The Tennis Channel, Inc. v. Comcast Cable Communications, LLC; File No. CSR-8258-P, 65323-65330 [2010-26766]
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Proposed Administrative Settlement
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SUMMARY:
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[FR Doc. 2010–26735 Filed 10–21–10; 8:45 am]
BILLING CODE 6560–50–P
FEDERAL COMMUNICATIONS
COMMISSION
[MB Docket No. 10–204; DA 10–1918]
The Tennis Channel, Inc. v. Comcast
Cable Communications, LLC; File No.
CSR–8258–P
Federal Communications
Commission.
ACTION: Notice.
AGENCY:
This document designates a
program carriage complaint for hearing
before an Administrative Law Judge
(‘‘ALJ’’) to resolve the factual disputes
and to return an Initial Decision.
DATES: The Tennis Channel, Inc. (‘‘The
Tennis Channel’’) and Comcast Cable
Communications, LLC (‘‘Comcast’’) shall
each file with the Chief, Enforcement
Bureau and Chief ALJ, by October 15,
2010, its respective elections as to
whether it wishes to proceed to
Alternative Dispute Resolution (‘‘ADR’’).
The hearing proceeding is suspended
during this time. If one or both of the
parties do not elect ADR, then the
hearing proceeding will commence on
October 18, 2010. In order to avail itself
of the opportunity to be heard, The
Tennis Channel and Comcast, in person
or by their attorneys, shall each file with
the Commission, by October 22, 2010, a
written appearance stating that it will
appear on the date fixed for hearing and
present evidence on the issues specified
herein.
ADDRESSES: Federal Communications
Commission, 445 12th Street, SW.,
Washington, DC 20554.
FOR FURTHER INFORMATION CONTACT: For
additional information on this
SUMMARY:
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65323
proceeding, contact David Konczal,
David.Konczal@fcc.gov, of the Media
Bureau, Policy Division, (202) 418–
2120.
SUPPLEMENTARY INFORMATION: This is a
summary of the Hearing Designation
Order and Notice of Opportunity for
Hearing for Forfeiture, DA 10–1918,
adopted and released on October 5,
2010. The full text of this document is
available for public inspection and
copying during regular business hours
in the FCC Reference Center, Federal
Communications Commission, 445 12th
Street, SW., CY–A257, Washington, DC
20554. This document will also be
available via ECFS (https://www.fcc.gov/
cgb/ecfs/). (Documents will be available
electronically in ASCII, Word 97, and/
or Adobe Acrobat.) The complete text
may be purchased from the
Commission’s copy contractor, 445 12th
Street, SW., Room CY–B402,
Washington, DC 20554. To request this
document in accessible formats
(computer diskettes, large print, audio
recording, and Braille), send an e-mail
to fcc504@fcc.gov or call the
Commission’s Consumer and
Governmental Affairs Bureau at (202)
418–0530 (voice), (202) 418–0432
(TTY).
Synopsis of the Order
I. Introduction
1. By this Hearing Designation Order
and Notice of Opportunity for Hearing
for Forfeiture (‘‘Order’’), the Chief, Media
Bureau (‘‘Bureau’’), pursuant to
delegated authority, hereby designates
for hearing before an ALJ the abovecaptioned program carriage complaint
filed by The Tennis Channel against
Comcast. The complaint alleges that
Comcast, a vertically integrated
multichannel video programming
distributor (‘‘MVPD’’), discriminated
against The Tennis Channel, a video
programming vendor, on the basis of
affiliation, with the effect of
unreasonably restraining The Tennis
Channel’s ability to compete fairly, in
violation of Section 616(a)(3) of the
Communications Act of 1934, as
amended (‘‘the Act’’), and Section
76.1301(c) of the Commission’s Rules.
47 U.S.C. 536(a)(3); 47 CFR 76.1301(c).
The complaint arises from Comcast’s
denial of The Tennis Channel’s request
to be repositioned from a premium
sports tier to a more broadly distributed
programming tier.
2. After reviewing The Tennis
Channel’s complaint, we find that The
Tennis Channel has put forth sufficient
evidence supporting the elements of its
program carriage discrimination claim
to establish a prima facie case. Below,
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we review the evidence from The
Tennis Channel’s complaint
establishing a prima facie case. We note
that in the most recent program carriage
decisions making a prima facie
determination, the Bureau provided a
detailed discussion of the defendant’s
counter-arguments to each of the claims
made by the complainant. See Herring
Broadcasting Inc., d/b/a WealthTV, et
al., Memorandum Opinion and Hearing
Designation Order, 73 FR 65312, 65313–
18, Nov. 3, 2008 (‘‘WealthTV HDO’’);
NFL Enters. LLC v. Comcast Cable
Communications, LLC, Memorandum
Opinion and Hearing Designation Order,
73 FR 65312, 65319–23, Nov. 3, 2008
(‘‘NFL Enterprises HDO’’); TCR Sports
Broadcasting Holding, LLP, d/b/a MidAtlantic Sports Network v. Comcast
Corp., Memorandum Opinion and
Hearing Designation Order, 73 FR
65312, 65323–27, Nov. 3, 2008 (‘‘MASN
II HDO’’). The Bureau did not follow this
approach, however, in earlier program
carriage cases. See TCR Sports
Broadcasting Holding, L.L.P. v. Comcast
Corp., Memorandum Opinion and
Hearing Designation Order, 71 FR
47222, Aug. 16, 2006 (‘‘MASN I HDO’’);
Classic Sports Network, Inc. v.
Cablevision Systems Corp.,
Memorandum Opinion and Hearing
Designation Order, 12 FCC Rcd 10288
(CSB 1997) (‘‘Classic Sports’’). We
believe the approach taken in MASN I
HDO and Classic Sports is more
appropriate for a prima facie
determination, which requires the
Bureau to assess the evidence set forth
in the complaint. Moreover, providing a
detailed discussion of the defendant’s
counter-arguments to each of the claims
made by the complainant may
incorrectly imply that the Bureau is
taking a position on the merits of those
arguments. While we do not summarize
each of Comcast’s counter-arguments
below, our review of the existing record,
including Comcast’s Answer, makes
clear that there are substantial and
material questions of fact as to whether
Comcast has engaged in conduct that
violates the program carriage provisions
of the Act and the Commission’s rules.
3. While we rule on a threshold
procedural issue regarding application
of the program carriage statute of
limitations, we do not reach the merits
on any of the other issues discussed
below. Rather, the existing record,
including Comcast’s Answer, makes
clear that there are substantial and
material questions of fact as to whether
Comcast has engaged in conduct that
violates the program carriage provisions
of the Act and the Commission’s rules.
We therefore initiate this hearing
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proceeding. We direct the Presiding
Judge to develop a full and complete
record and to conduct a de novo
examination of all relevant evidence in
order to make an Initial Decision.
4. As set forth below, the following
matters are not designated for the ALJ to
resolve: (i) Whether The Tennis Channel
has put forth evidence in its complaint
sufficient to warrant designation of this
matter for hearing; and (ii) whether The
Tennis Channel’s complaint was filed in
accordance with the program carriage
statute of limitations. As required by the
Commission’s Rules, to the extent
Comcast seeks Commission review of
our decision on these issues, such
review, if any, shall be deferred until
exceptions to the Initial Decision in this
proceeding are filed. See 47 CFR
1.115(e)(3).
II. Background
5. Section 616(a)(3) of the Act directs
the Commission to establish rules
governing program carriage agreements
and related practices between cable
operators or other MVPDs and video
programming vendors that, among other
things: ‘‘prevent [an MVPD] from
engaging in conduct the effect of which
is to unreasonably restrain the ability of
an unaffiliated video programming
vendor to compete fairly by
discriminating in video programming
distribution on the basis of affiliation or
nonaffiliation of vendors in the
selection, terms, or conditions for
carriage of video programming provided
by such vendors.’’ 47 U.S.C. 536(a)(3). In
implementing this statutory provision,
the Commission adopted Section
76.1301(c) of its rules, which closely
tracks the language of Section 616(a)(3).
See 47 CFR 76.1301(c). The Commission
has established specific procedures for
the review of program carriage
complaints. See 47 CFR 76.1302.
6. While those procedures provide for
resolution on the basis of a complaint,
answer, and reply, the Commission
expected that, in most cases, it would be
unable to resolve carriage complaints
solely on the basis of a written record.
Program Carriage Second Report and
Order, 58 FR 60390, Nov. 16, 1993.
Rather, it anticipated that the majority
of complaints would require a hearing
before an ALJ, given that alleged Section
616 violations typically involve
contested facts and behavior related to
program carriage negotiations. In such
cases, where the complainant is found
to have established a prima facie case
but disposition of the complaint
requires the resolution of factual
disputes or extensive discovery, the
parties can elect either ADR or an
adjudicatory hearing before an ALJ.
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Pursuant to Section 76.7(g)(1) of the
Commission’s Rules, the Commission
may refer to an ALJ entire proceedings
or discrete issues arising from
proceedings. See 47 CFR 76.7(g)(1); see
also 1998 Biennial Regulatory Review,
64 FR 6565, Feb. 10, 1999. If the parties
proceed to a hearing before an ALJ, the
ALJ’s Initial Decision is directly
appealable to the Commission. 47 CFR
1.276. The appropriate relief for
violation of the program carriage
provisions is determined on a case-bycase basis. Available sanctions and
remedies include forfeiture and/or
mandatory carriage and/or carriage on
terms revised or specified by the
Commission. For the purpose of our
prima facie determination, we discuss
below the factual bases for The Tennis
Channel’s claim of program carriage
discrimination.
7. The Tennis Channel is a national
cable sports network that launched in
May 2003 with a broad range of racquetsport-related programming. The Tennis
Channel is a video programming vendor
as defined in Section 76.1300(e) of the
Commission’s Rules. See 47 CFR
76.1300(e). The Tennis Channel states
that, to foster its growth, it offered
preferential terms to distributors, like
Comcast, that agreed to carry the
network before it had become wellestablished. The Tennis Channel asserts
that, since its launch on Comcast
systems, it has become the ‘‘leading
provider of 24/7 tennis programming’’
and ‘‘the only cable network in the
nation dedicated to covering the sport.’’
According to the network, in 2008, it
offered more than 2,700 hours of
worldwide event coverage, including
major coverage of three of the four
Grand Slam events—the Australian
Open, the French Open, and
Wimbledon. The Tennis Channel states
that in 2009 it added the fourth Grand
Slam event, the U.S. Open, to its
programming, as well as other event
coverage such as exclusive telecasts of
every worldwide and U.S. Davis Cup
and Fed Cup match. In addition to
coverage of more than 70 top tennis
tournaments worldwide, The Tennis
Channel offers non-event content,
including original lifestyle,
instructional, and fitness series,
specials, and short-form programs
featuring the sport’s most popular
figures.
8. Comcast is a multiple system cable
operator with approximately 24 million
subscribers nationwide. Comcast is a
multichannel video programming
distributor, as defined in Section
76.1300(d) of the Commission’s Rules.
See 47 CFR 76.1300(d). Comcast serves
customers in 39 States and the District
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of Columbia, and in 24 of the top 30
designated market areas (‘‘DMAs’’). A
DMA is a local television market area
designated by The Nielsen Company
(formerly, Nielsen Media Research).
There are 210 DMAs in the United
States. In addition to its role as a
programming distributor, Comcast is a
programming supplier by virtue of its
affiliation with several cable networks.
Among other interests, Comcast’s parent
company holds a financial stake in the
Golf Channel, the MLB Network, the
NHL Network, NBA TV, and a variety of
other national cable programming
networks. Comcast’s parent company
also owns Versus, a national sports
network that provides programming
coverage of multiple sports, as well as
a number of regional sports networks
(‘‘RSNs’’). In general, Comcast carries the
Golf Channel, Versus, and its affiliated
RSNs on its widely distributed
Expanded Basic/Digital Starter tier.
9. In 2005, The Tennis Channel
executed an affiliation agreement with
Comcast that provided for carriage of
the network on Comcast systems
nationwide. The agreement did not
specify the tier on which Comcast
would carry the network. With limited
exceptions, Comcast has carried The
Tennis Channel on a premium sports
tier, the ‘‘Sports and Entertainment
Package’’ (‘‘SEP’’), since the parties
executed their carriage agreement. A
few Comcast systems initially launched
The Tennis Channel on a digital basic
tier, but relocated the network to the
premium sports tier. Comcast currently
carries The Tennis Channel on the
premium sports tier in all of its systems
nationwide except one.
