Slightly Bolder Indie Programmers Seen With Game Show Network ALJ Ruling
Independent programmers might have gained a bit of leverage in carriage talks with a few major multichannel video programming distributors after last month's FCC administrative law judge advisory ruling that Cablevision discriminated when it retiered Game Show Network in 2011 (see 1611230046), some cable industry insiders and experts told us. The ruling has ramifications for only a select group of MVPDs that also own content, such as Comcast and -- if its bid to buy Time Warner goes through -- AT&T, said one independent network executive. But those pay-TV operators are likely going to take extra steps to rationalize and justify retiering indie networks, and networks might be emboldened to be slightly more aggressive in their asks, the executive said. Cablevision in its purchase by Altice USA agreed to sever common control between its distribution operations and programming interests (see 1605040010).
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The ruling's narrow nature won't mean numerous indie programmers will file similar complaints, many said. "It's telling" there wasn't a rush to the FCC of program carriage complaints after the agency initially found in favor of Tennis Channel in a complaint against Comcast (see 1201230072), said Ari Meltzer of Wiley Rein, who represents programmers and distributors. "From the perspective of programmers, [the GSN] decision is based on very narrow grounds where you're negotiating with a distributor that also has content that competes with you, a programmer," said Ovation General Counsel Rob Rader. "That situation only arises with certain MVPDs.” A lawyer with programming clients said if the FCC affirms ALJ Richard Sippel's decision and orders relief and the D.C. Circuit affirms, the decision "will have significant impact." The agency didn't comment.
Aside from the cost and time of such complaints, the likelihood of others being brought is low because of uncertainty about what the FCC will look like the next few years and the fear of retaliation and being blackballed by MVPDs, said a lawyer with programmer clients. An indie programmer executive said GSN, having been told by Cablevision it wasn't getting back on to the distributor's basic tier, probably had nothing left to lose by pursuing a complaint against one of its biggest customers. A cable lawyer who has represented both programmers and distributors said the proceeding likely won't end well for GSN, since even if the FCC agrees with Sippel's ruling, Altice might opt to drop the network altogether. Neither GSN nor Cablevision's now-parent, Altice USA, commented.
Multiple lawyers said it's not clear what the FCC might do, especially given the upcoming change in administration, but the ALJ advisory decision hews closely to the thinking in the U.S. Court of Appeals for the D.C. Circuit's 2013 Comcast vs. FCC ruling reversing the agency's finding in favor of Tennis Channel (see 1305290043). The latest ALJ decision doesn't directly reference that Tennis Channel ruling but does so implicitly when it points to Cablevision's lack of business justifications for retiering GSN, Meltzer said.
Sippel's GSN ruling highlighted evidence the programmer submitted showing the financial hit Cablevision took in retiering the network from basic cable to a specialty tier -- a key point the D.C. Circuit highlighted in its reversal of the FCC. Tennis Channel, in its unsuccessful appeal of the commission's subsequent decision against it in light of that court ruling, argued it would show all the losses Comcast endured by retiering that channel (see 1604180024).
Rader said indie programmers have some concerns the indie programming NPRM looking at most-favored-nation and alternative distribution method contractual clauses (see 1609290036) could fall by the wayside with the next FCC. “It would be a real shame if the new admin doesn't follow up on this unique opportunity to create a fair marketplace for programmers and distributors by examining how most favored nation and alternative distribution means clauses actually work," he said.