Independent fights cable Goliath for better dial positioning

In the nation’s capital, Golf Channel can be found on channel 11 of the Comcast lineup; Tennis Channel is at 735.

You might think that it’s just indicative of the Beltway, but to Ken Solomon, the CEO of Tennis Channel, the disparity is an injustice played out across the country.

And he’s succeeding in an effort to convince federal regulators, in this case an administrative law judge of the FCC, that the Goliath of the cable biz has discriminated against one of the Davids in its universe. Comcast owns Golf Channel, but doesn’t have a stake in the independently owned Tennis Channel.

The case, Solomon says, is about more than ensuring that the court gets equal footing with the club, but of the evolution of cable programming itself, where it is harder for indie networks to compete with those owned by conglomerates. Tennis Channel, he says, has been “thrust into this position of carrying the flag for any independent voice.” “In the cable world, there is a point at which it ceases to be a free market,” Solomon says. “In the cable world, we blew by that point a long time ago.”

Of course, that is not how Comcast sees it. Although administrative law judge Richard Sipple ruled in December that Comcast was in violation of Section 616 of the communications act — a “program carriage” law governing cable provider treatment of channels in which they do not own a stake — they believe that the provision is being used to rewrite the terms of a contract private contract between parties. The terms of that 15-year agreement, Comcast points out, gives Comcast the right to carry Tennis Channel “on any tier, including the sports tier.” They also say that Tennis Channel filed the complaint after seeking broader carriage, including offering cable operators equity stakes, but Comcast declined.

The most immediate battle is over when Comcast has to immediately abide by Sipple’s ruling. Although FCC staffers have said that Comcast has to implement it now, the cabler says that it shouldn’t have to until it exhausts other administrative remedies, like taking their case to the full FCC. Doing so now, it says, would be “time consuming, complex and costly to implement.” Moreover, it would be confusing to subscribers it reshuffled its line up to make room for Tennis Channel in the lower tiers, then ultimately prevailed in its claim on appeal.

“Comcast’s First Amendment rights will be infringed, as its ability to speak through its own networks will conditioned on broader distribution of Tennis Channel, a decision that both usurps Comcast’s editorial discretion and penalizes its own speech,” the company said in an FCC filing.

Solomon thinks the free speech argument is “specious.”

“We didn’t wake up and force Comcast to put Tennis Channel on the air,” he said. “They elected to do so on their own volition. What they have to do, once they make that determination, they have to give us fair treatment once they get similar situated networks.”

Solomon, who before Tennis Channel founded Fine Living and was president of Universal Television, speaks with the same showman’s eagerness about the case that he does of the channel’s ability to win rights to major tournaments.

Tennis Channel, founded in 2003, is owned by a consortium of investors including Apollo Partners, Bain Capital Ventures, DND Capital Partners, sports management firm IMG and Pete Sampras and Andre Agassi. According to Derek Baine, SNL Kagan senior media analyst, the channel has close to $100 million in annual revenue and went into the black in 2010.

Although a new placement on Comcast systems could eventually lead to an uptick in advertising dollars, not to mention a big boost in subscribers, the case is being seized on by other independently owned channels as a kind of hangover from the year-long regulatory wrangling that led to the government’s approval of Comcast’s combination with NBCU. Bloomberg LP, which along with Tennis Channel was a critic of the NBCU transaction, seized on Sipple’s ruling to call attention to its own FCC complaint against Comcast over the placement of its business channel within the same “neighborhood” as news channels, one of the conditions placed on the transaction. Again, Comcast disagrees. Even before the FCC and Justice Department gave the merger the greenlight, it had vowed to add 10 independently owned channels to its lineup over the next eight years.

But to Solomon, it’s not so much a matter of adding new channels but finding them. There’s a voluminous case file in the public record on the case, but he says it’s actually kind of grade-school simple to understand: “What you do for yourself, you have to do for others.”

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