10. The Tennis Channel states that in
early 2009, after it concluded strategic
efforts to enhance the quality of its
technical service and programming
content, it proposed that Comcast
reposition the network to a level of
carriage that The Tennis Channel
believed was justified given the
network’s expansion and service
improvements. Following discussions
between the parties in the spring of
2009, Comcast informed The Tennis
Channel in June 2009 that it would not
relocate the network to a more widely
distributed programming tier. The
Tennis Channel asserts that during the
course of those discussions, Comcast
indicated that it would retier The
Tennis Channel only if the network
offered a financial ‘‘incentive’’ to do so.
Comcast states that it decided to keep
The Tennis Channel on a sports tier
because (i) increasing the network’s
distribution would increase Comcast’s
costs; (ii) no Comcast system expressed
an interest in repositioning the network;
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and (iii) there was no indication of
subscriber defections to another MVPD
that carried the network more widely.
Comcast states that it informed The
Tennis Channel that it could attempt to
seek broader distribution with
individual Comcast systems on a
market-by-market basis. Consequently,
in December 2009, The Tennis Channel
notified Comcast of its intention to file
a program carriage complaint with the
Commission, and brought its complaint
shortly thereafter. Pursuant to Section
76.1302(b) of the Commission’s Rules,
The Tennis Channel provided its prefiling notification to Comcast on
December 10, 2009. The Tennis Channel
filed its program carriage complaint
with the Commission on January 5,
2010.
III. Discussion
11. Based on our review of the
complaint and as explained more fully
below, we conclude that The Tennis
Channel has established a prima facie
case of program carriage discrimination
pursuant to Section 616(a)(3) of the Act
and Section 76.1301(c) of the
Commission’s Rules. 47 U.S.C.
536(a)(3); 47 CFR 76.1301(c). When
filing a program carriage complaint, the
video programming vendor carries the
burden of proof to establish a prima
facie case that the defendant MVPD has
engaged in behavior prohibited by
Section 616 and the Commission’s
implementing rules. In previous cases
assessing whether a complainant has
established a prima facie case of
program carriage discrimination, the
Bureau has considered whether the
complaint contains sufficient evidence
to support the elements of a program
carriage discrimination claim: (i) The
complainant is a video programming
vendor as defined in Section 76.1300(e)
of the Commission’s Rules; (ii) the
defendant is an MVPD as defined in
Section 76.1300(d) of the Commission’s
Rules; (iii) the complainant programmer
is similarly situated to a programmer
affiliated with the defendant MVPD; (iv)
the defendant MVPD has treated the
complainant programmer differently
from its similarly situated, affiliated
programmer with respect to the
selection, terms, or conditions for
carriage; and (v) the defendant MVPD’s
discriminatory conduct has the effect of
unreasonably restraining the ability of
the complainant programmer to
compete fairly. See 47 CFR 76.1302(c);
WealthTV HDO, 73 FR 65312, 65312–
18, Nov. 3, 2008; NFL Enterprises HDO,
73 FR 65312, 65318–23, Nov. 3, 2008;
MASN II HDO, 73 FR 65312, 65323–29,
Nov. 3, 2008; MASN I HDO, 71 FR
47222, Aug. 16, 2006; Hutchens
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65325
Communications, Inc. v. TCI
Cablevision of Georgia, Inc.,
Memorandum Opinion and Order, 9
FCC Rcd 4849, para. 27 (CSB 1994); see
also Program Carriage Second Report
and Order, 58 FR 60390, Nov. 16, 1993.
12. With regard to the first and second
factors above, the parties agree that
Comcast is an MVPD and that The
Tennis Channel is a video programming
vendor as defined in the Commission’s
Rules. For purposes of the third factor,
Comcast admits that it is affiliated with
the Golf Channel and Versus. With
respect to the remaining factors, we
conclude that The Tennis Channel has
put forth sufficient evidence in its
complaint to establish a prima facie case
that Comcast has engaged in unlawful
discrimination in the ‘‘selection of
* * * video programming’’ by declining
to reposition the network to a more
widely distributed programming tier,
while carrying comparable affiliated
networks on such a tier. 47 U.S.C.
536(a)(3). (As discussed below, The
Tennis Channel does not contend that
its existing affiliation agreement with
Comcast contains discriminatory
‘‘terms’’ or ‘‘conditions.’’ The Tennis
Channel claims that Comcast has
impermissibly discriminated in its
‘‘selection’’ of The Tennis Channel for
placement on a sports tier while
selecting its affiliated networks for
placement on a more widely distributed
programming tier. See NFL Enterprises
HDO, 73 FR 65312, 65318–23, Nov. 3,
2008 (program carriage complaint
alleging that defendant impermissibly
discriminated by selecting complainant
for placement on sports tier while
selecting affiliated networks for
placement on a more widely distributed
programming tier).) We do not reach the
merits of this claim. Rather, we find that
the existing record, including Comcast’s
Answer, makes clear that there are
significant and material questions of fact
warranting resolution at hearing.
Because we are not ruling on the merits
of The Tennis Channel’s claims at this
prima facie stage, we find it premature
to address Comcast’s arguments
regarding the need to interpret Section
616(a)(3) of the Act and Section
76.1301(c) of the Commission’s Rules
narrowly to protect Comcast’s First
Amendment rights.
A. Procedural Issues
13. As a threshold matter, we reject
Comcast’s contention that The Tennis
Channel’s complaint is foreclosed as
untimely filed under the program
carriage statute of limitations. Pursuant
to Section 76.1302(f) of the
Commission’s Rules, an aggrieved
programmer has a one-year period in
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which to file a program carriage
complaint that commences upon the
occurrence of one of three specified
events. 47 CFR 76.1302(f). We find that
the third of those triggering events—the
provision of an aggrieved programmer’s
pre-filing notification pursuant to
Section 76.1302(b) of the Commission’s
Rules—is present in this case. See 47
CFR 76.1302(f)(3). (We agree with
Comcast that the limitations period in
Section 76.1302(f)(2) of the
Commission’s Rules, which governs
carriage offers unrelated to existing
affiliation agreements, is inapplicable in
this case.) Contrary to Comcast’s
assertions, nothing in the text of Section
76.1302(f)(3) limits the applicability of
that provision to situations where the
defendant ‘‘unreasonably refuses to
negotiate with [the] complainant.’’
While Comcast notes that the rule now
found at Section 76.1302(f)(3) formerly
contained language limiting its
applicability to refusals to negotiate, the
Commission eliminated this language in
1994. See Program Carriage Second
Report and Order, 58 FR 60390, Nov.
16, 1993; Program Carriage
Memorandum Opinion and Order, 59
FR 43776, Aug. 25, 1994. Although
Comcast contends that this language
was eliminated to accommodate
program carriage complaints filed by
MVPDs and was not intended to
otherwise alter the intent of this
provision, the plain language of the rule
allows a program carriage complaint to
be filed within one year of the pre-filing
notice, provided that the claim is not
otherwise barred by one of the other two
triggering events. WealthTV HDO, 73 FR
65312, 65316, Nov. 3, 2008 (‘‘the plain
language of the Commission’s rules
provides that the statute of limitations is
satisfied if the program carriage
complaint is filed within one year of the
pre-filing notice’’). On its face, Section
76.1302(f)(3) arguably could be read to
allow a complainant to file a program
carriage complaint based on allegedly
unlawful conduct that occurred years
before the filing of the pre-filing notice
provided the complaint was filed within
one year of the pre-filing notice. We are
not presented with such a case here.
Comcast informed The Tennis Channel
in June 2009 that it would not relocate
the network to a more widely
distributed programming tier. While
Comcast states that it invited The
Tennis Channel to seek broader
distribution with individual Comcast
systems on a market-by-market basis, it
is undisputed that in June 2009 Comcast
rejected The Tennis Channel’s proposal
that it be moved to a more widely
distributed tier across Comcast’s entire
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subscriber base. The Tennis Channel
filed its program carriage complaint
within one year of this allegedly
discriminatory refusal to retier the
Tennis Channel, as well as within one
year of its pre-filing notice. Accordingly,
we conclude that the complaint was
timely filed pursuant to Section
76.1302(f)(3) of the Commission’s Rules.
(Similarly, in both NFL Enterprises HDO
and MASN II HDO, the complainant
filed its complaint within one year of
the pre-filing notice as well as within
one year of the alleged discriminatory
act.)
14. We disagree with Comcast that
The Tennis Channel’s complaint is
barred by Section 76.1302(f)(1) of the
rules, which establishes a one-year
period for the filing of a program
carriage complaint that commences with
the ‘‘[execution of] a contract with [an
MVPD] that a party alleges to violate
one or more of the [program carriage]
rules.’’ 47 CFR 76.1302(f)(1). The
timeliness of The Tennis Channel’s
complaint is not an issue designated for
resolution by the Presiding Judge. As
required by the Commission’s Rules, to
the extent Comcast seeks Commission
review of our decision on this issue,
such review, if any, shall be deferred
until exceptions to the Initial Decision
in this proceeding are filed. See 47 CFR
1.115(e)(3).
15. Although the parties executed
their existing carriage agreement in
2005, The Tennis Channel does not
claim that this agreement contains
unlawfully discriminatory prices, terms,
or conditions. Nor do the parties dispute
that Comcast has abided by the explicit
terms of the 2005 agreement. The
agreement at issue did not otherwise
specify the tier on which Comcast
would carry the network. Comcast thus
has the discretion to carry The Tennis
Channel to a greater number of
subscribers than specified in the
contract and on a more widely
distributed tier than the premium sports
tier on which Comcast currently carries
The Tennis Channel. The gravamen of
The Tennis Channel’s complaint is that
Comcast has refused to exercise its
discretion to do so, while at the same
time carrying its allegedly similar
affiliated networks on a more widely
distributed tier, and has thus failed to
meet its obligation under Section
616(a)(3) of the Act and Section
76.1301(c) of the Commission’s Rules to
avoid discrimination on the basis of
affiliation. It is this refusal, not the
terms of the contract, which forms the
basis for The Tennis Channel’s
complaint. As discussed above, The
Tennis Channel establishes that this
refusal to retier occurred in June 2009.
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The Tennis Channel filed its complaint
within one year of this date, as well as
within one year of the pre-filing notice.
16. This interpretation is consistent
with Bureau precedent defining the
scope of the Commission’s program
carriage statute of limitations at the
prima facie stage of review. See NFL
Enterprises HDO, 73 FR 65312, 65320,
Nov. 3, 2008 (prima facie
determination); MASN II HDO, 73 FR
65312, 65324–25, Nov. 3, 2008 (prima
facie determination). We note that both
of these cases were settled before a
decision on the merits by an ALJ or the
Commission. While Comcast claims that
these cases were wrongly decided, we
disagree and find no reason to ignore or
reverse this precedent. In NFL
Enterprises HDO, the contract at issue
provided that the defendant had the
contractual right to move the
complainant to a premium sports tier if
certain events occurred. After those
events occurred, the defendant
exercised this contractual right. The
complainant filed a program carriage
complaint alleging that the defendant’s
exercise of its contractual right to move
the complainant to a premium sports
tier, while at the same time carrying
allegedly similar affiliated networks on
a more widely distributed tier, was
impermissibly discriminatory under
Section 616(a)(3) of the Act and Section
76.1301(c) of the Commission’s Rules.
The complaint was filed within one year
of the date of the retiering but more than
one-year from the date the contract was
executed. The Bureau rejected claims
that the basis for the dispute was the
contract and that the complaint should
have been filed within one year from the
date the contract was executed. The
Bureau explained that the alleged act of
discrimination that formed the basis for
the complaint was the act of moving the
complainant to a premium sports tier,
not the terms of the contract. As The
Tennis Channel did in this case, the
complaint was filed within one year of
the allegedly discriminatory act and
within one year of the pre-filing notice.
Thus, the Bureau held that the
complaint was filed in accordance with
the statute of limitations in Section
76.1302(f)(3).
