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AT&T Services, Inc. et al. v. Madison Square Garden, L.P. et al.

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Released: September 22, 2011

Federal Communications Commission

DA 11-1595

REDACTED VERSION

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of
)
)

AT&T Services, Inc. and
)
File No. CSR-8196-P
Southern New England Telephone Company
)
d/b/a AT&T Connecticut,
)
Complainants,
)
)

v.
)
)

Madison Square Garden, L.P. and
)
Cablevision Systems Corp.,
)
Defendants

ORDER

Adopted: September 22, 2011

Released: September 22, 2011

By the Chief, Media Bureau

TABLE OF CONTENTS

Heading
Paragraph #
I.
INTRODUCTION .................................................................................................................................. 1
II. BACKGROUND .................................................................................................................................... 2
A. Commission's Rules Addressing Unfair Acts Involving Terrestrially Delivered, Cable-
Affiliated Programming ................................................................................................................... 2
B. Appeal of the 2010 Order ................................................................................................................ 5
C. AT&T's Complaint.......................................................................................................................... 6
III. DISCUSSION....................................................................................................................................... 10
A. AT&T's Complaint is Not Barred by the October 2007 Release .................................................. 10
B. Count I "Unfair Act" in Violation of Section 628(b) of the Act and Section 76.1001(a)
of the Rules .................................................................................................................................... 11
1. AT&T Properly Invoked the Framework Adopted in the 2010 Order.................................... 12
2. AT&T Has Demonstrated that Defendants Violated Section 628(b) of the Act and
Section 76.1001(a) of the Rules .............................................................................................. 13
a. Both MSG LP and Cablevision Are Proper Defendants to Count I.................................. 14
(i) MSG LP...................................................................................................................... 14
(ii) Cablevision................................................................................................................. 17
b. Defendants' Withholding of MSG HD and MSG+ HD from AT&T is an "Unfair
Act"................................................................................................................................... 19
(i) The D.C. Circuit's Ruling in Cablevision II Affirms the Commission's
Authority to Address Whether Withholding is an "Unfair Act" on a Case-by-
Case Basis................................................................................................................... 20
(ii) The Bureau Has Delegated Authority to Consider Whether Withholding is an
"Unfair Act" ............................................................................................................... 24
(iii) Based on Established Precedent and Guidelines, Defendants' Withholding is
an "Unfair Act"........................................................................................................... 25

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(a) Defendants' Procompetitive Justifications for Withholding................................ 26
(b) Section 628(c)(4) Factors..................................................................................... 28
(i) Development of Competition in Local and National MVPD Markets.......... 29
(ii) The Effect of Withholding on Alternative Video Providers to Incumbent
Cable Operators............................................................................................. 31
(iii) Attraction of Investment in New Programming ............................................ 32
(iv) The Effect on Diversity of Programming in the MVPD Market................... 35
(v) Duration of Withholding ............................................................................... 37
(vi) Conclusion..................................................................................................... 38
(c) MDU Order.......................................................................................................... 39
(d) Legitimate Business Justification......................................................................... 40
(e) FTC Definition..................................................................................................... 41
(f) Conclusion ........................................................................................................... 42
c. Defendants' Withholding of MSG HD and MSG+ HD from AT&T Has the
"Effect" of "Significantly Hindering" AT&T................................................................... 43
(i) The "Significant Hindrance" Standard ....................................................................... 44
(ii) The Record Supports Application of a Rebuttable Presumption of
"Significant Hindrance" for HD RSNs....................................................................... 47
(iii) Defendants Have Failed to Rebut the Presumption.................................................... 50
(a) Survey Evidence .................................................................................................. 52
(i) The Results of Defendants' Surveys Contradict Their Product Differentiation
Strategy.......................................................................................................... 54
(ii) Defendants' Survey Evidence Is Not Reliable .............................................. 55
(b) Non-Survey Evidence .......................................................................................... 62
(c) Conclusion ........................................................................................................... 69
3. Remedy.................................................................................................................................... 70
4. First Amendment ..................................................................................................................... 73
C. Count II Unreasonable Refusal to Sell........................................................................................ 77
D. Count III Evasion ........................................................................................................................ 79
E. Count IV Undue or Improper Influence...................................................................................... 81
F. Count V Discrimination .............................................................................................................. 82
IV. ORDERING CLAUSES....................................................................................................................... 83

I.

INTRODUCTION

1.
In this Order, we find that Madison Square Garden, L.P. ("MSG LP") and Cablevision
Systems Corporation ("Cablevision") (MSG LP and Cablevision together, the "Defendants") violated
Section 628(b) of the Communications Act of 1934, as amended (the "Act") and Section 76.1001(a) of
the Commission's rules based on our findings that (i) both MSG LP and Cablevision are proper
defendants; (ii) Defendants' withholding of the high definition ("HD") versions of the MSG and MSG+
networks from AT&T Services, Inc. and Southern New England Telephone Company d/b/a AT&T
Connecticut (collectively, "AT&T") is an "unfair act";1 and (iii) this "unfair act" has the "effect" of
"significantly hindering" AT&T from providing a competing video service, including "satellite cable
programming and satellite broadcast programming," to subscribers and consumers in the state of


1 Throughout this Order, we use the term "unfair act" as shorthand for the phrase "unfair methods of competition or
unfair or deceptive acts or practices." 47 U.S.C. 548(b); see 47 C.F.R. 76.1001(a).
2

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Connecticut.2 Accordingly, we grant Count I of AT&T's program access complaint and order MSG LP to
enter into an agreement to license the MSG HD and MSG+ HD networks to AT&T on non-discriminatory
rates, terms, and conditions within 30 days of the release of this Order. For the reasons discussed herein, we
deny the remaining counts set forth in AT&T's complaint.

II.

BACKGROUND

A.

Commission's Rules Addressing Unfair Acts Involving Terrestrially Delivered,
Cable-Affiliated Programming

2.
Sections 628(b), 628(c)(1), and 628(d) of the Act3 grant the Commission broad authority
to prohibit "unfair acts" of cable operators, satellite cable programming vendors in which a cable operator
has an attributable interest, and satellite broadcast programming vendors that have the "purpose or effect"
of "hinder[ing] significantly or prevent[ing]" any multichannel video programming distributor ("MVPD")
from providing "satellite cable programming or satellite broadcast programming to subscribers or
consumers."4 Based on this broad grant of authority, the Commission adopted rules for the processing of
complaints alleging one or more of three "unfair acts" involving terrestrially delivered, cable-affiliated
programming: undue or improper influence, discrimination, and exclusive contracts.5 Among other
things, these rules require a complainant to demonstrate that the "unfair act" has the "purpose or effect" of
"significantly hindering or preventing" the complainant from providing satellite cable programming or
satellite broadcast programming to subscribers or consumers, as required by Section 628(b).6
3.
The Commission has recognized that some terrestrially delivered programming may be
non-replicable and sufficiently valuable to consumers that an "unfair act" regarding this programming


