Comcast Tells FCC There's Nothing Unlawful About Negotiating Hard for Digital TV Rights

On visits from his corporate superiors at Comcast
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"I dress the place up to look like a movie studio. I bring all the Winnebagos to the front; I have people pushing sets around, like one of those old Cecil B. DeMille movies. So they come for two days every two, three months, and we look like we're a bustling metropolis, and then we go back to being a regular old business."

Is Comcast looking to unfairly prop up Telemundo?

Liberman Broadcasting Inc. thinks so. In April, the owner of Estrella TV filed a program carriage complaint with the FCC, alleging that Comcast was refusing to extend a reasonable offer for fair distribution and compensation so as to benefit Comcast's own Spanish-language networks. What's more, Liberman asserted that Comcast's demand for streaming rights constituted the "kind of financial interest as a condition of carriage" that is barred by Section 616 of the 1992 Cable Act.

Comcast's reply, made public on Wednesday, seeks to translate Liberman's beef as the wrong entity asserting the wrong claim under the wrong statute and that if given any credence would make it unlawful anytime a cable or satellite distributor had the temerity to ask for digital rights.

Estrella was removed last year from Comcast's service in Houston, Denver and Salt Lake City after negotiations for carriage broke down. Liberman is now asking the FCC to do something about this.

In its reply, Comcast asserts that Liberman has no standing to pursue such claims. The cable giant tells the FCC that Congress made rules of the road for broadcasters and rules of the road for cable networks, and that broadcaster Liberman doesn't seem to know the difference by fashioning itself to be a "video programming vendor."

If Liberman doesn't like the offer it is getting, says Comcast, it can always invoke the must-carry rules for broadcasters. In fact, Estrella was switched from must-carry status in 2014 when Liberman hoped to negotiate higher retrans fees. Liberman and Comcast subsequently went back-and-forth on terms. Liberman didn't like the deal on the table, and so Estrella was dropped. Comcast says few of its customers complained.

As for the digital rights issue, Comcast isn't buying the hype.

"Although LBI characterizes the claim as an 'issue of first impression,' and a 'new cause of action,' a more apt label is 'frivolous,'" says Comcast.

Comcast rejects the notion that Section 616 of the Cable Act could be interpreted so that its request for Estrella's digital programming rights would constitute an impermissible demand for a "financial interest" in the station. Comcast doesn't like Liberman's argument that "if these rights conferred no financial benefit, Comcast would neither want nor demand them."

Here's Comcast's retort: "LBI’s tortured definition of 'financial interest' would expand the term to include an MVPD’s interest in obtaining a license to distribute programming — which is precisely what occurs in every successful carriage negotiation. Comcast and other MVPDs receive (or at least hope to achieve) an economic benefit every time they reach an agreement to distribute programming, whether through transmission of linear signals to cable customers in their homes, video-on-demand offerings, or TV Everywhere. LBI’s reading of the statute would make any request by an MVPD for carriage or additional distribution rights unlawful."