17. In MASN II HDO, the contract at
issue provided that the defendant would
carry the complainant on certain
specified systems but left it to the
defendant’s future discretion to choose
to carry the complainant on systems not
specified in the contract. After
negotiations regarding carriage of the
complainant on systems not specified in
the contract reached an impasse, the
complainant filed its program carriage
complaint. The complainant alleged that
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the defendant’s refusal to exercise its
discretion to carry the complainant on
systems not specified in the contract,
while at the same time carrying
allegedly similar affiliated networks on
those systems, was impermissibly
discriminatory under Section 616(a)(3)
of the Act and Section 76.1301(c) of the
Commission’s Rules. The complaint was
filed within one year of the date when
negotiations regarding carriage of the
complainant on systems not specified in
the contract reached an impasse, but
more than one-year from the date the
contract was executed. The Bureau
rejected claims that the basis for the
dispute was the contract and that the
complaint should have been filed
within one year from the date the
contract was executed. The Bureau
explained that the alleged act of
discrimination that formed the basis for
the complaint was the defendant’s
refusal to exercise its discretion to carry
the complainant on systems not
specified in the contract, not the terms
of the contract. As The Tennis Channel
did in this case, the complaint was filed
within one year of the date of the
allegedly discriminatory refusal to carry
the complainant on systems not
specified in the contract and within one
year of the pre-filing notice. Thus, the
Bureau held that the complaint was
filed in accordance with the statute of
limitations in Section 76.1302(f)(3).
18. As NFL Enterprises HDO and
MASN II HDO demonstrate, Bureau
precedent establishes that a
complainant may have a timely program
carriage claim in the middle of a
contract term if the basis for the claim
is an allegedly discriminatory decision
made by the MVPD, such as tier
placement, that the contract left to the
MVPD’s discretion. The exercise of such
discretion is subject to the MVPD’s
obligations under the program carriage
statute, which prohibits an MVPD from
‘‘discriminating in video programming
distribution on the basis of affiliation or
nonaffiliation of vendors in the
selection, terms, or conditions for
carriage * * *.’’ 47 U.S.C. 536(a)(3).
Comcast claims that such an
interpretation would create uncertainty
and ‘‘open the floodgates to program
carriage cases’’ because parties could
bring complaints at any time, regardless
of the existence of a non-discriminatory
agreement, based on a demand to
renegotiate the terms of the contract. We
disagree because neither this case, nor
the previous NFL Enterprises HDO and
MASN II HDO cases, involves a request
to renegotiate a term in an existing
contract. Rather, all of these cases
involve contracts which left a carriage
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decision to the defendant’s discretion,
and the gravamen of the complaints is
whether the defendant’s exercise of
such discretion was consistent with its
obligations under Section 616(a)(3) of
the Act and Section 76.1301(c) of the
Commission’s Rules. Moreover, we note
that the present case is the only program
carriage complaint filed in the two years
since the Bureau adopted NFL
Enterprises HDO and MASN II HDO,
thus refuting Comcast’s claim that this
interpretation of the statute of
limitations will ‘‘open the floodgates to
program carriage cases.’’
19. As the Bureau explained in NFL
Enterprises HDO, ‘‘[w]hether or not
Comcast had the right to [make a tiering
decision] pursuant to a private
agreement is not relevant to the issue of
whether doing so violated Section 616
of the Act and the program carriage
rules. Parties to a contract cannot
insulate themselves from enforcement of
the Act or our rules by agreeing to acts
that violate the Act or rules.’’ See NFL
Enterprises HDO, 73 FR 65312, 65320,
Nov. 3, 2008. Subsequent to the
Bureau’s decision in NFL Enterprises
HDO, the Chief ALJ supported this view
in denying a motion for a ruling on
judicial estoppel and laches issues. See
NFL Enterprises LLC v. Comcast Cable
Communications, LLC, Memorandum
Opinion and Order, FCC 09M–36 (Chief
ALJ 2009), at para. 3 (denying motion
that program carriage case should be
dismissed because complainant was
also pursuing a contract-based claim in
state court, explaining that ‘‘NFL
Enterprises seeks to vindicate its alleged
private contractual rights in the New
York litigation and its alleged federal
and regulatory rights in this case * * *.
The statutory and regulation issues in
this case are separate and distinct from
the contractual issues in the New York
action.’’). As in NFL Enterprises HDO
and MASN II HDO, we designate the
present case for a hearing to determine
whether Comcast exercised its
discretion consistent with its obligations
under the program carriage statute and
rules when it declined to tier The
Tennis Channel on a more widely
distributed tier.
20. Under Comcast’s interpretation of
the program carriage statute of
limitations, a programmer would be
forever barred from bringing a
discrimination claim unless the claim is
brought within one year from the date
the contract was executed. While
Comcast notes that such an
interpretation would provide certainty
to MVPDs, it would also preclude
programmers from bringing legitimate
claims regarding allegedly
discriminatory actions occurring more
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than one year after a contract was
executed. Tennis Channel explains that
fledgling networks often enter into
contracts that provide the MVPD with
tiering flexibility that allows the MVPD
to increase the network’s distribution as
it develops. Under Comcast’s
interpretation, a programmer would be
precluded from bringing a program
carriage discrimination claim after the
first year of the contract even if the
MVPD refuses to provide the
programmer with increased distribution
in order to favor its own affiliated
network.
21. Despite Comcast’s claims to the
contrary, this precedent is consistent
with the decision of the Cable Services
Bureau in EchoStar dismissing a
program access case on procedural
grounds. See EchoStar Communications
Corp. v. Fox/Liberty Networks, LLC, 13
FCC Rcd 21841 (CSB 1998), recon.
denied, EchoStar Communications
Corp. v. Fox/Liberty Networks, LLC, 14
FCC Rcd 10480 (CSB 1999). The
contract at issue in EchoStar specified
the rate the complainant would pay for
the defendant’s programming. Over one
year after the parties entered into the
contract, however, the complainant
sought to renegotiate the rate set forth in
the contract. The Bureau found that the
complaint was barred by the applicable
statute of limitations, which requires
that program access complaints be
brought within one year of the date of
execution of an affiliation agreement
that allegedly violates the Commission’s
program access requirements. Thus,
unlike the present case where the
contract at issue does not specify the
tier on which Comcast will carry The
Tennis Channel and instead leaves tier
placement to Comcast’s discretion,
EchoStar involved a complainant’s
attempt to renegotiate a rate set forth in
the contract more than one year after the
contract’s execution date. Here, The
Tennis Channel’s complaint does not
relate to any of the specific rates, terms,
or conditions set forth in the parties’
contract, but rather, Comcast’s allegedly
discriminatory tiering decision that
occurred subsequent to the contract’s
execution. Citing EchoStar, the
Commission later explained that ‘‘an
offer to amend an existing contract that
has been in effect for more than one year
does not reopen the existing contract to
complaints that the provisions thereof
are discriminatory.’’ 1998 Biennial
Regulatory Review, 64 FR 6565, Feb. 10,
1999. As discussed above, The Tennis
Channel does not allege that the
contract at issue contains discriminatory
provisions and does not seek to amend
its contract.
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1. Similarly Situated
22. We find that The Tennis Channel
has provided evidence sufficient to
demonstrate for the purpose of
establishing a prima facie case of
program carriage discrimination that it
is similarly situated with Comcastaffiliated networks—the Golf Channel
and Versus. (Comcast disputes that The
Tennis Channel is similarly situated to
the Golf Channel and Versus.) The
Tennis Channel asserts that the relevant
programming services are all nationally
distributed sports television networks
that generally compete in the same
markets and have similar levels of
viewer popularity. In particular, The
Tennis Channel claims that it competes
with Versus and the Golf Channel for
the same viewers, advertisers, and
programming. In support of its
contention, The Tennis Channel points
to the results of a survey purporting to
show that the three networks attract
affluent viewers that are predominantly
male. In particular, the survey results
indicate that the median household
income for viewers of The Tennis
Channel, Golf Channel, and Versus are
$82,754, $71,786, and $65,353,
respectively. Of viewer households with
incomes above $100,000, the median
income for The Tennis Channel and
Golf Channel viewers is $148,700 and
$144,500, respectively, which places
those two networks in the top ten
networks for median income among
these affluent households. The survey
results indicate that nearly 60 percent of
The Tennis Channel viewers are male,
and approximately 70 percent of Golf
Channel and Versus viewers are male.
With regard to competition for
advertisers, The Tennis Channel has put
forth evidence indicating that almost
half of Versus’s revenue from its top 30
advertisers derives from companies that
either have purchased advertising on
The Tennis Channel, or have evaluated
formal proposals from The Tennis
Channel during one of the past four ‘‘up
front’’ periods in which advertisers
solicit such proposals. Similarly, The
Tennis Channel claims that 68 percent
of the revenue that the Golf Channel
earns from its top 30 advertisers
originates from companies that have
purchased advertising on The Tennis
Channel or from companies that
evaluated The Tennis Channel
proposals during one of the past four
‘‘up front’’ periods. The Tennis Channel
further asserts that it competes with
Versus for tennis programming, and has
shared rights to tennis tournaments with
Versus.
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23. In addition, The Tennis Channel
has submitted evidence demonstrating
that The Tennis Channel’s ratings in its
coverage area are generally comparable
to those of both the Golf Channel and
Versus. With regard to the ‘‘value
proposition’’ of The Tennis Channel
(i.e., the rate charged by the network
relative to the popularity of the
network’s programming), the network
claims that it compares favorably to
both Versus and the Golf Channel. The
Tennis Channel asserts that, according
to published data, the ratio between the
license fee charged for the Golf Channel
and its average all-day rating—the ‘‘price
per point’’ of the network—is $3.13, and
that Versus’s price per point is $2.75.
Although national ratings for The
Tennis Channel are unavailable due to
the network’s limited distribution, The
Tennis Channel claims that its average
all-day household rating for the first
nine months of 2009, in the local
markets where it is rated, made its price
per point approximately $1.46.
24. Similarly, The Tennis Channel
contends that it surpasses Versus and
the Golf Channel in terms of the
quantity of event coverage and level of
viewer engagement or participation in
the covered sporting events. The Tennis
Channel maintains that, in 2008, it
offered more than 2,700 hours of
worldwide event coverage, the vast
majority of which was composed of
exclusive events within the United
States. By comparison, the Golf Channel
and Versus offered only 2,400 and 1,350
hours of event coverage, respectively,
that year. The Tennis Channel further
asserts that it holds exclusive rights to
telecast significant portions of all four of
the major events in its field, the Grand
Slams, and covers the world’s top 70
tennis tournaments. By contrast, The
Tennis Channel maintains, the Golf
Channel does not offer live or first-run
coverage of the most significant events
in its field, the Majors. In addition, The
Tennis Channel claims that ice hockey
and the Tour de France comprise
Versus’s most popular programming,
and that Versus covers only two games
in the ice hockey championship series,
the Stanley Cup Finals. The Tennis
Channel puts forth the results of a
recent study by an industry trade
association indicating that tennis is ‘‘the
fastest-growing sport in the country.’’
The study purports to show that
participation in tennis grew 43 percent
between 2000 and 2008. Conversely, the
study indicates that participation in golf
dropped one percent, and participation
in ice hockey, Versus’s principally
featured sport, declined 22 percent
during the same period.
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2. Differential Treatment
25. We also find that The Tennis
Channel has put forth evidence
sufficient to demonstrate for the
purpose of establishing a prima facie
case of program carriage discrimination
that Comcast has treated The Tennis
Channel differently ‘‘on the basis of
affiliation or nonaffiliation’’ from
Comcast’s similarly situated, affiliated
networks. (Comcast argues that its
differential treatment of The Tennis
Channel is justified by various
legitimate and non-discriminatory
reasons.) Comcast distributes Versus
and the Golf Channel to virtually all of
its subscribers on a comparatively
inexpensive, widely distributed
programming tier, and such subscribers
need not pay an additional fee to receive
those programming networks. By
contrast, Comcast customers wishing to
receive The Tennis Channel must
subscribe to a premium tier and pay a
monthly fee for the programming, in
addition to fees they must pay to
purchase an entry-level package of
digital cable programming and acquire a
digital cable box. According to The
Tennis Channel, customers that
subscribe to Comcast’s SEP must pay
approximately five dollars each month
in addition to the fees they must pay for
digital cable service. The SEP also
includes other sports programming
services. In Washington, DC, for
example, this premium tier includes the
Big Ten Network, Horse Racing
Television, TV Games, the Fox College
Sports regional channel, Fox Soccer
Channel, GolTV, Speed Channel, NFL
Red Zone, and CBS College Sports.
According to The Tennis Channel,
approximately ten percent of Comcast’s
customers subscribe to the SEP. The
Tennis Channel claims that Comcast
carries all of its affiliated programmers
on broadly penetrated tiers, whereas
Comcast’s premium sports tier is
occupied only by unaffiliated networks.
