Washington -- Cablevision Systems Corp. is trying to get
the Federal Communications Commission to help the cable company save $4 million in a
carriage dispute with a local-TV station.
The $4 million figure is the price tag, the MSO told the
FCC, for retrofitting more than one-dozen New York City-area systems to accommodate the
must-carry demands of just one Spanish-language broadcaster -- Univision Communication
Inc.'s WXTV Channel 41.
Univision is insisting that Cablevision carry the station
on channel 41 on all of its systems throughout the New York market, invoking
broadcasters' channel-positioning and mandatory-carriage rights found in federal
communications law.
Citing a host of financial, regulatory and contractual
issues that Univision's leader has attacked as unfounded, Cablevision told the FCC
that it is unwilling to spend the sums that it would take to comply with what it considers
an unreasonable channel-positioning demand.
Cablevision is carrying WXTV on channel 41 on systems
serving 585,000 subscribers in New York, but that represents just 22 percent of the
MSO's 2.64 million-subscriber base in the market.
For Cablevision, the clash with WXTV could involve a lot
more than a few million dollars.
Cablevision chairman and CEO Charles Dolan has personally
gotten involved by writing a letter to FCC chairman William Kennard to state in no
uncertain terms his hostility toward WXTV's position.
Meanwhile, Dolan's opposite number is no lightweight:
Univision is headed by former Housing and Urban Development secretary Henry Cisneros, who
left the Clinton administration in 1996.
However, Cisneros' involvement might be short-lived,
because he is facing a 21-count conspiracy indictment over allegedly concealing from the
FBI $250,000 in payments to his former mistress, Linda Jones.
An FCC source said the most intriguing issue raised by
Cablevision was its assertion that WXTV's reliance upon must-carry and
channel-positioning rules to slap cable operators with large costs without compensation is
a violation of the takings clause in the Fifth Amendment.
The cable industry as a whole is pressing the Fifth
Amendment argument in the FCC's digital must-carry rulemaking. The industry is
gripped by fears that a "double dose" of must-carry -- analog and digital --
will produce a windfall for TV stations while decimating the ranks of national cable
networks jettisoned from channel-locked systems.
The National Cable Television Association has hired Harvard
Law School Professor Laurence Tribe to frame its Fifth Amendment case.
Some inside the FCC are speculating that Dolan is trying to
get an answer, up or down, on the Fifth Amendment issue in the context of an analog
dispute for potential use in any litigation to fight digital must-carry rules that the FCC
might adopt later this year.
Cablevision sources said principle, and not technology, was
motivating the MSO's cause at the FCC.
"The matter of uncompensated takings and the serious
constitutional issues that it raises are emerging as central themes in the ongoing
must-carry debate," said David Ellen, Cablevision's senior counsel for
regulatory and legal affairs. "This is a welcome development and long overdue. The
issue is critical to our ability to drive customer satisfaction."
One FCC source said the agency's hierarchy is aware of
the Fifth Amendment issue raised by Cablevision and its connection to the digital
must-carry rulemaking. However, the source said, the FCC could resolve the WXTV dispute
without addressing the constitutional issue.
Univision filed a complaint with the FCC in November after
carriage talks with Cablevision apparently broke down.
Cablevision said it was financially infeasible to carry
WXTV on channel 41 on all of its New York-area systems. On 18 systems, channel 41 is
located in a band of channels that is "trapped" to prevent signal theft, to
offer a discrete broadcast-basic tier and to provide consumers with expanded-basic
programming on an unscrambled basis so that they do not need to lease set-top boxes.
The MSO said it would cost $4 million in engineering costs
alone to remove the traps, not to mention the costs associated with the loss of customer
goodwill in 2 million Cablevision homes that would undergo channel-lineup changes.
According to Cablevision, WXTV said it would not lodge a
complaint with the FCC to enforce channel-41 carriage if Cablevision agreed to carry WXTV
between channels 1 and 13. Known as the VHF band, these channels are the home of New
York's most highly rated TV stations, and they are typically the most valuable real
estate in the programming lineup.
Cablevision said it could not place WXTV in the VHF band
because all of those channels were occupied by other local-TV stations, premium networks
and highly rated basic-cable networks. Disrupting that lineup, the MSO said, would anger
subscribers and break carriage agreements.
Cablevision added that WXTV refused carriage on channel 22,
23 or 24 on all Cablevision systems in the New York market.
In a Dec. 16 letter to Kennard, Cisneros dismissed
Cablevision's technical-problems litany and branded the compliance-cost estimates as
"unsubstantiated and undocumented."
Moreover, he said, Cablevision's financial
difficulties with carrying WXTV on channel 41 -- given that must-carry and
channel-positioning rights have been the "law of the land" since 1993 --
indicated that "those costs are largely self-inflicted."
Cisneros capped his argument by demanding that the FCC fine
Cablevision for failing to honor WXTV's channel-positioning rights. He called
Cablevision an "intransigent" cable operator that the FCC should punish to show
other cable operators that they may not "delay and dawdle" with impunity.
"Perhaps when the cost of noncompliance becomes more
economically burdensome than the cost of compliance, companies such as Cablevision will
finally give their legal obligations the serious attention that they deserve," he
said.
