A Federal Communications Commission administrative judge ruled that cable giant Comcast Corp. discriminated against the small, independently owned Tennis Channel by putting it at a competitive disadvantage.
Tuesday's ruling marked the first time that an FCC judge has found that a cable operator violated the program carriage anti-discrimination rules, which were established in 1993.
Richard L. Sippel, the FCC's chief administrative law judge, ruled that Comcast, the nation's largest cable TV operator, treated the Santa Monica-based Tennis Channel unfairly by positioning it in a more expensive package of cable channels with fewer subscribers.
At the same time, the judge said, Comcast favored two of its own TV sports networks — the Golf Channel and Versus — by offering them as part of the basic programming package, received by nearly all of Comcast's 22 million video subscribers. That provided the Comcast-owned channels with more viewers, which helped lure advertising dollars.
In contrast, only about 2.5 million Comcast customers subscribe to the program package that offers the Tennis Channel — limiting the channel's revenue potential.
"This is a long-awaited day for Tennis Channel, and a watershed moment for independent programming networks and viewers who benefit from a true diversity of voices in the American media marketplace," Ken Solomon, chief executive of the Tennis Channel, said in a statement.
"We are now going to get to compete where we wanted to compete for the last seven years," he said in an interview.
The full FCC must vote on the matter before Sippel's decision becomes final.
Sippel ruled that Comcast immediately would have to pay the maximum fine of $375,000 and no longer discriminate against Tennis Channel. That means Comcast most likely would have to move the Tennis Channel to its more popular programming package.
Such a move would provide Tennis Channel with substantially more revenue because cable operators, including Comcast, pay networks based on the number of subscribers that receive the channel.
In his 59-page ruling, the judge wrote that Comcast's action "has depressed the number of Tennis Channel's subscribers, diminished the amount of its license fees, reduced its ability to procure valuable programming rights and made it more difficult for Tennis Channel to sell advertising."
Comcast said it was not headed to the locker room just yet.
"We respectfully disagree with the initial decision that was released today in the FCC case involving Tennis Channel," Sena Fitzmaurice, Comcast's vice president of government communications, said in a statement. Comcast has argued that its 2005 contract with Tennis Channel provided that the channel would be placed in the more exclusive sports tier.
"Comcast has the contractual right to distribute Tennis Channel as it does currently, and Comcast firmly believes that the exercise of that right to minimize costs to consumers is not discrimination," Fitzmaurice said. "We believe it is wrong for Tennis Channel to use the government to impose higher costs and prices on private enterprise and consumers, and we look forward to the review process."