America Channel’s Carriage Quest Spurs Pay-TV Concern

If affirmed by the FCC, the company’s Jan. request to be deemed an RSN would give it a much-needed break in trying to negotiate carriage deals. According to the FCC approval of Comcast and Time Warner’s $17.6 billion purchase of Adelphia, if designed an RSN America Channel could demand arbitration if either refuses to carry it. Arbitration wouldn’t guarantee TAC carriage -- unless it convinced a mediator to rule in its favor.

The channel contested cable and DBS filings declaring that they don’t carry networks before they start programming. “Experience with Comcast’s own RSNs and other affiliated networks demonstrates that it is common industry practice for a network to launch and produce programming only after a foundational carriage agreement,” the America Channel said. It cited a 2006 deal for Comcast to carry Mountain West Sports Network before it was operational and a 2003 agreement for the cable operator to carry TV One before the network had a CEO or a name. “Without a carriage deal, or at least a placeholder that signifies carriage will be forthcoming upon launch, financial investors are reluctant to commit capital,” the America Channel said. It told pay-TV companies they could carry the network for 3 years for free, which hasn’t been proposed by an RSN.

If the FCC treats TAC as an RSN, other upstarts could take that tack -- a prospect that frightens DirecTV, Time Warner Cable and a handful of independent networks. In comments to the FCC, those players said they share Comcast’s concern that the market for DBS and cable channels may be upended if one network can demand mediation over carriage without starting programming, getting financial backing or convincing pay-TV firms it has a worthwhile product.

TAC has been the subject of about a dozen FCC meetings in April and May, with Comcast founder Ralph Roberts making a rare trip to the 8th floor for an April 24 meeting with Comr. Copps. America Channel CEO Doron Gorshein made his case in May 3 meetings with Comrs. Adelstein and McDowell and aides to Comrs. Copps and Tate. FCC and cable lawyers are uncertain whether the full Commission will vote on Comcast’s petition or if the Media Bureau will act on delegated authority. However, the agency is expected to address the issue in coming months. FCC Chmn. Martin may decide a vote is necessary because TAC’s quest seems to raise a new issue - - what constitutes an RSN -- not addressed previously, said a cable lawyer: “If the Commission wanted to, it could treat this as a novel question of fact” and take a vote.

If the FCC defines the America Channel as an RSN, a bevy of other upstart programmers likely could establish their own footprints, getting distribution rights to a few college games and demanding carriage. That’s what Comcast, DirecTV and Time Warner Cable told the FCC they fear will occur. A channel could “acquire the rights to only a tiny number of Division 1 college football or basketball games, call itself an RSN and demand the right to carriage on any Comcast or Time Warner cable system,” said Comcast. DirecTV voiced similar concerns, saying: “If this is really what the Adelphia order means, failed programmers everywhere will rush to lesser-known Division 1 schools throughout America seeking to copy from TAC’s playbook, gaining carriage at the expense of other, more valuable programming.” A 2nd cable lawyer agreed that giving the America Channel carriage could be unfair, calling it “a big leg up on other cable networks.”

That fear is shared by the BlueHighways TV, Altitude and Africa Channel networks. The America Channel would take up limited cable system capacity otherwise devoted to “legitimate RSNs,” said Altitude, which carries Colo. Avalanche and Denver Nuggets games to 2.6 million subscribers in the West. “TAC’s efforts implicate, and threaten to devalue, the regional sports business model… and result in TAC seizing under false pretenses scarce channel capacity,” Altitude said. TAC threatens all programmers, not just sports networks, said BlueHighways TV Chmn. Stanley Hitchcock. “If one can do it, it opens the floodgates for everyone else changing overnight so they can get in,” he told us: “"There is not that much real estate out there open for us… It’s a hard road out here for an independent” network. The company began its channel March 15, but it won’t be carried on any cable operator until June, said Hitchcock. Its VoD programs reach about 3 million cable subscribers.

The America Channel has programming rights for 500 games from 140 NCAA Div. 1 schools -- 43% of the division -- it said in a Feb. 27 FCC filing responding to Comcast’s petition. It said it exceeds the minimum of professional or college sports games it must air to be considered an RSN under the FCC Adelphia order. The company has deals to air games from university cities across the U.S., but it said it satisfies the Adelphia requirement because it will offer 6 regional feeds. TAC asked the FCC to issue a rulemaking clarifying it’s an RSN and ordering Comcast to participate in mediation with an American Arbitration Assn. member. The channel has more college sports than any other network, Gorshein told us: “This has enormous potential benefits for consumers and for competition. It is important therefore that our market entry is not prevented.”

One reason the America Channel got deals to carry a wide array of college sports is that it won’t charge schools production or other costs to tape games, said 3 conference officials. They said the channel will provide women’s teams a rare chance at airtime and also profile players off the court. “Everyone is signing on the hopes that having a contract with a conference will influence their ability to get carriage,” said Big Sky Conference Comr. Doug Fullerton: “To get women’s games out with no money changing hands would be terrific.” Big West Conference Comr. Dennis Farrell agreed: “We don’t have too much opportunity for exposure for our women’s basketball program… We have a lot of inventory available in basketball that’s ripe for the picking.” TAC coverage of women’s sports will help schools recruit, said Richard Kilwien, U. of Wash. Huskies associate athletics dir.: “It’s sort of a no-brainer… We have no financial commitment on our end, so there’s no risk to us.” - Jonathan Make