The Tennis Channel has also provided
evidence that Comcast affords more
favorable channel positioning to sports
networks with which it is affiliated. For
example, in Washington, DC, Comcast
carries Versus and the Golf Channel on
low-numbered channels that are
adjacent to EPSN and ESPN2, two
popular sports programming networks.
The Tennis Channel, however, is
located at channel 735, adjacent to other
networks that comprise Comcast’s SEP.
3. Harm to Ability To Compete Fairly
26. The Tennis Channel has put forth
evidence sufficient to demonstrate for
the purpose of establishing a prima facie
case of program carriage discrimination
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that Comcast’s unwillingness to
distribute the network more broadly and
its disparate treatment of the network
has unreasonably restrained The Tennis
Channel’s ability to compete fairly.
(Comcast disputes that The Tennis
Channel has been unreasonably
restrained in its ability to compete
fairly.) The Tennis Channel claims that
Comcast’s failure to carry the network at
the same level offered to Versus and the
Golf Channel has impaired the
network’s overall distribution and
subscription fee revenue, thereby
depriving The Tennis Channel of
license fees that can be used to improve
the network. Because Comcast is the
dominant cable operator in seven of the
ten largest television markets, The
Tennis Channel asserts that its refusal to
expand The Tennis Channel’s
distribution is particularly detrimental
to the network. Moreover, The Tennis
Channel contends that the smaller
viewership of Comcast’s premium
sports tier reduces the value of
advertising on networks carried on that
tier. The Tennis Channel claims that
many national advertisers use a
threshold number of subscribers, e.g., 40
million subscribers, as a benchmark for
assessing whether a network will be
considered a viable competitor for
national advertising purchases. Thus,
The Tennis Channel asserts, networks
with a distribution level below that
threshold experience more difficulty
attracting national advertisers. Indeed,
The Tennis Channel claims that top
cable advertisers have excluded the
network as a competitor for national
advertising contracts due to its narrow
distribution. By contrast, The Tennis
Channel claims, some of those national
advertisers have expended significant
resources to place ads on both the Golf
Channel and Versus.
27. In addition, The Tennis Channel
asserts that Comcast’s disparate
treatment has impaired the network’s
ability to compete for programming, and
points to several examples where the
network either failed to win
programming rights or was forced to
make concessions in order to obtain
such rights. Finally, The Tennis
Channel claims that Comcast’s refusal to
expand its distribution has deprived the
network of economies of scale. The
Tennis Channel points out that, because
a cable network’s expenses are fixed
irrespective of the number of
subscribers, broader distribution of the
network increases revenues without
increasing costs. Thus, it claims, the
operating costs are substantially less for
a widely distributed network than for
one whose distribution is more limited.
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As a consequence of its inability to
realize economies of scale, The Tennis
Channel asserts that it has been forced
to limit marketing, production, and
programming expenses, and was unable
to renew agreements for certain smaller
tournaments in 2010.
4. Referral to ALJ or ADR
28. Based on the foregoing, we find it
appropriate to designate the captioned
complaint on the issues specified below
for a hearing before an ALJ. The
question of whether The Tennis
Channel has put forth evidence
sufficient to warrant designation of this
matter for hearing is not an issue before
the Presiding Judge. As required by the
Commission’s Rules, to the extent
Comcast seeks Commission review of
our decision on this issue, such review,
if any, shall be deferred until exceptions
to the Initial Decision in this proceeding
are filed. See 47 CFR 1.115(e)(3).
Despite our prima facie determination,
the Presiding Judge will conduct a de
novo examination of all relevant
evidence after developing a full and
complete record. Pursuant to Section
76.7(g)(2) of the Commission’s Rules,
each party will have ten days following
release of this Order to notify the Chief,
Enforcement Bureau and Chief ALJ, in
writing, of its election to resolve this
dispute through ADR. The hearing
proceeding will be suspended during
this ten-day period. In the event that
both parties elect ADR, the hearing
proceeding will remain suspended, and
the parties shall update the Chief,
Enforcement Bureau and Chief ALJ
monthly, in writing, on the status of the
ADR process. If both parties elect ADR
but fail to reach a settlement, the parties
shall promptly notify the Chief,
Enforcement Bureau and Chief ALJ in
writing, and the proceeding before the
ALJ will commence upon the receipt of
such notification. If both parties elect
ADR and reach a settlement, the parties
shall promptly notify the Chief,
Enforcement Bureau, Chief ALJ, and
Chief, Media Bureau in writing, and the
hearing designation will be terminated
upon the Media Bureau’s order
dismissing the complaint becoming a
final order. If one or both parties do not
elect ADR, then the hearing proceeding
will commence the day after the ten-day
period has lapsed.
29. Notwithstanding our
determination that The Tennis Channel
has made out a prima facie case of
program carriage discrimination by
Comcast, we direct the Presiding Judge
to develop a full and complete record in
the instant hearing proceeding and to
conduct a de novo examination of all
relevant evidence in order to make an
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Initial Decision on each of the
outstanding factual and legal issues. In
addition, we direct the Presiding Judge
to make all reasonable efforts to issue
his Initial Decision on an expedited
basis. In furtherance of this goal, we
encourage the Presiding Judge to place
limitations on the discovery tools
available to the parties.
30. Pursuant to Section 76.10(c)(2) of
the Commission’s Rules, a party
aggrieved by the ALJ’s decision on the
merits may appeal such decision
directly to the Commission in
accordance with Sections 1.276(a) and
1.277(a) through (c) of the Commission’s
Rules. 47 CFR 76.10(c)(2). Unless the
Commission grants a stay of the ALJ’s
decision, such decision will become
effective upon release and will remain
in effect pending appeal. However, if
the ALJ’s decision would require a
defendant MVPD to delete existing
programming from its system to
accommodate carriage, the order for
carriage will not become effective unless
and until the decision of the ALJ is
upheld by the Commission. 47 CFR
76.1302(g)(1).
IV. Ordering Clauses
31. Accordingly, it is ordered, that
pursuant to Section 409(a) of the
Communications Act of 1934, as
amended, 47 U.S.C. 409(a), and Sections
76.7(g) and 1.221 of the Commission’s
Rules, 47 CFR 76.7(g), 1.221, the
captioned program carriage complaint
filed by The Tennis Channel, Inc.
against Comcast Cable Communications,
LLC, is Designated For Hearing at a date
and place to be specified in a
subsequent order by an Administrative
Law Judge upon the following issues:
(a) To determine whether Comcast has
engaged in conduct the effect of which
is to unreasonably restrain the ability of
The Tennis Channel to compete fairly
by discriminating in video programming
distribution on the basis of the
complainant’s affiliation or nonaffiliation in the selection, terms, or
conditions for carriage of video
programming provided by The Tennis
Channel, in violation of Section
616(a)(3) of the Act and/or Section
76.1301(c) of the Commission’s Rules;
and
(b) In light of the evidence adduced
pursuant to the foregoing issue, to
determine whether Comcast should be
required to carry The Tennis Channel
on its cable systems on a specific tier or
to a specific number or percentage of
Comcast subscribers and, if so, the
price, terms, and conditions thereof;
and/or whether Comcast should be
required to implement such other
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carriage-related remedial measures as
are deemed appropriate; and
(c) In light of the evidence adduced
pursuant to the foregoing issues, to
determine whether a forfeiture should
be imposed on Comcast.
32. If the ALJ requires Comcast to
carry The Tennis Channel on its cable
systems on a specific tier or to a specific
number or percentage of subscribers, the
ALJ shall determine whether such
remedy would ‘‘require [Comcast] to
delete existing programming from its
system to accommodate carriage of ’’ The
Tennis Channel. 47 CFR 76.1302(g)(1). If
the ALJ determines that this remedy
would require Comcast to delete
existing programming, then this remedy
will be treated as Section 76.1302(g)(1)
treats ‘‘mandatory carriage,’’ thus
delaying the effectiveness of this
remedy unless and until the decision of
the ALJ is upheld by the Commission.
In that event, if the Commission
upholds the remedy ordered by the ALJ
in its entirety, Comcast will be required
to carry The Tennis Channel’s
programming for an additional period
equal to the time elapsed between the
ALJ’s decision and the Commission’s
ruling, on the terms and conditions
approved by the Commission.
33. It is further ordered, that pursuant
to Section 4(i) of the Communications
Act of 1934, as amended, 47 U.S.C.
154(i), The Tennis Channel and
Comcast Shall Each File with the Chief,
Enforcement Bureau and Chief ALJ, by
October 15, 2010, its respective
elections as to whether it wishes to
proceed to Alternative Dispute
Resolution. The hearing proceeding Is
Hereby Suspended during this time. If
one or both of the parties do not elect
ADR, then the hearing proceeding will
commence on October 18, 2010. If both
parties elect ADR, the hearing
proceeding will remain suspended, and
The Tennis Channel and Comcast shall
update the Chief, Enforcement Bureau
and Chief ALJ monthly on the status of
the ADR process. Such updates shall be
provided in writing and shall reference
the MB docket number and file number
assigned to this proceeding. If both
parties elect ADR but fail to reach a
settlement, the parties shall promptly
notify the Chief, Enforcement Bureau
and Chief ALJ in writing, and the
proceeding before the ALJ will
commence upon the receipt of such
notification by the Commission. If both
parties elect ADR and reach a
settlement, the parties shall promptly
notify the Chief, Enforcement Bureau,
Chief ALJ, and Chief, Media Bureau in
writing, and the hearing will be
terminated upon the Media Bureau’s
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order dismissing the complaint
becoming a final order.
34. It is further ordered that, pursuant
to Section 4(i) of the Communications
Act of 1934, as amended, 47 U.S.C.
154(i), in order to avail itself of the
opportunity to be heard, The Tennis
Channel and Comcast, in person or by
their attorneys, Shall Each File with the
Commission, by October 22, 2010, a
written appearance stating that it will
appear on the date fixed for hearing and
present evidence on the issues specified
herein, provided that, if both parties
elect ADR, each party shall file such
written appearance within five days
after notifying the Chief, Enforcement
Bureau and Chief ALJ that it has failed
to settle the dispute through ADR. In
light of the expedited basis of this
hearing proceeding, the deadline for
filing written appearances set forth in
Section 1.221(c) of the Commission’s
Rules, 47 CFR 1.221(c), is waived and
replaced with the deadlines set forth
above. In addition, Section 1.221(f) of
the Commission’s Rules, 47 CFR
1.221(f), provides that a ‘‘fee must
accompany each written appearance
filed with the Commission in certain
cases designated for hearing.’’ However,
neither the Act nor our rules specify a
fee for hearings involving program
carriage complaints. See 47 CFR 1.1104;
see also 47 U.S.C. 158. Accordingly,
neither The Tennis Channel nor
Comcast is required to pay a fee in
connection with the filing of their
respective appearances in this
proceeding.
35. It is further ordered that, if The
Tennis Channel fails to file a written
appearance by the deadline specified
above, or fails to file prior to the
deadline either a petition to dismiss the
above-captioned proceeding without
prejudice, or a petition to accept, for
good cause shown, a written appearance
beyond such deadline, the
Administrative Law Judge Shall Dismiss
the above-captioned proceeding with
prejudice for failure to prosecute.
36. It is further ordered that, if
Comcast fails to file a written
appearance by the deadline specified
above, or fails to file prior to the
deadline a petition to accept, for good
cause shown, a written appearance
beyond such deadline, its opportunity
to present evidence at hearing will be
deemed to have been waived. If the
hearing is so waived, the Presiding
Judge shall expeditiously terminate this
proceeding and certify to the
Commission the captioned complaint
for resolution based on the existing
record.
37. It is further ordered that in
addition to the resolution of the issues
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Fmt 4703
Sfmt 4703
(a) through (c) in paragraph 18 above,
the Presiding Judge shall also
determine, pursuant to Section 503(b) of
the Communications Act of 1934, as
amended, whether an Order for
Forfeiture shall be issued against
Comcast for each violation or each day
of a continuing violation, except that the
amount issued for any continuing
violation shall not exceed the amount
specified in Section 503(b)(2)(C), 47
U.S.C. 503(b)(2)(C), for any single act or
failure to act.
38. It is further ordered that for the
purposes of issuing a forfeiture, this
document constitutes notice, as required
by Section 503 of the Communications
Act of 1934, as amended, 47 U.S.C. 503.
