EchoStar Communications Corp. had a tough time in court Tuesday defending its
claim that it should be able to purchase Comcast SportsNet under federal
rules.
EchoStar's lawyers appeared before a three-judge panel of the U.S. Court of
Appeals for the D.C. Circuit to argue that by law, the direct-broadcast
satellite firm is entitled to distribute the Philadelphia regional sports
network controlled by cable operator Comcast Corp.
But Judge Harry T. Edwards said it appeared that Comcast's decision to
withhold the network from EchoStar was legal and the fact that Comcast was
perhaps seeking competitive advantage was irrelevant.
'[A company] can have all kinds of nasty thoughts,' Edwards said, adding,
'Motive is irrelevant . if legal.'
In October 1997, Comcast launched Comcast SportsNet as a regional service
distributed terrestrially. The Federal Communications Commission rejected EchoStar's complaint that Comcast's
terrestrial distribution was intended to evade another provision that requires the sale of cable-owned, satellite-delivered networks.
In court, EchoStar lawyer Pantelis Michalopoulos argued that the FCC 'took at
face value' Comcast's claim that terrestrial distribution of Comcast SportsNet
was not an evasion.
Among other things, Comcast told the FCC terrestrial distribution was
justified because it was less costly than satellite distribution by hundreds of
thousand of dollars annually.
The FCC also rebuffed EchoStar's request that it should compel Comcast to
demonstrate in greater detail the alleged cost savings by rejecting satellite
distribution.
Judge David Sentelle questioned whether the issue was really the reliability
of Comcast's cost justifications. EchoStar, he added, should have balanced the
record by advancing its own cost estimates.
Sentelle said the effort to force Comcast to produce stronger documentation
was a 'fishing expedition.'
EchoStar also had trouble convincing Sentelle that Comcast had taken
advantage of a legal loophole to deny EchoStar access to the sports network.
'If the loophole is there, isn't it not illegal to use?' Sentelle asked.
FCC attorney Louis Peraertz told the court EchoStar's interpretation of the
law should not be affirmed because it assumed that competitors should absorb
unnecessary distribution costs each time EchoStar demands access to certain
programming.
David Mills, an attorney for Comcast, said the law was clear that cable-owned
programming delivered by satellite had to be sold to EchoStar, but Congress
excluded from that must-sell mandate vertically integrated programming
distributed terrestrially.
Michalopoulos ended the 40-minute oral argument by insisting that the
commission should not have concluded that Comcast acted lawfully without
demanding additional support that terrestrial distribution was motivated more by
cost savings than by the opportunity to deny Comcast SportsNet to EchoStar.
'This is a process that will always end up whitewashing [cable operators],'
he added.
A ruling is not expected for several months.
