The FCC’s administrative law judge (“ALJ”) has once again sided with a programmer in resolving a complaint under the Commission’s program carriage rules. More than five years after GSN filed a program carriage complaint against Cablevision, ALJ Richard Sippel issued an initial decision finding that Cablevision improperly discriminated against GSN on the basis of its non-affiliation when moving GSN from Cablevision’s expanded basic tier to its “Sports Pak”—this despite the fact that the ALJ determined that Cablevision had demonstrated that it saved programming fees as a result of the retiering.
Section 616 of the Communications Act and the FCC’s implementing regulations prohibit multichannel video programming distributors (MVPDs) from “unreasonably restraining the ability of an unaffiliated programming vendor to compete fairly by discriminating in video programming distribution on the basis of affiliation or non-affiliation of vendors in the selection, terms, or conditions” for carriage.
GSN alleged that Cablevision discriminated against it on the basis of non-affiliation by moving GSN to the “Sports Pak” while leaving affiliated networks, including similarly situated WeTV and Wedding Channel along with expensive affiliated sports networks, in the expanded basic tier. Cablevision originally considered and rejected proposals to move GSN to its Silver tier and to move GSN and three other unaffiliated networks to the Sports Pak to reduce programming expenses. Ultimately, GSN was the only non-sports or outdoors network included in the “Sports Pak,” which Cablevision renamed the “Sports and Entertainment Pak.”
Although the ALJ did not disagree with Cablevision’s claim that moving GSN to the Sports Pak reduced Cablevisions programming expenses, he concluded that this justification was pretextual to harm GSN and favor affiliated women’s networks. In support of this conclusion, the ALJ cited both Cablevision’s earlier decision not to retier other networks to the Sports Pak and the popularity of GSN among loyal Cablevision subscribers. Ultimately, the ALJ determined that a Cablevision executive “first targeted GSN for elimination from Cablevision’s lineup for reasons unrelated to cost savings” and then instructed another executive “to come up with necessary business reasons to support his intention.” The ALJ also determined that GSN, WeTV, and Wedding Channel were similarly situated in that all three networks primarily targeted female viewers even though there were differences in the specific types of programming they carried.
Notably, the same ALJ issued the 2011 initial decision in Tennis Channel that was later overturned by the DC Circuit on the basis that the Commission had done “nothing to refute Comcast’s contention that its rejection of Tennis’ proposal was simply a straight-up financial analysis.” Here, the ALJ noted that “Cablevision did not even consider retiering any of its seven affiliated networks distributed on the expanded basic tier.” He went on to conclude that “Cablevision would have saved substantially more by retiering just one affiliated network from the expanded basic tier to the premium sports tier.”
Cablevision’s new corporate parent, AlticeUSA, issued a statement: “We respectfully disagree with the ALJ’s decision and fully intend to appeal.”
In the meantime, the decision serves as a potential hurdle to efforts by vertically integrated MVPDs to drop or retier unaffiliated programming networks.