2 47 U.S.C. 548(b); 47 C.F.R. 76.1001(a). AT&T, Cablevision, and MSG LP are each a "Party" and are
collectively the "Parties."
3 Section 628 was passed as part of the Cable Television Consumer Protection and Competition Act of 1992 ("1992
Cable Act"). See Cable Television Consumer Protection and Competition Act of 1992, Pub. L. No. 102-385, 106
Stat. 1460 (1992).
4 See 47 U.S.C. 548(b) ("[I]t shall be unlawful for a cable operator, a satellite cable programming vendor in which
a cable operator has an attributable interest, or a satellite broadcast programming vendor to engage in unfair methods
of competition or unfair or deceptive acts or practices, the purpose or effect of which is to hinder significantly or to
prevent any multichannel video programming distributor from providing satellite cable programming or satellite
broadcast programming to subscribers or consumers."); 47 U.S.C. 548(c)(1); 47 U.S.C. 548(d).
5 See 47 C.F.R. 76.1001; Review of the Commission's Program Access Rules and Examination of Programming
Tying Arrangements
, First Report and Order, 25 FCC Rcd 746 (2010) ("2010 Order"), affirmed in part and vacated
in part Cablevision Sys. Corp. et al. v. FCC
, No. 10-1062, 2011 WL 2277217 (D.C. Cir. June 10, 2011)
("Cablevision II"). We note that the AT&T Complaint was filed five months prior to release of the 2010 Order. See
AT&T Services Inc. et al., Program Access and Section 628(b) Complaint, File No. CSR-8196-P (filed Aug. 13,
2009) ("AT&T Complaint"). Many of the Parties' arguments from earlier stages of this proceeding pertain to the
Commission's statutory authority to address "unfair acts" involving terrestrially delivered, cable-affiliated
programming pursuant to Section 628(b). See, e.g., id. at 86-88; Defendants, Answer to Program Access
Complaint, File No. CSR-8196-P (filed Sept. 17, 2009), at 20-33 ("Defendants' Answer"); AT&T Services Inc. et
al.
, Reply, File No. CSR-8196-P (filed Oct. 2, 2009), at 6-13 ("AT&T Reply"). In the 2010 Order, the Commission
interpreted Section 628(b) and addressed arguments regarding the scope of this provision. See 2010 Order, 25 FCC
Rcd at 757-61, 19-24. Rather than repeating that analysis here, we incorporate by reference the Commission's
interpretation of Section 628(b) from the 2010 Order.
6 See 2010 Order, 25 FCC Rcd at 780-82, 50-51.
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presumptively but not conclusively has the purpose or effect set forth in Section 628(b).7 The
Commission has found that Regional Sports Networks ("RSNs") fall within this category.8 Accordingly,
rather than requiring litigants and the Commission staff to undertake repetitive examinations of RSN
precedent and the relevant historical evidence, the Commission allows complainants to invoke a
rebuttable presumption that an "unfair act" involving a terrestrially delivered, cable-affiliated RSN has the
purpose or effect set forth in Section 628(b).9 The Commission has explained that the defendant may
overcome the presumption by establishing that the "unfair act" does not have the prohibited purpose or
effect.10
4.
In addition, the Commission has concluded that HD programming is growing in
significance to consumers11 and that consumers do not consider the standard definition ("SD") version of
a particular channel to be an adequate substitute for the HD version due to the different technical
characteristics and sometimes different content.12 Accordingly, the Commission analyzes the HD version
of a network separately from the SD version with similar content for purposes of determining whether an
"unfair act" has the purpose or effect set forth in Section 628(b).13 Thus, the fact that a complainant
offers the SD version of a network to subscribers will not alone be sufficient to refute the complainant's


7 See id. at 750, 8 and 782-83, 52.
8 See id. at 782-83, 52. In establishing the RSN rebuttable presumption, the Commission relied on evidence in the
record supporting the conclusion that RSNs typically offer non-replicable content and are considered "must have"
programming by MVPDs. See id. at 768-69, 32 and 782-83, 52 nn.205-206. The Commission also relied on an
empirical analysis performed in the 2006 Adelphia Order assessing the impact of the withholding of terrestrially
delivered, cable-affiliated RSNs on the market shares of Direct Broadcast Satellite ("DBS") operators. See id. at
768-69, 32 and 782, 52 n.202 (citing Applications for Consent to the Assignment and/or Transfer of Control of
Licenses, Adelphia Communications Corporation, Assignors to Time Warner Cable, Inc., Assignees, et al.,
Memorandum Opinion and Order, 21 FCC Rcd 8203, 8271, 149 (2006) ("Adelphia Order") (concluding that
Comcast's withholding of the terrestrially delivered Comcast SportsNet Philadelphia RSN from DBS operators
caused the percentage of television households subscribing to DBS in Philadelphia to be 40 percent lower than what
it otherwise would have been; and concluding that Cox's withholding of the terrestrially delivered Cox-4 RSN from
DBS operators in San Diego caused the percentage of television households subscribing to DBS in that city to be 33
percent lower than what it otherwise would have been); Review of the Commission's Program Access Rules and
Examination of Programming Tying Arrangements
, MB Docket No. 07-198, Report and Order, 22 FCC Rcd 17791,
17818-19, 40 and 17876-82, Appendix B (addressing comments concerning the Adelphia Order study) (2007)
("2007 Order"), aff'd sub nom. Cablevision Sys. Corp. v. FCC, 597 F.3d 1306 (D.C. Cir. 2010) ("Cablevision I")).
The Commission defined an RSN in the same way the Commission has defined that term in previous merger
proceedings for purposes of adopting program access conditions: "any non-broadcast video programming service
that (1) provides live or same-day distribution within a limited geographic region of sporting events of a sports team
that is a member of Major League Baseball, the National Basketball Association, the National Football League, the
National Hockey League, NASCAR, NCAA Division I Football, NCAA Division I Basketball, Liga de Bisbol
Profesional de Puerto Rico, Baloncesto Superior Nacional de Puerto Rico, Liga Mayor de Ftbol Nacional de Puerto
Rico, and the Puerto Rico Islanders of the United Soccer League's First Division and (2) in any year, carries a
minimum of either 100 hours of programming that meets the criteria of subheading 1, or 10% of the regular season
games of at least one sports team that meets the criteria of subheading 1." See id. at 783-84, 53.
9 See id. at 782-83, 52.
10 See id.; see also id. at 750, 8.
11 See id. at 784-85, 54.
12 See id. at 784-85, 54-55.
13 See id. at 784-85, 54.
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showing that lack of access to the HD version has the purpose or effect set forth in Section 628(b).14
Similarly, in cases involving an RSN, withholding the HD feed is rebuttably presumed to cause
"significant hindrance" even if an SD version of the network is made available to competitors.15

B.

