Tennis Channel Advertisers Also Buy Time on Comcast Sports Networks

Many Tennis Channel advertisers also buy spots on Comcast’s sports networks, the administrative law judge overseeing the network’s case against the cable operator was told Tuesday. There’s a large overlap between top advertisers on the channel and those who also buy ads on Comcast’s Golf Channel and Versus, Tennis Channel Senior Vice President Gary Herman testified. He said the independent channel’s growth in ad dollars and subscribers has been curtailed by Comcast’s refusal to move it to a more widely purchased tier of cable service (CD April 26 p6). A lawyer for Comcast asked Herman about a dozen questions on other channels not owned by the cable operator that have even more advertiser overlap.

The Tennis Channel’s program carriage case is being heard by Chief FCC ALJ Richard Sippel. He asked Herman, who oversees ad sales for the plaintiff, to explain the practice of giving pay-TV subscribers free, temporary access to the Tennis Channel, and about the top-30 advertisers by revenue for that network. Among those ad buyers, 77 percent also bought commercials on the Golf Channel, and 60 percent on Versus, Herman said. The channel is hamstrung by not having more pay-TV subscribers in large markets, where Comcast owns systems, he said. Limited distribution “is the single most prevalent reason we get from advertisers for not doing business with us,” Herman said. “It’s the fundamental mathematics of how cable works."

There’s a “substantial overlap of business we compete for” between the channel and Comcast sports networks, Herman said. Comcast lawyer Edward Moss said during cross-examination that lifestyle and news cable channels and broadcast networks have more advertisers in common with the Tennis Channel than do Golf and Versus. ABC, CBS, CNN, the Food Network, HGTV, Headline News and NBC are among those sharing more top-30 advertisers with the plaintiff, Herman confirmed during a round of questioning. In advertisers’ minds, the Tennis Channel competes with other sports networks, since the same portion of ad budgets pay for commercials on all of them, Herman said. “I would not agree” that non-sports programmers directly vie for ads in most cases with the Tennis Channel, he said. “Advertisers segment the portions of their budget by product category."

DirecTV and Dish Network, which have seats on the Tennis Channel board, will recuse themselves from deliberations on issues that involve themselves, said lawyer William Phillips, representing the plaintiff. Sippel said he was “just curious” about how the Tennis Channel’s board would deal with such situations. Michael Carroll, representing Comcast, said there was no documented “mechanism” about board deliberations involving pay-TV distribution. Representatives of both DBS companies, which have stakes in the Tennis Channel, “were present at board meetings where distribution related to my client, Comcast, is discussed,” Carroll said. Phillips said he didn’t “really see the relevance of this matter,” but would provide the requested information.

In another program carriage case, which came up during the Tennis Channel hearing Monday, the Mid-Atlantic Sports Network sued the FCC. MASN failed to get the agency to force Time Warner Cable to carry in North Carolina the regional sports network (RSN), showing baseball games of the Baltimore Orioles and Washington Nationals (CD Dec 23 p9). The programmer had asked the 4th U.S. Court of Appeals in Richmond, Va., to overturn a December FCC reversal of a 2008 Media Bureau finding that Time Warner Cable discriminated against MASN in favor of its own programming, and must carry MASN in the state. Spokespeople for the bureau and Time Warner Cable declined to comment.

The MASN order may have some bearing on Tennis Channel v. Comcast, Carroll said Monday. He said the order held there’s no reason for the regulator to find an operator may have favored its own channel over rival, unaffiliated programming just because the reason for making a carriage decision wasn’t documented. “The case is so much stronger” for Comcast in Tennis Channel, because there are so many “contemporaneous documents” of a “cost-benefit analysis of why the Tennis Channel isn’t worth being carried” more widely, Carroll said. Informed by him that MASN appealed, Sippel replied, “I wonder why I'm not surprised by that."

If the FCC’s MASN ruling is upheld, it “would eviscerate the protections Congress enacted to ensure that vertically integrated cable operators do not discriminate in favor of their affiliated networks,” MASN said in a Monday opening brief to the 4th Circuit. The commission erred in accepting “at face value TWC’s purported justifications for its discriminatory treatment of MASN,” that channel said. It “erroneously credited TWC’s post hoc, lawyer-prepared declarations as reflecting TWC’s contemporaneous reasons for refusing to carry MASN, even though live testimony and documentary evidence contradicted those claims,” the filing said. “The FCC erred by accepting TWC’s purportedly ‘neutral’ criteria for making carriage decisions, even though TWC did not apply those criteria to its affiliated RSNs.”