Before the Federal Communications Commission Washington, D.C. 20554

In the Matter of ) ) ) MB Docket No. 08-214 Herring Broadcasting, Inc. d/b/a WealthTV, ) File No. CSR-7709-P Complainant ) v. ) Time Warner Cable Inc. ) Defendant ) ) Herring Broadcasting, Inc. d/b/a WealthTV, ) File No. CSR-7822-P Complainant ) v. ) Bright House Networks, LLC, ) Defendant ) ) Herring Broadcasting, Inc. d/b/a WealthTV, ) File No. CSR-7829-P Complainant ) v. ) Cox Communications, Inc., ) Defendant ) ) Herring Broadcasting, Inc. d/b/a WealthTV, ) File No. CSR-7907-P Complainant ) v. ) Comcast Corporation, ) Defendant )

AMENDED TESTIMONY OF CHARLES HERRING, FOR COMPLAINANT HERRING BROADCASTING, INC. D/B/A DATED APRIL 22, 2009

Introduction

On June 1, 2004, Herring Broadcasting Company, Inc. successfully launched WealthTV, a national cable network, across the United States. Upon its launch on June 1, 2004, WealthTV was immediately available 24/7 in high definition, HD, and in a “downconverted” standard

1 definition, SD, format. The HD network was unique in offering an all original “themed” programming lineup appealing to an upscale, male skewed audience in the 25 to 49 age group.

To the best of my knowledge, upon WealthTV’s launch, it was one of only a handful of national cable channels to offer a high definition network service. Other high definition channels included

HD Net, launched on September 6, 2001, Discovery HD Theater, launched June 1, 2002, and

INHD/INHD2 operated by iN DEMAND, launched in September of 2003, used “HD” in their name. As I followed these networks, it became apparent to me that they focused on the technology of HD rather than a themed programming lineup specifically targeting a well-defined demographic. That is to say, rather than focus on producing original programming around a central theme or idea, these other HD networks aired a mix of HD programming for the “wow factor” offered by the high definition life-like picture quality.

At the time of WealthTV’s launch on June 1, 2004, it was a unique and differentiated service from the other HD cable networks in the marketplace. As I attended various industry trade shows and followed the various public documents on the network programming industry, it became clear to me that there was a tremendous amount of interest within the cable industry with respect to high definition. I only noted a few HD networks launching per year and believe that WealthTV’s launch was closely watched by those associated with the cable television business. With the successful negotiation of each new affiliation agreement, WealthTV demonstrated the viability of a themed programming network with special appeal to a small but highly desirable demographic in the audience at large, and likely to be among the earliest adopter of HD – wealthy men ages 25 to 49 years old.

I, along with other WealthTV’s senior management had been meeting with and divulging its programming and business strategies to iN DEMAND’s cable owners since early 2004 in an effort to secure carriage for its channel. Yet despite apparent interest in response to presentations

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I and my sale force made, and despite WealthTV’s ability to reach affiliation agreements with other video distributors, WealthTV was unable to conclude carriage agreements with all four of iN DEMAND’s owners. In 2007, when I saw a press release from iN DEMAND announcing the launch of the “MOJO” network, I believed I understood why iN DEMAND’s four owners refused to carry. From what I could tell from the press release and the general descriptions in the trade press, MOJO intended to offer the same kind of programming we offered.

I. BUILDING WEALTHTV, SOLID MANAGEMENT AND A CONSISTENT VISION TARGETING THE EARLY ADOPTER, 25 TO 49 YEAR OLD MALES EARNING MORE THAN $100K PER YEAR

About WealthTV’s Management Team

WealthTV is led by my father, Robert Herring, Sr., CEO, of WealthTV. He is a highly proven and successful business entrepreneur with over 35 years of experience founding and leading high technology companies. In 1972, my father was the sole founder of Industrial Circuits, an advanced printed circuit board company. The company was self funded and solely owned by my family. By 1988, Industrial Circuits had become one of the largest producers of printed circuit boards. The business was sold in 1988. Shortly thereafter, my father, brother and I started Herco

Technology, a manufacturer of high volume printed circuit boards. The advanced operations were built from the ground up. By 2000, the company was the largest independent producer of printed circuit boards in the United States, operating out of a 232,000 sq ft facility with 600 employees. In 1992, my father also solely acquired and owned Synthane Taylor a high-end manufacturer of advanced materials for the electronics industry. Both Synthane Taylor and

Herco Technology were sold to Teradyne, Inc. in August of 2000.

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In addition to experience with cutting edge technology, my father also owned and invested in businesses related to the entertainment industry and, significantly, was heavily involved in the early days of the rapid expansion of the Direct Broadcast Satellite (DBS) industry. Through the years, my father has owned a weekly newspaper, operated music concerts and invested in the

Venetian Hotel’s entertainment showroom as one of two partners. In the early 1990s our family business, Herco Technology, became the producers of the primary electronic component for

DirecTV’ set-top-box. We watched and contributed to the expansion of the DirecTV set-top-box deployment to over a million subscribers.

This combination of exposure to cutting edge MVPD technology and the entertainment industry inspired us to consider entry into the emerging DBS programming market. We considered launching a “WealthTV like” service. Because satellite costs remained prohibitively high, we decided to focus our resources on our existing businesses. Yet, we remained convinced that the concept of placing a themed channel, designed to have appeal to a male targeted demographic with significant income and a tendency to be early adopters of new high-end video technologies could be successful, given the right investment commitment and management team. After selling our family electronic business in 2000, we resumed our investigation into the feasibility of launching such a channel.

Another key initial senior management member of WealthTV was Dean Harris. Mr. Harris has an extensive background in the financial services sector and the media industry. Prior to joining

WealthTV, Dean was the president of Heftel Entertainment, overseeing Heftel’s program production and post production facilities in Las Vegas and Miami. He was a member of the board of directors for Billboard Live!, an entertainment subsidiary of Billboard Magazine. As

GM of WealthTV from its inception until September 2006, Mr. Harris oversaw daily operations

4 of the network, including being the Executive in Charge of Production on hundreds of hours of original programming.

Once we committed to the business of WealthTV, we relied on the lessons of our past highly successful start-up operations. Most importantly, the senior management of WealthTV, led by my father, continued a practice implemented in previous businesses, namely investing in the best talent available. Fortunately, Southern California has a plethora of talented individuals in the entertainment industry. As we prepared for launch, we hired the most capable staff members available, from technical engineering managers to oversee operations to producers, editors, on-air talent, sound technicians and video photographers for content production. We also assembled the best available affiliate sales team, comprised of highly seasoned veterans within the cable industry. Today, our full time staff is approximately 45 people strong.

As needed, WealthTV had numerous other resources available. In addition to hiring multiple consultants as deemed beneficial, including Ken Meza, Michael Kassan, Bob Gold & Associates,

Mike Young, Ann Droste, and Dan Carvillo, we had talented veterans such as Randall Dark, of

HD Vision Studios, one of the leading pioneers in the field of high definition, offering strategic guidance as needed. Further, WealthTV contracted Sony and Ascent Media, part of Liberty

Media, one of the nation’s largest media conglomerates, to turn key our production studios. The initial contract was in the multimillions of dollars and both Sony and Ascent Media offered extensive resources as needed.

We also recognized the need to have top-notch production facilities. My brother, Robert Herring,

Jr., accompanied by a small staff, including our technical engineering manager, oversaw the initial construction of the production operations and assisted in daily operations of the network.

Over the years, he has overseen numerous construction projects, managed production operations

5 with upwards of 400 employees, and held the titles of General Manager and Director of

Engineering for our previous electronic company’s operations. His experience in the design of facilities and management of production ensured that WealthTV would have an experienced team on the ground and intense hands-on involvement by the owners/investors critical to success.

Today, I’m pleased and amazed with the talents of our staff. Many members have been with us prior to the launch of WealthTV in June of 2004 and are celebrating their fifth year anniversary with WealthTV.

Internal Funding

WealthTV’s management was and remains highly committed to the success of WealthTV.

Unlike many emerging networks preparing for launch, WealthTV wasn’t burdened with funding challenges as its owners were committed to fully funding the network’s launch and ramp, mitigating the usual concerns of an emerging network of how long it may take to achieve profitability. When management has directly and heavily invested capital into a business, they demonstrate a strong commitment to the long term success of the organization.

WealthTV Built Full Production Capabilities, Master Control & Uplink Prior to its Launch

In 2003, it became clear that there was minimal high definition content available in the marketplace. Moreover, the type of content readily available didn’t always fit WealthTV’s targeted audience. In January of 2004, a small group of WealthTV’s staff, including me, attended a major content acquisition show in Las Vegas called NATPE. The amount of HD content readily available was minimal. Moreover, much of the content simply didn’t fit our target audience. It was apparent that WealthTV would need to either help outside production

6 companies move more rapidly towards high definition production and/or build-out our own production studios to create content specifically targeting our audience.

WealthTV did both. We worked with several outside production companies to create original high definition content for the channel. Many companies were paid in advance for multiple episodes of a series to help fund their acquisition of HD equipment. More importantly,

WealthTV made a substantial investment in building full in-house production capabilities. We acquired a 40,000 sq ft facility to house our production operations and headquarters. In late

2003, Sony’s video production integration group was tasked with re-designing the layout of the facility to house and optimize internal content creation from concept to airing. (Sony’s integration group was acquired by Ascent Media shortly after the design phase but prior to build- out.) In early 2004, the roof of the facility was removed to enhance the studio space and the building was heavily renovated to house our production studios, edit bays, graphic creation, sound correction, center equipment room, control room, master control and uplink operations.

Ascent Media, with help from Motorola, designed our master control, giving WealthTV the ability to uplink on site – which is the process of transmitting the feed from earth to a satellite spacecraft. The creation of our own content would further enhance the viability of WealthTV.

Offering a differentiated service with unique and original content, rather than repurposed content, would enhance the appeal to video consumers. By producing and maintaining full rights to our content, WealthTV can offer advanced services, such as video on demand without worrying about contractual license issues. Most importantly, the commitment shown in building full production capabilities signaled that WealthTV was fully committed to offering a viable quality long-term product.

WealthTV made this extraordinary upfront commitment because it intended to target a specific audience – males 25 to 49, earning more than $100,000 per year. To appeal to this high-end

7 audience requires top-quality programming, which requires a top-notch facility. In addition, we understood that the more aspects of the programming chain we could bring under our control, the greater our ability to guarantee the consistent quality demanded by the targeted demographic and by the video distributors.

The Concept of WealthTV – A Themed High End Lifestyle Network

Several years prior to launching WealthTV, my father discussed with me his desire to launch a high-end lifestyle channel. Although at the time, there was no name placed on the concept, it would become WealthTV years later. The initial concept of the channel remains the same, namely to use themed original lifestyle programming to attract a high end male skewed audience with disposable income. Through the years, in order to give people a quick picture of the concept of the channel we have stated it is similar to the Robb Report magazine. To some extent this is true, yet not the complete picture. Like the Robb Report WealthTV features content on cars, boats, cigars, and travel. Yet, WealthTV also offers shows featuring finance, food, wine, music, and other high-end lifestyle programming.

After the sale of our family businesses in August 2000 more discussions took place regarding the potential business model, necessary infrastructure, and types of programming that could be aired.

