REDACTED VERSION Before the Federal Communications Commission Washington, D.C. 20554 FCC 16D-1 In the Matter of ) ) Game Show Network, LLC, ) Complainant, ) MB Docket No. 12-122 ) v. ) File No. CSR-8529-P ) Cablevision Systems Corp. ) Defendant. ) Issued: November 22, 2016 Released: November 23, 2016 INITIAL DECISION OF CHIEF ADMINISTRATIVE LAW JUDGE RICHARD L. SIPPEL Appearances Stephen A. Weiswasser, Esq., Paul W. Schmidt, Esq., Elizabeth H. Canter, Esq., Laura Flahive Wu, Esq., Stephen Kiehl, Esq., C. William Phillips, Esq., and Jonathan M. Sperling, Esq., on behalf of Game Show Network, LLC; Jay Cohen, Esq., Andrew G. Gordon, Esq., Gary R. Carney, Esq., George W. Kroup, Esq., Tara M. Corvo, Esq., and Robert G. Kidwell, Esq., on behalf of Cablevision Systems Corporation; and Pamela S. Kane, Esq., and William Knowles-Kellett, Esq., on behalf of the Enforcement Bureau. TABLE OF CONTENTS Heading Paragraph # I. PRELIMINARY STATEMENT ............................................................................................................ 1 II. FINDINGS OF FACT .......................................................................................................................... 10 A. Description of Parties and Background ......................................................................................... 10 1. Game Show Network .............................................................................................................. 10 2. Cablevision Systems Corporation ........................................................................................... 13 B. Cablevision’s Carriage of GSN ..................................................................................................... 21 C. Cablevision Retiered GSN on the Basis of Non-Affiliation .......................................................... 25 1. The Retiering Conduct ............................................................................................................ 25 a. Background ....................................................................................................................... 25 b. Targeting GSN .................................................................................................................. 27 c. Cablevision’s 2011 Programming Budget ........................................................................ 31 d. The Retiering Decision ..................................................................................................... 35 e. The Retiering’s Erroneous Justification ............................................................................ 40 f. Effects of the Retiering Decision on Cablevision ............................................................. 45 (i) Subscriber Outrage ..................................................................................................... 45 (ii) Fallout of the Retiering Decision ............................................................................... 46 (iii) Renaming the Tier ...................................................................................................... 49 2. GSN Was Similarly Situated to WE tv and Wedding Central ................................................ 50 Federal Communications Commission FCC 16D-1 a. Women’s Networks .......................................................................................................... 51 b. Target Programming ......................................................................................................... 59 (i) GSN Target Programming .......................................................................................... 60 (ii) WE tv and Wedding Central Target Programming .................................................... 63 c. Target Audience ................................................................................................................ 65 d. Actual Audience ............................................................................................................... 69 e. Advertising........................................................................................................................ 71 (i) Target Demographic ................................................................................................... 73 (ii) Target Advertisers ...................................................................................................... 76 3. Business Reasons for Retiering Are Pretextual ....................................................................... 78 4. Motive To Discriminate .......................................................................................................... 84 D. Cablevision’s Discriminatory Conduct Unreasonably Restrained GSN’s Ability To Compete Fairly .............................................................................................................................. 87 1. Loss of License Fee Revenue .................................................................................................. 88 2. Loss of Advertising Revenue .................................................................................................. 90 3. Unfair Placement on Premium Sports Tier ............................................................................. 91 4. Anticompetitive Effect ............................................................................................................ 92 III. CONCLUSIONS OF LAW .................................................................................................................. 94 A. Statutory and Regulatory Background ........................................................................................... 94 B. Proven Discrimination on the Basis of Non-Affiliation ................................................................ 99 1. Direct Evidence of Discrimination ........................................................................................ 100 a. GSN Was Retiered on the Basis of Non-Affiliation ....................................................... 101 b. The “Must-Have” Programming Disconnect .................................................................. 102 c. Cablevision Lacked a Legitimate Business Reason ........................................................ 105 d. Cablevision’s Dealings with Affiliated Networks .......................................................... 108 e. DIRECTV-Wedding Central Gambit ............................................................................. 109 2. Circumstantial Evidence of Discrimination .......................................................................... 110 C. GSN Has Proven that Cablevision’s Discriminatory Conduct Unreasonably Restrained Its Ability to Compete Fairly ............................................................................................................ 115 D. Remedy ........................................................................................................................................ 117 IV. ULTIMATE CONCLUSIONS AND DECISION ............................................................................. 121 V. ORDER .............................................................................................................................................. 124 I. PRELIMINARY STATEMENT 1. On October 12, 2011, Game Show Network, LLC (GSN) filed with the Media Bureau a program carriage complaint against Cablevision Systems Corporation (Cablevision)1 alleging that Cablevision, a cable operator and multichannel video programming distributor (MVPD),2 discriminated against GSN, a video programming vendor,3 in violation of section 616 of the Communications Act of 1934, as amended (Act),4 and section 76.1301(c) of the Commission’s rules.5 1 Game Show Network, LLC v. Cablevision Systems Corp., MB Docket No. 12-122, Program Carriage Complaint (filed Oct. 12, 2011). 2 An MVPD is “an entity engaged in the business of making available for purchase, by subscribers or customers, multiple channels of video programming . includ[ing] . but not limited to, a cable operator, . .” 47 CFR § 76.1000(e). 3 A “video programming vendor” is “a person engaged in the production, creation, or wholesale distribution of video programming for sale.” 47 U.S.C. § 536(b). 4 47 U.S.C. § 536(a)(3). 2 Federal Communications Commission FCC 16D-1 2. In its complaint, GSN principally contends that on the basis of affiliation and non- affiliation, Cablevision moved GSN from a broadly penetrated expanded basic tier to a narrowly penetrated premium sports tier that required Cablevision subscribers to pay an additional fee for continued access to GSN, and such move had the effect of unreasonably restraining GSN’s ability to compete fairly.6 As a remedy, GSN requested that the Media Bureau order Cablevision to restore GSN to the expanded basic tier and that the Media Bureau impose on Cablevision the maximum permissible monetary forfeiture.7 GSN also requested that the Media Bureau require Cablevision, which carries GSN at-will,8 to negotiate in good faith and enter into a new carriage agreement with GSN; and that such new agreement provide that GSN will be carried on a tier no less distributed than the most broadly penetrated tier on which Cablevision carries WE tv, an affiliated network,9 and at a license rate10 that is no less than the greater of the rate Cablevision currently pays WE tv, or the rate Cablevision paid GSN prior to February 1, 2011, the effective date of Cablevision’s retiering conduct.11 3. On May 9, 2012, the