FCC votes to stop cable operators from withholding sports programs with competitors
Update: Quotes from FCC Chairman Julius Genachowski, Cablevision statement
The Federal Communications Commission voted today to prevent cable operators from withholding sports programming from competing paid television providers such as DirecTV and AT&T.
Analysts said the move, ahead of the the agency's review of Comcast and NBC Universal's controversial $30 billion merger, shows the FCC wanted to remove the issue from the bargaining table so it could focus on potentially bigger concessions. The Justice Department is reviewing the merger for potential antitrust implications. The FCC, which said it has not yet received an application for review, will scrutinize the merger for its effect on consumers and competition.
FCC Chairman Julius Genachowski said the action will help increase competition in the paid video market.
"Locking up a much-loved local sports franchise could be game, set, match for cable competition," he said in a statement. "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."
The action, in a four to one vote, will close a so-called "terrestrial loophole" in communications policy that has allowed for cable operators to keep some local programming such as sports games from non-cable video operators such as satellite and telecom companies.
"There could be no clearer signal that the FCC is looking for bigger concessions than this in order to approve the NBCU deal," Bernstein analyst Craig Moffett wrote in a report.
As background: The 1992 Cable Act required that operators make any programming available to competitors -- as long as it was transmitted by satellite feed. At the time, satellite feeds were considered the prime way cable companies would collect content. The cable companies, however, began transmitting their local sports shows via cable lines -- otherwise known as terrestrial feeds -- and argued that such programs were exempt from the rules.
DirecTV has complained that Comcast has used the policy loophole to shut out competitors from the Philadelphia market, where it owns coverage of the Philadelphia 76ers, Philadelphia Flyers, and Philadelphia Phillies. Comcast dominates that programming through its Comcast regional sports network. AT&T's U-verse customers will get access to San Diego Padres games that it complains Cox is withholding from competitors. And Verizon FiOs will be able to show high-definition sports events at Madison Square Garden that it said Cablevision has blocked.
AT&T and Verizon immediately hailed the decision. Analysts say cable operators are expected to challenge the decision in court.
In a statement, Cablevision said it didn't believe the FCC's move had legal grounding:
"While we find the legal basis for the decision unfounded, we are pleased that the FCC recognized the value of Cablevision’s local programming strategy and investments. Verizon and AT&T will not receive an FCC bailout that will allow them to capture News 12, MSG Varsity and other programming that we have developed for our customers. We are also pleased that despite the phone companies' overwhelming lobbying effort, the FCC has ensured a complaint process. If the phone companies complain that they are unable to compete, we are confident that we can prove that it is for a variety of reasons, none of which have to do with HD sports programming. Verizon and AT&T do not need a regulatory bailout in order to compete.”
January 20, 2010; 2:42 PM ET
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