39. It is further ordered that a copy of
this Order shall be sent by Certified
Mail—Return Receipt Requested and
regular first class mail to (i) The Tennis
Channel, 2850 Ocean Park Boulevard,
Suite 150, Santa Monica, CA 90405,
with a copy (including a copy via email) to Stephen A. Weiswasser, Esq.,
Covington and Burling LLP, 1201
Pennsylvania Avenue, NW.,
Washington, DC 20004–2401
(sweiswasser@cov.com); and (ii)
Comcast Cable Communications, LLC,
One Comcast Center, Philadelphia, PA
19103, with a copy (including a copy
via e-mail) to David P. Murray, Esq.,
Willkie Farr & Gallagher LLP, 1875 K
Street, NW., Washington, DC 20006
(dmurray@willkie.com).
40. It is further ordered that the Chief,
Enforcement Bureau, is made a party to
this proceeding without the need to file
a written appearance, and she shall have
the authority to determine the extent of
her participation therein.
41. It is further ordered that a copy of
this order or a summary thereof shall be
published in the Federal Register.
Federal Communications Commission.
Nancy Murphy,
Associate Chief, Media Bureau.
[FR Doc. 2010–26766 Filed 10–21–10; 8:45 am]
BILLING CODE 6712–01–P
FEDERAL DEPOSIT INSURANCE
CORPORATION
Sunshine Act Meeting
Pursuant to the provisions of the
‘‘Government in the Sunshine Act’’ (5
U.S.C. 552b), notice is hereby given that
the Federal Deposit Insurance
Corporation’s Board of Directors will
meet in open session at 10 a.m. on
Tuesday, October 19, 2010, to consider
the following matters:
Summary Agenda: No substantive
discussion of the following items is
E:\FR\FM\22OCN1.SGM
22OCN1
Agencies
[Federal Register Volume 75, Number 204 (Friday, October 22, 2010)]
[Notices]
[Pages 65323-65330]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-26766]
=======================================================================
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
[MB Docket No. 10-204; DA 10-1918]
The Tennis Channel, Inc. v. Comcast Cable Communications, LLC;
File No. CSR-8258-P
AGENCY: Federal Communications Commission.
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: This document designates a program carriage complaint for
hearing before an Administrative Law Judge (``ALJ'') to resolve the
factual disputes and to return an Initial Decision.
DATES: The Tennis Channel, Inc. (``The Tennis Channel'') and Comcast
Cable Communications, LLC (``Comcast'') shall each file with the Chief,
Enforcement Bureau and Chief ALJ, by October 15, 2010, its respective
elections as to whether it wishes to proceed to Alternative Dispute
Resolution (``ADR''). The hearing proceeding is suspended during this
time. If one or both of the parties do not elect ADR, then the hearing
proceeding will commence on October 18, 2010. In order to avail itself
of the opportunity to be heard, The Tennis Channel and Comcast, in
person or by their attorneys, shall each file with the Commission, by
October 22, 2010, a written appearance stating that it will appear on
the date fixed for hearing and present evidence on the issues specified
herein.
ADDRESSES: Federal Communications Commission, 445 12th Street, SW.,
Washington, DC 20554.
FOR FURTHER INFORMATION CONTACT: For additional information on this
proceeding, contact David Konczal, David.Konczal@fcc.gov, of the Media
Bureau, Policy Division, (202) 418-2120.
SUPPLEMENTARY INFORMATION: This is a summary of the Hearing Designation
Order and Notice of Opportunity for Hearing for Forfeiture, DA 10-1918,
adopted and released on October 5, 2010. The full text of this document
is available for public inspection and copying during regular business
hours in the FCC Reference Center, Federal Communications Commission,
445 12th Street, SW., CY-A257, Washington, DC 20554. This document will
also be available via ECFS (https://www.fcc.gov/cgb/ecfs/). (Documents
will be available electronically in ASCII, Word 97, and/or Adobe
Acrobat.) The complete text may be purchased from the Commission's copy
contractor, 445 12th Street, SW., Room CY-B402, Washington, DC 20554.
To request this document in accessible formats (computer diskettes,
large print, audio recording, and Braille), send an e-mail to
fcc504@fcc.gov or call the Commission's Consumer and Governmental
Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY).
Synopsis of the Order
I. Introduction
1. By this Hearing Designation Order and Notice of Opportunity for
Hearing for Forfeiture (``Order''), the Chief, Media Bureau
(``Bureau''), pursuant to delegated authority, hereby designates for
hearing before an ALJ the above-captioned program carriage complaint
filed by The Tennis Channel against Comcast. The complaint alleges that
Comcast, a vertically integrated multichannel video programming
distributor (``MVPD''), discriminated against The Tennis Channel, a
video programming vendor, on the basis of affiliation, with the effect
of unreasonably restraining The Tennis Channel's ability to compete
fairly, in violation of Section 616(a)(3) of the Communications Act of
1934, as amended (``the Act''), and Section 76.1301(c) of the
Commission's Rules. 47 U.S.C. 536(a)(3); 47 CFR 76.1301(c). The
complaint arises from Comcast's denial of The Tennis Channel's request
to be repositioned from a premium sports tier to a more broadly
distributed programming tier.
2. After reviewing The Tennis Channel's complaint, we find that The
Tennis Channel has put forth sufficient evidence supporting the
elements of its program carriage discrimination claim to establish a
prima facie case. Below,
[[Page 65324]]
we review the evidence from The Tennis Channel's complaint establishing
a prima facie case. We note that in the most recent program carriage
decisions making a prima facie determination, the Bureau provided a
detailed discussion of the defendant's counter-arguments to each of the
claims made by the complainant. See Herring Broadcasting Inc., d/b/a
WealthTV, et al., Memorandum Opinion and Hearing Designation Order, 73
FR 65312, 65313-18, Nov. 3, 2008 (``WealthTV HDO''); NFL Enters. LLC v.
Comcast Cable Communications, LLC, Memorandum Opinion and Hearing
Designation Order, 73 FR 65312, 65319-23, Nov. 3, 2008 (``NFL
Enterprises HDO''); TCR Sports Broadcasting Holding, LLP, d/b/a Mid-
Atlantic Sports Network v. Comcast Corp., Memorandum Opinion and
Hearing Designation Order, 73 FR 65312, 65323-27, Nov. 3, 2008 (``MASN
II HDO''). The Bureau did not follow this approach, however, in earlier
program carriage cases. See TCR Sports Broadcasting Holding, L.L.P. v.
Comcast Corp., Memorandum Opinion and Hearing Designation Order, 71 FR
47222, Aug. 16, 2006 (``MASN I HDO''); Classic Sports Network, Inc. v.
Cablevision Systems Corp., Memorandum Opinion and Hearing Designation
Order, 12 FCC Rcd 10288 (CSB 1997) (``Classic Sports''). We believe the
approach taken in MASN I HDO and Classic Sports is more appropriate for
a prima facie determination, which requires the Bureau to assess the
evidence set forth in the complaint. Moreover, providing a detailed
discussion of the defendant's counter-arguments to each of the claims
made by the complainant may incorrectly imply that the Bureau is taking
a position on the merits of those arguments. While we do not summarize
each of Comcast's counter-arguments below, our review of the existing
record, including Comcast's Answer, makes clear that there are
substantial and material questions of fact as to whether Comcast has
engaged in conduct that violates the program carriage provisions of the
Act and the Commission's rules.
3. While we rule on a threshold procedural issue regarding
application of the program carriage statute of limitations, we do not
reach the merits on any of the other issues discussed below. Rather,
the existing record, including Comcast's Answer, makes clear that there
are substantial and material questions of fact as to whether Comcast
has engaged in conduct that violates the program carriage provisions of
the Act and the Commission's rules. We therefore initiate this hearing
proceeding. We direct the Presiding Judge to develop a full and
complete record and to conduct a de novo examination of all relevant
evidence in order to make an Initial Decision.
4. As set forth below, the following matters are not designated for
the ALJ to resolve: (i) Whether The Tennis Channel has put forth
evidence in its complaint sufficient to warrant designation of this
matter for hearing; and (ii) whether The Tennis Channel's complaint was
filed in accordance with the program carriage statute of limitations.
As required by the Commission's Rules, to the extent Comcast seeks
Commission review of our decision on these issues, such review, if any,
shall be deferred until exceptions to the Initial Decision in this
proceeding are filed. See 47 CFR 1.115(e)(3).
II. Background
5. Section 616(a)(3) of the Act directs the Commission to establish
rules governing program carriage agreements and related practices
between cable operators or other MVPDs and video programming vendors
that, among other things: ``prevent [an MVPD] from engaging in conduct
the effect of which is to unreasonably restrain the ability of an
unaffiliated video programming vendor to compete fairly by
discriminating in video programming distribution on the basis of
affiliation or nonaffiliation of vendors in the selection, terms, or
conditions for carriage of video programming provided by such
vendors.'' 47 U.S.C. 536(a)(3). In implementing this statutory
provision, the Commission adopted Section 76.1301(c) of its rules,
which closely tracks the language of Section 616(a)(3). See 47 CFR
76.1301(c). The Commission has established specific procedures for the
review of program carriage complaints. See 47 CFR 76.1302.
6. While those procedures provide for resolution on the basis of a
complaint, answer, and reply, the Commission expected that, in most
cases, it would be unable to resolve carriage complaints solely on the
basis of a written record. Program Carriage Second Report and Order, 58
FR 60390, Nov. 16, 1993. Rather, it anticipated that the majority of
complaints would require a hearing before an ALJ, given that alleged
Section 616 violations typically involve contested facts and behavior
related to program carriage negotiations. In such cases, where the
complainant is found to have established a prima facie case but
disposition of the complaint requires the resolution of factual
disputes or extensive discovery, the parties can elect either ADR or an
adjudicatory hearing before an ALJ. Pursuant to Section 76.7(g)(1) of
the Commission's Rules, the Commission may refer to an ALJ entire
proceedings or discrete issues arising from proceedings. See 47 CFR
76.7(g)(1); see also 1998 Biennial Regulatory Review, 64 FR 6565, Feb.
10, 1999. If the parties proceed to a hearing before an ALJ, the ALJ's
Initial Decision is directly appealable to the Commission. 47 CFR
1.276. The appropriate relief for violation of the program carriage
provisions is determined on a case-by-case basis. Available sanctions
and remedies include forfeiture and/or mandatory carriage and/or
carriage on terms revised or specified by the Commission. For the
purpose of our prima facie determination, we discuss below the factual
bases for The Tennis Channel's claim of program carriage
discrimination.
7. The Tennis Channel is a national cable sports network that
launched in May 2003 with a broad range of racquet-sport-related
programming. The Tennis Channel is a video programming vendor as
defined in Section 76.1300(e) of the Commission's Rules. See 47 CFR
76.1300(e). The Tennis Channel states that, to foster its growth, it
offered preferential terms to distributors, like Comcast, that agreed
to carry the network before it had become well-established. The Tennis
Channel asserts that, since its launch on Comcast systems, it has
become the ``leading provider of 24/7 tennis programming'' and ``the
only cable network in the nation dedicated to covering the sport.''
According to the network, in 2008, it offered more than 2,700 hours of
worldwide event coverage, including major coverage of three of the four
Grand Slam events--the Australian Open, the French Open, and Wimbledon.
The Tennis Channel states that in 2009 it added the fourth Grand Slam
event, the U.S. Open, to its programming, as well as other event
coverage such as exclusive telecasts of every worldwide and U.S. Davis
Cup and Fed Cup match. In addition to coverage of more than 70 top
tennis tournaments worldwide, The Tennis Channel offers non-event
content, including original lifestyle, instructional, and fitness
series, specials, and short-form programs featuring the sport's most
popular figures.
8. Comcast is a multiple system cable operator with approximately
24 million subscribers nationwide. Comcast is a multichannel video
programming distributor, as defined in Section 76.1300(d) of the
Commission's Rules. See 47 CFR 76.1300(d). Comcast serves customers in
39 States and the District
[[Page 65325]]
of Columbia, and in 24 of the top 30 designated market areas
(``DMAs''). A DMA is a local television market area designated by The
Nielsen Company (formerly, Nielsen Media Research). There are 210 DMAs
in the United States. In addition to its role as a programming
distributor, Comcast is a programming supplier by virtue of its
affiliation with several cable networks. Among other interests,
Comcast's parent company holds a financial stake in the Golf Channel,
the MLB Network, the NHL Network, NBA TV, and a variety of other
national cable programming networks. Comcast's parent company also owns
Versus, a national sports network that provides programming coverage of
multiple sports, as well as a number of regional sports networks
(``RSNs''). In general, Comcast carries the Golf Channel, Versus, and
its affiliated RSNs on its widely distributed Expanded Basic/Digital
Starter tier.
