(Updates with Verizon statement in fifth paragraph.)
June 10 (Bloomberg) -- A U.S. rule that could help bring Knicks basketball, Phillies baseball and other sports to more television viewers withstood a challenge from Cablevision Systems Corp. in a court decision issued today.
The U.S. Court of Appeals in Washington said the Federal Communications Commission acted within its rights in a January 2010 ruling that aimed to make coverage of sports teams more widely available. Withholding sports programming can place competitors at a “serious disadvantage,” the judges said in a 3-0 ruling.
“We doubt that Philadelphia baseball fans would switch” to an alternative service “if doing so would mean they could no longer watch Roy Halladay, Cliff Lee, Roy Oswalt, and Cole Hamels take the mound” for the Phillies, the court said in a 48-page opinion written by Judge David Tatel.
Comcast Corp., based in Philadelphia, withholds its SportsNet coverage of professional teams in Philadelphia from DirecTV and Dish. AT&T Inc. and Verizon Communications Inc. have complained to the FCC of not being able to buy access to sports programming controlled by Bethpage, Long Island-based Cablevision.
“Today’s decision clears the way for the FCC to resolve pending program-access disputes and to ensure that the programming that is important to sports fans is available to them,” Michael Glover, a Verizon senior vice president, said in an e-mailed statement.
The FCC last year decided companies such as DirecTV, AT&T and Verizon are harmed when they’re unable to get access to cable-owned sports shows. The judges today placed one restriction on the rule, saying the FCC can’t simply assume harm without looking at a particular complaint.
The FCC acted “to close the so-called terrestrial loophole” that lets cable companies decline to sell rivals access to programming not distributed by satellite, Andrew Jay Schwartzman, policy director of Media Access Project, said in an interview.
Today’s ruling “means that the FCC has been substantially affirmed,” said Schwartzman, whose Washington-based group is a public policy law firm. “In a particular case, they’re going to have to show that the withholding of the programming was unfair rather than assuming it’s unfair.”
Disputes have flared between cable companies, which own regional sports networks that control coverage rights, and telephone companies that increasingly offer TV service.
AT&T in 2009 complained to the FCC that its television customers in Connecticut couldn’t watch high-definition broadcasts of the Knicks and other sports teams because Cablevision unfairly withheld the programming. At issue were telecasts by Madison Square Garden Network, which includes coverage of the Knicks and the Rangers, Islanders and Devils hockey teams.
Verizon in 2009 told the FCC that Cablevision withheld high-definition coverage of professional sports events including Knicks games in the New York market. The second-largest U.S. phone company argued to the agency that local sports is considered “must-have” programming by New York customers.
The Verizon and AT&T complaints are pending at the FCC.
Cablevision last year spun off its Madison Square Garden unit as Madison Square Garden Inc.
The National Cable & Telecommunications Association, a Washington-based group with members including leading U.S. cable operator Comcast Corp. and Time Warner Cable Inc., joined the case on Cablevision’s side.
Bob Quinn, an AT&T senior vice president, said in an e- mailed statement that the company is “hopeful that the FCC now will move quickly on our pending complaint against Cablevision.”
Cablevision is “pleased” that the court is “is requiring the FCC to reconsider the idea that exclusive terrestrial programming contracts are categorically unfair,” Kim Kerns, a spokeswoman for company, said in an e-mail. “Exclusives can be highly pro-competitive, particularly in markets like New York with as many as five video providers.
The FCC is “pleased” that the court affirmed its rule “to promote competition,” Neil Grace, a spokesman for the agency, said in an e-mail. “By closing a loophole in the cable television program access rules, consumers retain choice in their video service providers without giving up the ability to watch their favorite sports team on regional sports networks.”
The case is Cablevision Systems Corp. v. Federal Communications Commission, 10-1088, U.S. Court of Appeals, District of Columbia Circuit (Washington).
--Editors: Fred Strasser, Charles Carter
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