FCC Roughed Up in D.C. Circuit on Comcast-Tennis Case
Judges Have Issues with Statute of Limitations on Carriage Complaint,
First Amendment Implications of Remedy
By: John Eggerton
Multichannel News
Feb 25 2013 - 2:55pm
http://www.multichannel.com/distribution/fcc-roughed-dc-circuit-comcast-tennis-case/141901
A three-judge panel of the U.S. Court of Appeals heard the case of
Comcast vs. the FCC on Monday, challenging the FCC's first-ever finding
in favor of a program carriage complaint and its imposition of a
carriage remedy. While the judges usually wield a gavel, in this case is
was more like a hammer, with the FCC mostly on the receiving end.
Between the serious First Amendment issues with the FCC's carriage
remedy expressed by Judge Brett Kavanaugh and the contract issues on
which Judge Harry Edwards focused, the FCC appeared to have an uphill
fight to keep its decision from being remanded back. Following the
hearing, sources on both sides of the case expressed that sentiment
following lengthy questioning that saw FCC and Tennis Channel lawyers.
In a 3-2 party line vote, the FCC in July 2012 upheld an FCC judge's
ruling that Comcast discriminated against Tennis Channel by carrying it
in a sports tier, while carrying its co-owned Golf Channel and Versus
(now NBC Sports Network) on a more widely viewed basic tier. Comcast
appealed the decision to the FCC, then the court.
The FCC remedy was to provide Tennis Channel with the same level of
distribution, whether that be basic or sports tier or not carrying it at
all -- that it provided its co-owned channels.
Judges Kavanaugh and Edwards were joined by Judge Stephen Williams on
the panel, but the former two asked most of the questions. Since judges
often play devil's advocate, it is hard to predict how the judges will
come down on this case. The FCC is due some deference as the expert
administrative agency, but the D.C. Circuit is the one that threw out
the FCC's Comcast Bittorrent decision, and the panel that heard Monday's
argument was characterized by one attorney familiar with the circuit as
both conservative and tough on the FCC.
With former D.C. Federal Judges looking down from gilt frames along each
wall of the courtroom -- including now Supreme Court Justice Ruth Bader
Ginsburg and the late High Court nominee Robert Bork -- Comcast's
lawyer, former D.C. Circuit nominee Miguel Estrada, argued that the FCC
was dictating distribution in violation of the First Amendment and based
on flawed reading of the statute. He also argued that the complaint
should be moot because it was filed after the one-year statute of
limitations. Tennis signed a contract agreeing to sports tier carriage
in 2005, but did not file the carriage complaint until more than three
years later.
That was the issue that drove Judge Edwards to weigh in early and often.
He said it seemed to him clear that the FCC had set a one-year statute
of limitations on changes in contracts. The FCC and Tennis Channel
lawyers countered that discrimination was based on similarly situated
networks, and that Tennis Channel had not been similarly situated in
2005, but only became so after it got stronger.
Edwards asked what Tennis knew in 2009 that it didn't know in 2005. The
FCC pointed to high-definition and U.S. Open rights that had
strengthened the channel.
Estrada said he agreed with Edwards and that the complaint was clearly
moot because it was not timely filed. But even if it had been, he
suggested, the FCC was ignoring the market dynamics, including that
other MVPDs gave Tennis no better carriage than Comcast, and that the
FCC was instead making a comparison based on content.
Edwards said that Tennis could or should have anticipated that it would
improve and written into its contract a provision about changing the
tier if that happened. He said the FCC's reading would make a contract
"silly," and suggested FCC's argument that it was ludicrous for the FCC
to suggest that a complaint could be filed anytime somebody wanted to.
Edwards said the FCC itself had made absolutely clear that after one
year, such a complaint could not be filed.
Coincidentally, the judges had just been dealing with government content
calls in an earlier case--Comcast was the third oral argument of the
morning -- in which the CIA had refused to pay attorney's fees for a
FOIA request because it had concluded the content of the request was not
sufficiently relevant. In that case, Edwards suggested the government
shouldn't be in the business of deciding what content should be made
available.
Comcast's argument was essentially three-pronged: The complaint was moot
because it came after the statute of limitations; the FCC failed to look
at the competitive markets, which justified Tennis' Channel placement;
and the remedy violated Comcast's First Amendment freedom to choose its
own programming.
Comcast argues that it is free to discriminate for the right reasons,
just not the wrong ones. Estrada said that Comcast has a constitutional
right to favor its own speech over others, so long as it does not do so
for anticompetitive reasons. Ignoring the marketplace evidence that
others treated Tennis no better, and some worse, in terms of carriage,
Estrada suggested, the FCC had arrogated for itself the role of a
government censorship board and that the FCC's decision was the most
outrageous content call since the Sedition Acts. He suggested, as
Comcast has in its brief, that the FCC's decision is comparable to
telling a newspaper it has to put a freelancer on the front page.
The FCC argued that cable did not still have to have bottleneck control
of an MVPD market for the anti-discrimination provision of the Cable Act
to still hold sway, but that if the court found that a showing of
bottleneck control was necessary, the court should give it a chance to
prove that.
The commission said it could do so by showing that the impact on
advertising, but Estrada countered that cable operators' business was
based primarily on sub fees, not ad revenues.
At least from the tenor of the court arguments, that last option --
vacating the decision but remanding it back to the FCC for a showing of
undue market power -- sounds like the most likely scenario.
--
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Associate Professor Fax (713) 743-3927
Political Science Mail: antunes at uh dot edu
University of Houston
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