SBJ/June 20 - 26, 2005/Media

Comcast scrap hinders O’s RSN deal with MLB

Baltimore Orioles owner Peter Angelos was handed $75 million and the keys to a shiny new regional sports network from Major League Baseball, all so he wouldn’t try to stop the Washington Nationals’ move into the nation’s capital.

Owner Peter Angelos’ Orioles got 90% of the network, but Comcast won’t let the O’s go.
But until he finds a way around Comcast Corp., he won’t be able to complete what many baseball insiders are calling the sweetheart deal of the decade.

The battle between Angelos and Comcast, the nation’s largest cable operator, took another turn last week with two legal maneuvers by Mid-Atlantic Sports Network (MASN), the new regional sports network that is owned 90 percent by the Orioles and 10 percent by MLB and the Nationals. MASN is televising Nationals games this season and plans to begin Orioles telecasts in 2007.

On Tuesday, MASN petitioned the Federal Communications Commission to force Comcast’s Washington-area cable systems to carry the new network.

The day before, MASN attorneys asked a judge to dismiss a lawsuit brought by Comcast against MASN.

At the center of that lawsuit and the entire dispute is Comcast’s claim that Comcast SportsNet Mid-Atlantic, the current Orioles rights holder, has the right to match any offers for the Orioles’ television rights and that the Orioles can’t assign those rights to MASN or anyone else without going to Comcast first.

But in the court motion filed last week, MASN claimed the right to match applies only to third-party offers, and that MASN is merely a new name for a team-owned business entity that already owned the Orioles’ television rights, so no third-party offer has been made. In other words, the Orioles are keeping their television rights in-house, and Comcast has no say in the matter.

They further contend that Comcast is using the right-to-match claim as a ploy to try to protect its dominance of regional sports television inside the Beltway.

In the FCC petition, MASN and the Orioles argued that Comcast is refusing to carry the new network only because Comcast wants to own both the Nationals’ and Orioles’ television rights for Comcast SportsNet, and that Comcast is illegally using its clout as a cable operator to thwart distribution of a new competitor.

“We have two arguments,” said David Frederick, an attorney at Washington-based Kellogg, Huber, Hansen, Todd, Evans & Figel PLLC, which represents MASN. “One is that Comcast is discriminating against MASN in favor of Comcast SportsNet because Comcast SportsNet was denied the opportunity to be the regional sports network that would produce and exhibit Washington Nationals games.

“The second argument is that up until MLB and the Orioles struck their deal, Comcast floated proposals for a [new] two-team regional sports network. Their position is they weren’t going to carry the games unless they owned an equity interest.” This, he said, is a violation of federal communications law that bars cable operators from demanding equity in a network in exchange for carriage.

Comcast denies that it ever made any proposal to own part of a new regional sports network, and Frederick acknowledged that the Orioles had no direct communication with Comcast regarding ownership in a new network.

He said the proposals he referred to were made by Allen & Co. partner Steve Greenberg, who was a paid representative of MLB. In the FCC filing, MASN charged that Greenberg “was in fact acting as an agent of Comcast” when he told the Orioles that Comcast would require a large equity stake in any new network in order to carry it.

Greenberg has publicly denied having any conflict of interest.

Comcast says these are all just creative ways of Angelos trying to get out of an ironclad contract.

“Program carriage rules have never required a cable operator to carry a network that was created through a breach of contract with that cable operator,” said Chris Helein, vice president of communications at Comcast SportsNet. “MASN unfortunately seems to want to use this very important public policy to shore up its defense of a very clear breach of contract.”

To support their claim that the Orioles breached their right to match, Comcast attorneys point to the fact that in 1994, the Orioles had a clause in their television deal with the regional sports network HTS that allowed the club to bring its rights in-house without having to offer any right to match. If that clause were still in effect, they said, there would be no issue.

But in 1996, when HTS increased its annual rights fees substantially, it negotiated to have that clause taken out of the contract as a trade-off. Comcast, which later acquired HTS and that agreement, says the fact that the clause was deleted indicates that both sides intended for the right to match to apply even if the Orioles wanted to control their own television rights.

Comcast has 30 days from when the FCC complaint was filed to respond, but there is no set timetable on when the FCC would have to make a decision. In the civil case, a hearing has been set for July 27.

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