Comcast, Tennis Channel Each Have Incentives to Settle FCC Case
Comcast and the Tennis Channel each have incentives to settle their cable program carriage dispute, which is slated to go before an FCC judge this month if they don’t enter arbitration or mediation (CD Oct 6 p9), industry lawyers and executives not involved in the case told us Thursday. Some of them said Comcast’s plan to buy control of NBC Universal is one reason for the cable operator to settle with the Tennis Channel, to avoid having the programming dispute become part of or muddy FCC consideration of the deal. That the deal is pending before the FCC may have been a reason the Media Bureau this week set Tennis Channel v. Comcast, which the programmer filed in January, for hearing by an administrative law judge, speculated agency and industry officials.
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For the programmer, keeping the case out of litigation would help control costs and possibly get it wider distribution on Comcast, communications lawyers and executives said. They said pursuing a settlement now also would avoid a lengthy process in which the ALJ considers program access cases, makes a recommended decision for what the full commission should do and then gets FCC approval. Some pointed to a case brought by WealthTV, which the same ALJ ruled on in October 2009 but which hasn’t been acted on by the commission.
There’s no item circulating for a vote on the WealthTV complaint against Bright House Networks, Comcast, Cox Communications and Time Warner Cable, commission officials said. It also doesn’t appear that work has ended by career agency staffers -- including from the bureau and Office of General Counsel -- on an order that would address the ALJ’s ruling and be voted on by commissioners, they said. The WealthTV case is the only one of a batch of three program access complaints Chief FCC ALJ Richard Sippel heard last year that haven’t been settled (CD Jan 7 p3). The delay in FCC action has the head of that channel upset and recommending the Tennis Channel not pursue its case before Sippel. A bureau official declined to comment on the WealthTV and Tennis Channel cases.
"Any litigant in a contested matter would prefer to find a negotiated solution” to going “through the full panpoly of litigation,” said lawyer Stephen Weiswasser of Covington & Burling, representing the Tennis Channel. “The Tennis Channel brought this complaint after trying to exhaust every avenue it could to reach a private agreement with Comcast.” The independent programmer is giving “serious” thought to pursuing what the bureau’s order called alternative dispute resolution rather than the case at the FCC, Weiswasser said, and he imagines that the cable operator is doing the same. “We are hopeful we could get an expedited proceeding if that’s what the parties follow” at the commission, but there’s a risk “this could be a very long period of time,” and “clearly that has to be a consideration as one thinks about alternative dispute resolution, because that can be faster,” Weiswasser said. A Comcast spokeswoman didn’t reply to a message seeking comment. The company has said it’s abiding by its contract with the programmer and looks forward to taking the case before the ALJ.
"Companies involved in mergers do normally tread more lightly to avoid any accidental spillover to the deal,” said analyst Paul Gallant of Washington Research Group. For plaintiffs, “legal costs can get awfully high in protracted proceedings like this,” he added. “But companies sometimes need to see it through because of the precedential effects on other deals.” A cable lawyer who reviewed the bureau’s order on the case said it seems at first glance that the Tennis Channel seeks to be put on the same programming tier -- where Comcast carries sports channels it owns -- as many other sports networks also would like. “If the interests of one channel are advanced, the interests of other channels are hurt, but there is no way to account for this” in an ALJ proceeding, the lawyer said. “Judges and arbitrators are probably not in a position to even think about such things."
"That this has now been designated for hearing may push Comcast more towards settlement,” said another cable lawyer not involved in the Tennis Channel case. “As a general matter, there is often an incentive for one or both parties to settle rather than have a judge make a decision. For the complainant, the benefit is a speedier resolution and reduced litigation expenses. For the defendant, the benefit can be having some control over the nature of and spin on the remedy."
"Nothing stops you from settling at any step along the way” as the ALJ considers the case, said Public Knowledge Legal Director Harold Feld, who served as co-counsel on the WealthTV matter before Sippel but isn’t involved in the proceeding now. “Going with the ALJ is going to be an incredibly long process,” so “if you're trying to get a resolution more quickly, settlement is certainly an option that you'd want to consider.” For his own part, as an advocate of additional FCC involvement in these matters, he hopes the programmer stays the course, because that could set precedent.
WealthTV CEO Robert Herring advised the Tennis Channel to stay out of the conference room on the FCC’s ground floor that served as the ALJ’s hearing room during last year’s program carriage cases. The bureau asked Sippel to handle the case on an expedited basis, he noted. “Yet our complaint has been setting at the FCC for three years and it has been a year since the ALJ made his recommendation,” Herring said. “Now we are waiting for the FCC to do something. We are not able to even get status on our case. This is why we have asked that the Comcast-NBC merger be held up until discrimination charges against them are handled.”