Cablevision Pledges to Appeal ALJ Decision in GSN Carriage Fight
When Cablevision moved the Game Show Network (GSN) from the expanded basic tier to the Sports Pak tier in 2011, the business reasons it gave were pretexts, said FCC Administrative Law Judge Richard Sippel in a 70-page initial decision Wednesday, calling the retiering discrimination. Cablevision parent Altice USA said it "respectfully disagree[s] with the ALJ’s decision and fully intend[s] to appeal" to the full FCC. GSN outside counsel Stephen Weiswasser of Covington & Burling emailed us that the network is reviewing its own options.
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In the decision, Sippel orders Cablevision to pay a $400,000 fine and prohibits it from discriminating against GSN in its video programming distribution terms and conditions. But Sippel denied GSN's request that Cablevision be ordered to sign a new carriage agreement that would have it distribute GSN as widely as it does WE tv and pay GSN the same license rate given to Cablevision's affiliated WE tv channel. Sippel called those terms inappropriate because Cablevision's carriage of GSN on the premium sports tier violates the law, "not its carriage of GSN on an at-will basis." Instead, he ordered Cablevision to carry GSN on the expanded basic tier at the existing carriage license rate until either they sign a new carriage agreement or for five years, whichever comes first.
Cablevision's retiering of GSN was arguably profitable for the cable distributor in the form of lower license fees, but additional subscribers to its Sports Pak tier -- which was renamed shortly after the retiering to Sports & Entertainment -- and no meaningful increase in customer churn, that analysis "omits the damage done to GSN by its retiering strategy," Sippel said. "If discriminating against non-affiliated networks were not commercially beneficial to integrated cable distributors, then section 616 [of the Cable Act, covering carriage agreements] and section 76.1301(c) of the Commission's rules [which covers similar ground] would be useless and unnecessary."
Rather than being a "common or competitive" move, Sippel said the retiering was clearly discriminatory, as shown by Cablevision's opting not to go with a cost-savings proposal of its own to retier four unaffiliated networks, including GSN, from basic to sports. And the judge rejected Cablevision arguments GSN had been a weak and poorly performing network on Cablevision's basic lineup, pointing to "the preponderance of evidence" otherwise. Sippel said GSN proved discrimination via Cablevision's own admission and evidence that it treated GSN differently from affiliated networks, but he said it hadn't proven discrimination in its arguments the cable distributor tried to later condition different carriage terms on it being able to extract some value from one of GSN's parent companies, Sony.
Sippel also rejected Cablevision arguments it had no motive to discriminate, especially since the company never moved any other entertainment networks to its sports tier. He said Cablevision's argument GSN wasn't "must-have" programming was belied by the fact a record number of subscribers called to complain about the retiering and more than 5,000 canceled their cable service. Sippel also cited that Cablevision didn't consider retiering any of seven affiliated networks on the basic tier that also don't offer "must-have" programming.
Meanwhile, the retiering "significantly and negatively" hit GSN's advertising and license fee revenue and unreasonably restrained its ability to compete against other female-targeting networks like WE tv, the decision said. Specific dollar figures in lost revenue were redacted in the order, but GSN said the retiering cut its distribution by 96 percent among Cablevision subscribers and 4 percent nationally.
Sippel's decision was contrary to an Enforcement Bureau opinion last year, which recommended the ALJ conclude Cablevision didn't violate multichannel video programming distributor rules (see 1510150044).