Appeal of the 2010 Order

5.
The Defendants in this case MSG LP and Cablevision each appealed the 2010 Order
to the United States Court of Appeals for the D.C. Circuit ("D.C. Circuit"). On June 10, 2011, the D.C.
Circuit issued a decision (i) affirming the Commission's interpretation of Section 628(b) as extending to
"unfair acts" involving terrestrially delivered, cable-affiliated programming;16 (ii) denying the
Defendants' facial First Amendment challenge to the Commission's interpretation of Section 628(b);17
(iii) rejecting as unripe a First Amendment challenge to the Commission's interpretation of Section
628(b) as applied in the New York City video market;18 (iv) upholding the Commission's decision to
establish a rebuttable presumption of "significant hindrance" for "unfair acts" involving RSNs and HD
RSNs under both First Amendment and Administrative Procedure Act ("APA") review;19 (v) affirming
under APA review the Commission's decision to hold a "satellite cable programming vendor in which a
cable operator has an attributable interest" liable for "unfair acts" involving terrestrially delivered
programming;20 and (vi) affirming under APA review the Commission's decision to hold each of the three
types of entity listed in Section 628(b) liable for the "unfair acts" of a terrestrially delivered programmer
that the entity wholly owns, controls, or with which it is under common control.21 The D.C. Circuit
vacated just one part of the 2010 Order the Commission's decision to treat certain acts involving
terrestrially delivered, cable-affiliated programming as categorically "unfair."22 As discussed in further
detail below, the D.C. Circuit's decision on this issue does not preclude the Media Bureau ("Bureau")
from assessing on a case-by-case basis whether an act is "unfair" under Section 628(b).23 The court's
mandate issued on July 27, 2011.24

C.

AT&T's Complaint

6.
Complainant AT&T is an MVPD as defined in Section 76.1000(e) of the Commission's
rules that provides video service to subscribers in Connecticut, among other areas, under the service name
of AT&T U-verse TV service.25 Defendant Cablevision is a cable operator as defined in Section 522(5)


14 See id. at 785, 55.
15 See id.
16 See Cablevision II, 2011 WL 2277217, at *6-*12.
17 See id. at *13-*15.
18 See id. at *15.
19 See id. at *17-*19.
20 See id. at *19-*20.
21 See id. at *20-*21.
22 See id. at *21-*24.
23 See infra 20-24.
24 See Judgment, File No. 10-1062 (D.C. Cir.).
25 See AT&T Complaint at 1, 12, 14, 80 and Joint Declaration of Daniel York, Christopher Lauricella, and Rob
Thun (Aug. 10, 2009), at 5 ("York/Lauricella/Thun Decl."); Defendants' Answer at 83 ( 1), 85 ( 14). AT&T
states that it provides service in the following communities, among others, in the state of Connecticut within the
(continued....)
5

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of the Act that provides video service in the state of Connecticut, among other areas.26 Defendant MSG
LP owns and operates two RSNs: MSG and MSG+.27 MSG owns exclusive rights to produce and exhibit
within a certain geographic region the games of the New York Knicks (of the National Basketball
Association ("NBA")) and New York Rangers (of the National Hockey League ("NHL")), among
others.28 MSG+ owns exclusive rights to produce and exhibit within a certain geographic region the
games of the New York Islanders (of the NHL) and New Jersey Devils (of the NHL), and also televises
local and national college football and basketball games.29 MSG LP delivers the SD versions of MSG
and MSG+ to cable operators via satellite and delivers the HD versions of these networks via terrestrial
facilities.30 At the time the AT&T Complaint was filed in August 2009, MSG LP was a wholly owned
subsidiary of Cablevision.31 In February 2010, Madison Square Garden, Inc. ("MSG Inc.") was spun off
from Cablevision, becoming a separate public company.32 Defendant MSG LP is now a wholly owned
subsidiary of MSG Inc.33 Despite this spin off, MSG LP is affiliated with Cablevision pursuant to the
Commission's attribution rules because Cablevision and MSG LP share a common controlling
shareholder (the Dolan family) and thus are under common control.34
7.
AT&T claims that Defendants have continually refused to provide AT&T with access to
the terrestrially delivered MSG HD and MSG+ HD networks in the state of Connecticut.35 AT&T
contends that Defendants initially indicated in 2007 that they would not license the HD versions of MSG
and MSG+ to AT&T.36 AT&T claims that it attempted to obtain access to the HD versions of MSG and
MSG+ in 2008 and 2009 in connection with negotiations pertaining to the satellite-delivered HD versions
of Defendants' national networks, but Defendants again declined.37 Defendants admit that "it is true that
(Continued from previous page)


New York Designated Market Area ("DMA") (Bridgeport, Danbury, Darien, Easton, Fairfield, Greenwich, New
Canaan, Norwalk, Shelton, Stamford, Stratford, Weston, and Westport) and the Hartford/New Haven DMA (Bristol,
East Haven, Hamden, Hartford, Middleton, Milford, Naugatuck, New Britain, New Haven, Orange, Wallingford,
Waterbury, West Haven, and Woodbridge). See AT&T Complaint at 12; York/Lauricella/Thun Decl. at 9; see
also Defendants' Answer
at 15 n.41.
26 See AT&T Complaint at 16-17, 19, 81; Defendants' Answer at 85 ( 16), 86 ( 17), 87 ( 81).
27 See AT&T Complaint at 22.
28 See id. at 23; Defendants' Answer at 86 ( 23).
29 See AT&T Complaint at 23; Defendants' Answer at 86 ( 23).
30 See AT&T Complaint at 24, 44; Defendants' Answer at 10-13 ( 1-5), 70-71, 86 ( 24) and Declaration of
Steven J. Pontillo (Sept. 16, 2009), at 11-20 ("Pontillo Decl.").
31 See AT&T Complaint at 2, 21; Defendants' Answer at 86 ( 21).
32 See Defendants, Answer to AT&T's Supplement to Program Access Complaint, File No. CSR-8196-P (filed Jan.
6, 2011), at 119-20 ("Defendants' Post-Discovery Answer to Supplement").
33 See id. at 120.
34 See Reply Brief of Defendants, File No. CSR-8196-P (filed Jan. 31, 2011), at 59 n.221 ("Defendants' Post-
Discovery Reply Brief
"); see also Opening Brief of AT&T, File No. CSR-8196-P (filed Jan. 6, 2011), at 23 n.43
(citing Madison Square Garden, Inc., SEC Form 10-Q at 14 (Aug. 6, 2010)) and at 24 n.45 ("AT&T Post-Discovery
Opening Brief
"); Reply Brief of AT&T, File No. CSR-8196-P (filed Jan. 31, 2011), at 35 ("AT&T Post-Discovery
Reply Brief
"); AT&T Complaint at 22 n.19.
35 See AT&T Complaint at 6-7, 42, 44, 50-54, 62; York/Lauricella/Thun Decl. at 33-48.
36 See AT&T Complaint at 42-44; York/Lauricella/Thun Decl. at 34-36; Defendants' Answer at 13-14 ( 6).
37 See AT&T Complaint at 46-54; York/Lauricella/Thun Decl. at 39-47; Defendants' Answer at 14-15 ( 8).
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AT&T cannot obtain access to MSG HD and MSG+ HD."38 Despite their withholding of MSG HD and
MSG+ HD from AT&T, Defendants have licensed these networks to many of AT&T's competitors in the
state of Connecticut, including Cablevision, Time Warner, Comcast, and DIRECTV.39
8.
On July 10, 2009, AT&T notified Defendants of its intention to file a program access
complaint based on Defendants' refusal to provide AT&T with access to the HD versions of MSG and
MSG+.40 Defendants responded on July 23, 2009, stating that they had no legal obligation to provide
AT&T with access to the HD versions of MSG and MSG+ and that their refusal to do so was not
unreasonable, unfair, or anticompetitive.41 On August 13, 2009, AT&T filed its complaint, raising five
separate counts with respect to Defendants' withholding of MSG HD and MSG+ HD from AT&T.42
Among other things, AT&T asks the Commission to provide a period not to exceed 30 days for
Defendants to negotiate nondiscriminatory terms and conditions for AT&T's access to MSG HD and
MSG+ HD.43 AT&T also asks the Commission to institute a forfeiture proceeding under 47 U.S.C.
503(b) based on Defendants' alleged repeated failure to comply with the Communications Act and the
Commission's rules.44 Defendants filed an Answer to the AT&T Complaint, to which AT&T filed a
Reply.45 While AT&T initially elected to prosecute Count I of its complaint under Section 628(d)


