Washington – The National Football League, which rakes in $3.7 billion a year in TV revenue alone, is accusing the cable industry of favoring channels it owns and discriminating against unaffiliated channels such as the NFL Network through less favorable economic terms and channel positioning.
“[Cable operators] commonly disadvantage independent services by forcing them to accept inferior compensation or channel placement – or both,” the NFL Network told the Federal Communications Commission in a Sept. 11 filing related to cable system carriage of independently owned program networks.
The NFL Network and some cable operators have been at loggerheads over the price and channel position of the fledging pigskin network. The clash began after NFL leaders decided to air a few games on their own cable network, and try to recover hundreds millions of dollars in lost TV revenue through NFL Network license fees charged to cable and satellite operators.
The league is hoping that the NFL Network will also give the game year-round TV luster.
In the FCC filing, the NFL had strong words for Comcast, the largest cable operator with more than 24 million subscribers. Comcast and the NFL Network have had an especially rocky relationship.
“Comcast routinely places its affiliated channels on its basic tier or digital basic tier while refusing to make comparable independent channels available on the same basis,” the NFL said.
The NFL is highlighting an issue that has been associated with the cable industry for more than two decades: vertical integration, or the common ownership of cable systems and cable networks, both regional and national.
In 1992, cable operators owned 57% percent of 68 national cable networks in existence, compared to 20% today because of the explosion in cable programming services. The FCC has identified more than 500 cable networks.
“This isn't the first time someone has looked for leverage in contract negotiations by getting the government involved. But a fight between the top sports league and the biggest video distributor is a pretty big deal,” said Paul Gallant, a media analyst with Stanford Group in Washington, D.C.
The NFL filing didn’t mention that it lost a tier-placement law suit to Comcast and that it won’t license “NFL Sunday Ticket to Comcast” or any other U.S. cable operator. DirecTV, a satellite pay-TV provider, has exclusive rights to Sunday Ticket.
Comcast, which is vertically integrated with about 10% of the networks on its systems, has programming ownership interests in the Golf Channel, Comcast SportsNet, E! Entertainment Television, Versus and Style.
“Most of our sports networks are multi-sport, with multiple professional leagues on each network and with hundreds of games to watch. This is a major distinction between them and the NFL Network,” said Comcast spokeswoman Sena Fitzmaurice. “The cost to carry Golf and Versus is significantly different from what the NFL Network is demanding. There is vastly more programming on these networks, which are national in scope with broad interest across many demographics.”
The NFL filing included a chart showing that Comcast placed affiliated channels on the widely viewed basic tier and the NFL Network on lesser viewed sports tiers, hurting the ad sales of the latter. But the NFL’s chart, for the sake of comparison, did not show the tier location given Comcast-owned programming and the NFL Network by other cable operators and satellite TV providers.
The attack on Comcast comes as the FCC considers revising rules that ban cable operators from discriminating against a cable network based on the network’s ownership.
The NFL Network urged the national media regulator to adopt rules requiring Comcast to “bargain in good faith,” as it must when dealing with local TV stations. The FCC, the NFL Network added, would need to back up breakdowns in good faith with binding arbitration initiated by the programmer.
“This approach would ensure the continued development of independent services and protect consumers’ interest in promoting continued media diversity,” the NFL Network said.
The National Cable & Telecommunications Association told the FCC that the agency has reviewed just two program carriage distribution complaints in a decade, with one of them jointly dismissed. Speaking on behalf of all major cable operators, NCTA said that the FCC should handle all future disputes and reject the imposition of binding arbitration as beyond its legal authority.
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