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Shutterstock photoComcast Corp.CMCSA - the largest cable MSO in the U.S. - received regulatory clearance from the Federal Communications Commission (FCC) pertaining to the discrimination and carriage pricing charges leveled by Liberman Broadcasting Inc. (LBI), the owner of Estrella TV in Apr 2016.
Liberman's Complaint
In Apr 2016, Liberman filed a complaint with the FCC charging Comcast of discriminating against Spanish channel Estrella TV and making unjustified demands for carrying it on its network in Denver, Houston and Salt Lake City region. The company was also accused of favoring its own Spanish-language NBCUniversal assets, Telemundo and NBC Universo, thus violating Section 616 of the 1992 Cable Act.
FCC Verdict
As per FCC norms, a cable operator cannot give preference to its own channels over others. In relation to this, Comcast pointed out that such anti-discrimination rules do not apply to broadcasters like Liberman. Further, FCC stated that Liberman's filing failed to provide enough evidence, which is the minimal requirement for filing a complaint. Moreover, Liberman could not justify itself as a 'video programming vendor' instead of a 'broadcast licensee'.
The regulator further went on to explain the difference between a broadcaster and a video program distributor. It says that Liberman is originally occupied in the production, creation and wholesale distribution of video programming. Liberman even charges compensatory fees from Comcast for carrying out its television broadcast stations.
Comcast's Win
The green signal from the FCC's Media Bureau comes as a breather for Comcast. Moreover, Comcast believes that LBI's complaint was baseless in relation to judiciary rights and was nothing but an attempt to extract carriage fees for Estrella TV from it in a baseless way. Further, Comcast rated the performance of Estrella TV as weak without citing any significant negative customer reaction.
Liberman's Discontentment
Officials at Liberman expressed grievance over Comcast getting a cleaning chit and Liberman's complaint being deemed as one based on mere technical issues. Further, Liberman disagreed with the Media Bureau's analysis of the case. It also believes that such verdicts will not be able to put a check on Comcast's discrimination against Estrella TV. Liberman further mentioned that in a market where every other major multichannel video programming distributor (MVPD) prefers Estrella TV for its popularity among Hispanic viewers, Comcast prefers the competing networks.
The Bottom Line
The FCC approval is a constructive development for Comcast. On the other hand, blackouts related to carriage pricing and discrimination disagreements have now become common within the pay-TV industry, with some deadlocks running into weeks or even months. This dispute follows the recent spat between AT&T Inc. T and Grupo Televisa, S.A.B. TV -owned Univision. Moreover, Comcast-owned NBCUniversal faced similar issues with DISH Network Corp. DISH .
Comcast currently carries a Zacks Rank #3 (Hold).
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