REDACTED - FOR PUBLIC INSPECTION Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. ) In the Matter of ) ) Game Show Network, LLC, ) ) Complainant, ) File No. CSR-8529-P ) v. ) ) Cablevision Systems Corporation, ) ) Defendant. ) EXPERT REPORT OF MICHAEL EGAN REDACTED - FOR PUBLIC INSPECTION TABLE OF CONTENTS Page I. INTRODUCTION ...............................................................................................................1 II. QUALIFICATIONS ............................................................................................................1 III. METHODOLOGY ..............................................................................................................4 IV. SUMMARY OF CONCLUSIONS......................................................................................5 V. THE PROGRAMMING ON GSN IS NOT AND WAS NOT SIMILAR TO THAT ON WE tv AND WEDDING CENTRAL .........................................................................11 A. GSN Is Not Similar In Genre To WE tv................................................................11 1. WE tv devoted 93% of its broadcast hours to its top five genres of Reality, Comedy, Drama, Movie, and News while GSN aired content of those genres in less than 3% of its airtime. WE tv offers programming in 10 different genres while virtually all of GSN’s programming is found in just two genres. .................................................11 2. The 2012 public {{** **}} statements of GSN’s senior executives affirm that it has been a Game Show network and not a network airing programming labeled by the Complaint as “relationship and female-oriented reality.” The executives have stated bluntly that they hope to add a new genre of “real-life” shows in the future................23 B. GSN And WE tv Do Not Have Similar Target Programming...............................25 1. The subject matters of GSN and WE tv programs differ dramatically. WE tv typically displays content for and about women in their family- centered ages with an emphasis on weddings, their families, and their challenges, all told from a distinctly female point of view. On the other hand, GSN airs programming centered on contests and the games are the primary subject. It is designed to attract those adults, both men and women, seeking, as GSN’s programming chief explained, “the excitement and fun of winning.”................................................................27 2. The programming content on WE tv and GSN looks and feels very different, resulting in dissimilar network personalities and brands. WE tv’s appearance and point of view are traditionally female and personal. In general, GSN’s visual and audio qualities are gender neutral and “showbiz”-y. Like a traditional Game Show, GSN often “flashes and buzzes.” .................................................................................35 3. An evaluation of the record of competition and cooperation between GSN and WE tv in the areas of programming, talent, and promotion reveals that there is no special relationship between the networks............39 C. GSN And WE tv Are Not Similar In Programming Expenditure..........................42 i REDACTED - FOR PUBLIC INSPECTION 1. WE tv’s {{** **}} programming budget provides the financial resources for it to produce and acquire {{** **}} programming, containing the attributes MVPDS typically value most. ..................................................................................43 2. Examined by multiple measures, WE tv invests {{** **}} .................................................................47 3. Compared to their broadly-penetrated cable network peers, WE tv {{** **}}............................................................49 D. Conclusions Regarding Programming Content Similarity. ...................................50 E. Flaws In GSN’s Discussions Of Programming Similarity. ...................................53 1. Regarding Genre. .......................................................................................53 2. Regarding Target Programming: GSN and Mr. Brooks fail to provide a target programming analysis...................................................................75 VI. GSN IS NOT AND WAS NOT SIMILAR IN AUDIENCE TO WE tv AND WEDDING CENTRAL.....................................................................................................76 A. GSN Is Not Similar In Target Audience To WE tv...............................................77 1. An Abundance Of Consistent Evidence Makes It Clear That WE tv’s Target Audience Is Females 18 - 49 and 25 - 54. ......................................77 2. The Evidence Reveals That GSN’s Primary Target Audience Is All Adults 18+ Interested in Game Shows and Game Playing........................81 