38 See Defendants' Post-Discovery Answer to Supplement at 94; see also Defendants' Answer at 13 ( 6), 14-15 (
8), Declaration of Adam Levine (Sept. 17, 2009), at 12 ("[I]t had previously been made clear to AT&T that MSG
would not provide AT&T with a license to carry MSG HD and MSG+ HD.") ("Levine Sept. 2009 Decl.");
Defendants' Objections to AT&T's Improperly Propounded and Irrelevant Discovery Requests, File No. CSR-8196-
P (filed Oct. 29, 2009), at 6 ("The parties agree that AT&T sought a license to carry MSG HD and MSG+ HD, and
that it was denied such a license.") ("Defendants' Oct. 29th Discovery Objection").
39 See AT&T Complaint at iv and 6, 66, 68, 76, 110; Defendants' Answer at 58; AT&T Reply at 15; AT&T Post-
Discovery Opening Brief
at 23; Defendants' Post-Discovery Answer to Supplement at 97-98.
40 See AT&T Complaint at 53 and Exhibit 5.
41 See id., Exhibit 6.
42 See id. at 78-111. At the request of the Parties, the Bureau adopted a Protective Order in this proceeding to
govern the submission of confidential material. See AT&T Services Inc. et al. v. Madison Square Garden, L.P. et al.,
Order, 24 FCC Rcd 11258 (MB 2009).
43 See AT&T Complaint at 8 and p.44.
44 See id. at 8, 112 and p.44.
45 See generally Defendants' Answer; AT&T Reply. The Parties have also made a number of additional filings
outside of the authorized pleading cycle but prior to discovery. Defendants submitted two surveys purporting to
demonstrate the importance (or lack thereof) of MSG HD and MSG+ HD to subscribers, which AT&T sought to
strike as late-filed. See Defendants' Supplement to the Record, File No. CSR-8196-P (filed April 9, 2010)
("Defendants' April 2010 Supplement"), Exhibit A (Declaration of Leslie Shifrin (March 15, 2010) ("Shifrin March
2010 Decl.")), Exhibit B ("Radius Global Market Research Market Research Assessing Reasons for Choice of
Television Provider" ("Defendants'/Radius Survey")), Exhibit C ("OTX Online Testing Exchange Assessing the
Impact of Verizon Offering MSG HD/MSG+ HD on Verizon Customer Acquisition" ("Defendants'/OTX March
2010 Survey
")); AT&T, Motion to Strike Defendants' Supplement to the Record, File No. CSR-8196-P (filed April
16, 2010); Defendants' Opposition to AT&T's Motion to Strike Defendants' Supplement to the Record, File No.
CSR-8196-P (filed April 26, 2010); AT&T, Reply in Support of Its Motion to Strike Defendants' Supplement to the
Record, File No. CSR-8196-P (filed April 30, 2010). In addition, MSG LP filed a Motion to Dismiss MSG LP as a
party to the proceeding, which AT&T opposed. See Madison Square Garden, L.P., Motion to Dismiss MSG LP as a
Party, File No. CSR-8196-P (filed April 9, 2010) ("MSG LP Motion to Dismiss"); AT&T, Opposition to Motion to
Dismiss MSG LP as a Party, File No. CSR-8196-P (filed April 16, 2010) ("AT&T Opposition to MSG LP Motion to
Dismiss
"); Madison Square Garden, L.P., Reply to AT&T's Opposition to Motion to Dismiss MSG LP as a Party,
(continued....)
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pursuant to the pre-2010 Order framework,46 AT&T subsequently filed a supplement to its complaint on
July 14, 2010 to invoke the post-2010 Order framework.47
9.
During the course of the proceeding, each Party submitted discovery requests as well as
objections to the other Party's discovery requests.48 On August 9, 2010, the Bureau informed the Parties
(Continued from previous page)