In the early summer of 2003, my father and I had extensive discussions on the necessary infrastructure of launching a channel and programming that it could feature. The examples were numerous. I recall discussions on exotic cars, yachts, travel, fine wines, foods, and finance. In order to attract a more educated audience, the programming would have to offer substance with the entertainment. We also wanted to avoid Hollywood “gossip” and pure flash. If a jet was shown, we’d explain why the owner uses it, the advantages to his business and life, and the expenses in owning one. We felt that the concept was very unique based upon the lack of such a

8 dedicated channel on TV at the time. We also realized that the programming would draw in a secondary audience, namely those looking to live vicariously. In early December, 2003 as we began a content buying spree for the channel, it was announced in a press release that “We are actively seeking fresh, high-end lifestyle and entertainment programs with a broad appeal that show the high-end lifestyle at its best.”1

We recognized that advertising revenue is a critical component to the success of emerging networks and carving out a niche for WealthTV would be key. Our strategy for becoming a long- term viable network focused on attracting a highly desirable audience for our advertisers – namely an upscale male skewed audience with plenty of disposable income. I’ve used the phrase

“having special appeal to the high end viewer” to describe this strategy.

WealthTV’s all original themed programming strategy features shows on how wealth is achieved, used and enjoyed.2 Themes focus on enjoyable aspects of financial success, including travel, fine dining, luxury transport, gadgetry, finance, philanthropy, and thoughtful insights on cultures, among others. With various heavily male skewed series, we’ve used multiple images in our advertisements with key short phrases to convey the target audience of the network. An example is a full page color ad (Exhibit 13) WealthTV ran in 2007 and 2008, which has placed in multiple magazines. The ad uses the phase, “from great cars to the best cigars, WealthTV delivers the luxury lifestyle all in high definition.”

I and the rest of WealthTV’s management carefully examined all the high definition channels that had launched or had announced a potential launch. At the time the universe of such channels was

1 Source: A WealthTV press release dated December 12, 2003, “WealthTV Begin’s Content Buying Spree”, http://www.wealthtv.net/releases.html 2 See WTV001 0000028, WealthTV’s pre-launch marketing flyer. 3 This Exhibit is document WTV001 0000005.

9 very small. They included HD NET and INHD. I looked at INHD and continued to track its programming even after launch, as I did with the programming of other HD networks. Our conclusion as we developed and launched WealthTV, was that INHD was not a direct competitor to WealthTV. To us, it looked like INHD was offering any HD programming with no particular theme. I considered it “general interest” HD network, showing a mix of movies, sports and other programming of interest to children. It seemed to me that advertisers interested in a targeted high- end demographic of the kind offered by WealthTV would see us as offering a different and unique product rather than a competing product. I have provided a copy of an INHD weekly schedule (Exhibit 125) as an example of the sort of material I reviewed to come to the conclusion that WealthTV had nothing to fear from INHD.

As I continued to track INHD after launch, my monitoring of the industry for potential competitors continued to reaffirm this initial business decision not to regard INHD as a direct competitor. Exhibits 90 and 91 represent that sort of material generated by iN DEMAND describing its own channel that confirmed for me that INHD did not target the same high-end demographic we did. My regular reading of industry news articles likewise continued to confirm for me that my initial judgment that INHD did not directly compete with WealthTV was right, and that WealthTV could therefore continue to market itself as uniquely situated to its target demographic.

A Scare for WealthTV – Fine Living

By at least late 2003, I became aware of Fine Living. The name sounded like it could be similar to WealthTV and we were afraid that our “unique” programming model wasn’t so unique.

Although WealthTV was launching in HD and Fine Living didn’t offer a HD feed, WealthTV wasn’t about the technology. WealthTV was about the themed high-end lifestyle programming.

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After watching the channel and reading numerous articles, and later having in-depth discussions with one of its founders, I came to the conclusion that the concept of Fine Living and WealthTV were nothing alike. Although Fine Living sounds similar to WealthTV, my impression is the concept is not. I believe that Fine Living is about how to enjoy your life at your current economic level. I’ve noted a key series at the time was Simplify your Life. My impression of this series is that it gives helpful, timesaving tips to allow viewers to better enjoy their life. As an example of an episode of Simplify your Life that I watched, the program showed how to use Tupperware containers to place extra belongings underneath one’s bed to tidy up living quarters. This isn’t a type of show that would ever air on WealthTV. Two of Fine Living’s key programming categories that I found on their web site included “personal space” and “practical living”. I consider both to be outside of WealthTV’s general theme.

Nor, as I continued to reassure myself, did Fine Living have a male skew as shown by their demographic data that I viewed on their website. It appears to me that Fine Living clearly targets females, while WealthTV is designed to attract males. Today, I’ve noted Martha Stewart programming on Fine Living, which I believe typifies the programming on Fine living.

WealthTV’s Targeted Demographic - Educated, High-End, 25-49 Year-Old Males

Consistent with our vision we target a male skewed audience from 25 to 49 years old. From 2003 when I helped founded WealthTV, we designed the programming to have the highest interest among such male viewers with incomes above $100,000. We’ve designed and described

WealthTV as holding a special appeal to the highest income households. Branding the channel as “WealthTV” has demonstrated our desire to attract the highest income households.

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Our target audience hasn’t been a secret in the industry or with the defendants. WealthTV clearly communicated our target audience to cable operators and advertisers beginning with our initial introductory presentations. From our initial discussions with operators in early 2004 through our launch in June, WealthTV visited with nearly all the major cable operators, including

Time Warner, Comcast, Bright House and Cox, providing initial overviews and highlighting our targeted demographic, a key element and discussion topic for any network seeking carriage. For example, in March of 2004, I flew to Philadelphia with our senior affiliate sales person to visit with Comcast’s programming department. We presented a thorough overview on WealthTV, including a PowerPoint presentation, consisting of fourteen slides4, dated March 26, 2004. The presentations supplied during these initial introductory visits were generally similar to materials delivered to all cable operators and advertisers. As an example, on June 9, 2004, WealthTV provided a presentation5 to Orion Cable. The presentation is identical to the Comcast presentation, except for the addition of one slide specifically for Orion Cable. Both presentations contain a WealthTV Targeted Audience (Exhibit 2) slide. WealthTV’s initial presentations to advertisers also included discussions on our targeted demographic. For example, on April 12,

2004, I provided a presentation6 to Yachting Magazine’s Time4Media, a subsidiary of Time

Warner that includes an identical demographic page. Nearly four years later, on January 25,

2008, as WealthTV was kicking off an exclusive advertising representation relationship with TV

Ad Works, I responded via email with two emails (See Exhibit 297 ) with the associated attachments, including to the president of the organization, copying others, including its CEO, when asked for demographic information with, “WealthTV attracts 70% men, educated, affluent from 25-49+.” A summary of WealthTV’s target audience as shown to Comcast in a formal presentation dated March 26, 2004 is shown below:

4 WTV001 0004604 to WTV001 0004617 5 WTV001 0004674 to WTV001 0004680 6 WTV001 0004735 to WTV001 0004784 7 These exhibits have associated bate stamps, but at the time of this writing, I’m unaware of the number.

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TARGET AUDIENCE OF WEALTHTV (see WTV 001 0004611)

AGE: 25 to 49 years old.

SEX: Male skewed

INCOME: Home with incomes above $100,000 to have the highest interest (special appeal)

EDUCATION: Skewed towards EDUCATED

I personally made the Target Audience slide provided in the three presentations cited above

(Exhibit 2).8 My definition of skewed is having a definitive slant or towards something. Since at least early 2004, I’ve stated that the audience for WealthTV is at least to some extent represented by me. Upon the launch of WealthTV in 2004, I was 38 years old, male, college educated, and have been fortunate to travel extensively - falling in the stated income shown above.

WealthTV’s Direct Overlap with HD Early Adopter Viewers

Although the concept of WealthTV was established well before our decision to launch in high definition, our management team was well aware of the fact that our network demographic directly overlapped with high-end advanced consumer electronics male skewed audience, including the early adopters of high definition televisions. As clear evidence of this understanding, WealthTV has numerous shows on gadgets and consumer electronics, including

WealthTV’s Amazing Gadget’s & Technology, Innov8, and The Best of Home Theater, among others. Over the last three years, WealthTV has sent internal production crews to capture the

8 Exhibit 2 is the same as WTV001 0004611, WTV001 0004674, WTV001 0004742

13 happenings at the consumer electronics show, producing five complete shows solely on CES. In

2003 and early 2004, our management team researched the target market for high definition set consumption and viewers.

The research repeatedly showed that the male, high income households held the highest interest in high definition programming. The audience is comprised, not surprisingly, of 25-49 year olds.

Our goal was to provide programming directly targeted at these early adopters, namely upscale male viewers. During our initial presentations to the defendants, we highlighted that the

WealthTV demographic key characteristics was identical to the HD early adopters as shown on the Target Audience slide (WTV001 000411). On December 9, 2004, in an email soliciting

Forbes, I wrote, “All statistics show that the HD viewer is well educated, affluent, and interested in the best life has to offer. A highly concentrated viewership of the ideal demographics may be preferred over a very broad base. WealthTV’s programming strategy is to deliver a 24/7 national cable channel in high definition that is highly desired by this audience, while entertaining everyone, regardless of economic status.”9

WealthTV’s Target Audience is Sufficient to Reach Enough Subscribers for Viability

Although WealthTV targeted a very specific demographic, providing a clear focus for our programming choices, it is a large enough demographic to support a programming network – even one producing original HD programming such as WealthTV. WealthTV’s targeted age range of 25 to 49 spans not just a few years, but 25 years. US Census Bureau data10 shows that for July 2004, the year WealthTV launched its services, of the male population in the United

9 See WTV001 004421 10 http://www.census.gov/popest/national/asrh/NC-EST2007-sa.html. This same data source shows that for 40-50 year olds, the US male population is 22,342,735 and the 18 to 24 year old male population is roughly 15 million. Some estimates are required.

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States, totaling 144 million men, more than 53 million were men ages 25 to 49 years old. By no means can 53 million men from the ages of 25 to 49 million be described as a small or niche audience. A smaller subset of the 53 million men fall into the high income range, yet WealthTV appeals to people who aspire to get there. Targeting this audience offered a substantial and broad audience for WealthTV. Even with a dedicated mission to have appeal to an educated, high income, male skewed audience, WealthTV’s programming appeals to a relatively broad group that enjoys the finer things in life regardless of income such as our shows on wines and travel.

Although the skew to males earning $100,000 or more significantly narrows the primary audience targeted, we anticipated that to some degree males in the appropriate age group but earning less than $100,000 would also watch. There is a vicarious living and aspirational appeal with these types of shows. In addition, we recognized that many of our shows, although tailored to our targeted audience, would attract some women. Today, our demographic data shows our targeted audience is being successfully reached. We clearly know that not every viewer has an annual income of $100,000 or higher and not every viewer is male, but such viewers form the bulk of our audience. There is no reason to alienate anyone wishing to enjoy our programming lineup and our high-end focus discourages certain types of programming, which appeals to our focused target audience and to some outside our focus audience. We have described WealthTV as

“Intelligent Family Television” not because we offer children’s programming, and not because we have averted our focus from our target demographic. We describe WealthTV this way because members of our target demographic as a practical matter do watch television with other member of the household in the room. They can watch WealthTV without concern that others in the household will be exposed to inappropriate content during normal family viewing hours.

