A federal appeals court in Washington, DC has rebuked a challenge by Cablevision and upheld the FCC’s rules requiring cable companies such as Cablevision to make sports programming available to competing video providers. The decision gives a boost to alternative providers, such as Verizon and AT&T, who want access to regional sports networks operated by Cablevision and other major MSOs.
Those regional sports networks won’t immediately appear on Verizon FiOS and AT&T U-Verse, since the appeals court order the FCC to review its previous finding that all exclusive terrestrial programming contracts are by their very nature unfair. Cablevision drew some solace to winning on that narrow issue and said it will make the case that some exclusive contracts can be good for competition, particularly in markets with many video providers.
But the main issue, whether the FCC had authority over sports programming not distributed by satellite, broke in the Commission’s favor. So Verizon and AT&T can now pursue their attempts to break Cablevision’s exclusive rights to the Madison Square Garden Network in the New York market. AT&T had originally complained that it should have the right to carry the MSG network in HD in Connecticut to be able to compete and Verizon joined in seeking access to the HD sports programming for its customers in New York.
The three-judge panel ruled unanimously that Cablevision sought too narrow an interpretation of the law, which the ruling said actually used broad language and had a broad purpose: “promoting competition by restricting vertically integrated cable companies from denying their competitors access to popular programming networks.” At the time the case began the MSG network was owned by Cablevision, but has since been spun off into a separate company, albeit one closely linked to Cablevision. The ruling stated that “we see nothing in the statute that unambiguously precludes the Commission from extending its program access rules to terrestrially delivered programming. Nor do we see any merit in petitioners’ contention that the Commission’s rules violate the First Amendment or in their various Administrative Procedure Act challenges, save one: that the Commission acted arbitrarily and capriciously by deciding to treat certain conduct involving terrestrial programming withholding as categorically ‘unfair’,” which set up the new battle at the FCC over whether or not the exclusive MSG contract with Cablevision is unfair and, as Verizon and AT&T claim, denies them “must-have” programming to be competitive.