File No. CSR-8196-P (filed April 23, 2010) ("MSG LP Reply to AT&T Opposition to Motion to Dismiss"). The
Parties also submitted additional substantive filings after the close of the pleading cycle but prior to discovery. See,
e.g.,
Letter from Aaron M. Panner, Counsel for AT&T, to Marlene H. Dortch, Secretary, FCC, File No. CSR-8196-P
(March 30, 2010) ("AT&T March 30th Letter"); Letter from Howard J. Symons, Counsel for Defendants, to Marlene
H. Dortch, Secretary, FCC, File No. CSR-8196-P (April 9, 2010) ("Defendants' April 9th Letter"); Letter from
Aaron M. Panner, Counsel for AT&T, to Marlene H. Dortch, Secretary, FCC, File No. CSR-8196-P (April 16, 2010)
("AT&T April 16th Letter"); Letter from Howard J. Symons, Counsel for Defendants, to Marlene H. Dortch,
Secretary, FCC, File No. CSR-8196-P (April 23, 2010) ("Defendants' April 23rd Letter"). In the interest of acting
on a complete record, we decline to strike any of these post-pleading-cycle/pre-discovery filings and consider the
substantive claims made therein in reaching a decision. We have declined, however, Defendants' request to submit
supplemental briefs on the issue of whether the record supports a finding that Defendants have engaged in an "unfair
act." See Email from Christopher J. Harvie, Counsel for Defendants, to David S. Konczal, Assistant Division Chief,
Policy Division, Media Bureau, FCC, File No. CSR-8196-P (Aug. 1, 2011). The request was made on August 1,
2011, nine months after the close of discovery in this proceeding. See id. The parties have had a full opportunity to
brief this issue, and the record on this issue is well-developed. See Email from David S. Konczal, Assistant Division
Chief, Policy Division, Media Bureau, FCC to Christopher J. Harvie, Counsel for Defendants, File No. CSR-8196-P
(Aug. 3, 2011); see also infra 23. Moreover, the Bureau informed the parties on July 26, 2011, prior to
Defendants' request for supplemental briefing, that the Bureau intended to resolve the pending complaints in the
near future, thus granting the Defendants' request would have resulted in unnecessary delay. See Email from David
S. Konczal, Assistant Division Chief, Policy Division, Media Bureau, FCC to Howard J. Symons, Counsel for
Defendants, File No. CSR-8196-P (July 26, 2011).
46 See infra n.69.
47 See AT&T Services Inc. et al., Supplemental Filing Regarding the Commission's New Program Access Rules,
File No. CSR-8196-P (filed July 14, 2010) ("AT&T Supplement"); see also 2010 Order, 25 FCC Rcd at 751, 10,
756-57, 17, 785, 55, 789, 64 n.237.
48 AT&T initially filed a discovery request in October 2009. See AT&T's First Set of Interrogatories, File No. CSR-
8196-P (filed Oct. 16, 2009); AT&T's First Request for the Production of Documents, File No. CSR-8196-P (filed
Oct. 16, 2009); Defendants' Oct. 29th Discovery Objection; Letter from Colin S. Stretch, Counsel for AT&T, to
Marlene H. Dortch, Secretary, FCC, File No. CSR-8196-P (Oct. 30, 2009). AT&T subsequently requested that the
Commission resolve Count I of its complaint without discovery, unless the Commission did not find the record
adequate to rule on its claims, in which case AT&T requested the Commission to order Defendants to provide the
requested discovery. See AT&T March 30th Letter at 5 n.13. In response to an inquiry from the Bureau, AT&T filed
a revised discovery request in April 2010. See Letter from David S. Konczal, Assistant Division Chief, Policy
Division, Media Bureau, FCC to Aaron M. Panner, Counsel for AT&T, and Howard J. Symons, Counsel for
Defendants, File No. CSR-8196-P (April 8, 2010); Letter from Aaron M. Panner, Counsel for AT&T, to Marlene H.
Dortch, Secretary, FCC, File No. CSR-8196-P (April 16, 2010) (attaching AT&T's Amended First Interrogatories
(April 16, 2010) and AT&T's Amended First Request for the Production of Documents (April 16, 2010));
Defendants' April 23rd Letter; AT&T's Reply in Support of Amended Requests for Discovery, File No. CSR-8196-P
(April 30, 2010). At the request of the Bureau, Defendants submitted their discovery requests in July 2010. See
Letter from Nancy Murphy, Associate Bureau Chief, Media Bureau, FCC to Howard J. Symons, Counsel for
Defendants, and Aaron M. Panner, Counsel for AT&T, File No. CSR-8196-P (June 23, 2010); Letter from Howard
J. Symons, Counsel for Defendants, to Marlene H. Dortch, Secretary, FCC, File No. CSR-8196-P (July 9, 2010)
("Defendants' July 9th Letter"); Defendants' First Request for the Production of Documents, File No. CSR-8196-P
(filed July 9, 2010); Defendants' First Set of Interrogatories, File No. CSR-8196-P (filed July 9, 2010); AT&T's
Objections to Defendants' First Discovery Requests, File No. CSR-8196-P (July 19, 2010); Letter from Howard J.
(continued....)
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that discovery was necessary for the resolution of Counts I, III, and V and directed the Parties to resolve
their outstanding discovery disputes.49 On August 24, 2010, the Parties submitted a joint letter describing
their agreement regarding the scope of discovery to be conducted.50 The Bureau resolved the remaining
discovery disputes and established November 1, 2010 for the end of discovery.51 The Parties agreed to
file post-discovery opening briefs on January 6, 2011 and to file post-discovery reply briefs on January
31, 2011.52

III.

DISCUSSION

A.

AT&T's Complaint is Not Barred by the October 2007 Release

10.
We find that the AT&T Complaint is not barred by the release that AT&T entered into
with Cablevision and its wholly owned subsidiary, Rainbow Media Holdings, LLC ("Rainbow'), in
October 2007.53 The release resulted from a previous program access complaint filed by AT&T in June
2007 against Cablevision and Rainbow pertaining to AT&T's request to license the SD versions of MSG
and MSG+.54 In October 2007, AT&T withdrew its June 2007 complaint after Cablevision and Rainbow
agreed to license the SD versions of MSG and MSG+ to AT&T.55 The release states that AT&T and
(Continued from previous page)


Symons, Counsel for Defendants, to Marlene H. Dortch, Secretary, FCC, File No. CSR-8196-P (July 26, 2010)
("Defendants' July 26th Letter").
49 See Letter from David S. Konczal, Assistant Division Chief, Policy Division, Media Bureau, FCC to Aaron M.
Panner, Counsel for AT&T, and Howard J. Symons, Counsel for Defendants, File No. CSR-8196-P (Aug. 9, 2010)
("Bureau Aug. 9th Letter").
50 See Joint Letter from Aaron M. Panner, Counsel for AT&T, and Christopher J. Harvie, Counsel for Defendants, to
Marlene H. Dortch, Secretary, FCC, File No. CSR-8196-P (Aug. 14, 2010) ("Parties' Aug. 24th Letter"). In light of
the settlement of the outstanding discovery disputes, the Parties' pending discovery objections and the Defendants'
request to refer the discovery disputes to an Administrative Law Judge are moot. See Defendants' April 23rd Letter
at 3 n.16.
51 See Letter from Nancy Murphy, Associate Chief, Media Bureau, FCC to Aaron M. Panner, Counsel for AT&T,
and Howard J. Symons, Counsel for Defendants, File No. CSR-8196-P (Sept. 1, 2010).
52 See Email from Christopher J. Harvie, Counsel for Defendants, to David S. Konczal, Assistant Division Chief,
Policy Division, Media Bureau, FCC, File No. CSR-8196-P (Dec. 3, 2010). The Parties agreed to a mutual
exchange of opening briefs and reply briefs rather than the pleading schedule established in the 2010 Order. See id.;
2010 Order, 25 FCC Rcd at 789, 64 n.237. The Commission has established an aspirational goal of resolving
program access complaints within five months from the submission of a complaint for denial of programming cases,
and within nine months for all other program access complaints, such as price discrimination cases. See 2007
Order
, 22 FCC Rcd at 17856, 107; see also 2010 Order, 25 FCC Rcd at 747, 1 n.2. In addition to a denial of
programming, the present case involves undue influence and evasion claims, thus the nine-month goal applies.
While this would establish May 2010 as the goal for resolving this complaint, this proceeding was further
complicated by the intervening 2010 Order adopted in January 2010 in which the Commission interpreted Section
628(b) and its application to terrestrially delivered, cable-affiliated programming; the Defendants' appeal of the
2010 Order to the D.C. Circuit; AT&T's decision to supplement its complaint in July 2010; and the Parties' decision
to engage in extensive discovery. See Implementation of the Cable Television Consumer Protection and
Competition Act of 1992
, Report and Order, 13 FCC Rcd 15822, 15842-43, 41 (1998) (explaining that the
aspirational goals for resolving program access cases do not apply to cases involving complex discovery or extra
pleadings based upon new information).
53 See Defendants' Answer, Exhibit 4.
54 See AT&T Complaint, Exhibit 4.
55 See id. at 40; York/Lauricella/Thun Decl. at 32.
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Rainbow (defined to include Cablevision and MSG) agreed to "release one another . . . from any and all
claims, actions, damages, and liabilities arising out of or related to the issues in" (i) AT&T's June 2007
complaint and (ii) the "negotiation" of the October 2007 agreement to license the SD versions of MSG
and MSG+ to AT&T "including, without limitation, the terms, conditions, and provisions contained
therein or that could have been contained therein."56 While there is no dispute that AT&T did not raise
the issue of licensing MSG HD and MSG+ HD in its June 2007 complaint,57 Defendants claim that the
negotiations leading to the October 2007 agreement included requests by AT&T to license MSG HD and
MSG+ HD.58 Accordingly, Defendants claim that the release precludes AT&T from bringing a complaint
regarding access to MSG HD and MSG+ HD.59 We disagree. While the record indicates that AT&T
raised the issue of licensing MSG HD and MSG+ HD on two occasions prior to the October 2007
agreement,60 there was no "negotiation" related to MSG HD and MSG+ HD.61 Rather, Cablevision and
Rainbow flatly refused to negotiate with AT&T regarding MSG HD and MSG+ HD.62 Moreover, the
record indicates that Cablevision and Rainbow requested that the parties handle the issue of HD rights
separately from the issue of SD rights.63 This is consistent with Defendants' statement that "MSG HD
and MSG+ HD are licensed separately from MSG and MSG+."64 In addition, AT&T notes that it