This in no way means that we have shifted our target demographic, nor that our actual delivered demographic has changed.

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WealthTV’s Measured Demographic

In Q3 of 2007, WealthTV hired the services of Kersey Research Strategies to perform third party confirmation of our audience demographics. One of our key series, Taste! The Beverage Show, was perfect for adult beverage advertisers. We also felt our music series Sound Check might be an ideal show for advertising beer and liquor. At the time, WealthTV was working with KSL

Media, a New York based advertising firm representing Grey Goose, a high end vodka supplier.

The firm instructed WealthTV on their need to self monitor media demographics to confirm reach of our actual demographic. Adult beverage suppliers self regulate their media placements. The self regulated requirement established by the Distilled Spirits Council of the United States,

DISCUS, are designed to reasonable access that 70% or greater of the expected viewers are of the legal permissible drinking age, LPA. After working with KSL Media on acceptable methodologies, including the acceptable minimum statistical relevant sample size, and reviewing the Distilled Spirits Council of the United States, DISCUS, requirements, WealthTV hired Kersey

Research Strategies to confirm our audience demographics, tabulating viewer feedback forms.

Kersey Research confirmed the data showed the following:

THIRD PARTY MEASURED AUDIENCE OF WEALTHTV (see Kersey Testimony)

AGE: 21-34 is 16%, 35 & up is 83%.

SEX: 71% men

INCOME: 55% with household income of $75,000 or greater. (Compared to 29.5% for the US population11)

Although I did not personally evaluate the raw data used in the tabulations, I was by no means surprised by the measured male skewed and high income audience findings. Since WealthTV’s launch on June 1, 2004, WealthTV has been targeting this demographic with original content.

11 see http://www.census.gov/prod/2007pubs/p60-233.pdf page 29

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By late 2007, our programming was clearly delivering on our targeted audience. My confidence in this data was exhibited by sharing it with our advertising firm (Exhibit 29) and advertisers. We also posted on our website the letter provided by Kersey Research stating our audience meets the requirements of DISCUS.

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The Branding Images of WealthTV

The advertising images used by WealthTV to brand the network speak loudly to its targeted demographic of upscale male audience and have been consistent in approach since our inception.

One of our first marketing pieces (WTV001 0000027, -28) printed and distributed months before the launch of WealthTV in June 2004, highlights the luxury upscale male skewed audience

WealthTV targets. The six images show fast and luxury cars, private jets, and yachts, undeniably projecting an image of upscale luxury lifestyle entertainment targeted at to high income male viewer.

Perhaps the most revealing ad (WTV001 0002633) for WealthTV ran on Time Warner Cable’s own web site in San Antonio at least by March 2, 2007. WealthTV supplied this ad to Time

Warner on February 23, 2007, to advertise the availability of WealthTV’s programming on Time

Warner San Antonio’s video on demand (VoD) system. WealthTV’s staff felt that this image properly spoke to the WealthTV brand as it was displayed on Time Warner’s home page. The image was the first branding web banner on Time Warner’s website advertising the new HD

VOD service by WealthTV. Once again, we see a consistent and male focused theme with our elegantly dressed James Bond like man with images of fine cigars and an exotic car with a young blond leaning on the side of the car. The image says luxury lifestyle entertainment targeted to an upscale male viewer.

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WealthTV highlighted various shows for our VOD offering on Time Warner. WealthTV offered images and descriptions of our VOD offering to Time Warner which were posted on Time

Warner’s website. The July 2007 WealthTV Programming Highlights (Exhibit 32) for

WealthTV’s VOD offering highlights six WealthTV shows, they are: Best of Men’s Wear,

Wealth on the Water, The Boomer Show with Brian Christie, and two Wealth on Wheels titles, namely L.A. Auto Show and Viewer’s Choice Awards. WOW! Park City, featuring the top rated ski resort in the nation, Deer Valley. The overall branding message is luxury lifestyle entertainment targeted to an upscale male audience.

WealthTV’s most current print image appears in an AT&T U-Verse mailer (Exhibit 3) for March

2009. The front of the mailer features six images of various networks. One of the six is

WealthTV’s Electrified series. We know that this show is a top performing series as measured across over 2.5 million televisions12. The multiple part WealthTV Electrified series showcases the conversion of a Porsche 911 to a 100% electric racing machine. There is no doubt in my mind that this show draws a primarily male audience.

The latest full-page print ad campaign (WTV001 0000008) for WealthTV was featured in

American Driver, a magazine featuring cars, travel destinations, and upscale luxury living. To the best of my knowledge, the ads ran from early 2007 into mid 2008. The WealthTV full-page ad shows an image of a late thirties to early forties year old James Bond like man dressed in a black tuxedo. The image of the man is centered on the page and is substantially bigger than the woman who is drifting out of the picture. Unlike the woman, the man is looking squarely at the viewer. The message is clear – this network is about the man. Six images further paint the picture. In the upper right is a beautiful blond woman with her hand on an exotic bright yellow

12 On two occasions in 2009, I’ve viewed Rentrak TV Essentials data for WealthTV. Electrified was one of our top performing shows for a weekly period.

18 sports car, in the center we see a close-up of fine cigars, in the lower right is an image of scampi and pasta entre with perfect presentation. The center bottom image shows a hotel pool side. The last two images are of a private jet in the air and an amazing private estate. These images were designed to resonant with an upscale male audience looking for the finer things in life, consistent with our 25-49, male skewed, educated, income of $100k and up (or aspire to) demographic.

In an ad (WTV001 0000981) we ran in the Wild Blue Wonder magazine on Frontier Airlines,

WealthTV is described as, “…it’s the luxury lifestyle and entertainment network featuring travel secrets, fast cars, investment tips, and much more.” Again, we see on the television an image of a sophisticated relatively young man in a black tuxedo.

WealthTV’s current brochure cover (Exhibit 33) features four images on the cover, namely an exotic travel destination on the water, a man’s elegant time piece, a picture of Steve Forbes, and a beautiful bright red high performance car. The images are designed to project and convey upscale luxury lifestyle entertainment targeted to a high income male audience in the 25 to 49 age group.

Industry Trade Show Branding

WealthTV has exhibited at various leading cable programming trade shows, including The Cable

Show, since 2005. Our messaging theme has been very consistent with luxury lifestyle entertainment programming with a targeted demographics of a high-income, male skewed audience. For example, each year, WealthTV has multiple large HDTV flat screens prominently displaying our programming. In addition, we offer a free giveaway that speaks to our brand and attracts crowds to our booth. In 2005 WealthTV raffled the use of a classic Rolls Royce with driver for the evening. In 2006, WealthTV featured a book signing with Malcolm Gladwell, a

19 well known author of business books, including “Tipping Point”. I believe we gave away 500 signed copies. We selected Malcolm Gladwell because he appeals to the male, business reader, in our 25 to 49 targeted demographic. In addition, WealthTV featured a cigar roller (Exhibit 4) in the booth.

In 2007, WealthTV had a red Ferrari 360 (Exhibit 5) in our booth. In 2008, WealthTV featured a cigar roller and two red Ferrari’s. On April 1st, 2009, WealthTV’s booth opened with a cigar roller, a red Ferrari F430 and a Lamborghini Gallardo. Fine cigars, exotic sports cars, and well- known business authors speak of our luxury lifestyle entertainment programming targeting a high income, male skewed audience, 25-49 year old.

Examples of WealthTV’s Luxury Lifestyle Entertainment Programming

WealthTV offers a wide range of all original programming designed to appeal to a 25 to 49 year old, male skewed, educated, and upscale audience. WealthTV offers programming covering luxury lifestyle entertainment, including travel, adult beverages, cooking, gadgets and technologies, cars, boats, planes, motorcycles, cigars, finance, music, comedy, among numerous others. All content on WealthTV has never been aired before in the US. Thus, longer descriptions are provided herein. Five examples of our luxury lifestyle entertainment programming are highlighted below, with numerous additional examples provided throughout my testimony.

Wealth on Wheels (Exhibit 6) features numerous different angles on cars, but a common theme is highlighting the latest high-end cars and technologies in the automobile industry. Each year,

WealthTV travels to various automotive shows to highlight the latest trends and advancements in the automotive industry. In addition we take viewers on test drives. Each year, WealthTV

20 honors the hottest new releases in six categories and features a show highlighting the winner cars.

A show highlighting the latest automotives could feature the “best family van” or “the most economical car to own” or as is commonly done, the “best buy” in each category. WealthTV doesn’t take this approach. Four of the six categories use the word “sports” cars or “luxurious” cars. A close examination of the categories and winning cars loudly speaks to our audience.

• Most Exciting New Release of 2009 – Ferrari California

• Most Luxurious SUV of 2009 - Lexus LX 570

• Most Luxurious Sedan of 2009 - BMW 7 Series

• Hottest Sports Car under $50k of 2009 - Audi TTS Roadster

• Hottest Sports Car no Price Limit of 2009 – Aston Martin DBS

• Most Advanced use of Hybrid Technology of 2009 – Cadillac Escalade Hybrid

World of Wealth – this series first aired in June of 2004. The series delves into the world of business through the eyes of well-known business celebrities, experts, and visionaries. The series is best described as a financial show. Each show offers a business theme topic, such as globalization, highlighting what it means in business today and tomorrow.

Sound Check (Exhibit 7) – A hip and witty 30 year old male host, Matt Gagin, with dark, funky sunglasses delivers his dry and insulting humor between the latest pop music videos, typically 5 per show, from Coldplay to Will Smith.

Featured artists include: Janet Jackson, Rainer Maria, Sean Lennon, Norah Jones, Meat Loaf, and Ziggy Marley, Coldplay ,Richard Ashcroft, Joss Stone, Will Smith, Broken Social Scene, Corinne Bailey Rae, Gorillaz, Placebo, K.O.S, Joan Jett, Beck, Aly and AJ, OK GO!, Interpol The Beastie Boys, Hilary Duff, The Concrete, Gwen Stefani, Ambulance LTD., RBD, Sleep Station, Skinny Puppy, Beth Orton, Sachal Vasandani, MXPX, Janet Jackson, The Dears, Lilly Allen, Madonna, Meg And Dia, 30 Seconds to Mars, Ben Harper, Los Lonely Boys, Emily Haines, Mcfly, Emerson Hart, Lisa Marie, and The Vines, Plain White T's, Jimmy Buffet, Girl in a Coma, Interpol, Blue County, Coldplay, Talib & Kwelui, Amos Lee, and Green Day, Lenny Kravitz, Kylie Minogue, Brisaroche, Gorillaz, and Raven Simone, Vanessa Hudgens, Voodoo Blue, Taking Back Sunday, Annie Stela, Marie Digby, Varsity Fan Club, Corinne Bailey Rae, Placebo,

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Ben Harper, The Cute Lepers, The Jonas Brothers, Katy Perry, Miley Cyrus, Corinne Bailey Rae, KT Tunstall, The Last Goodnight, Coldplay, Saving Abel, Mikel Knight, Yellowcard, The Starting Line, Plain White T's, Raul Midon, Plushgun, Sick Puppies, MAE, Reliant K, Anberlin, Ben Harper, Lily Allen, Beth Orton, Lenny Kravitz, Coldplay, Stacie Orrico. (WTV 001 0004655 and WTV 001 0004657)

The Big Biz Show (Exhibit 8) – Sully and Russ 'T' Nailz are two funny guys who happen to be in the business of personal finance and investing with an unmatched ability to deliver bar room style conversation with a business flair. Russ “T” Nailz is a professional comedian, while Sully is truly a financial expert.

