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Before the FEDERAL COMMUNICATIONS COMMISSION Washington, DC 20554

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Before the FEDERAL COMMUNICATIONS COMMISSION Washington, DC 20554 Before the FEDERAL COMMUNICATIONS COMMISSION Washington, DC 20554 In the Matter of ) ) Promoting the Availability of ) MB Docket No. 16-41 Diverse and Independent ) Sources of Video Programming ) ) ) REPLY COMMENTS OF beIN SPORTS LLC David R. Goodfriend Antonio Briceño 1300 19th Street, N.W. Deputy Managing Director 5th Floor beIN Sports LLC Washington, D.C. 20036 7291 NW 74th Street (202) 557-3512 Miami, FL 33166 April 19, 2016 TABLE OF CONTENTS I. INTRODUCTION AND SUMMARY…………………………………..2 II. THE COMMISSION SHOULD DEFINE “INDEPENDENT PROGRAMMER” AS LACKING ANY ATTRIBUTABLE OWNERSHIP INTEREST HELD BY, OR COMMON OWNERSHIP WITH, A MULTICHANNEL VIDEO PROGRAMMING DISTRIBUTOR OR BROADCAST LICENSEE…3 III. DIVERSITY OF OWNERSHIP THROUGH INDEPENDENT NETWORKS ENHANCES COMPETITION AND CHOICE IN CRITICAL SPORTS AND MULTICULTURAL FORMATS………………………………………4 IV. MOST-FAVORED-NATION (“MFN”) CLAUSES CURTAIL INDEPENDENT PROGRAMMERS’ ABILITY TO EXPAND DISTRIBUTION AND INCREASE REVENUES……………………………………………….6 V. ALTERNATIVE DISTRIBUTION METHOD (“ADM”) CONTRACT PROVISIONS PREVENT INDEPENDENT PROGRAMMERS FROM REACHING NEW AUDIENCES AND DEVELOPING NEW REVENUE STREAMS………………………………………………………………10 VI. INDEPENDENT PROGRAMMERS SUFFER DISPROPORTIONATE OBSTACLES TO SECURING DISTRIBUTION, COMPENSATION, AND PROMOTION………………………………………………………….11 VII. CONCLUSION AND RECOMMENDATIONS……………………..17 1 Before the FEDERAL COMMUNICATIONS COMMISSION Washington, DC 20554 In the Matter of ) ) Promoting the Availability of ) MB Docket No. 16-41 Diverse and Independent ) Sources of Video Programming ) ) ) REPLY COMMENTS OF beIN SPORTS LLC I. INTRODUCTION AND SUMMARY. beIN SPORTS (“beIN”) respectfully disagrees with the assertions made by some commenters in this proceeding that restrictive contractual provisions endured by independent programmers are good for competition and consumers. They are not. In fact, the challenges faced by independent programmers – those unaffiliated with any MVPD1 or broadcaster -- reduce innovation and choice, often to the detriment of consumers, particularly Latino and other minority niche audiences. Sports programming, critical to the video marketplace, provides a compelling example of why consumers benefit from a vibrant, competitive video marketplace and why Commission action is necessary to maintain competition. beIN sympathizes with the arguments made by MVPDs that broadcast conglomerates, through their bundling practices, tend to crowd out truly independent programming. The Commission should tackle this problem but not to the exclusion of addressing the unique challenges faced by beIN and other independent programmers. 2 beIN is an independent programmer not owned or controlled by pay-TV providers or broadcasters. In August of 2012, beIN launched two channels, “beIN SPORTS” and “beIN SPORTS en Español,” plus a live streaming service now branded ,“beIN SPORTS CONNECT.” beIN offers viewers popular sports content and entertainment across both channels and on beIN SPORTS CONNECT. A cornerstone of beIN is its unrivaled live soccer coverage, which includes live matches from La Liga, Serie A, Ligue 1 and CONMEBOL/ CONCACAF/CAF World Cup Qualifiers, as well as news and in-depth analysis of all the top soccer leagues from around the world. In addition to soccer, beIN serves as a haven to fans of motorsports, tennis, rugby, volleyball, Olympic, and boxing, among others. Both channels are currently available to over eighty percent of pay-TV consumers, carried on tiers delivered to just over thirty percent of pay-TV consumers. II. THE COMMISSION SHOULD DEFINE “INDEPENDENT PROGRAMMER” AS LACKING ANY ATTRIBUTABLE OWNERSHIP INTEREST HELD BY, OR COMMON OWNERSHIP WITH, A MULTICHANNEL VIDEO PROGRAMMING DISTRIBUTOR OR BROADCAST LICENSEE. beIN believes that the NOI defines an “independent programmer” too narrowly as “one that is not vertically integrated with a MVPD.”1 As representatives of the broadcast industry point out, most broadcasters would fall into this category.2 It simply cannot be the Commission’s intent to express concern for the negotiating leverage of major broadcaster-affiliated programming juggernauts, such as ESPN, a Disney subsidiary sharing common ownership with the ABC television network and the ABC owned-and-operated local broadcast stations. Such a definition would not preserve or increase source diversity among smaller, niche programming 1 Notice at n.4. 2 NAB Comments at 2. 