56 See Levine Sept. 2009 Decl. at 10; see also Defendants' Answer at 18.
57 See AT&T Reply at 44 and Joint Reply Declaration of Rob Thun, Christopher Lauricella, and Tom Rawls (Oct. 2,
2009), at 19 ("Thun/Lauricella/Rawls Reply Decl.").
58 See Defendants' Answer at 19; Levine Sept. 2009 Decl. at 7-8.
59 See Defendants' Answer at 19-20; Levine Sept. 2009 Decl. at 10.
60 First, in June 2007, AT&T indicated that it was interested in accessing MSG HD and MSG+ HD, but agreed to set
that issue aside to focus on other programming negotiations. See AT&T Complaint at 42-43;
York/Lauricella/Thun Decl. at 34-35; Thun/Lauricella/Rawls Reply Decl. at 21; see also Defendants' Answer at
19. Second, in October 2007 during the course of settling AT&T's June 2007 complaint, AT&T again raised the
issue of licensing MSG HD and MSG+ HD. See AT&T Complaint at 44; York/Lauricella/Thun Decl. at 36;
Thun/Lauricella/Rawls Reply Decl. at 22; see also Defendants' Answer at 19.
61 See Thun/Lauricella/Rawls Reply Decl. at 19 ("In standard English and industry practice, `negotiation' involves
a give and take of proposed terms and conditions of carriage. But such `negotiation' never occurred with respect to
HD rights: Although AT&T wanted to engage in such negotiations, Defendants outright refused to do so. It was, in
short, a `refusal to negotiate,' not a `negotiation,' on the part of Defendants."); see also AT&T Reply at 45.
62 In response to AT&T's June 2007 inquiry regarding licensing MSG HD and MSG+ HD, Cablevision and
Rainbow informed AT&T that "a license to distribute MSG HD and MSG+ HD would not be part of the deal under
discussion." Levine Sept. 2009 Decl. at 7; see Defendants' Answer at 19; AT&T Complaint at 42;
York/Lauricella/Thun Decl. at 34; Thun/Lauricella/Rawls Reply Decl. at 21. With respect to AT&T's October
2007 inquiry regarding licensing MSG HD and MSG+ HD, Defendants state that "this request was again denied."
Levine Sept. 2009 Decl. at 8; see Defendants' Answer at 19; AT&T Complaint at 44; York/Lauricella/Thun Decl.
at 36; AT&T Reply at 45; Thun/Lauricella/Rawls Reply Decl. at 22.
63 See Defendants' Answer at 14-15 ( 8) (stating that Defendants rejected all attempts by AT&T to obtain a license
for MSG HD and MSG+ HD "consistent with Defendants' preference to limit the negotiations to the satellite-
delivered HD programming"); see also AT&T Complaint at 41-42; York/Lauricella/Thun Decl. at 33-34;
AT&T Reply at 44-45; Thun/Lauricella/Rawls Reply Decl. at 20.
64 Levine Sept. 2009 Decl. at 4; see also Defendants' Answer at 78-79; Levine Sept. 2009 Decl. at 13; AT&T
Reply
at 45 n.55; infra 82 (noting that, in response to AT&T's claim that Defendants have offered and sold a
package of the SD and HD versions of MSG and MSG+ to other MVPDs, Defendants stated that MSG SD and
MSG+ SD are licensed separately from MSG HD and MSG+ HD).
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continued to seek access to MSG HD and MSG+ HD after the October 2007 release,65 but the first time
the Defendants claimed that the release applied to AT&T's request to license MSG HD and MSG+ HD
was in their September 2009 Answer to the AT&T Complaint.66 Accordingly, for the foregoing reasons,
we conclude that the AT&T Complaint is not barred by the October 2007 release.

B.

Count I "Unfair Act" in Violation of Section 628(b) of the Act and Section
76.1001(a) of the Rules

11.
In Count I, AT&T alleges that Defendants' withholding of MSG HD and MSG+ HD
from AT&T is an "unfair act" that has the "effect" and "purpose" of "significantly hindering" AT&T
from providing "satellite cable programming or satellite broadcast programming to subscribers or
consumers," as prohibited by Section 628(b) of the Act and Section 76.1001(a) of the Commission's
rules.67 As discussed in greater detail below, we determine that Defendants violated these provisions
based on our findings that (i) both MSG LP and Cablevision are proper defendants; (ii) Defendants'
withholding of the HD versions of the MSG and MSG+ networks from AT&T is an "unfair act"; and (iii)
this "unfair act" has the "effect" of "significantly hindering" AT&T from providing a competing video
service, including "satellite cable programming and satellite broadcast programming," to subscribers and
consumers in the state of Connecticut.68 Accordingly, we grant Count I of AT&T's program access
complaint and order MSG LP to enter into an agreement to license the MSG HD and MSG+ HD networks
to AT&T on non-discriminatory rates, terms, and conditions within 30 days of the release of this Order.
1.