The Very Best of Everything with Marc Cummings (Exhibit 9) – This series began airing upon

WealthTV’s launch and was advertised in the first marketing material printed on WealthTV.

Marc Cummings is a modern day renaissance man. He is a Cordon Bleu Master trained chef, former Davis Cup tennis pro, a world class fisherman, a cultural expert, and has traveled the world. (Marc is also the grandson of Nathanial Cummings, founder of Sarah Lee.) In each episode the viewer joins Marc as he travels to resort destination and enjoys a wide range of activities. In segments Marc may take us fishing off Florida or for a little tennis. Segments have included an occasional highlight of an amazing sports car. Each show features cooking and a tour of the resort, along with insights into the surrounding area, culture, and history.

It’s important to note that looking at a stand-alone show and determining the audience is substantially different than looking at a group of programming designed to attract a targeted audience. Yet, The Very Best of Everything with Marc Cummings, featuring travel, sports, cooking (and drinking), an occasional car, and cultural insights hits many of the topics that appeal to upscale men, 25 to 49 years old, and featured on WealthTV.

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WealthTV also airs shows that may appear to be outside the target demographic. On such show is “Fashion Runway”. This series features beautiful models on the runway. Several shows have little to no dialogue which, from the male perspective, simply isn’t needed. The images are revealing (Exhibit 10). WealthTV’s Let’s Shop, with voluptuous host Cheryll Gillespie travels the world looking for the best in local affairs from coffee and rum in the Caribbean to bikini’s in

Rio De Janeiro. The series is filled with scantily clad beautiful women from around the world

(Exhibit 11).

Proven Demand for WealthTV

Unlike MOJO, WealthTV has been successful with receiving carriage from AT&T U-Verse,

Verizon FiOS, and Qwest, the three largest telcos that have deployed video services. In addition,

WealthTV received carriage on VOOM, the DBS platform that was shut down in 2005. To date,

WealthTV has over 125 linear video distribution partners providing WealthTV’s 24/7 network into homes across the United States.

II. DEFENDANT’S AFFILIATED PROGRAMMING MOJO DIRECTLY COMPETED WITH WEALTHTV.

From when we first brought WealthTV to market, I and my staff had meetings with programming executives and decisionmakers for all of the defendants. But no matter how many other affiliation deals we concluded, and no matter how we tried to address any requests for information or offer of terms, we could never seem to get a final agreement.

On March 19, 2007, I discovered from a press release issued by iN DEMAND that iN DEMAND intended to replace its existing INHD service with a new themed programming network called

“MOJO.” (Exhibit 94). Even without the connection to defendants, I would have followed this development closely. As I stated above, although I had concluded that INHD did not directly compete with WealthTV, and had only followed it in a very cursory way after 2005.

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MOJO Programming Competed Directly With WealthTV’s Programming.

As illustrated by our “Fine Living scare,” the real test of whether I would view a network as a direct competitor is in the programming. I therefore spent considerable time watching MOJO’s programming lineup and signature series. The March 19, 2007 press release that first informed me of MOJO’s existence described the programming line up as follows:

“MOJO was born in June, 2006 as a prime-time programming block on the INHD network, with original high-def series geared to males who are “active affluents” – dynamic, intelligent, adventurous. Since then, the network has further developed the MOJO brand and expanded its slate of programming, with new series spanning adventure travel, comedy, finance, music, cuisine, and spirit and high tech toys.” (emphasis added)

These are the same kinds of programming we developed at WealthTV, and have marketed in precisely this way. Subsequent descriptions of its own programming in press releases were consistent with this first description. MOJO’s April 14, 2008 press release announcing a new high tech show called The Circuit, shows indicates (http://www.MOJOhd.com/press/view/30):

“Original shows are about wide-ranging men’s interests including high tech, finance, comedy-reality, adventurous travel, music, cuisine and spirits.” (emphasis added)

From my own viewing of MOJO’s programming and reactions from the press confirmed the descriptions in these press releases and led me to believe that MOJO focused its programming line-up in the categories of: high-end cuisine, spirits, finance, high tech toys, music, and adventure travel. WealthTV also offers an extensive number of original series that covers these programming categories.

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MOJO’s signature series as highlighted on its daily program schedule and website featured these original and defining 18 plus “MOJO Series,” all of which appear to be targeted at MOJO’s self- described audience of 25 to 49 year old affluent males. MOJO’s signatures series, targeted at

MOJO’s defined audience included Uncorked with Billy Merritt, King of Miami, I Bet You, The

Show, Pressure Cook, Bobby G: Adventure Capitalist, Start-up Junkies, Three Sheetz, Beer Nutz,

After Hours, Doctor Danger, and Fueled among others. In November 2007 MOJO announced a new programming block every Thursday entitled MOJO Money Night. This block partnered three original MOJO series about maverick entrepreneurs and investors, Bobby G: Adventure

Capitalist, Start-up Junkies, along with Wall Street Warriors. Three of MOJO’s original signature series featured adult beverage shows, namely Beer Nutz, Three Sheetz, and Uncorked with Billy Merritt.

I have prepared for this litigation a chart illustrating which MOJO series parallel which

WealthTV series. I have submitted this chart as Exhibit 25.

The MOJO Audience – Average Age of 39.3 year old, with 38% over 50 years old

At the Consumer Electronics Show in early January 2008, I came across and viewed MOJO’s full page color advertising page13 carried in an Advertising Supplement to Television Week. The page states that the average age of a MOJO viewer is 39.3 years old., that 34% of their viewers earn more than $100,000 per year, and other indicators of a “high end” demographic similar to that sought by WealthTV. I also came across a four page color presentation called “The MOJO

Viewer” (Exhibit 12) found on MOJO’s website. This information on the website again matched the viewer targeted by WealthTV, including more detailed information about age that confirmed

13 See WTV001 0002129 (WTV Exhibit 133)

25 that MOJO had the same age focus as WealthTV. That the information MOJO reported about itself closely tracked with my own belief of the make-up of WealthTV’s audience, as described above, made it clear to me that MOJO was competing for our target market by producing the same kind of programming.

WealthTV and MOJO Attract and Solicit the Same Advertisers

MOJO and WealthTV, with similar programming targeting the same audience, solicited and attracted the same type of advertiser. MOJO secured advertisers in the categories of high-end auto, consumer manufacturers and high-end alcohol (WTV001 0002054, -5) Both WealthTV and MOJO were actively soliciting these types of high end advertisers (WTV001 0001846,-7).

With shows like Wealth on Wheels, Taste! The Beverage Show, World of Wealth, Innov8, and

WealthTV’s Amazing Gadgets and Technologies, WealthTV attracted the audience and advertisers for high end cars, adult beverages, finance, and consumer electronics. WealthTV was actively soliciting Lexus, Porsche, BMW, Grey Goose (Exhibit 118, WTV001 0004654, -9),

Morgan Stanley (Exhibit 119,WTV001 0004660, -5) and Samsung Electronics (Exhibit

121WTV001 0004697, -4704), among others. I’ve noted that MOJO is also targeting similar advertisers as WealthTV, namely high-end automotive companies, adult beverage companies, financial institutions, and consumer product companies. I’m aware that both WealthTV and

MOJO secured Bose as an advertiser and solicited Grey Goose.

Reporting of Subscriber Numbers & Demographic Information to Advertisers

I’ve tried to ensure that our subscriber numbers and demographics information are reported as accurately as possible, especially to advertisers, who rely on this information for determining the value of advertising spots on our network. Occasionally we have been asked to provide estimated subscriber numbers in the future. Forward looking projections on subscriber growth is very challenging, as historical data may not represent future growth and additional distribution

26 partners are being added. Yet, such projections, including some provided directly by me, have been included in some presentations and have proven over time to be inaccurate, although that was not the intent. Today, I’ve become hesitant to provide such forward looking statements.

Furthermore I’ve experienced issues with one direct sales person who was inflating our subscriber numbers in an effort to further attract advertisers. Although I had multiple conversations with him, the practice did not stop and contributed to his dismissal approximately

90 days after his initial hire date. Today I’m aware that he also incorrectly described our target audience to at least one advertiser. He was not authorized to incorrectly describe either our subscriber numbers or target audience information. Today, we provide a single tabulated subscriber report sheet by market area for advertisers to avoid any concerns with properly reporting our subscriber numbers.

IV. DEFENDANTS’ FAILED TO NEGOTIATE IN GOOD FAITH

WealthTV’s Affiliate Sales Activities

From 1992 to 2000, I worked at our family business overseeing the sales and marketing activities

for Herco Technology. From August 2000 to August 2001, I continued in a similar role for

Teradyne, Inc., the company that acquired Herco Technology. I directly oversaw our

relationships with numerous global leaders in the telecommunications, consumer and automotive

industries, among other industry sectors. Our customers numbered over 100. I personally

oversaw our relations at IBM, Northern Telecom, Honda, Qualcomm, and other major users of

electronic components overseeing our direct sales force of approximately 10 individuals and

about a dozen representative firms.

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Shortly after joining WealthTV, my duties included assisting in the search for an affiliate sales leader and monitoring the affiliate sales progress. I provided support to the affiliate sales team and in 2004 I traveled heavily with the affiliate sales group, representing senior management and discussing the vision, funding, infrastructure and programming of WealthTV as needed, visiting with representatives with Comcast, Time Warner Cable, Cox Communications, and Bright House

Networks.

WealthTV’s Affiliate Sales Team

WealthTV’s initial affiliate sales team was led by an industry veteran, Donna Thomas. Donna

came highly recommended and had a wealth of experience. Her base salary was $250,000 per

year. She was given the authority to hand pick three other highly experienced affiliate sales

people. In addition, she had one in-house affiliate sales assistant. The initial 12 month budget

for the team, including travel and exhibiting at shows was in excess of one million dollars. The

affiliate sales team traveled the nation, visiting with field system locations and corporate

programming groups of numerous MVPDs, including Comcast, Time Warner, Cox, and Bright

House.

WealthTV’s Affiliate Sales Activities – Contract Negotiations

Since the inception of WealthTV, I’ve been directly involved in roughly 70 affiliate agreement negotiations dating from 2004 to 2009. Generally, the programmer and the MSO have standard affiliate agreements. In the case of WealthTV, we offer a short form agreement and a long form standard agreement. In addition, we remain flexible to use any format the MVPD wishes to use, including an agreement provided by the video distributor. I’ve concluded agreements in a very short amount of time from initial discussions of the terms to jointly executed agreement with

28 multiple distribution partners. In addition, we have launched services based upon short letters of intent and one page launch forms. With WealthTV offering free rates for all of its services from

2004 to the end of 2008, concluding a short term agreement to allow for the immediate launch of

WealthTV was much more feasible.