3 services. Several cable and satellite TV providers correctly point to the bundling practices of the largest broadcast conglomerates,3 which beIN agrees share significant blame for the crowding out of independent programmers. To reflect market reality, the Commission should define “independent” such that programmers with an attributable ownership interest held either by MVPDs or broadcasters are not considered to be independent sources of content. There is precedent for the Commission defining non-independent programmers based on elements other than vertical integration with a MVPD.4 beIN suggests that the Commission take similar action in this and other dockets by broadening the applicable definition in order to better differentiate between programmers that have, and those that lack, maximum leverage with distributors. Doing so will allow the Commission to target any pro-competitive action at the truly independent programmers facing the greatest challenges in reaching and serving consumers. III. DIVERSITY OF OWNERSHIP THROUGH INDEPENDENT NETWORKS ENHANCES COMPETITION AND CHOICE IN CRITICAL SPORTS AND MULTICULTURAL FORMATS . As some commenters point out, the goal of a diverse video marketplace is well established in the Communications Act and through decades of Commission policy, yet is 3 See, e.g., ACA at 20; Aspire at 3; AT&T at 11-12; HITN at 5; Verizon at 1. 4 See Applications of Comcast Corporation, General Electric Company and NBC Universal, Inc., Memorandum Opinion and Order, Federal Communications Commission, MB Doc. No. 10-56, (rel. Jan. 20, 2011) (“Comcast/NBCU”) at ¶ 122, n. 292 (requiring Comcast to “neighborhood” independent news channels with all other news channels, and defining “independent” to mean, among other things, “unaffiliated with one of the top 15 programming networks, as measured by annual revenues”). 4 threatened by the status quo in today’s Pay-TV market.5 This is particularly acute in the critical formats sports and multicultural programming. The Commission has recognized that sports programming is among the highest-rated in the video market and a critical element of the video marketplace,6 leading the Commission to take action in multiple proceedings to ensure that vertically integrated Regional Sports Networks were widely available to competing providers.7 This, in turn, means that competition and diversity among sports programmers enhances competition among distribution platforms, all to the benefit of consumers. Similarly, the Commission has found that the public interest is served when a variety of multicultural, minority-niche oriented programming is available to the public and has promoted diversity of ownership.8 According to Nielsen data (available upon request), beIN serves both sports and multicultural audiences. Soccer continues to grow in popularity across all demographics in the U.S. To Latino and multicultural audiences in the U.S., it was and remains a major attraction. beIN’s experience reflects these trends. Despite its relatively young age and the obstacles faced by independent programmers, beIN has solid and growing ratings among demographic groups 5 See, e.g., Free Press Comments at 3 (“Independent and diverse programmers face higher barriers to distribution than incumbent and vertically integrated programmers do, often as a result of structural racial and gender inequities built into our media landscape by public policies.”). 6 See Sports Blackout Rules, Report and Order, Federal Communications Commission, MB Doc. No. 12-3 (Rel. Sept. 30, 2014) at ¶ 25 (“[W]e note that NFL games are consistently the highest rated programs on broadcast television.”). 7 See, e.g., Comcast/NBCU at n.107 (citing DIRECTV’s problems carrying the Comcast-owned sports network “Versus”); News Corporation and Liberty Media Corporation, Memorandum Opinion and Order, Federal Communications Commission, MB Doc. No. 07-18 (Rel. Feb. 26, 2008) at ¶ 68; News Corporation and Liberty Media Corporation, Memorandum Opinion and Order, Federal Communications Commission, MB Doc. No. 07-18 (Rel. Feb. 26, 2008) at ¶ 79. 8 See Promoting Diversification of Ownership in the Broadcasting Services, Report and Order, Federal Communications Commission, MB Doc. No. 07-294 (Rel. Jan. 8, 2016) at ¶ 1 (“[T]he Commission has a long history of promulgating rules and regulations designed to foster diversity in terms of minority and female ownership in particular”). 5 nationwide, while significantly over-indexing among Latino audiences. In 2015, American soccer fans saw over 9,000 total hours (about 378 days) of live national soccer programming from more than 20 networks, of which 36% was viewed in English and 64% was viewed in Spanish. beIN provided more live soccer than any other network: 32%, or 2,880 total live hours. The competitive ability of beIN to secure and expand distribution therefore impacts consumers of sports generally, and Latino/multicultural audiences in particular. IV. MOST-FAVORED-NATION (“MFN”) CLAUSES CURTAIL INDEPENDENT PROGRAMMERS’ ABILITY TO EXPAND DISTRIBUTION AND INCREASE REVENUES. Some commenters assert in this proceeding that MFN clauses serve
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