The Federal Communications Commission served up an ace for the Tennis Channel on Tuesday, ruling that media giant Comcast Corp. had discriminated against the small independent sports channel.
Ending a three-year legal dispute, the finding will be a huge competitive boost for the Tennis Channel. Comcast must now add the Tennis Channel, currently available in 34 million homes nationwide, into an additional 18 million households that subscribe to Comcast cable service -- and pay the Santa Monica network millions of dollars more each year for its programming.
Such increased exposure, and higher fees paid by Comcast, would give the Tennis Channel the ability to add more original programming to its lineup and provide coverage of additional tournaments.
"The Commission’s decision constitutes a persuasive rejection of each argument Comcast has sought to make over the past several years to justify its discriminatory treatment of Tennis Channel," the channel said in a statement.
Outlined in a 47-page ruling, the FCC decision is a milestone for the television industry because it marks the first time that a cable operator was found in violation of federal anti-discrimination program carriage rules, established by the agency in 1993.
The problem, according to a majority of commissioners, was that Comcast gave two sports networks it owns, the Golf Channel and Versus (recently renamed NBC Sports Network), preferential treatment by providing those two channels to nearly all of its 22 million cable customers.
The 3-2 commission vote was along party lines, with the Democrat appointees, led by FCC Chairman Julius Genachowski, finding in favor of the Tennis Channel. The two Republican commissioners, Robert M. McDowell and Ajit Pai, dissented.
The ruling comes at an opportune time for the Tennis Channel, about a month before one of the sport's biggest events of the year -- the U.S. Open in New York.
Comcast had fought vigorously to prevent the decision, believing that such a ruling could ultimately force the cable company to pay other independent networks more for their programming.
Comcast said it planned to appeal the decision.
"We are disappointed in today's majority decision," Kyle McSlarrow, president of Comcast/NBCUniversal Washington affairs, said in a statement.
"The finding of a violation here is inconsistent with the evidence, which shows that all major distributors recognize that Tennis Channel does not merit the same carriage as Golf Channel and NBC Sports Network," McSlarrow said. "The decision will accomplish nothing other than to drive up programming costs and enrich a group of wealthy investors in the Tennis Channel."
Comcast has long chafed at the Tennis Channel's complaint, pointing out that the channel agreed to reside in the more exclusive programming package when Comcast agreed to carry it.
"Comcast has carried the Tennis Channel for more than seven years under a contract Tennis Channel freely negotiated, which this government action would now override," McSlarrow said.
By relegating the Tennis Channel to a more expensive sports tier, which reached only about 3 million Comcast homes, Comcast had effectively limited the channel's reach and crimped its revenue prospects.
"We conclude that Tennis Channel has demonstrated that Comcast discriminated against Tennis Channel and in favor of Golf Channel and Versus on the basis of affiliation, and that this discrimination unreasonably restrained Tennis Channel’s ability to compete," the commission wrote.
Comcast has 45 days to offer Tennis Channel the same level of carriage as the two Comcast-owned channels -- the Golf Channel and NBC Sports Network.
"Now that the Commission has definitively ruled, we invite Comcast to work with us to ensure Tennis Channel, Golf Channel and NBC Sports Network are equally available to Comcast viewers," the Tennis Channel said in its statement. "While our network will benefit greatly from the broader carriage, ultimately it is the consumer who has won today."
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