AT&T Properly Invoked the Framework Adopted in the 2010 Order


12.
We reject Defendants' claim that AT&T waived its right to prosecute its complaint
pursuant to the post-2010 Order framework by initially requesting immediate Commission action on
Count I pursuant to Section 628(d) under the pre-2010 Order framework.69 Defendants allege that the
Commission adopted an "either/or" approach in the 2010 Order, such that an entity with a pending
complaint could elect either (i) to continue to prosecute the complaint pursuant to Section 628(d) under
the pre-2010 Order framework, or (ii) to prosecute the complaint under the post-2010 Order framework
by supplementing the complaint.70 Defendants argue that AT&T, by initially requesting immediate


65 See AT&T Complaint at 45-54; York/Lauricella/Thun Decl. at 38-47.
66 See AT&T Reply at 45; Thun/Lauricella/Rawls Reply Decl. at 23. We also note that Defendants did not raise the
issue of the October 2007 release in response to AT&T's July 2009 pre-filing notice. See AT&T Complaint, Exhibit
6.
67 See AT&T Complaint at 78-88; AT&T Supplement at 7-9.
68 Because we conclude below that Defendants' withholding of MSG HD and MSG+ HD from AT&T is an "unfair
act" that has the "effect" of "significantly hindering" AT&T from providing "satellite cable programming or satellite
broadcast programming to subscribers or consumers," we find it unnecessary to also address whether Defendants'
conduct has the "purpose" of "significantly hindering" AT&T. See 47 U.S.C. 548(b) (prohibiting "unfair acts"
that have the "purpose or effect" of "significantly hindering" an MVPD from providing satellite cable programming
or satellite broadcast programming to subscribers or consumers); 47 C.F.R. 76.1001(a) (same); see also AT&T
Complaint
at 64-67, 84; AT&T Reply at 25-26; AT&T Post-Discovery Opening Brief at 20-22, 28; Defendants'
Post-Discovery Answer to Supplement
at 7-8, 92-93; AT&T Post-Discovery Reply Brief at 8-9; Defendants' Post-
Discovery Reply Brief
at 29-30.
69 See AT&T March 30th Letter at 1 (urging the Commission to expeditiously grant the relief sought in the AT&T
Complaint
"based on the existing record and existing program access rules and procedures" and "without discovery
and further briefing").
70 See Defendants' April 9th Letter at 2-3; Defendants' April 23rdLetter at 1-3.
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Commission action on Count I pursuant to Section 628(d) under the pre-2010 Order framework, waived
any benefit from the post-2010 Order framework.71 We reject Defendants' arguments. The Commission
in the 2010 Order never stated or implied that an entity with a pending complaint could not initially elect
to prosecute its complaint pursuant to Section 628(d) under the pre-2010 Order framework and then to
subsequently supplement the complaint to take advantage of the post-2010 Order framework.72
Moreover, we note that the 2010 Order did not establish a deadline for filing a supplement to invoke the
post-2010 Order framework.73 In this case, AT&T initially elected to prosecute Count I under Section
628(d) pursuant to the pre-2010 Order framework.74 Before the Commission could act on that request,
AT&T requested instead to prosecute its complaint pursuant to the post-2010 Order framework.75 We
conclude that AT&T's election was authorized by the 2010 Order. We also reject Defendants' claim that
procedural fairness and principles of administrative efficiency and economy require AT&T to be held to
its initial decision to proceed pursuant to Section 628(d) under the pre-2010 Order framework.76 We find
no basis in the record for concluding that Defendants were in any way prejudiced by AT&T's actions.77
Indeed, nothing in the 2010 Order or the Commission's rules would have prevented AT&T from
continuing to prosecute its complaint pursuant to the pre-2010 Order framework, subsequently
withdrawing that complaint, and then refiling its complaint under the post-2010 Order framework.
2.

AT&T Has Demonstrated that Defendants Violated Section 628(b) of the
Act and Section 76.1001(a) of the Rules

13.
Section 628(b) of the Act and Section 76.1001(a) of the Commission's rules require a
complainant to establish three elements in order to demonstrate a violation of these provisions: (i) the


71 See Defendants' April 9th Letter at 2-4; Defendants' April 23rd Letter at 1-2.
72 The Commission stated that a complainant could continue to prosecute its complaint pursuant to Section 628(d)
under the pre-2010 Order framework and, "[i]n addition," could supplement its complaint to take advantage of the
post-2010 Order framework. See 2010 Order, 25 FCC Rcd at 751, 10; see also id. at 785, 55, 789, 64 n.237;
AT&T March 30th Letter at 4 n.11 (stating that a complaint can be considered under both Section 628(b) and the new
rules adopted in the 2010 Order).
73 See 2010 Order, 25 FCC Rcd at 751, 10 (permitting complainants to file a supplement after the effective date of
the rules adopted in the 2010 Order, but not specifying a deadline for filing the supplement); see also id. at 785, 55
and 789, 64 n.237.
74 See supra n.69.
75 See AT&T March 30th Letter at 4 n.11 (stating that, after the 2010 Order, AT&T contacted Defendants about
licensing MSG HD and MSG+ HD, but Defendants refused, and further stating that AT&T reserves the right to
submit a supplement to its complaint); AT&T Supplement at 2-3, 7 (stating that Defendants refused to provide access
to MSG HD and MSG+ HD after the effective date of the rules adopted in the 2010 Order and supplementing the
complaint accordingly). With respect to Count I, we note that AT&T has elected to prosecute this count pursuant to
only the post-2010 Order framework. See Parties' Aug. 24th Letter at 16 ("AT&T elects to proceed with respect to
Count I based solely on Defendants' post-[2010 Order] denial of AT&T's request to license MSG HD and MSG+
HD and the post-[2010 Order] legal framework for resolving such disputes."). Accordingly, we need not, and do
not, consider Defendants' claim that applying the Commission's interpretation of Section 628(b) in the 2010 Order
to an act that occurred prior to the 2010 Order is impermissibly retroactive. See, e.g., Defendants' April 9th Letter at
4-7.
76 See Defendants' April 23rdLetter at 1-3, 6.
77 Similarly, we find no basis for concluding that Defendants were prejudiced by AT&T's decision to request that
the Commission resolve Count I of its complaint without discovery and then to subsequently submit a revised
discovery request approximately two weeks later. See supra nn.48, 69; Defendants' April 23rd Letter at 3.
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defendant is within one of the three categories of entities covered by these provisions (i.e., a cable
operator, a satellite cable programming vendor in which a cable operator has an attributable interest, or a
satellite broadcast programming vendor); (ii) the defendant (or a terrestrial cable programming vendor
that the defendant wholly owns, controls, or with which it is under common control) has engaged in an
"unfair act"; and (iii) the "purpose or effect" of the "unfair act" is to "significantly hinder or prevent" an
MVPD from providing satellite cable programming or satellite broadcast programming to subscribers or
consumers.78 For the reasons discussed below, we find that AT&T has established each element.
a.

