking, the NFL Network is urging the FCC to require cable companies to bargain in good faith, coupled with binding arbitration initiated by a programmer.
Under the suspension, an RSN may not rely on the Adelphia merger condition to seek carriage from Comcast or Time Warner.
“Although the order finds that TAC met the technical definition of an 'RSN’ under the Adelphia order, we are gratified that the [FCC] has suspended the ambiguous arbitration condition [and] acknowledged that the order’s RSN definition is both confusing and inconsistent with industry standards,” said Sena Fitzmaurice, Comcast’s senior director of corporate communications.
The FCC ruling was the beginning a process that could take at least several months.
BLOW FOR 'DIVERSITY’
TAC CEO Doron Gorshein applauded the agency’s support. “The FCC acted decisively today to protect competition and diversity in the cable television industry,” he said in a statement.
“Independent and minority-owned channels, and advocates for diversity and competition alike, have reason to cheer today’s seminal decision.”
If the TAC-Comcast dispute does reach arbitration, the arbitrator would first decide whether Comcast had discriminated against TAC.
If TAC prevailed, then Comcast and the network would need to put forward their best offers for the arbitrator to select.
The arbitrator has 45 days to issue a final decision, which either TAC or Comcast may appeal to the FCC.
“We are comfortable proceeding to arbitration with this one potential channel and remain confident in our business positioning with respect to The America Channel,” Fitzmaurice said.
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