9. In 2005, The Tennis Channel executed an affiliation agreement
with Comcast that provided for carriage of the network on Comcast
systems nationwide. The agreement did not specify the tier on which
Comcast would carry the network. With limited exceptions, Comcast has
carried The Tennis Channel on a premium sports tier, the ``Sports and
Entertainment Package'' (``SEP''), since the parties executed their
carriage agreement. A few Comcast systems initially launched The Tennis
Channel on a digital basic tier, but relocated the network to the
premium sports tier. Comcast currently carries The Tennis Channel on
the premium sports tier in all of its systems nationwide except one.
10. The Tennis Channel states that in early 2009, after it
concluded strategic efforts to enhance the quality of its technical
service and programming content, it proposed that Comcast reposition
the network to a level of carriage that The Tennis Channel believed was
justified given the network's expansion and service improvements.
Following discussions between the parties in the spring of 2009,
Comcast informed The Tennis Channel in June 2009 that it would not
relocate the network to a more widely distributed programming tier. The
Tennis Channel asserts that during the course of those discussions,
Comcast indicated that it would retier The Tennis Channel only if the
network offered a financial ``incentive'' to do so. Comcast states that
it decided to keep The Tennis Channel on a sports tier because (i)
increasing the network's distribution would increase Comcast's costs;
(ii) no Comcast system expressed an interest in repositioning the
network; and (iii) there was no indication of subscriber defections to
another MVPD that carried the network more widely. Comcast states that
it informed The Tennis Channel that it could attempt to seek broader
distribution with individual Comcast systems on a market-by-market
basis. Consequently, in December 2009, The Tennis Channel notified
Comcast of its intention to file a program carriage complaint with the
Commission, and brought its complaint shortly thereafter. Pursuant to
Section 76.1302(b) of the Commission's Rules, The Tennis Channel
provided its pre-filing notification to Comcast on December 10, 2009.
The Tennis Channel filed its program carriage complaint with the
Commission on January 5, 2010.
III. Discussion
11. Based on our review of the complaint and as explained more
fully below, we conclude that The Tennis Channel has established a
prima facie case of program carriage discrimination pursuant to Section
616(a)(3) of the Act and Section 76.1301(c) of the Commission's Rules.
47 U.S.C. 536(a)(3); 47 CFR 76.1301(c). When filing a program carriage
complaint, the video programming vendor carries the burden of proof to
establish a prima facie case that the defendant MVPD has engaged in
behavior prohibited by Section 616 and the Commission's implementing
rules. In previous cases assessing whether a complainant has
established a prima facie case of program carriage discrimination, the
Bureau has considered whether the complaint contains sufficient
evidence to support the elements of a program carriage discrimination
claim: (i) The complainant is a video programming vendor as defined in
Section 76.1300(e) of the Commission's Rules; (ii) the defendant is an
MVPD as defined in Section 76.1300(d) of the Commission's Rules; (iii)
the complainant programmer is similarly situated to a programmer
affiliated with the defendant MVPD; (iv) the defendant MVPD has treated
the complainant programmer differently from its similarly situated,
affiliated programmer with respect to the selection, terms, or
conditions for carriage; and (v) the defendant MVPD's discriminatory
conduct has the effect of unreasonably restraining the ability of the
complainant programmer to compete fairly. See 47 CFR 76.1302(c);
WealthTV HDO, 73 FR 65312, 65312-18, Nov. 3, 2008; NFL Enterprises HDO,
73 FR 65312, 65318-23, Nov. 3, 2008; MASN II HDO, 73 FR 65312, 65323-
29, Nov. 3, 2008; MASN I HDO, 71 FR 47222, Aug. 16, 2006; Hutchens
Communications, Inc. v. TCI Cablevision of Georgia, Inc., Memorandum
Opinion and Order, 9 FCC Rcd 4849, para. 27 (CSB 1994); see also
Program Carriage Second Report and Order, 58 FR 60390, Nov. 16, 1993.
12. With regard to the first and second factors above, the parties
agree that Comcast is an MVPD and that The Tennis Channel is a video
programming vendor as defined in the Commission's Rules. For purposes
of the third factor, Comcast admits that it is affiliated with the Golf
Channel and Versus. With respect to the remaining factors, we conclude
that The Tennis Channel has put forth sufficient evidence in its
complaint to establish a prima facie case that Comcast has engaged in
unlawful discrimination in the ``selection of * * * video programming''
by declining to reposition the network to a more widely distributed
programming tier, while carrying comparable affiliated networks on such
a tier. 47 U.S.C. 536(a)(3). (As discussed below, The Tennis Channel
does not contend that its existing affiliation agreement with Comcast
contains discriminatory ``terms'' or ``conditions.'' The Tennis Channel
claims that Comcast has impermissibly discriminated in its
``selection'' of The Tennis Channel for placement on a sports tier
while selecting its affiliated networks for placement on a more widely
distributed programming tier. See NFL Enterprises HDO, 73 FR 65312,
65318-23, Nov. 3, 2008 (program carriage complaint alleging that
defendant impermissibly discriminated by selecting complainant for
placement on sports tier while selecting affiliated networks for
placement on a more widely distributed programming tier).) We do not
reach the merits of this claim. Rather, we find that the existing
record, including Comcast's Answer, makes clear that there are
significant and material questions of fact warranting resolution at
hearing. Because we are not ruling on the merits of The Tennis
Channel's claims at this prima facie stage, we find it premature to
address Comcast's arguments regarding the need to interpret Section
616(a)(3) of the Act and Section 76.1301(c) of the Commission's Rules
narrowly to protect Comcast's First Amendment rights.
A. Procedural Issues
13. As a threshold matter, we reject Comcast's contention that The
Tennis Channel's complaint is foreclosed as untimely filed under the
program carriage statute of limitations. Pursuant to Section 76.1302(f)
of the Commission's Rules, an aggrieved programmer has a one-year
period in
[[Page 65326]]
which to file a program carriage complaint that commences upon the
occurrence of one of three specified events. 47 CFR 76.1302(f). We find
that the third of those triggering events--the provision of an
aggrieved programmer's pre-filing notification pursuant to Section
76.1302(b) of the Commission's Rules--is present in this case. See 47
CFR 76.1302(f)(3). (We agree with Comcast that the limitations period
in Section 76.1302(f)(2) of the Commission's Rules, which governs
carriage offers unrelated to existing affiliation agreements, is
inapplicable in this case.) Contrary to Comcast's assertions, nothing
in the text of Section 76.1302(f)(3) limits the applicability of that
provision to situations where the defendant ``unreasonably refuses to
negotiate with [the] complainant.'' While Comcast notes that the rule
now found at Section 76.1302(f)(3) formerly contained language limiting
its applicability to refusals to negotiate, the Commission eliminated
this language in 1994. See Program Carriage Second Report and Order, 58
FR 60390, Nov. 16, 1993; Program Carriage Memorandum Opinion and Order,
59 FR 43776, Aug. 25, 1994. Although Comcast contends that this
language was eliminated to accommodate program carriage complaints
filed by MVPDs and was not intended to otherwise alter the intent of
this provision, the plain language of the rule allows a program
carriage complaint to be filed within one year of the pre-filing
notice, provided that the claim is not otherwise barred by one of the
other two triggering events. WealthTV HDO, 73 FR 65312, 65316, Nov. 3,
2008 (``the plain language of the Commission's rules provides that the
statute of limitations is satisfied if the program carriage complaint
is filed within one year of the pre-filing notice''). On its face,
Section 76.1302(f)(3) arguably could be read to allow a complainant to
file a program carriage complaint based on allegedly unlawful conduct
that occurred years before the filing of the pre-filing notice provided
the complaint was filed within one year of the pre-filing notice. We
are not presented with such a case here. Comcast informed The Tennis
Channel in June 2009 that it would not relocate the network to a more
widely distributed programming tier. While Comcast states that it
invited The Tennis Channel to seek broader distribution with individual
Comcast systems on a market-by-market basis, it is undisputed that in
June 2009 Comcast rejected The Tennis Channel's proposal that it be
moved to a more widely distributed tier across Comcast's entire
subscriber base. The Tennis Channel filed its program carriage
complaint within one year of this allegedly discriminatory refusal to
retier the Tennis Channel, as well as within one year of its pre-filing
notice. Accordingly, we conclude that the complaint was timely filed
pursuant to Section 76.1302(f)(3) of the Commission's Rules.
(Similarly, in both NFL Enterprises HDO and MASN II HDO, the
complainant filed its complaint within one year of the pre-filing
notice as well as within one year of the alleged discriminatory act.)
14. We disagree with Comcast that The Tennis Channel's complaint is
barred by Section 76.1302(f)(1) of the rules, which establishes a one-
year period for the filing of a program carriage complaint that
commences with the ``[execution of] a contract with [an MVPD] that a
party alleges to violate one or more of the [program carriage] rules.''
47 CFR 76.1302(f)(1). The timeliness of The Tennis Channel's complaint
is not an issue designated for resolution by the Presiding Judge. As
required by the Commission's Rules, to the extent Comcast seeks
Commission review of our decision on this issue, such review, if any,
shall be deferred until exceptions to the Initial Decision in this
proceeding are filed. See 47 CFR 1.115(e)(3).
15. Although the parties executed their existing carriage agreement
in 2005, The Tennis Channel does not claim that this agreement contains
unlawfully discriminatory prices, terms, or conditions. Nor do the
parties dispute that Comcast has abided by the explicit terms of the
2005 agreement. The agreement at issue did not otherwise specify the
tier on which Comcast would carry the network. Comcast thus has the
discretion to carry The Tennis Channel to a greater number of
subscribers than specified in the contract and on a more widely
distributed tier than the premium sports tier on which Comcast
currently carries The Tennis Channel. The gravamen of The Tennis
Channel's complaint is that Comcast has refused to exercise its
discretion to do so, while at the same time carrying its allegedly
similar affiliated networks on a more widely distributed tier, and has
thus failed to meet its obligation under Section 616(a)(3) of the Act
and Section 76.1301(c) of the Commission's Rules to avoid
discrimination on the basis of affiliation. It is this refusal, not the
terms of the contract, which forms the basis for The Tennis Channel's
complaint. As discussed above, The Tennis Channel establishes that this
refusal to retier occurred in June 2009. The Tennis Channel filed its
complaint within one year of this date, as well as within one year of
the pre-filing notice.
16. This interpretation is consistent with Bureau precedent
defining the scope of the Commission's program carriage statute of
limitations at the prima facie stage of review. See NFL Enterprises
HDO, 73 FR 65312, 65320, Nov. 3, 2008 (prima facie determination); MASN
II HDO, 73 FR 65312, 65324-25, Nov. 3, 2008 (prima facie
determination). We note that both of these cases were settled before a
decision on the merits by an ALJ or the Commission. While Comcast
claims that these cases were wrongly decided, we disagree and find no
reason to ignore or reverse this precedent. In NFL Enterprises HDO, the
contract at issue provided that the defendant had the contractual right
to move the complainant to a premium sports tier if certain events
occurred. After those events occurred, the defendant exercised this
contractual right. The complainant filed a program carriage complaint
alleging that the defendant's exercise of its contractual right to move
the complainant to a premium sports tier, while at the same time
carrying allegedly similar affiliated networks on a more widely
distributed tier, was impermissibly discriminatory under Section
616(a)(3) of the Act and Section 76.1301(c) of the Commission's Rules.
The complaint was filed within one year of the date of the retiering
but more than one-year from the date the contract was executed. The
Bureau rejected claims that the basis for the dispute was the contract
and that the complaint should have been filed within one year from the
date the contract was executed. The Bureau explained that the alleged
act of discrimination that formed the basis for the complaint was the
act of moving the complainant to a premium sports tier, not the terms
of the contract. As The Tennis Channel did in this case, the complaint
was filed within one year of the allegedly discriminatory act and
within one year of the pre-filing notice. Thus, the Bureau held that
the complaint was filed in accordance with the statute of limitations
in Section 76.1302(f)(3).
