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Charter Responds to NAB Challenge

Charter Communications Inc. isn't taking lightly a broadcast-industry group's allegations that the MSO may have violated federal law in connection with its carriage dispute with The Walt Disney Co. over ESPNews.

On Aug. 20, Charter sent the Federal Communications Commission a letter stating that the allegations were "groundless and irresponsible."

Charter's letter was intended to confront the National Association of Broadcasters' charges that the MSO attempted to coerce Disney into signing an exclusive carriage deal for ESPNews, perhaps in violation of FCC rules.

"The most glaring of many flaws in the NAB argument is the assumption that somehow Charter holds the balance of power in negotiations with ESPN. Nothing could be further from the truth," Charter general counsel Curtis S. Shaw wrote in the two-page letter.

Charter and Disney were locked in a battle over Disney's right to stream ESPNews programming, for which it pays a license fee, over the Internet for free.

On June 30, the MSO replaced ESPNews in about 250,000 of the network's 1.35 million Charter homes with other programming, including TechTV. ESPNews had revoked Charter's permission to carry the network, but restored it before June 30.

Nonetheless, Charter replaced the network in markets where it had already committed to replacement programming.

In the FCC letter, Charter said none of its actions clashed with federal law and said ESPN's 20-percent annual license-fee increases demonstrate that Disney holds the upper hand in talks with cable operators.

"NAB failed to mention that the Disney-ABC-ESPN media/programming behemoth has consistently used its dominant programming product position to exert tremendous bargaining leverage over cable television operators," Charter said.

Charter also noted that because ESPNews is distributed by cable competitors such as direct-broadcast satellite providers, the MSO could not have signed an exclusive deal with Disney.

Charter said it was properly concerned that programming for which it was paying millions of dollars a year might be sent over the Internet for free without limitation.

Charter got also got in a dig at the NAB by insinuating that maybe Disney — the only owner of a major TV network that hasn't left the trade group — influenced its decision to criticize Charter's bargaining position.

"Perhaps NAB simply misread the marketplace and the Communications Act. Or perhaps NAB was subject to some of the same Disney-ABC-ESPN leverage to which cable operators have become so familiar," Charter said.