FCC's Elimination Of Loophole Seen As Big Victory For Sports Fans

FCC Closes Loophole That Allows Cable Operators To Keep Programming From Rivals

The FCC yesterday voted 4-1 to close the "terrestrial loophole" in program access rules, which has allowed cable operators to "keep local sports networks or their HD versions from their satellite TV and telecom competitors," according to Georg Szalai of the HOLLYWOOD REPORTER. The decision sets Philadelphia, N.Y. and San Diego and "surrounding areas as potential new subscriber battlegrounds between big cable firms and their rivals, even though cable companies must not automatically hand over their sports programming." Cable operators are "expected to appeal the FCC ruling, and even after a final decision, competitors would still need to request and negotiate carriage deals with them." This ultimately could "delay broader distribution of the sports channels until mid-year or beyond." Once they "do make local sports channels available to [rivals], cable firms may see some subscriber losses, but likely only a relatively small near-term financial hit." Bernstein Research analyst Craig Moffett said the decision is "bad news for Comcast in more ways than one." He believes that DirecTV "will be the primary beneficiary, followed by Dish Network and telecom firms." Comcast in its home city of Philadelphia kept most 76ers, Flyers and Phillies games "to itself" via Comcast SportsNet Philadelphia, "even though the cable giant recently also made the network available to Verizon FiOS and RCN" (HOLLYWOOD REPORTER, 1/21). PAID CONTENT's Staci Kramer noted Comcast "essentially has a lock on major sports programming" in Philly through its local RSN, drawing scrutiny "especially when crucial games are blocked." In addition, Cablevision has been "holding back its MSG Network in HD," but the ruling seems to indicate that HD "has to be included" (PAIDCONTENT.org, 1/20). The FCC had "considered closing the loophole before, but there have been questions about whether the agency had legal authority to do so." One of the panel's Republic commissioners, Robert McDowell was the only panel member to vote against the measure, saying it was "beyond our statutory reach" (WALL STREET JOURNAL, 1/21).

A VICTORY FOR SPORTS FANS: USA TODAY's David Lieberman notes the Cable Act of 1992 "requires cable companies to share channels that they own and distribute to local systems via satellite." But cable companies claim that "doesn't apply to local sports and news that they distribute over land lines." Yesterday's ruling says that the commission will "presume that withholding a channel is unfair, unless the cable operator can prove otherwise." Verizon Senior VP/Federal Regulatory Affairs Kathleen Grillo said the FCC decision is a "big-time victory for television sports fans" (USA TODAY, 1/21). FCC Chair Julius Genachowski said that the action "will help increase competition in the paid video market." He said in a statement, "Locking up a much-loved local sports franchise could be game, set, match for cable competition. Consumers who want to switch video providers shouldn’t have to give up their favorite team in the process. Today the Commission levels the competitive playing field" (WASHINGTONPOST.com, 1/20). Meanwhile, Cablevision yesterday in a statement said it was pleased Verizon and AT&T will not receive an "FCC bailout that will allow them to capture" certain programming, including MSG Varsity. Cablevision's statement stressed that the FCC declined to "outright prohibit withholding terrestrial programming despite lobbying from Verizon, DirecTV and others" (CABLEFAX DAILY, 1/21).

Yesterday's Verdict Does Not Mean Padres Games Will Show Up On Satellite Anytime Soon

A LOCAL LOOK: In San Diego, Mike Freeman notes AT&T last year filed a complaint with the FCC, claiming that Cox Communications' "refusal to license Padres games had hamstrung its U-Verse television service." However, yesterday's verdict "doesn't mean the Padres games will show up on satellite or telephone company TV services anytime soon." Cox still would have to "negotiate deals with rivals to carry its Channel 4 San Diego for a fee." Cox yesterday said that it is "trying to determine what to do next." Cox Media & PR Manager Ceanne Guerra: "It's too soon to speculate on what this means, but today's vote doesn't change anything overnight. Cox still has the rights to televise the Padres games on Channel 4 San Diego, and Cox customers will continue to have access to those games" (SAN DIEGO UNION-TRIBUNE, 1/21). Meanwhile in Portland, John Canzano notes Trail Blazers fans "won a victory" with yesterday's decision. More negotiations "must be held and legal briefs written before Blazers broadcasts become more widely available," but "for a change, there's reason to hope." However, Comcast SportsNet Northwest yesterday said that it "does not believe the FCC ruling applies to to the Portland market." Comcast SportsNet VP/Communications Tim Fitzpatrick said, "You should know that satellite companies have made the decision not to carry Comcast SportsNet Northwest and that issue is unrelated to today's FCC matter" (Portland OREGONIAN, 1/21).

WHAT IT MEANS FOR COMCAST-NBC: DAILY VARIETY's Paul Harris notes the FCC ruling comes "in advance of the agency's review of Comcast's merger with NBC Universal, specifically addressing a competitive issue that was likely to be considered in that proceeding -- such as Dish Network's inability to air Philadelphia sports events coverage owned by Comcast." By closing the loophole prior to that review, the FCC has "effectively taken the issue off the table." The Comcast-NBCU merger is slated to "come before lawmakers on Feb. 4, when the Senate Judiciary Committee's antitrust subcommittee has scheduled a hearing" with Comcast Chair & CEO Brian Roberts and NBC U President & CEO Jeff Zucker to testify (DAILY VARIETY, 1/21).