17. In MASN II HDO, the contract at issue provided that the
defendant would carry the complainant on certain specified systems but
left it to the defendant's future discretion to choose to carry the
complainant on systems not specified in the contract. After
negotiations regarding carriage of the complainant on systems not
specified in the contract reached an impasse, the complainant filed its
program carriage complaint. The complainant alleged that
[[Page 65327]]
the defendant's refusal to exercise its discretion to carry the
complainant on systems not specified in the contract, while at the same
time carrying allegedly similar affiliated networks on those systems,
was impermissibly discriminatory under Section 616(a)(3) of the Act and
Section 76.1301(c) of the Commission's Rules. The complaint was filed
within one year of the date when negotiations regarding carriage of the
complainant on systems not specified in the contract reached an
impasse, but more than one-year from the date the contract was
executed. The Bureau rejected claims that the basis for the dispute was
the contract and that the complaint should have been filed within one
year from the date the contract was executed. The Bureau explained that
the alleged act of discrimination that formed the basis for the
complaint was the defendant's refusal to exercise its discretion to
carry the complainant on systems not specified in the contract, not the
terms of the contract. As The Tennis Channel did in this case, the
complaint was filed within one year of the date of the allegedly
discriminatory refusal to carry the complainant on systems not
specified in the contract and within one year of the pre-filing notice.
Thus, the Bureau held that the complaint was filed in accordance with
the statute of limitations in Section 76.1302(f)(3).
18. As NFL Enterprises HDO and MASN II HDO demonstrate, Bureau
precedent establishes that a complainant may have a timely program
carriage claim in the middle of a contract term if the basis for the
claim is an allegedly discriminatory decision made by the MVPD, such as
tier placement, that the contract left to the MVPD's discretion. The
exercise of such discretion is subject to the MVPD's obligations under
the program carriage statute, which prohibits an MVPD from
``discriminating in video programming distribution on the basis of
affiliation or nonaffiliation of vendors in the selection, terms, or
conditions for carriage * * *.'' 47 U.S.C. 536(a)(3). Comcast claims
that such an interpretation would create uncertainty and ``open the
floodgates to program carriage cases'' because parties could bring
complaints at any time, regardless of the existence of a non-
discriminatory agreement, based on a demand to renegotiate the terms of
the contract. We disagree because neither this case, nor the previous
NFL Enterprises HDO and MASN II HDO cases, involves a request to
renegotiate a term in an existing contract. Rather, all of these cases
involve contracts which left a carriage decision to the defendant's
discretion, and the gravamen of the complaints is whether the
defendant's exercise of such discretion was consistent with its
obligations under Section 616(a)(3) of the Act and Section 76.1301(c)
of the Commission's Rules. Moreover, we note that the present case is
the only program carriage complaint filed in the two years since the
Bureau adopted NFL Enterprises HDO and MASN II HDO, thus refuting
Comcast's claim that this interpretation of the statute of limitations
will ``open the floodgates to program carriage cases.''
19. As the Bureau explained in NFL Enterprises HDO, ``[w]hether or
not Comcast had the right to [make a tiering decision] pursuant to a
private agreement is not relevant to the issue of whether doing so
violated Section 616 of the Act and the program carriage rules. Parties
to a contract cannot insulate themselves from enforcement of the Act or
our rules by agreeing to acts that violate the Act or rules.'' See NFL
Enterprises HDO, 73 FR 65312, 65320, Nov. 3, 2008. Subsequent to the
Bureau's decision in NFL Enterprises HDO, the Chief ALJ supported this
view in denying a motion for a ruling on judicial estoppel and laches
issues. See NFL Enterprises LLC v. Comcast Cable Communications, LLC,
Memorandum Opinion and Order, FCC 09M-36 (Chief ALJ 2009), at para. 3
(denying motion that program carriage case should be dismissed because
complainant was also pursuing a contract-based claim in state court,
explaining that ``NFL Enterprises seeks to vindicate its alleged
private contractual rights in the New York litigation and its alleged
federal and regulatory rights in this case * * *. The statutory and
regulation issues in this case are separate and distinct from the
contractual issues in the New York action.''). As in NFL Enterprises
HDO and MASN II HDO, we designate the present case for a hearing to
determine whether Comcast exercised its discretion consistent with its
obligations under the program carriage statute and rules when it
declined to tier The Tennis Channel on a more widely distributed tier.
20. Under Comcast's interpretation of the program carriage statute
of limitations, a programmer would be forever barred from bringing a
discrimination claim unless the claim is brought within one year from
the date the contract was executed. While Comcast notes that such an
interpretation would provide certainty to MVPDs, it would also preclude
programmers from bringing legitimate claims regarding allegedly
discriminatory actions occurring more than one year after a contract
was executed. Tennis Channel explains that fledgling networks often
enter into contracts that provide the MVPD with tiering flexibility
that allows the MVPD to increase the network's distribution as it
develops. Under Comcast's interpretation, a programmer would be
precluded from bringing a program carriage discrimination claim after
the first year of the contract even if the MVPD refuses to provide the
programmer with increased distribution in order to favor its own
affiliated network.
21. Despite Comcast's claims to the contrary, this precedent is
consistent with the decision of the Cable Services Bureau in EchoStar
dismissing a program access case on procedural grounds. See EchoStar
Communications Corp. v. Fox/Liberty Networks, LLC, 13 FCC Rcd 21841
(CSB 1998), recon. denied, EchoStar Communications Corp. v. Fox/Liberty
Networks, LLC, 14 FCC Rcd 10480 (CSB 1999). The contract at issue in
EchoStar specified the rate the complainant would pay for the
defendant's programming. Over one year after the parties entered into
the contract, however, the complainant sought to renegotiate the rate
set forth in the contract. The Bureau found that the complaint was
barred by the applicable statute of limitations, which requires that
program access complaints be brought within one year of the date of
execution of an affiliation agreement that allegedly violates the
Commission's program access requirements. Thus, unlike the present case
where the contract at issue does not specify the tier on which Comcast
will carry The Tennis Channel and instead leaves tier placement to
Comcast's discretion, EchoStar involved a complainant's attempt to
renegotiate a rate set forth in the contract more than one year after
the contract's execution date. Here, The Tennis Channel's complaint
does not relate to any of the specific rates, terms, or conditions set
forth in the parties' contract, but rather, Comcast's allegedly
discriminatory tiering decision that occurred subsequent to the
contract's execution. Citing EchoStar, the Commission later explained
that ``an offer to amend an existing contract that has been in effect
for more than one year does not reopen the existing contract to
complaints that the provisions thereof are discriminatory.'' 1998
Biennial Regulatory Review, 64 FR 6565, Feb. 10, 1999. As discussed
above, The Tennis Channel does not allege that the contract at issue
contains discriminatory provisions and does not seek to amend its
contract.
[[Page 65328]]
B. Discrimination Claim
1. Similarly Situated
22. We find that The Tennis Channel has provided evidence
sufficient to demonstrate for the purpose of establishing a prima facie
case of program carriage discrimination that it is similarly situated
with Comcast-affiliated networks--the Golf Channel and Versus. (Comcast
disputes that The Tennis Channel is similarly situated to the Golf
Channel and Versus.) The Tennis Channel asserts that the relevant
programming services are all nationally distributed sports television
networks that generally compete in the same markets and have similar
levels of viewer popularity. In particular, The Tennis Channel claims
that it competes with Versus and the Golf Channel for the same viewers,
advertisers, and programming. In support of its contention, The Tennis
Channel points to the results of a survey purporting to show that the
three networks attract affluent viewers that are predominantly male. In
particular, the survey results indicate that the median household
income for viewers of The Tennis Channel, Golf Channel, and Versus are
$82,754, $71,786, and $65,353, respectively. Of viewer households with
incomes above $100,000, the median income for The Tennis Channel and
Golf Channel viewers is $148,700 and $144,500, respectively, which
places those two networks in the top ten networks for median income
among these affluent households. The survey results indicate that
nearly 60 percent of The Tennis Channel viewers are male, and
approximately 70 percent of Golf Channel and Versus viewers are male.
With regard to competition for advertisers, The Tennis Channel has put
forth evidence indicating that almost half of Versus's revenue from its
top 30 advertisers derives from companies that either have purchased
advertising on The Tennis Channel, or have evaluated formal proposals
from The Tennis Channel during one of the past four ``up front''
periods in which advertisers solicit such proposals. Similarly, The
Tennis Channel claims that 68 percent of the revenue that the Golf
Channel earns from its top 30 advertisers originates from companies
that have purchased advertising on The Tennis Channel or from companies
that evaluated The Tennis Channel proposals during one of the past four
``up front'' periods. The Tennis Channel further asserts that it
competes with Versus for tennis programming, and has shared rights to
tennis tournaments with Versus.
23. In addition, The Tennis Channel has submitted evidence
demonstrating that The Tennis Channel's ratings in its coverage area
are generally comparable to those of both the Golf Channel and Versus.
With regard to the ``value proposition'' of The Tennis Channel (i.e.,
the rate charged by the network relative to the popularity of the
network's programming), the network claims that it compares favorably
to both Versus and the Golf Channel. The Tennis Channel asserts that,
according to published data, the ratio between the license fee charged
for the Golf Channel and its average all-day rating--the ``price per
point'' of the network--is $3.13, and that Versus's price per point is
$2.75. Although national ratings for The Tennis Channel are unavailable
due to the network's limited distribution, The Tennis Channel claims
that its average all-day household rating for the first nine months of
2009, in the local markets where it is rated, made its price per point
approximately $1.46.
24. Similarly, The Tennis Channel contends that it surpasses Versus
and the Golf Channel in terms of the quantity of event coverage and
level of viewer engagement or participation in the covered sporting
events. The Tennis Channel maintains that, in 2008, it offered more
than 2,700 hours of worldwide event coverage, the vast majority of
which was composed of exclusive events within the United States. By
comparison, the Golf Channel and Versus offered only 2,400 and 1,350
hours of event coverage, respectively, that year. The Tennis Channel
further asserts that it holds exclusive rights to telecast significant
portions of all four of the major events in its field, the Grand Slams,
and covers the world's top 70 tennis tournaments. By contrast, The
Tennis Channel maintains, the Golf Channel does not offer live or
first-run coverage of the most significant events in its field, the
Majors. In addition, The Tennis Channel claims that ice hockey and the
Tour de France comprise Versus's most popular programming, and that
Versus covers only two games in the ice hockey championship series, the
Stanley Cup Finals. The Tennis Channel puts forth the results of a
recent study by an industry trade association indicating that tennis is
``the fastest-growing sport in the country.'' The study purports to
show that participation in tennis grew 43 percent between 2000 and
2008. Conversely, the study indicates that participation in golf
dropped one percent, and participation in ice hockey, Versus's
principally featured sport, declined 22 percent during the same period.
2. Differential Treatment
25. We also find that The Tennis Channel has put forth evidence
sufficient to demonstrate for the purpose of establishing a prima facie
case of program carriage discrimination that Comcast has treated The
Tennis Channel differently ``on the basis of affiliation or
nonaffiliation'' from Comcast's similarly situated, affiliated
networks. (Comcast argues that its differential treatment of The Tennis
Channel is justified by various legitimate and non-discriminatory
reasons.) Comcast distributes Versus and the Golf Channel to virtually
all of its subscribers on a comparatively inexpensive, widely
distributed programming tier, and such subscribers need not pay an
additional fee to receive those programming networks. By contrast,
Comcast customers wishing to receive The Tennis Channel must subscribe
to a premium tier and pay a monthly fee for the programming, in
addition to fees they must pay to purchase an entry-level package of
digital cable programming and acquire a digital cable box. According to
The Tennis Channel, customers that subscribe to Comcast's SEP must pay
approximately five dollars each month in addition to the fees they must
pay for digital cable service. The SEP also includes other sports
programming services. In Washington, DC, for example, this premium tier
includes the Big Ten Network, Horse Racing Television, TV Games, the
Fox College Sports regional channel, Fox Soccer Channel, GolTV, Speed
Channel, NFL Red Zone, and CBS College Sports. According to The Tennis
Channel, approximately ten percent of Comcast's customers subscribe to
the SEP. The Tennis Channel claims that Comcast carries all of its
affiliated programmers on broadly penetrated tiers, whereas Comcast's
premium sports tier is occupied only by unaffiliated networks. The
Tennis Channel has also provided evidence that Comcast affords more
favorable channel positioning to sports networks with which it is
affiliated. For example, in Washington, DC, Comcast carries Versus and
the Golf Channel on low-numbered channels that are adjacent to EPSN and
ESPN2, two popular sports programming networks. The Tennis Channel,
however, is located at channel 735, adjacent to other networks that
comprise Comcast's SEP.