WealthTV’s Affiliate Sales Activities with Time Warner

WealthTV began calling upon Time Warner prior to its launch on June 1, 2004. Within the first year, WealthTV had visited nearly every Time Warner system across the country and had numerous discussions with Time Warner’s corporate programming, marketing, and other senior staff. To date, I’ve personally visited with Time Warner systems in numerous states and with

Time Warner corporate in Stamford, Connecticut numerous. I believe the first visit I attended with Time Warner corporate was on June 8, 2004 (WTV001 0003363), I, along with Nico

Fasano and Donna Thomas of our affiliate staff met with Lynne Costantini, SVP of Programming for Time Warner, Corporate and Karsten Amlie, Director of Programming for Time Warner. Our goal was to provide an in depth overview on WealthTV. My role was to support our affiliate efforts by discussing the vision of WealthTV and its programming. I recall reviewing numerous shows from our presentation slides, speaking about the demographics, and leaving a sample DVD with about an hour of clips from various series. In addition, for the first time, we were asked to provide additional hours of our programming as it aired on tape. Time Warner wanted to see eight hours of programming as it was aired. At the time, I thought this was unusual as our feed was not encoded, referred to as being “in the clear”, available for viewing by any cable operator relatively easily. Regardless, I had eight hours of our on-air programming placed on HD CAM tapes and sent to Time Warner. Ms. Costantini also asked for a “term sheet” which was later provided. WealthTV used a standard PowerPoint presentation for affiliate sales activities. The next day, on June 9, 2004, I provided an affiliate sales presentation to Orion Cable, a small local

29 cable provider in my home time. I believe this presentation, with the exception of one slide customized for Orion, is identical to the presentation provided to Time Warner. The Orion Cable presentation is also identical, with the exception of the one additional slide, to a presentation given to Comcast in March of 2004.

From 2004-2007, I accompanied our affiliate sales team to meetings at Time Warner locations in

Texas, New York, North and South Carolina, Wisconsin, Ohio, and New England. At these meetings, we were told that they would carry WealthTV if a corporate deal could be concluded.

These field locations told us they would contact Lynne Costantini (or her successor at meetings after she left the company) to express interest in our service. The Time Warner staff at these meetings told us they liked the programming and thought it was different from other programming on the market. I recall specifically that Mr. Frank Hosea, VP of Marketing for

Charlotte, North Carolina, said he liked the programming, that he would launch it if we had a corporate deal, and asked for IRD setup directions so he could watch WealthTV. I took this as confirming that Mr. Hosea was genuinely interested. Instructions were provided to him in July of

2004.

Another specific example I recall are meetings I attended Stamford, Connecticut, with Jim

Fellhauer, EVP and Brian Kelly, Senior Vice President of Corporate Marketing, Greg DiPaolo,

SVP of High Speed Data, along with others in 2004 and in 2006. Mr. Kelly, Mr. Fellhauer, and

Mr. DiPaolo were all supportive of concluding a deal with WealthTV. A few years later, I met with Mr. DiPaolo in Ohio. His role had changed and he was overseeing marketing. He commented to me that “he liked WealthTV from the moment he heard about it”. Mr. Kelly offered to help with encouraging Lynne Costantini to conclude an agreement with WealthTV.

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In 2005, our affiliate sales team continued to visit with Time Warner locations and reported to me that they had received positive feedback from several locations. In April 2005, I met Mickey

Carter, who replaced Karsten Amlie, as Director of Programming for Time Warner Corporate. I also provided a one hour overview to Fred Dressler, EVP of Programming with Mr. Carter present. We reviewed the infrastructure that WealthTV built, our target demographics to the high income male viewer, the unique and original programming lineup, and our affiliate terms offering free carriage through the end of 2008 with rates thereafter.

Expression Of Interest From Time Warner Corporate Officer.

In April 2006 at The National Cable Show, Mr. Mickey Carter, Director of Programming for

Time Warner Corporate, discussed with me his interest in concluding an affiliation agreement.

Mr. Carter told me he had heard numerous statements of support from field locations, and that he wanted to conclude an affiliate agreement. He stated that he was bogged down with a number of projects, but would be able to conclude an agreement with WealthTV by the end of summer. As summer 2006 came and went, I reached out to Mr. Carter several times, but he stated that he was too occupied to find time to conclude an agreement with WealthTV and I was unsuccessful in getting him to engage any affiliate agreement discussions.

Also in 2006 in the same general time frame, I was able to arrange a meeting with Fred Dressler,

Time Warner’s Executive VP of Programming, in Beverly Hills, California. Mr. Dressler spent about an hour with my father and me. Mr. Dressler indicated that he was planning on removing a few channels from the Time Warner’s lineup that weren’t performing well and he would make space for WealthTV. As Mr. Dressler was Mr. Carter’s superior, we believed Mr. Dessler’s information was consistent with Mr. Carter’s expressions of interest in concluding a deal. Our hopes were high as we were led to believe that meaningful carriage discussions were around the

31 corner. In July of 2006, I reached out for Mr. Dressler several times and received a curt email stating he met with me as a courtesy and to work via Mr. Carter.

Time Warner San Antonio

On December 28, 2006, we received an email from Scott Pleyte, Programming Marketing

Manager Time Warner Cable-San Antonio stating:

“One of my colleagues watched your channel in Dallas last week and liked the content. I was wondering if you have an agreement with Time Warner Cable so that we could consider adding you to our lineup.” (Exhibit 86)

I, along with our Texas based EVP of Affiliate Sales, John Ghiorzi, met with Scott Pleyte and his boss Dean Aitken. They informed us that one of their employees had been watching WealthTV in the Dallas area on Verizon FiOS TV and enjoyed the programming. Time Warner San

Antonio was interested in expanding their HD lineup to compete with AT&T U-Verse. They indicated that they would like to launch both WealthTV in digital and WealthTV in HD. I explained we didn’t have a corporate agreement with Time Warner and encouraged Scott Pleyte to contact Mickey Carter. In an effort to expedite an agreement, WealthTV provided Mr. Carter with short affiliate agreement, providing free carriage to Time Warner of all our feeds through the end of 2008 and our lowest rates offered any MVPD thereafter.

On January 17, 2007, Scott Pleyte confirmed to me that “Mickey (Carter) said he would work on a Corporate agreement for us.” (Exhibit 86). By the end of the month, Scott Pleyte cc:ed me on an email in which he asked Mickey Carter if he could accept IRD equipment from WealthTV in order to launch WealthTV’s digital and high definition channel upon completion of an agreement

(Exhibit 82). Mickey told me that Scott had given permission to accept the equipment, so I instructed our EVP of Affiliate Sales to hand deliver the equipment to Time Warner San Antonio.

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At this point, Time Warner San Antonio could physically receive and transmit our signal, the only thing holding back a launch was the go ahead from Time Warner Corporate, which could have been as simple as a few page letter of intent. Despite this, Time Warner San Antonio never broadcast our live feed.

WealthTV Launches first free HD VOD for Time Warner San Antonio

During my visits with Scott Pleyte and Dean Aitken, I asked if they could launch WealthTV without a corporate agreement or if Time Warner San Antonio could execute an agreement directly with WealthTV. Dean and Scott told me they did not think it was possible and that they might get into trouble for pursuing such an approach. Scott mentioned that the individual locations had the right to sign VOD agreements. I explained that WealthTV had been offering

HD VOD since 2006 and that we had an extensive library of HD content. There was a strong interest by Dean and Scott to offer WealthTV’s HD VOD to their customers. I learned from Scott and Dean that Time Warner had tried to exhibit HD VOD in the past but the Time Warner facility providing the content, GDMX, owned by Time Warner, was unsuccessful.

I further explained to Dean and Scott that our HD VOD is only free to our linear customers, but based upon their expressed interest to carry our linear feeds, I’d be glad to offer HD VOD in advance because we believed an affiliate agreement would soon be concluded with Mickey Carter of Time Warner corporate and WealthTV. WealthTV and Time Warner San Antonio executed a

HD VOD agreement. Based on my contacts with Mr. Carter described above, I felt that the linear agreement was only a month or two away from being concluded. Mr. Pleyte told me he agreed with this assessment. I agreed to offer HD VOD for 6 months only. The agreement was a free

VOD, FVOD, template provided by Eric Goldberg, Time Warner’s Director of Pay per View and

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VOD, who works closely with iN DEMAND. Mr. Goldberg was copied on numerous emails and part of several discussions beginning in late January 2007.

My father and I met with Paul Saccone, the General Manager of GMDX in El Segundo,

California to discuss providing HD VOD to San Antonio. We learned that his facility had problems in the past and he was anxious to prove that GDMX could supply HD VOD to Time

Warner and that he would personally overlook the success if we agreed to work with him. I also learned that GDMX would send the content to all locations at once, in a company wide “pitch out”. Unfortunately there was no difference in cost to send to one Time Warner location verses all Time Warner locations.

On March 1, 2007, WealthTV provided HD VOD to Time Warner. The following day, a Time

Warner press announcement (Exhibit 93) was released stating:

“Time Warner Cable San Antonio has announced the first roll-out of high definition free video on demand programming featuring exciting lifestyle and entertainment titles from WealthTV. The Free on Demand high definition product offering features shows highlighting exotic travel, the newest cars and the latest medical advancements and more, all in brilliantly clear high definition.”

WealthTV, in support of its expected linear launches in the immediate future, ran radio campaigns on a sports station and talk radio station advertising WealthTV’s HD VOD service on

Time Warner. Further, we provided images of WealthTV for us on Time Warner’s home page and a turn-key landing page on a monthly basis that was featured every month WealthTV was available.

On March 5, 2007, Scott Pleyte of Time Warner, Texas emailed three other Time Warner locations indicating that “WealthTV is a linear HD channel offered by many of our competitors…” and that he “…highly recommends…” that the take advantage of the HD VOD

34 offered by WealthTV and assumes like with Time Warner San Antonio it will be the first free HD

VOD offering to Time Warner customers in their market (Exhibit 81) My sales representatives informed me that several locations outside of Texas were also interested in distributing WealthTV

HD VOD services. But before we could market VoD to other locations, I received an unsolicited phone call from Eric Goldberg, an officer at Time Warner Corporate. In multiple phone calls and emails, Mr. Goldberg informed me that WealthTV could only supply our HD VOD to Texas locations and that we should not try to market our VoD content to other locations. He instructed me that I’d receive a list of Texas locations from Andrew Brown to which we could deliver our

VoD content, that I should modify the San Antonio agreement to reflect this limitation, and send a revised copy of the San Antonio agreement to him. I recognized Andrew Brown as an iN

DEMAND employee, not a Time Warner employee.

I received the address from Andrew Brown, and, as asked, modified the agreement to reflect that we would only provide our content to the Texas locations listed. After sending the modified contract to Eric Goldberg, Mr. Goldberg again contacted me to inform me that our HD VOD would be limited to Time Warner, San Antonio only. Supplying WealthTV’s HD VOD across as many Time Warner systems as possible would have allowed the locations to view WealthTV’s content – which would have been highly advantageous to WealthTV.

Time Warner Refuses to Engage with WealthTV

On April 3rd, 2007, I received a call from Time Warner –West Columbia, South Carolina asking for IRD information to begin carrying WealthTV’s HD linear feed (Exhibit 83) I was informed by

Dan Santelle that the request was a mistake. (It’s clear from a November 29, 2006 email (Exhibit

137) that Time Warner – Dan Santelle, Time Warner Cable - West Columbia had WealthTV on a short list and asked Melinda Witmer if he could launch WealthTV in HD by the end of 2006.)

