A Federal Communications Commission administrative judge ruled that cable giant Comcast Corp. discriminated against the small, independently owned Tennis Channel by putting it at a competitive disadvantage.
Tuesday's ruling marked the first time that an FCC judge has found that a cable operator had violated the program carriage anti-discrimination rules, which were established by the federal agency in 1993.
Richard L. Sippel, the FCC's chief administrative law judge, found that Comcast, the nation's largest cable TV operator, treated the Santa Monica-based Tennis Channel unfairly by positioning it in a more expensive package of cable channels with fewer subscribers.
At the same time, the judge said that Comcast favored two of its own TV sports networks -- Golf Channel and Versus -- by offering them as part of the basic programming package, received by nearly all of Comcast's 22 million video subscribers. That provided the Comcast-owned channels with more viewers, which in turn, helped the company lure advertising dollars.
In contrast, only about 2.5 million Comcast customers subscribe to the program package that offers the Tennis Channel -- limiting the channel's revenue potential.
"This is a long-awaited day for Tennis Channel, and a watershed moment for independent programming networks and viewers who benefit from a true diversity of voices in the American media marketplace,” Ken Solomon, chairman and chief executive of the Tennis Channel, said in a statement.
"We are now going to get to compete where we wanted to compete for the last seven years," Solomon said in an interview.
The full FCC must vote on the matter before Sippel's ruling becomes final. After the FCC takes action, the matter could be appealed to a federal court.
In his order, Sippel said that Comcast immediately would have to pay the maximum fine of $375,000 and no longer discriminate against Tennis Channel. That means Comcast most likely would have to move the Tennis Channel to its more popular programming package.
Such a move would provide Tennis Channel with substantially more revenue because cable operators, including Comcast, pay networks based on the number of subscribers that receive the channel.
"Comcast Cable's unequal treatment of Tennis Channel vis-a-vis its sports affiliates has adversely affected the ability of Tennis Channel to compete fairly in the video programming marketplace," the judge wrote in his 59-page ruling.
Comcast Cable's action "has depressed the number of Tennis Channel's subscribers, diminished the amount of its license fees, reduced its ability to procure valuable programming rights, and made it more difficult for Tennis Channel to sell advertising."
Sippel's ruling could boost Bloomberg News' position. Bloomberg also has complained that Comcast put it at a disadvantage by refusing to place its business news channel in close proximity to CNBC, the most popular business news channel, which is partially owned by Comcast.
Comcast said it was not headed to the locker room just yet.
“We respectfully disagree with the initial decision that was released today in the FCC case involving Tennis Channel," Sena Fitzmaurice, Comcast's vice president of government communications, said in a statement. Comcast has argued that its 2005 contract with Tennis Channel provided that the channel would be placed in the more exclusive sports tier.
"Comcast has the contractual right to distribute Tennis Channel as it does currently, and Comcast firmly believes that the exercise of that right to minimize costs to consumers is not discrimination," she said.
Fitzmaurice noted that other cable operators placed the Tennis Channel in a more exclusive programming package and that "some refuse to carry Tennis Channel at all."
"We believe it is wrong for Tennis Channel to use the government to impose higher costs and prices on private enterprise and consumers, and we look forward to the review process," Fitzmaurice said.
-- Meg James
Photo: Tennis Channel Chief Executive Ken Solomon in 2009. A judge ruled in favor of the channel in legal battle with Comcast. Credit: Fred Mullane