3. Harm to Ability To Compete Fairly
26. The Tennis Channel has put forth evidence sufficient to
demonstrate for the purpose of establishing a prima facie case of
program carriage discrimination
[[Page 65329]]
that Comcast's unwillingness to distribute the network more broadly and
its disparate treatment of the network has unreasonably restrained The
Tennis Channel's ability to compete fairly. (Comcast disputes that The
Tennis Channel has been unreasonably restrained in its ability to
compete fairly.) The Tennis Channel claims that Comcast's failure to
carry the network at the same level offered to Versus and the Golf
Channel has impaired the network's overall distribution and
subscription fee revenue, thereby depriving The Tennis Channel of
license fees that can be used to improve the network. Because Comcast
is the dominant cable operator in seven of the ten largest television
markets, The Tennis Channel asserts that its refusal to expand The
Tennis Channel's distribution is particularly detrimental to the
network. Moreover, The Tennis Channel contends that the smaller
viewership of Comcast's premium sports tier reduces the value of
advertising on networks carried on that tier. The Tennis Channel claims
that many national advertisers use a threshold number of subscribers,
e.g., 40 million subscribers, as a benchmark for assessing whether a
network will be considered a viable competitor for national advertising
purchases. Thus, The Tennis Channel asserts, networks with a
distribution level below that threshold experience more difficulty
attracting national advertisers. Indeed, The Tennis Channel claims that
top cable advertisers have excluded the network as a competitor for
national advertising contracts due to its narrow distribution. By
contrast, The Tennis Channel claims, some of those national advertisers
have expended significant resources to place ads on both the Golf
Channel and Versus.
27. In addition, The Tennis Channel asserts that Comcast's
disparate treatment has impaired the network's ability to compete for
programming, and points to several examples where the network either
failed to win programming rights or was forced to make concessions in
order to obtain such rights. Finally, The Tennis Channel claims that
Comcast's refusal to expand its distribution has deprived the network
of economies of scale. The Tennis Channel points out that, because a
cable network's expenses are fixed irrespective of the number of
subscribers, broader distribution of the network increases revenues
without increasing costs. Thus, it claims, the operating costs are
substantially less for a widely distributed network than for one whose
distribution is more limited. As a consequence of its inability to
realize economies of scale, The Tennis Channel asserts that it has been
forced to limit marketing, production, and programming expenses, and
was unable to renew agreements for certain smaller tournaments in 2010.
4. Referral to ALJ or ADR
28. Based on the foregoing, we find it appropriate to designate the
captioned complaint on the issues specified below for a hearing before
an ALJ. The question of whether The Tennis Channel has put forth
evidence sufficient to warrant designation of this matter for hearing
is not an issue before the Presiding Judge. As required by the
Commission's Rules, to the extent Comcast seeks Commission review of
our decision on this issue, such review, if any, shall be deferred
until exceptions to the Initial Decision in this proceeding are filed.
See 47 CFR 1.115(e)(3). Despite our prima facie determination, the
Presiding Judge will conduct a de novo examination of all relevant
evidence after developing a full and complete record. Pursuant to
Section 76.7(g)(2) of the Commission's Rules, each party will have ten
days following release of this Order to notify the Chief, Enforcement
Bureau and Chief ALJ, in writing, of its election to resolve this
dispute through ADR. The hearing proceeding will be suspended during
this ten-day period. In the event that both parties elect ADR, the
hearing proceeding will remain suspended, and the parties shall update
the Chief, Enforcement Bureau and Chief ALJ monthly, in writing, on the
status of the ADR process. If both parties elect ADR but fail to reach
a settlement, the parties shall promptly notify the Chief, Enforcement
Bureau and Chief ALJ in writing, and the proceeding before the ALJ will
commence upon the receipt of such notification. If both parties elect
ADR and reach a settlement, the parties shall promptly notify the
Chief, Enforcement Bureau, Chief ALJ, and Chief, Media Bureau in
writing, and the hearing designation will be terminated upon the Media
Bureau's order dismissing the complaint becoming a final order. If one
or both parties do not elect ADR, then the hearing proceeding will
commence the day after the ten-day period has lapsed.
29. Notwithstanding our determination that The Tennis Channel has
made out a prima facie case of program carriage discrimination by
Comcast, we direct the Presiding Judge to develop a full and complete
record in the instant hearing proceeding and to conduct a de novo
examination of all relevant evidence in order to make an Initial
Decision on each of the outstanding factual and legal issues. In
addition, we direct the Presiding Judge to make all reasonable efforts
to issue his Initial Decision on an expedited basis. In furtherance of
this goal, we encourage the Presiding Judge to place limitations on the
discovery tools available to the parties.
30. Pursuant to Section 76.10(c)(2) of the Commission's Rules, a
party aggrieved by the ALJ's decision on the merits may appeal such
decision directly to the Commission in accordance with Sections
1.276(a) and 1.277(a) through (c) of the Commission's Rules. 47 CFR
76.10(c)(2). Unless the Commission grants a stay of the ALJ's decision,
such decision will become effective upon release and will remain in
effect pending appeal. However, if the ALJ's decision would require a
defendant MVPD to delete existing programming from its system to
accommodate carriage, the order for carriage will not become effective
unless and until the decision of the ALJ is upheld by the Commission.
47 CFR 76.1302(g)(1).
IV. Ordering Clauses
31. Accordingly, it is ordered, that pursuant to Section 409(a) of
the Communications Act of 1934, as amended, 47 U.S.C. 409(a), and
Sections 76.7(g) and 1.221 of the Commission's Rules, 47 CFR 76.7(g),
1.221, the captioned program carriage complaint filed by The Tennis
Channel, Inc. against Comcast Cable Communications, LLC, is Designated
For Hearing at a date and place to be specified in a subsequent order
by an Administrative Law Judge upon the following issues:
(a) To determine whether Comcast has engaged in conduct the effect
of which is to unreasonably restrain the ability of The Tennis Channel
to compete fairly by discriminating in video programming distribution
on the basis of the complainant's affiliation or non-affiliation in the
selection, terms, or conditions for carriage of video programming
provided by The Tennis Channel, in violation of Section 616(a)(3) of
the Act and/or Section 76.1301(c) of the Commission's Rules; and
(b) In light of the evidence adduced pursuant to the foregoing
issue, to determine whether Comcast should be required to carry The
Tennis Channel on its cable systems on a specific tier or to a specific
number or percentage of Comcast subscribers and, if so, the price,
terms, and conditions thereof; and/or whether Comcast should be
required to implement such other
[[Page 65330]]
carriage-related remedial measures as are deemed appropriate; and
(c) In light of the evidence adduced pursuant to the foregoing
issues, to determine whether a forfeiture should be imposed on Comcast.
32. If the ALJ requires Comcast to carry The Tennis Channel on its
cable systems on a specific tier or to a specific number or percentage
of subscribers, the ALJ shall determine whether such remedy would
``require [Comcast] to delete existing programming from its system to
accommodate carriage of '' The Tennis Channel. 47 CFR 76.1302(g)(1). If
the ALJ determines that this remedy would require Comcast to delete
existing programming, then this remedy will be treated as Section
76.1302(g)(1) treats ``mandatory carriage,'' thus delaying the
effectiveness of this remedy unless and until the decision of the ALJ
is upheld by the Commission. In that event, if the Commission upholds
the remedy ordered by the ALJ in its entirety, Comcast will be required
to carry The Tennis Channel's programming for an additional period
equal to the time elapsed between the ALJ's decision and the
Commission's ruling, on the terms and conditions approved by the
Commission.
33. It is further ordered, that pursuant to Section 4(i) of the
Communications Act of 1934, as amended, 47 U.S.C. 154(i), The Tennis
Channel and Comcast Shall Each File with the Chief, Enforcement Bureau
and Chief ALJ, by October 15, 2010, its respective elections as to
whether it wishes to proceed to Alternative Dispute Resolution. The
hearing proceeding Is Hereby Suspended during this time. If one or both
of the parties do not elect ADR, then the hearing proceeding will
commence on October 18, 2010. If both parties elect ADR, the hearing
proceeding will remain suspended, and The Tennis Channel and Comcast
shall update the Chief, Enforcement Bureau and Chief ALJ monthly on the
status of the ADR process. Such updates shall be provided in writing
and shall reference the MB docket number and file number assigned to
this proceeding. If both parties elect ADR but fail to reach a
settlement, the parties shall promptly notify the Chief, Enforcement
Bureau and Chief ALJ in writing, and the proceeding before the ALJ will
commence upon the receipt of such notification by the Commission. If
both parties elect ADR and reach a settlement, the parties shall
promptly notify the Chief, Enforcement Bureau, Chief ALJ, and Chief,
Media Bureau in writing, and the hearing will be terminated upon the
Media Bureau's order dismissing the complaint becoming a final order.
34. It is further ordered that, pursuant to Section 4(i) of the
Communications Act of 1934, as amended, 47 U.S.C. 154(i), in order to
avail itself of the opportunity to be heard, The Tennis Channel and
Comcast, in person or by their attorneys, Shall Each File with the
Commission, by October 22, 2010, a written appearance stating that it
will appear on the date fixed for hearing and present evidence on the
issues specified herein, provided that, if both parties elect ADR, each
party shall file such written appearance within five days after
notifying the Chief, Enforcement Bureau and Chief ALJ that it has
failed to settle the dispute through ADR. In light of the expedited
basis of this hearing proceeding, the deadline for filing written
appearances set forth in Section 1.221(c) of the Commission's Rules, 47
CFR 1.221(c), is waived and replaced with the deadlines set forth
above. In addition, Section 1.221(f) of the Commission's Rules, 47 CFR
1.221(f), provides that a ``fee must accompany each written appearance
filed with the Commission in certain cases designated for hearing.''
However, neither the Act nor our rules specify a fee for hearings
involving program carriage complaints. See 47 CFR 1.1104; see also 47
U.S.C. 158. Accordingly, neither The Tennis Channel nor Comcast is
required to pay a fee in connection with the filing of their respective
appearances in this proceeding.
35. It is further ordered that, if The Tennis Channel fails to file
a written appearance by the deadline specified above, or fails to file
prior to the deadline either a petition to dismiss the above-captioned
proceeding without prejudice, or a petition to accept, for good cause
shown, a written appearance beyond such deadline, the Administrative
Law Judge Shall Dismiss the above-captioned proceeding with prejudice
for failure to prosecute.
36. It is further ordered that, if Comcast fails to file a written
appearance by the deadline specified above, or fails to file prior to
the deadline a petition to accept, for good cause shown, a written
appearance beyond such deadline, its opportunity to present evidence at
hearing will be deemed to have been waived. If the hearing is so
waived, the Presiding Judge shall expeditiously terminate this
proceeding and certify to the Commission the captioned complaint for
resolution based on the existing record.
37. It is further ordered that in addition to the resolution of the
issues (a) through (c) in paragraph 18 above, the Presiding Judge shall
also determine, pursuant to Section 503(b) of the Communications Act of
1934, as amended, whether an Order for Forfeiture shall be issued
against Comcast for each violation or each day of a continuing
violation, except that the amount issued for any continuing violation
shall not exceed the amount specified in Section 503(b)(2)(C), 47
U.S.C. 503(b)(2)(C), for any single act or failure to act.
38. It is further ordered that for the purposes of issuing a
forfeiture, this document constitutes notice, as required by Section
503 of the Communications Act of 1934, as amended, 47 U.S.C. 503.
39. It is further ordered that a copy of this Order shall be sent
by Certified Mail--Return Receipt Requested and regular first class
mail to (i) The Tennis Channel, 2850 Ocean Park Boulevard, Suite 150,
Santa Monica, CA 90405, with a copy (including a copy via e-mail) to
Stephen A. Weiswasser, Esq., Covington and Burling LLP, 1201
Pennsylvania Avenue, NW., Washington, DC 20004-2401
(sweiswasser@cov.com); and (ii) Comcast Cable Communications, LLC, One
Comcast Center, Philadelphia, PA 19103, with a copy (including a copy
via e-mail) to David P. Murray, Esq., Willkie Farr & Gallagher LLP,
1875 K Street, NW., Washington, DC 20006 (dmurray@willkie.com).
40. It is further ordered that the Chief, Enforcement Bureau, is
made a party to this proceeding without the need to file a written
appearance, and she shall have the authority to determine the extent of
her participation therein.
41. It is further ordered that a copy of this order or a summary
thereof shall be published in the Federal Register.
Federal Communications Commission.
Nancy Murphy,
Associate Chief, Media Bureau.
[FR Doc. 2010-26766 Filed 10-21-10; 8:45 am]
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