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Around this time, I learned that Mickey Carter had left the company. In a phone conversation with Eric Goldberg, he informed me that I’d need to work with others in Time Warner’s corporate programming department that would be taking over Mr. Carter’s responsibilities. I asked for the names of the individuals but Mr. Goldberg refused to provide me with any. I asked for his assistance in introducing me and provided him with an email (Exhibit 106) making the request, hoping he would forward this email to others.

I tried to reach out via email and phone to Mr. Carter’s boss Melinda Witmer (Exhibit 84) and

Robert Marcus, Senior Executive Vice President overseeing programming affiliate relationships.

Although I placed numerous phone calls, sent emails, and sent at least one package to Ms.

Witmer, to this day she hasn’t responded in any fashion. Nor did I receive any response from Mr.

Marcus. Mr. Goldberg refused to assist me with any introductions to other corporate programming people, while representing that he oversaw pay per view and video on demand services only. I asked Scott Pleyte of Time Warner, San Antonio for any assistance with reaching

Time Warner corporate programming (Exhibit 109). They were unable to provide any help.

WealthTV had been effectively shut-out and denied carriage.

On May 1, 2007, MOJO launched 24/7. WealthTV filed an FCC pre-filing notice for carriage access discrimination on May 7, 2007.

Time Warner Replaces WealthTV’s VOD with MOJO

By June 6, 2007, I notified Time Warner – San Antonio that our last delivery of free HD VOD content would be supplied on July 1, 2007 and available to Time Warner subscribers through

August, consistent with the six month term of our VOD agreement. Not surprisingly, on July 31,

2007, iN DEMAND issued a press release stating that it would be offering a free HD VOD

36 service called “MOJO Mix”. iN DEMAND announced that it’s MOJO Mix free HOD VOD would offer up to 5 hours of content beginning August 1, 2007. The sub title reads, “Service to

Launch Across Time Warner Cable’s Footprint” (Exhibit 22). WealthTV offered its HD VOD service five months ahead of MOJO and offered four times the hours of content compared to

MOJO. In addition, WealthTV was willing to offer its content across all Time Warner systems, but was prevented from doing by Time Warner.

Lack of Meaningful Negotiations by Time Warner After Filing the Pre-Filing Notice

By June 27, 2007, WealthTV met with Time Warner Cable representatives and the parties agreed to have carriage discussions. WealthTV summarized interest by Time Warner field locations,

WealthTV’s broader acceptance by the market, and programming comparisons in a PowerPoint presentation (Exhibit 97). On July 18, 2007 WealthTV met with Time Warner representatives in

Stamford, Connecticut, including Eric Goldberg, Andrew Rosenberg, and Bob Benya. By August

7, 2007, after a number of phone calls with Mr. Goldberg, I provided him with a short agreement with proposed terms per his direction. The agreement would require carriage in specific states over a long term. We confirmed with San Antonio that they were still interested in launching our

digital and HD feeds (Exhibit 88). The key demands made by Mr. Goldberg were his

requirements for: 1. No commitment to carry on any system, even though several locations were

prepared to launch on the conclusion of an agreement. 2. A unilateral drop clause for Time

Warner Cable, namely the right to discontinue the service at any time for any reason once carried.

3. Provide Time Warner Cable with the right to reposition the service at any time. These three

conditions, effectively amount to no agreement for carriage other than the right to solicit systems.

There was effectively no consideration given by Time Warner Cable and could be viewed as an

attempt to resolve a potential access carriage discrimination complaint without offering anything.

Time Warner Cable , via Mr. Goldberg, had already proven to WealthTV that he could and did

37 stop the deployment of WealthTV’s free HD VOD service to various field systems. There was no assurance that the Time Warner Cable systems could act in their best interest and that discriminatory conduct already carried-out by Time Warner Cable would not continue.

I expressed my concerns about agreeing to these one-sided terms and giving Time Warner Cable such unilateral power to drop the service for any reason or no reason at all. Mr. Goldberg stated that Time Warner Cable would not extend an agreement unless it generally planned on launching the service nationally and that it isn’t in the practice of dropping services. Yet, he wouldn’t commit to anything in writing.

On August 23, 2007 Mr. Goldberg responded to a term sheet I previously sent to him on August

7th, highlighting several issues. On August 27, 2007 I responded to his marked up document,

conceding to 8 out of 9 of the items he raised. The remaining item was the repositioning and drop

clause. I wrote:

“It's our thoughts that to capitulate to a drop clause on a short agreement with an extended free period, after acquiescing to all other raised issues, makes for a very lopsided and unreasonably unfair agreement. In my opinion, an agreement where one party can take at will with no commitment really isn't an agreement. I must ask for your help and consideration on this point. We are accepting of the hunting license type agreement but ask for removal of the drop clause and any re-tiering to a lower penetrated tier, which in effect is a quasi drop clause. It simply wouldn't be fair to launch WealthTV during the free period and drop WealthTV the last year of the agreement to avoid reasonable fees” (Exhibit 105)

The August 27, 2007 offer preserved the right for Time Warner Cable to launch WealthTV’s free

HD VOD product only with the deployment of the linear channel.

WealthTV Capitulates on All of Time Warner Cable’s Demands

38

On September 5, 2007, with no movement from Time Warner, our management made a strategic

gamble – namely to concede on all points demanded by Time Warner including the drop and

repositioning clause. Yet, the agreement would only give Time Warner Cable the right to launch

our free HD VOD product upon deploying our linear channel, a point that was not contested.

With WealthTV agreeing to all the terms, I was told that Mr. Goldberg would respond with a long

form written agreement. By October 8, 2007, with no responses regarding the term sheet, my

father wrote a letter stating that WealthTV agreed to all the terms, how do we move forward?

(Exhibit 98). On October 16, 2007, I emailed Eric Goldberg and Andrew Rosenberg asking:

“…We can't get a response on the term sheet for further progression towards an agreement. I understand that other issues come up, leaving limited resources, but keep in mind I've heard that WealthTV is in the process for completing a deal by a certain time before without any conclusion. After multiple years, I must ask for a little push from your side for a response on the term sheet. How can I appropriately elevate?” (Exhibit 108)

On 10/19/07 I received a call from Eric Goldberg stating that we were moving forward with the

term sheet and his attorneys would provide the next document. I sent him an email stating he

made my day and year (Exhibit 107). The document never came and Eric informed me that he

needed to renegotiate the term sheet. WealthTV concluded that Time Warner had not and had no

intentions of negotiating in good faith.

WealthTV’s Sales Affiliate Activities with Bright House Networks, BHN

WealthTV began calling on BHN prior to WealthTV’s launch on June 1, 2004. Our reports show that WealthTV visited BHN locations in Orlando, Tampa, Bakersfield, and Lithonia,

Michigan. As early as April 19th, 2004, WealthTV visited with BHN Tampa. It was reported to me that Orlando would consider carrying WealthTV in HD if a corporate Time Warner agreement was in place. I therefore made a personal visit in the summer of 2004, along with our EVP of

39

Affiliate Sales to Chris Fenger, the GM of Orlando. He expressed interest in carrying WealthTV in his market once an agreement was in place. . In 2004 WealthTV representatives made multiple visits to BHN – Bakersfield. It was reported to me that there was interest in launching

WealthTV once an affiliate agreement was concluded.

WealthTV Sales Affiliate Activities with Bright House Networks, Tampa.

It was reported to me that on April 19, 2004, Nico Fasano, WealthTV’s VP of Affiliate Sales, met with the Tampa location of Bright House, including with Steve Colafrancesco and Kevin Hyman.

I’m aware that Anne Whitehouse contacted Nico Fasano, WealthTV’s VP of Affiliate Sales, on

February 17, 2005. It’s been reported to me that Mr. Fasano met with Ms. Whitehouse and provided her with an overview on WealthTV. Despite the favorable reports from my affiliate marketing staff from these meetings, no deal was ever concluded.

Ms. Anne Stith (formerly Anne Whitehouse), director of Product Marketing for Bright House

Tamapa, contacted WealthTV on or about July 18, 2006. I spoke with her via phone the following day. Ms. Stith told me that she was doing a comparison of the Verizon FiOS lineup and noted that WealthTV was featured in digital and HD. She stated that Bright House did not want Verizon to have any differentiated programming and asked if we had a corporate agreement with Time Warner. I told her that we did not have an agreement, but that we were working with a

Time Warner programming person, namely Mickey Carter, and encouraged her to contact him.

Ms. Stith stated that if WealthTV had an agreement with Time Warner she would launch our services, but couldn’t do anything in the meantime. I responded back to Ms. Stith the same day via email stating, “We don’t have a deal with Time Warner… yet!”. On the same day, I also

contacted Mr. Carter of Time Warner, stating that “Brighthouse is interested in ensuring that

Verizon doesn’t have any unique and differentiated programming” (Exhibit 46)

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On or about February 9, 2007, WealthTV’s John Scaro visited with Ann Stith and Michelle Stuart of Bright House. He reported to me that although there was an interest in carrying our services, the regional offices couldn’t do anything without an agreement in place and he was encouraged to contact Mr. Miron at Bright House’s corporate office for assistance. Based on this report, I prepared an email and had my assistant send it to Mr. Miron’s assistant. The email requested a visit with Mr. Robert Miron. My assistant received a reply from Steve Miron stating “I would suggest either Charles or John give me a call first.” I instructed Mr. Scaro to contact Mr. Steve

Miron, since he made the most recent visits to BHN locations. Mr. Scaro reported to me that based upon his conversation with Mr. Miron, Bright House refused to give WealthTV any carriage consideration until a Time Warner agreement is in place as BHN only launches on Time

Warner agreements and that we should not call on Bright House until such time. I therefore downgraded our efforts to solicit an agreement from Bright House without first securing an agreement from Time Warner Corporate.

WealthTV’s Sales Affiliate Activities with Comcast

WealthTV began introducing Comcast systems to WealthTV as early as March 2004. Four seasoned affiliate sales people for WealthTV focused on visiting the major Comcast field locations across the United States. I also attended several meetings with Comcast field and corporate locations, including visits with Comcast’s corporate personnel, including Madison

“Matt” Bond, EVP of Programming, Alan Dannenbaum, VP of Programming, Jennifer Gaiski,

VP of Programming, and David Watson, EVP of Operations. I believe the first Comcast meeting

I attended was on March 26, 2004, in Philadelphia. Prior to the meeting, Donna Thomas,

WealthTV’s EVP of Affiliate Sales and I had an off-site breakfast meeting with Ms. Gaiski of

Comcast’s programming team. I recall Ms. Gaiski commenting on how her own private jet

41 travel and how the programming would resonate with high-income viewers. We joined Alan

Dannenbaum at Comcast’s offices later in the day. WealthTV gave Comcast a PowerPoint overview of WealthTV (Exhibit 117). We highlighted the target audience and strong appeal to high income viewers, skewed toward men, the appeal to advertisers and operators for attracting such an audience, and provided a sample reel highlighting our programming.

By early June, shortly after WealthTV’s successful launch, our affiliate sales team had visited numerous locations and there was several locations expressing support. One early proposal

offered to Matt Bond by WealthTV’s Michael Kassan, representing WealthTV included a no

affiliate fees for an extended period and a revenue sharing component of up to 5% of the

advertising revenue based upon penetration. (Exhibit 135) Comcast expressed no interest in this

offer.

