Comcast Scores Win|Over Tennis Channel

WASHINGTON (CN) - Comcast did not discriminate against the Tennis Channel by making it available only through premium subscriptions, unlike its own sports channels, the D.C. Circuit ruled.

The federal appeals court in Washington, D.C., overturned a July 2012 ruling by the Federal Communications Commission, which ordered Comcast to make the Tennis Channel available to basic cable subscribers on the same basis as Comcast-owned Golf Channel and NBC Sports Network (formerly Versus).

The FEC had affirmed an administrative law judge's finding that Comcast discriminated against Tennis Channel by making it available only through premium cable subscriptions in order to protect its own sports channels.

The judge said Comcast was paying "substantially more for carrying Golf Channel and Versus that it would if it were to carry Tennis Channel at the same level of distribution."

Comcast was ordered to treat distribution of the three networks in the same manner and fork over $375,000 for its past discrimination, a penalty held up by the FEC in Comcast's appeal.

But the D.C. Circuit disagreed and reversed, citing Comcast's right to make its own financial decisions.

"The commission has nothing to refute Comcast's contention that its rejection of Tennis's proposal was simply 'a straight up financial analysis,' as one of its executives put it," Judge Stephen Williams wrote.

Tennis Channel had claimed that Comcast violated the Communications Act by giving preferential treatment to its networks at the expense of unaffiliated vendors. But the three-judge panel called the broad financial argument "mere handwaving," saying the channel failed to offer evidence of discrimination.

"Without showing any benefit for Comcast from incurring the additional fees for assigning Tennis a more advantageous tier, the commission has not provided evidence that Comcast discriminated against Tennis on the basis of affiliation," Williams wrote for the unanimous panel.

In his concurring opinion, Judge Brett Kavanaugh said vertical integration -- absent market power -- can be good for competition.

"Not surprisingly given its procompetitive characteristics, vertical integration and vertical contracts are common and accepted practices in the American economy: Apple's iPhones contain integrated hardware and software, Dunkin' Donuts sells Dunkin' Donuts coffee, Ford produces radiators for its cars, McDonalds sells Big Macs, Nike stores are stocked with Nike shoes, Netflix owns 'House of Cards,' and so on," he wrote.

Judge Harry Edwards agreed, adding that the Tennis Channel's complaint should be time-barred as well.

"Tennis Channel's complaint simply alleges that Comcast's continued carriage pursuant to the terms of the 2005 agreement is discriminatory," he wrote. "Therefore, the complaint is almost four years late and should be dismissed as time-barred."

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