HDNet co-founder and owner Mark Cuban is the latest independent programmer to cry foul to federal regulators about a distributor, expanding his dispute with DirecTV from a Texas court to Washington.
In several filings with the Federal Communications Commission earlier this month, Cuban claims that both his HDNet and HDNet Movies are being unfairly treated, and discriminated against, by both DirecTV and Liberty Media, which is seeking to acquire News Corp.’s 38.5% stake in the satellite provider for $11 billion.
“The proposed transaction cannot be in the ‘public interest’ as required by law without the addition of conditions to protect independent programmers carried by DirecTV at the time this application was filed,” HDNet said in its ex parte papers Nov. 13 regarding the proposed Liberty Media-DirecTV deal.
In the FCC documents, HDNet also charged that DirecTV is trying to “kill off” the network, and that at one point Liberty Media was seeking to acquire 50% of Cuban’s HD network.
HDNet asked the FCC to require DirecTV to continue to carry the network for four years after approval is granted for the Liberty Media deal.
In turn DirecTV, in a filing with the FCC Tuesday, and in documents previously filed with the Texas court, denied HDNet’s charges.
“Sensing that it might not have much commercial leverage in next year’s renewal negotiations, HDNet has concocted a discrimination claim against DirecTV in hopes that the Commission will guarantee it carriage for years to come, at rates which HDNet, on the merits of its content, could not command otherwise,” DirecTV told the FCC.
Liberty Media declined to comment, and Cuban, who also owns the Dallas Mavericks, couldn’t be reached for comment.
HDNet filed papers with the FCC Nov. 13, a day after winning a temporary restraining order from a 101st Judicial District Court judge in Dallas, an order that bars DirecTV from moving HDNet and HDNet Movies from the satellite provider’s most widely distributed HD offering to a mini-pay tier of HD-only networks.
Cuban claims that moving his two HD networks to that new $4.99 a month “HD Extra Pack” tier, with four other networks, violates his carriage deal with DirectTV, a charge that the satellite provider denied in its answer in the Texas court.
HDNet and HDNet Movies are now part of DirecTV’s most comprehensive HD offering, which costs $9.99 monthly. Subscribers would have to pay $4.99 in addition to the “HD Access” $9.99 fee to get the HD-only Extra Pack, a switch that HDNet claims will make it lose 75% of its subscriber base.
“Such actions do not merely amount to discrimination, they are tantamount to the termination of carriage of a competing, unaffiliated programmer,” HDNet told the FCC.
DirecTV maintains that its “HD Access” is not a tier or package, as HDNet claims, but rather that it’s an equipment or technology fee.
A Dec. 7 hearing on the temporary restraining order is scheduled in Dallas.
But in the interim, Cuban and HDNet went to the FCC, making allegations against not only against Liberty Media and DirecTV but also Discovery Communications, which HDNet describes as “affiliated or controlled by” John Malone, Liberty Media’s chairman.
Discovery Holding, a publicly traded entity controlled by Liberty Media, owns a 66.7% interest in Discovery Communications, which includes all of Discovery’s domestic and international networks, including Discovery Channel.
HDNet isn’t the only independent programmer that’s visited the FCC this month to plead its case. Hallmark Channel was also talking to the FCC, lobbying on behalf of rules that would promote competition and benefit standalone cable networks in their dealings with distributors.
In the case of HDNet, it told the FCC that DirecTV’s actions will benefit Malone and “his Discovery-related affiliates, among others.”
For example, Discovery HD Theater, which does not simulcast in standard definition, has not been moved to the HD-only Extra Pack, HDNet told the FCC. It remains on DirecTV’s standard $9.99 HD offering.
HDNet also claimed that Liberty Media approached it about buying a stake in the service.
“Liberty, with full knowledge of our deteriorating relationship with DirecTV and the adverse and discriminatory carriage terms to which we were going to be subject, approached HDNet with the suggestion that it sell them a 50% interest in HDNet,” the network told the FCC. “When it became clear that HDNet was not coming to an agreement with DirecTV on its future carriage, Liberty ceased expressing an interest.”
HDNet also alleged that Discovery Channel will no longer carry ads for it and HDNet Movies.
Discovery Communications filed papers with the FCC Tuesday, like DirecTV, denying HDNet’s charges that is receiving special consideration from DirecTV because of its affiliation with Liberty.
As for its decision not to run HDNet ads anymore, Discovery Communications said, “In assessing whether to accept HDNet advertising, Discovery’s internal review process was inadvertently short-circuited. Had the standard review occurred, the advertisements would not have been accepted.”
Discovery Communications said it is trying to get carriage for its own HD simulcast networks, so “any advertising encouraging viewers to contact their local cable operator and request carriage of a competing HD service places Discovery at a significant business disadvantage.”
HDNet, in its list of charges to the FCC, also alleged that DirecTV is targeting it because the satellite provider is trying to do original concert programming, which is one of the HD network’s bailiwicks.
“One of DirecTV’s motives to kill off HDNet and HDNet Movies is to obtain HDNet’s programming for its own new network, The 101,” HDNet told the FCC. “DirecTV is trying to sign on bands and concerts that have been shown by HDNet in an attempt to copy HDNet’s Sunday concert programming.”
DirecTV has denied HDNet’s allegations.
In its FCC filing, DirecTV said that it “was in no way motivated by the desire to favor programming affiliated with itself or its prospective largest shareholder, Liberty Media.”
Explaining why Discovery HD Theater will not be on the new HD-only tier, DirecTV told the FCC that the service “is treated differently not because it is affiliated with Liberty Media’s chairman, but because it is available free” to DirecTV.
“DirecTV does not pay Discovery HD Theater a per-subscriber fee for its HD programming,” DirecTV said. “By contrast, every programmer carried on the HD Extra Pack tier is [or soon will be] paid a per-subscriber fee for that programming. The distinction is one based on economics, not affiliation.”
According to DirecTV, “There are now a large number of programmers offering high quality HD programming at little or no cost,” DirecTV told the FCC.
As to the charge that it is trying to corner the market on music programming, DirecTV told the FCC that it “has been broadcasting free concerts to its subscribers since 1999, well before HDNet launched,” and that concerts are only part of the lineup on The 101.
In its response to the programmer’s lawsuit in Texas, DirecTV argued that it has no contractual obligations to offer HDNet in any basic programming package, and that in fact its $9.99 “HD Access” offering “is not a programming package or tier...it is a technology or equipment fee” that gives subscribers access to the HD counterparts of the networks they are already getting as part of their particular standard-definition service.
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