Decided: May 14, 2012
Mid-Atlantic Sports Network (“Network”) appealed an order of the Federal Communications Commission (“FCC”), which found that Time Warner Cable Inc. (“Time Warner”) provided legitimate and non-discriminatory reasons for declining to carry the Network’s programming on an analog tier in its North Carolina cable system. The Fourth Circuit Court of Appeals denied Mid-Atlantic Sports Network’s petition for review and affirmed the FCC’s Order in favor of Time Warner.
The Network is an unaffiliated regional sports network (“RSN”) that owns the rights to produce and exhibit nearly all of the games of the Baltimore Orioles and Washington Nationals Major League Baseball franchises. The Network seeks program carriage on networks of multichannel video program distributors, like Time Warner, throughout its television territory, which includes North Carolina. Time Warner owns multiple cable systems in several states and is the largest provider of pay television service in North Carolina. In March 2005, the Network initiated negotiations with Time Warner for program carriage in North Carolina on an analog tier. Negotiations between the parties broke down in May 2007 when Time Warner refused to accept the Network’s request for program carriage on a statewide analog tier, and instead proposed carriage of the Network’s programming on a digital sports tier or analog tier in Time Warner’s cable systems in eastern North Carolina.
This litigation arose out of an administrative process that began in June 2007 when the Network filed an arbitration demand with the American Arbitration Association. The Network claimed that Time Warner had violated the 1992 Cable Act by refusing the carry the Network’s carriage on Time Warner’s statewide analog tier, which Time Warner offered to its affiliated RSNs. Ultimately, the FCC concluded that the Network had “failed to demonstrate that Time Warner has impermissibly discriminated” pursuant to requirements under federal statute and implementing rules. The Network appealed to the Fourth Circuit Court of Appeals, and the Court reviewed the reasonableness of the FCC’s decision pursuant to the Administrative Procedure Act. The Act requires the Fourth Circuit to affirm the FCC’s decision unless it is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(a).
First, the Fourth Circuit dismissed the Network’s claim that the FCC “erroneously credited Time Warner’s post hoc justifications” for its refusal to carry the Networks programming, finding that the “FCC reasonably credited” sworn statements by Time Warner’s executives, even if the statements post-dated the initiation of the litigation. The Court further found similar decisions in other circuits to be persuasive in its decision “to decline to read significance solely into the timing of a defendant’s explanation or the absence of contemporaneous evidence.” The Court also found that evidence of an email exchange between Time Warner employees corroborated the sworn statements and served as contemporaneous documentary evidence supporting the FCC’s decision. Based on the aforementioned analysis, the Court additionally addressed the Network’s assertion that the “FCC made factual findings not supported by substantial evidence” and concluded that the record contained substantial evidence supporting the FCC’s findings.
Next, the Fourth Circuit considered the Network’s “argument that it made an indisputable prima facie showing of program carriage discrimination by showing that Time Warner treated [the Network] less favorably that its affiliated RSNs.” The Court found that the Network “failed to show that, even assuming that it made a prima facie discrimination case, Time Warner did not effectively rebut that case with evidence supporting legitimate, non-discriminator business reasons for its denial of statewide analog tier carriage, or that the analytical framework applied by the FCC to its decision in this regard was erroneous.”
The Fourth Circuit concluded by addressing the Network’s argument that the “FCC’s Order will harm competition and consumers.” The Court found that the FCC followed its practice of evaluating carriage claims on a case-by-case basis and individually evaluated the Network’s claim. Again, the Court concluded that “the evidence supports the FCC’s determination that Time Warner’s decision” was driven by legitimate business factors, and concluded that the Network “failed to show how such legitimate business decisions harm competition or consumers.
Ultimately, the Fourth Circuit held that “the FCC acted neither arbitrarily nor capriciously nor otherwise unlawfully” and upheld the FCC’s order in favor of Time Warner.
– Allison Hite