Comcast’s VP of Programming Instructed a SVP of Programming at Adelphia to Prevent the Launch of WealthTV Prior to Comcast’s Acquisition of Adelphia

In 2005, I negotiated an agreement with OlympuSAT to replace an OlympuSAT channel, called

Chronicle, with WealthTV. The benefit of the agreement to WealthTV was that WealthTV would

receive carriage on Adelphia and several smaller MSOs. WealthTV would pay OlympuSAT for

the replacement of Chronicle with WealthTV. OlympuSAT was responsible for ensuring that

Adelphia would accept the channel change, which represented the biggest percentage of

subscribers. Chronicle per OlympuSAT had minimal capital to invest in programming and

Chronicle wasn’t up to par with other services, offering only a minimal number of hours in its

library. The replacement of Chronicle by WealthTV would be a major improvement. A key

provision in the agreement was a clause allowing WealthTV to back out of the deal if the

subscriber numbers dropped below a certain percentage.

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On July 6, 2005, John Ghiorzi, WealthTV’s VP of Affiliate Sales and I met with Alan

Dannenbaum, VP of Programming for Comcast, at Comcast’s office in Philadelphia. Mr.

Dannenbaum asked how our distribution was progressing and whether we had carriage on

Adelphia. I told Mr. Dannenbaum that WealthTV would be gaining distribution on Adelphia,

replacing the services of Chronicle. I expected Mr. Dannenbaum to react favorably towards

WealthTV gaining distribution on Adelphia. Instead he stated he would put an end to the change

and that Adelphia was instructed not to make any channel adjustments without Comcast’s

approval. I had no doubt that he possessed the ability to cause issues with the channel change and

pleaded with him not to make any inquires with Adelphia. I never received his reassurance.

On July 18, 2005, John Ghiorzi and I returned a call to Judy Meyka, SVP of Programming with

Adelphia. Ms. Mekya was upset and stated that WealthTV would not be replacing Chronicle. I

explained that OlympuSAT made visits with Adelphia in Denver and received approval to make

the channel change. Ms. Mekya stated that her approval was not given and she didn’t care who

on her staff authorized the channel change, it would not take place and if it did, WealthTV’s feed

would be removed. John Ghiorzi provided me with a printout from his ACT notes dated July 18,

2005, summarizing the phone call . Mr. Ghiorzi also prepared a draft email to Ms. Mekya I don’t

believe the email was sent per my request.

I contacted OlymuSAT and advised them of the facts. I was informed that they made an in-

person visit to Adelphia and received verbal approval for the channel change, but did not receive

any written confirmation. To my surprise, OlympuSAT went forward with the channel change on

August 22, 2005. I learned that the Adelphia subscribers were not included and notified

OlympuSAT that based upon the lack of the Adelphia customers, the clause allowing WealthTV

to back out of the agreement was triggered. I notified OlympuSAT of our desire to back out of

the deal. There was a disagreement between OlympuSAT and WealthTV centering around my

43 actions of notifying Mr. Dannenbaum of the channel change and subsequent loss of the Adelphia

subscribers. OlympuSAT pursued legal action against WealthTV, claiming that my contacts with

Mr. Dannenbaum had scuttled their carriage deal.

Comcast’s VP of Programming states that Comcast Refuses to Grant Carriage to Networks Unless they Own the Service

In July 2006, I put together a video pitch to Mr. Brian Roberts requesting a visit. I’m aware that some senior managers get directly involved in approvals for new channels. I also felt it was time to try to elevate the discussions in an attempt to receive consideration. The effort led to another meeting with Alan Dannenbaum, which wasn’t the outcome I was looking for. I met with Mr.

Dannenbaum in August of 2006. The meeting was attended by John Ghiorzi, WealthTV’s EVP of Affiliate Sales at the time and me. Mr. Dannenbaum didn’t seem like he had any interest in engaging in a discussion. We had numerous new items to discuss with him, including marketing on Frontier airlines. He bluntly stated that Comcast had no interest in digital channels, and the only interest was in HD, VOD, and broadband. He indicated that the VOD space was filling up and they were reaching full capacity, leaving no real possibilities for WealthTV. I wasn’t interested in broadband and asked Mr. Dannenbaum how WealthTV could receive consideration for our linear HD feed. He stated that Comcast didn’t want to make another MTV on its back without owning it. His comment was meant to be clear and it was - Comcast wasn’t interested in launching any linear service unless it had direct ownership. I wasn’t authorized to have an equity decision and didn’t know where to take the conversation. It ended on a very awkward note as I didn’t see any other discussions to have. I had hoped to keep my expressions in check and not let

Mr. Dannenbaum see how angry I was with his comment. Mr. Ghiorzi informed me that he never saw me look so upset. Upon jumping into a taxi for the airport, I called my father and reported on the meeting and Mr. Dannenbaum’s statement. I asked Mr. Ghiorzi for his best recollection, which he provided on April 16, 2008

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Comcast’s Carrot on a Stick Delay Tactics

In August 2008, I gave Mr. Bond a courtesy notice that we were planning on filing a FCC complaint for carriage access discrimination. I had a series of phone conversations with Matt

Bond in an apparent attempt to reach a carriage agreement. Mr. Bond countered one of my proposals by offering to carry WealthTV in only one market, namely Chicago and re-evaluate

WealthTV’s performance a year later. After clarification of the point with Mr. Bond, effectively,

WealthTV would be prevented from gaining more carriage during the initial one year period.

More importantly, the Chicago DMA, which is Comcast’s largest market, with in excess of 2.2 million subscribers, apparently wasn’t exactly what Mr. Bond had in mind. After further inquiry on April 18, 2008, Mr. Bond was really proposing a significantly reduced subset of the Chicago market, which would represent less than 40,000 homes carrying WealthTV. It become clear to me that Mr. Bond wasn’t negotiating in good faith and was simply trying to delay WealthTV from filing a FCC complaint without any willingness to negotiate by offering the proverbial carrot on a stick that is unreachable.

WealthTV’s Sales Affiliate Activities with Cox Communications

WealthTV focused heavily on Cox locations prior to and through the first few years after our launch. Several Cox field locations expressed interest in launching WealthTV if a corporate agreement could be concluding, including, but not limited to New Orleans, Florida, Phoenix,

North Carolina, and Wichita. I attended numerous meetings including with representatives from

Cox New England, Phoenix, California, Las Vegas, Wichita and others. As an example, on July

19, 2004 (Exhibit 102 (call report)) I along with several of our affiliate sales staff enjoyed dinner with Mark Cameron of Cox New England in Boston. I sat directly across from Mr. Cameron. He expressed his desire in launching our HD feed and willingness to assist WealthTV as needed with

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Cox Corporate. He offered his name as a reference, which I later used in encouraging Pat Esser, a senior executive with Cox, to call him. Mr. Cameron told me that the only thing preventing a launch on Cox New England was the lack of a corporate agreement.

Regardless of Field Support, Cox Refused to have Meaningful Carriage Discussions with WealthTV

As an example of Cox’s refusal to engage in meaningful carriage discussion, I’ve highlighted

WealthTV’s experiences with Cox Wichita, in which I was directly involved in. On July 19,

2004, I along with Beth Joseph, WealthTV’s, VP of Affiliate Sales, met with Tony Mathews and

Robert Bunting of Cox, Wichita during an industry CTAM event in Boston. Ms. Joseph indicated to me that she had previously given both Mr. Matthews and Mr. Bunting an overview on WealthTV and they were interested in launching our services. Mr. Bunting and Mr. Mathews explained that they were expanding their programming lineup and were excited to add WealthTV in digital immediately, followed by a launch of WealthTV’s HD feed in the near future. The digital launch would comprise of approximately 80,000 subscribers. Mr. Mathews indicated that

they were requesting launch support for marketing in the $1 per subscriber range. Beth, with my

approval, offered Cox, Wichita $0.50 in launch support.

Mr. Mathews agreed with our offer of $0.50 in launch support and we concluded a deal. Mr.

Matthews told me he was pleased with the terms, and stated that Cox relied upon his and Mr.

Bunting’s judgment for channel additions. He told me they possessed the ability to favorably

influence approval with their boss and corporate programming (WTV001 0003397). Despite

these assurances, no deal was concluded.

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In preparation for a visit with Bob Wilson and Pat Esser of Cox Communications, I took a side trip to revisit with Tony Matthews to inquire about the status of the Witchita deal, as I intended to raise the matter with Bob Wilson and Pat Esser. On or about May 2, 2005, I flew to Wichita and met with Mr. Bunting and Adena Barnes joining them for lunch and visiting with them in the Cox

Wichita offices. Mr. Bunting informed me that he was still very interested in launching

WealthTV’s digital and HD services. Ms. Barnes said she felt that the vicarious aspect of

WealthTV’s programming would play well in the Wichita market. I asked if Kimberly Edmund’s was supportive of the efforts and Mr. Bunting stated that she placed a call to Mr. Wilson to express Wichita’s desire to launch WealthTV. He expressed his disappointment in not being able to launch our services and get the necessary support from Cox Corporate.

In early June 2005, I provided an overview14 to Mr. Wilson and Mr. Esser of Cox in Atlanta. Mr.

Wilson denied that anyone in Wichita contacted him expressing an interest in launching our services. Furthermore, Mr. Esser doubted the validity of a slide (WTV001 0004488) showing the numerous Cox field locations interested in launching WealthTV. On June 7, 2005, I wrote

Mr. Esser a letter indicating:

During our visits to Cox locations over the last 12-16 months, we have had numerous strong positive responses. I felt a little challenged during our meeting when we showed a matrix of Cox locations that have responded favorably to WealthTV’s programming and have expressed a strong interest in considering a launch if a corporate hunting license was in place. I would like to request that you speak with three very different Cox regions and hear for yourself their thoughts on the value of WealthTV.

Cox Las Vegas Prevents KLAS from Launching WealthTV as a Multicast Channel

14 WTV001 0004468 (There is an “end” slide in the deck indicating that the last slide is WTV001 0004490.)

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In 2006, I was approached by Chip Harward of Multicast Networks Group, Inc. to entertain a multicast distribution model that would put WealthTV on Cox Las Vegas. Mr. Harward explained that a CBS affiliate, KLAS, could provide WealthTV’s signal as part of a multicast feed that was carried by Cox Las Vegas. I flew to Las Vegas and met with the President of

KLAS to reach an agreement for carriage of WealthTV by Cox Las Vegas via KLAS. After a series of discussions which would have been mutually beneficial for KLAS and WealthTV, Leo

Brennan, GM of Cox Las Vegas informed KLAS upon inquiry that Cox would not allow KLAS to carry WealthTV and it was prohibited within the agreement with Cox and KLAS. I spoke directly to Mr. Brennan, who I had visited with in person. He confirmed to me that he notified

KLAS that WealthTV couldn’t be carried due to contractual issues with KLAS. In an email immediately after the call15, I thanked him for returning my call promptly and providing me with the full picture, namely KLAS was contractually prohibited from launching WealthTV. He also told me directly that he didn’t want KLAS to drop WealthTV down the road when they planned on launching a business channel because he expected his customers would enjoy WealthTV and didn’t want them getting upset when the channel was not longer available.