B. GSN Is Not Similar In Actual Viewing Audience To WE tv................................87 1. A Comparison Of Audience Size By Household Ratings Reveals That WE tv’s Audience Varied Dramatically In Size Between Daytime And Primetime, While GSN’s Was Comparatively Stable, Indicating That Total Day Averages For Household Ratings, By Themselves, Can Be Misleading In An Investigation Of Whether Or Not Two Networks Have Similar Actual Viewing Audiences. .................................................90 2. An Audience Size Comparison Of The Two Networks Using Cablevision’s Audience By Network Reports Evinces That WE tv Is Viewed By A Far Larger Percentage Of Cablevision’s Customers...........93 3. A Comparison Of Audiences Using Nielsen Ratings Makes It Clear That GSN’s Viewing Audience Is Not At All Similar to WE tv’s In Demographic Composition, Specifically In The Demos Alleged By GSN To Be The Audience Target For Both Networks And The Substance Of The Similarity, Women 18 – 49 and Women 25 – 54.........95 ii REDACTED - FOR PUBLIC INSPECTION 4. GSN Has Little In Common With The Other Members Of Its Invention of “A Core Group Of National Cable Networks… Predominately Viewed By Women.”.......................................................103 C. Conclusions on Audience Similarity. ..................................................................108 D. Flaws In GSN’s Discussions Of Audience Similarity. ........................................109 1. Regarding Target Audience: GSN and Mr. Brooks fail to provide an analysis of the target audiences of GSN and WE tv. ...............................109 2. Regarding Actual Viewing Audience ......................................................110 3. Regarding Cablevision’s STB Data And Audience By Network Reports. ....................................................................................................117 4. Mr. Brooks and GSN Misrepresent The Design Intent And Purpose Of The Beta Research Study. It Is Not Used As A Cable Subscriber Satisfaction Survey, But Rather, It Is Employed As A Cable Network Sales Tool.................................................................................................118 5. The Price Per Rating Point/Ratings-Adjusted Price Metric Cited By Dr. Singer Is Not Designed For Or Intended To Be Used By A Cable Operator When Making Carriage Decisions. As A Result, It Does Not Include Most Of The Factors Considered By An MVPD When Making Such Evaluations......................................................................................122 iii REDACTED - FOR PUBLIC INSPECTION List of Exhibits Egan Exhibit 1 – Documents Relied Upon by the Expert Egan Exhibit 2A – Programs Aired During the Twelve Sample Weeks on WE tv and GSN Egan Exhibit 2B – Programs by Network with Show Descriptions and Genre Identifications Egan Exhibit 2C – Programming Schedules for WE tv for Each of the Twelve Sample Weeks with Each Program Color-Coded by Genre Egan Exhibit 2D – Schedules for GSN for Each of the Twelve Sample Weeks, Color-Coded by Genre Egan Exhibit 3 – Slide from WE tv’s 2010-11 Upfront Presentation, “Programming mirrors key turning points in WE tv viewers’ lives” Egan Exhibit 4 – Excerpts from July 26, 2012 WE tv Affiliate Sales Team Presentation to Comcast Egan Exhibit 5 – Slide from WE tv’s 2012-13 Upfront Presentation, “WE tv gets what her family is about” Egan Exhibit 6 – WE tv.com and GSN.com Screenshot Comparison Egan Exhibit 7 – History of WE tv’s Promotional Barter Deals With Cable Networks Egan Exhibit 8A – Actual Programming Production Expenses by Network Egan Exhibit 8B – Amortized Expenses for Acquired Programs by Network Egan Exhibit 9 – Detailed Listing of the 24 Networks Within 10% of GSN’s Subscriber Total Egan Exhibit 10 – Slide from AMC Networks Lenders Presentation, April 2011 Egan Exhibit 11 – Netflix TV Genres as of 9-13-12 Egan Exhibit 12 – Two Slides from WE tv Presentations to MVPDs: (1) 2010 – Best Year Ever For WE tv! and (2) 2011 – WE KEEP GROWING – BEST YEAR EVER Egan Exhibit 13 – Two Slides from WE tv Presentations to National Advertising and Programming Communities: (1) 2009 Was WE tv’s Best Year Ever! and (2) Research Study Regarding Women And The Recession Egan Exhibit 14 – WE tv’s Presentation to Enlist MVPD Affiliates in “WE Empowers Women” Public Affairs Program iv REDACTED - FOR PUBLIC INSPECTION Egan Exhibit 15 – Two WE tv Advertising Sales Client Leave-Behind Pieces: (1) “WE Fact Sheet (2010/2011)” and (2) “WE tv Marketbreaks – 1Q11” Egan Exhibit 16 – Three WE tv Internal Competitive Tracking Reports Of Ratings and Audience Delivery: (1) WE tv And Key Competitors Primetime Performance By Week For W18-49; (2) Oct 2010 Program Schedule By Network With Ratings; (3) Monthly Comparisons – WE tv,