Cox San Diego Prepared to Air WealthTV Content but Only on its Own Channel

I recall that in 2004 and 2005, Cox San Diego, including William Geppert, GM and Dennis

Morgigno, Station Manager for San Diego’s 4SD – High Definition channel, have visited

WealthTV’s production studios on multiple occasions. Mr. Geppert has inquired about whether

WealthTV would offer some of its programming to air on his 4SD – High Definition channel.

WealthTV informed him that we only wish our content to be aired as WealthTV network rather

15 WTV001 0004308

48 than have individual shows aired as part of 4SD’s programming. They expressed no interest in carrying WealthTV as a network.

Mr. Morgigno and Mr. Geppert stated that they were potentially going to build high definition studios and wanted to tour our operations to gather ideas and benchmark content production flow.

They expressed their general approval of our facility, including how “State of the art” our production facilities were. They made preliminary inquiries if we would be interested in producing programming for them for a fee. We replied that we were unwilling to produce non-

WealthTV content.

I supervised these visits, and can state that at no time did they engage in any extended discussions with our production staff.

V. DEFENDANT’S DISCRIMINATORY ACTIONS RESTRAINED WEALTHTV’S ABILITY TO COMPETE

I have reviewed and discussed various business models of emerging national cable channels to determine how best to achieve long term viability. National cable networks receive revenue by two primary sources, namely affiliate fees and advertising revenue. The most viable emerging networks achieve revenue from both affiliate fees and advertising revenue as their primary revenue streams. Both affiliate fees and advertising revenue are directly related to the number of subscribers a national cable network achieves. The defendants collectively represent approximately 45.4 million video subscribers as reported by the NCTA as of September 2008, the latest data posted. The breakdown is as follows as reported by the NCTA, Comcast has 24.4 million video subscribers, Time Warner has 13.3 subscribers, Cox has 5.4 subscribers, and Bright

House has 2.3 million video subscribers. To be denied access to these subscribers, which

49 collectively represents over 70% of the conventional cable homes reported by NCTA totaling

64.4 million, unfairly restrains WealthTV’s ability to compete fairly.

In my declaration dated February 21st, 2008, items 2 through 5, I highlight several reasons why defendant’s refusal to carry WealthTV restrains its ability to compete fairly. Below I’ve addressed the need for an emerging network to achieve at least 20 million subscribers in order to become viable. I would note, however, that regardless of the necessary subscriber count to become viable, the discriminatory behavior of the defendants makes it substantially more challenging to reach any threshold subscriber number, as well as generally make it more difficult to attract advertisers and secure carriage agreements.

I’ve personally spoken with numerous advertising agencies and directly with several advertisers.

In addition, I’ve visited with some of the largest advertising agencies. For example, I’ve made in person visits to Zenith Media, New York City, regarding Lexus, HP, Chase, Verizon, and other clients, GSD&M in Austin regarding BMW, Cruise Lines, and other clients. Media Edge, Inc.,

Irvine, regarding Jaguar, Team One, in El Segundo, regarding Lexus, Ritz Carlton and other clients, Cramer Krasselt regarding MGM Mirage Resorts and other clients. I’ve visited with

Forbes in New York City, American Express in New York City and Conde Nast in New York

City. Based upon my experience, although there is a great deal of interest in WealthTV and its high income male skewed audience, receiving meaningful consideration is difficult with our subscriber numbers well below the 20 million market.

The Defendants Discriminatory Conduct and Leadership Role has Affected WealthTV’s Ability to Receive Fair Market Rates and Carriage Consideration from other MVPDs

WealthTV was unfairly hindered by the defendants from achieving “fair market” rates, terms, and conditions from its current distribution partners. The Multi-video programming distributor

50 community more highly values programming services that are already carried and have received the validity by the largest cable operators, namely the defendants. Any concerns about

WealthTV’s long term viability would have been greatly diminished with carriage by the defendants. Numerous times in affiliate relations discussions, the long term viability of

WealthTV has been questioned without carriage by the defendants. Thus the rates and terms

represented by WealthTV’s agreement with Verizon are below the fair market value due to unfair carriage discrimination by the defendants. Furthermore, large MVPDs allow programming costs to be spread out over a greater number of subscribers, reducing the compensation per subscriber fee necessary for the programmer to break even. WealthTV was impacted by its need to file FCC carriage access complaints by other large MVPDS. Specifically, Cablevision has cancelled a visit stating, “…there is not much to gain from such a meeting, particularly based on your

recent pattern of issues with other distributors.” Emphasis added, WTV001 0000108, -9)

The Defendants tend to be the dominate cable providers in the markets they serve. Smaller operators are more concerned about matching the product offering by the Defendants than looking for differentiated programming. Further some MVPDs are allowed to launch services on the agreements signed by these distributors, just as Bright House rides the Time Warner

Agreement. I’ve been directly told that Bresnan rides the Comcast affiliate agreement and Insight

Communications has the ability to ride the Comcast agreements also. I met with one operator and before she said “Hello” I was asked, “are you on Time Warner”. I learned it was a measurable in her mind as to a network’s success.

VI. THE APPROPRIATE REMEDY

The Appropriate Remedy – Required Carriage of WealthTV by the Defendants Similar to MOJO

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MOJO’s linear high definition 24/7 network and MOJO HD VOD services were carried by the defendants providing MOJO with 10 million subscribers prior to its demise. WealthTV proposes that its linear high definition 24/7 network and its HD VOD services shall be continuously carried throughout the term and during any renewal thereof by the defendants on the same systems and any expansion or replacement thereof, and available to all subscribers on those systems, or on a more heavily penetrated tier, as the defendant’s carried MOJO. WealthTV is pleased to offer to the defendants the right, but not the obligation, to carry the standard definition digital feed of

WealthTV. (WealthTV foresees a time when all channels may be high definition.) If defendants decide to carry WealthTV’s linear digital feed, it shall remain carried throughout the term on the same or a more highly penetrated tier.

The Appropriate Affiliation Agreement

We’ve included as Exhibit 23 an affiliate agreement that we believe is fair and is based upon an iN DEMAND affiliate agreement.

Determining the Appropriate Rate

In order to determine a fair rate, WealthTV utilized a fair market comparison using its largest distribution partner, based upon the number of subscribers receiving WealthTV service,

namely Verizon FiOS TV.

No Volume Discounts

There is no justification for a volume discount which would disadvantage subscribers receiving video services from other MVPDs other than the Defendants.

Payment Should be per Digital Subscribers

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Similar to the Verizon agreement, which has payment across more than 98% of its subscribers, I

believe based upon documents that I have read that IN DEMAND charges MVPDs based upon

the total number of digital subscribers.

Fair Market Price

The lowest “fair market” value price for WealthTV’s services is best established by its largest

distribution partner, Verizon FiOS TV, measured by the number of subscribers currently

receiving WealthTV’s high definition feed. WealthTV has been under contract with Verizon

since February 2005. Verizon has distributed WealthTV’s digital and high definition feeds since

its initial deployment of video services in 2005. WealthTV’s most current agreement establishes

the rates for its service as follows:

Year Amount Yearly Increase Payment Against

2009 $0.157 n/a Service Subscribers, Expanded Basic * 2010 $0.176 $0.019 Service Subscribers, Expanded Basic 2011 $0.196 $0.020 Services Subscribers, Expanded Basic

(* Note Verizon’s Service Subscribers, Expanded Basic comprises in excess of 98% of its total subscribers.)

The Digital Transition Further Makes These Rates DIGITAL TRANSITION

The defendants may attempt to argue that the digital transition should prevent them from having to pay based upon the total number of digital subscribers. WealthTV’s largest distribution partner, based upon the number of subscribers receiving WealthTV’s 24/7 high definition service,

is Verizon FiOS TV. Verizon is currently paying WealthTV a rate of 15.7 cents per expanded

basic subscriber for calendar year 2009. The expanded basic subscriber represents nearly all of

Verizon’s subscribers with a penetration of 98% of the total video subscribers on Verizon’s

system. The 15.7 cent rate correlates to a $15.4 rate across all Video subscribers. Thus, the fair

market value for WealthTV’s services as established by its largest distribution partner, Verizon

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FiOS TV, is 15.4 cents for 2009. Regardless of cable’s digital penetration, even if it reaches

100% after the digital transition the rate represents a fair market rate.

The MOJO Rate May Not Represent the Fair Market Rate

If for ANY reason DEFENDANTS, who jointly own iNDEMAND, do not operate at an arm's length with iNDEMAND, and potentially have the ability to change its payment structure at any

time, claim the MOJO rate is significantly lower than the Verizon rate, then the best and most

reliable determination of the fair competitive rate for WealthTV’s services is the fair open market

and Verizon FiOS TV’s rate should be relied upon.

WealthTV is Proposing a Rate of Less Than Half the Fair Market Rate Established by Verizon FiOS

In order to completely eliminate any discussions as to the reasonableness of WealthTV’s best and final offer for the price for carriage of the complainant’s network on the defendants systems,

WealthTV is proposing a rate of LESS THAN HALF the fair market rate of 15.4 cents.

WealthTV is proposing as its best and final offer:

A starting rate of only 7.5 cents per all digital subscribers per month. WealthTV proposes a start date for the rate effective June 1, 2009. The defendants shall launch WealthTV’s HD and

HD VOD services across all their systems by June 1, 2009. If the defendants fail to launch

WealthTV’s services for any reason, its obligation to pay the rate against all of its digital subscribers remains in effect as of June 1, 2009. WealthTV proposes that the rate shall increase

by $0.01 cent effective September 1, 2009 and by $0.01 cent every September 1 thereafter.

Term

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WealthTV’s largest distribution partner, based upon the MVPDs total number of subscribers, is

Charter Communications. Per available public data offered by the NCTA16, Charter has roughly

5.2 million subscribers. Charter has over 2.8 million more video subscribers than defendant

Bright House and is roughly the same size as is Cox Communications. WealthTV’s current

agreement with Charter Communications dated May 1, 2006 has a term of 10 years. Section 3a

of the Agreement reads, “The “Initial Term” of this Agreement shall be for ten (10) years, commencing as of the date hereof.” WealthTV has numerous agreements with this duration, which is WealthTV’s standard length for the term. It is not uncommon for affiliate agreements to

run for 10 years or longer. WealthTV was forced to bring FCC complaints against the defendants

for carriage access discrimination. The possibility of retaliation at the end of the initial term is

real. WealthTV therefore proposes a term of 10 years, equivalent to its affiliation agreement

term with Charter Communications.

The Defendants Shouldn’t Be Rewarded with a Most Favored Nation Provision

The proposed rate by WealthTV is lower than any rate currently under contract with any MVPD for the same time period. Yet, the defendants have engaged in discriminatory practices that have had detrimental effects on WealthTV’s business. Such conduct by the defendants should not be further rewarded by extending a Most Favored Nation provision to the defendants. Most Favored

Nation clauses are designed to protect and reward MVPDs that have acted fairly and have been first movers with emerging networks. Unlike WealthTV’s current distribution partners, the defendants did not act as a “first mover” nor did the offer fair consideration to WealthTV, but rather discriminated against the network causing WealthTV to file costly and time consuming carriage access discrimination complaints against the defendants. By no means would it be appropriate to extend an MFN provision in the affiliate agreements with the defendants.

16 see: http://www.ncta.com/Statistic/Statistic/Top25MSOs.aspx

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I verify under penalty of perjury that the foregoing is true and correct. Executed on April 22,

2009

Charles P. Herring

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