Both MSG LP and Cablevision Are Proper Defendants to Count I

(i)

MSG LP

14.
Section 628(b) of the Act and Section 76.1001(a) of the Commission's rules apply to the
"unfair acts" of, among other entities, a "satellite cable programming vendor in which a cable operator
has an attributable interest."79 Defendants concede that (i) MSG LP is a "satellite cable programming
vendor"80 and (ii) a cable operator (Cablevision) has an attributable interest in MSG LP.81 While MSG
LP claims that a "satellite cable programming vendor" cannot be liable under Section 628(b) of the Act
and Section 76.1001(a) of the Commission's rules when the conduct at issue involves only terrestrial
programming and not satellite programming,82 this argument has been rejected by both the Commission83
and the D.C. Circuit.84 Accordingly, MSG LP is a proper defendant to Count I.
15.
The record also establishes that MSG LP is a "terrestrial cable programming vendor"
because it delivers MSG HD and MSG+ HD via terrestrial means.85 Defendants argue, however, that the


78 See 47 U.S.C. 548(b); 47 C.F.R. 76.1001(a).
79 See 47 U.S.C. 548(b); 47 C.F.R. 76.1001(a); see also 47 U.S.C. 548(i)(2) (the "term `satellite broadcast
programming vendor' means a person engaged in the production, creation, or wholesale distribution for sale of
satellite cable programming, but does not include a satellite broadcast programming vendor").
80 See Defendants' Answer at 87 ( 25) ("Admitting that MSG is a `satellite cable programming vendor' only to the
extent that it licenses certain satellite cable programming not at issue in this case."); Pontillo Decl. at 13; MSG LP
Motion to Dismiss
at 4 ("MSG is also in the business of providing satellite-delivered services such as Fuse and the
standard definition MSG and MSG Plus program services").
81 See Defendants' Post-Discovery Reply Brief at 59 n.221.
82 See Defendants' Post-Discovery Answer to Supplement at 138 ("Where the only programming at issue is
terrestrially-delivered, the entity delivering the programming is not acting as a satellite cable programming vendor
for purposes of any dispute under Section 628(b), and is therefore not subject to jurisdiction under that provision in
such circumstances."); MSG LP Motion to Dismiss at 1-4.
83 See 2010 Order, 25 FCC Rcd at 779, 49 n.192 ("Nothing in the statute excludes an otherwise covered entity
from the reach of Section 628(b) simply because the conduct at issue is not covered by the statutorily defined
activities of a `cable operator' or `satellite cable programming vendor.' To the contrary, under Section 628(b), so
long as the provider itself meets the statutory definition of a covered entity, it is prohibited from engaging in any
unfair or deceptive acts or practices that hinder significantly or prevent any MVPD from providing satellite cable or
satellite broadcast programming to consumers.").
84 See Cablevision II, 2011 WL 2277217, at *19 ("In defining satellite cable vendors, Congress could have required
that an entity would be covered `only `when' or `to the extent' that it provides the regulation-triggering services.' . .
. But as the Commission recognized in its order, Congress imposed no such limitation.") (citations omitted).
85 See 47 C.F.R. 76.1000(m) (defining "terrestrial cable programming vendor"); 47 C.F.R. 76.1000(l) (defining
"terrestrial cable programming"). Defendants admit that MSG LP distributes MSG HD and MSG+ HD terrestrially;
thus, MSG LP is a "terrestrial cable programming vendor." See MSG LP Motion to Dismiss at 2 ("[I]n the current
(continued....)
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Commission's definition of "terrestrial cable programming vendor" excludes a "satellite cable
programming vendor," such that a single entity cannot be both a "terrestrial cable programming vendor"
and a "satellite cable programming vendor."86 Defendants claim that the Commission's definition means
that the only type of programmer that can qualify as a "terrestrial cable programming vendor" is one that
distributes only terrestrial cable programming.87 Thus, Defendants contend, because MSG LP distributes
"satellite cable programming" (MSG SD, MSG+ SD, Fuse)88 in addition to terrestrial cable programming,
it cannot be a "terrestrial cable programming vendor."89
16.
We find that Defendants' interpretation of the Commission's definition contradicts
established Commission precedent and would create a significant loophole that would eviscerate the
protections afforded by the program access rules applicable to both satellite-delivered and terrestrially
delivered programming. First, Defendants' interpretation contradicts the Commission's holding in the
2010 Order, which has been upheld by the D.C. Circuit, that a "satellite cable programming vendor" that
also distributes terrestrial cable programming can violate Section 628(b) of the Act to the extent it is
providing terrestrial cable programming.90 This holding indicates that the Commission expected entities
that distribute both satellite cable programming and terrestrial cable programming to be subject to
complaints under the procedures established in the 2010 Order. Second, we note that the Commission's
definition of "terrestrial cable programming vendor" mirrors Congress's definition of "satellite cable
programming vendor" in the 1992 Cable Act, which excludes a "satellite broadcast programming
vendor."91 Under Defendants' interpretation, a single entity cannot simultaneously be both a "satellite
cable programming vendor" and a "satellite broadcast programming vendor." Thus, Defendants' view
would mean that the only type of programmer that can qualify as a "satellite cable programming vendor"
is one that distributes only satellite cable programming, to the exclusion of satellite broadcast
(Continued from previous page)


context MSG is acting as a terrestrial programmer . . . ."); id. at 3 ("The only programming at issue in AT&T's
Complaint is the terrestrially-delivered MSG HD and MSG+ HD services."); MSG LP Reply to AT&T Opposition to
Motion to Dismiss
at 1 ("The programming sought by AT&T in the instant Complaint, MSG HD and MSG+ HD, is
terrestrially-delivered . . . ."); see also Defendants' Answer at 10-13 ( 1-5), 21; Defendants' Post-Discovery
Answer to Supplement
at 111 ("[T]he only programming at issue is terrestrially-delivered."). Contrary to
Defendants' claim, there was no "defect" in the AT&T Supplement. See Defendants' Post-Discovery Answer to
Supplement
at 110. Rather, the record clearly establishes that MSG HD and MSG+ HD are "terrestrial cable
programming" and that MSG LP is a "terrestrial cable programming vendor." There was no reason for AT&T to re-
establish in its Supplement what had already been established in the existing record.
86 See Defendants' Post-Discovery Answer to Supplement at 9, 111-12; Defendants' Post-Discovery Reply Brief at
56; see also 47 C.F.R. 76.1000(m) (defining "terrestrial cable programming vendor" as "a person engaged in the
production, creation, or wholesale distribution for sale of terrestrial cable programming, but does not include a
satellite broadcast programming vendor or a satellite cable programming vendor
") (emphasis added).
87 See Defendants' Post-Discovery Answer to Supplement at 112 n.435.
88 See Defendants' Answer at 87 ( 25) ("Admitting that MSG is a `satellite cable programming vendor' only to the
extent that it licenses certain satellite cable programming not at issue in this case."); Pontillo Decl. at 13; MSG LP
Motion to Dismiss
at 4 ("MSG is also in the business of providing satellite-delivered services such as Fuse and the
standard definition MSG and MSG Plus program services.").
89 See Defendants' Post-Discovery Answer to Supplement at 110-12.
90 See Cablevision II, 2011 WL 2277217, at *19; 2010 Order, 25 FCC Rcd at 779, 49 n.192.
91 See 47 U.S.C. 548(i)(2) (defining "satellite cable programming vendor" as "a person engaged in the production,
creation, or wholesale distribution for sale of satellite cable programming, but does not include a satellite broadcast
programming vendor
") (emphasis added).
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programming. Such an interpretation would create a loophole in the rules applicable to satellite-delivered
programming whereby an entity that distributes satellite cable programming could avoid liability merely
by distributing some satellite broadcast programming as well. Congress, however, never stated or implied
any intention to create such a loophole. The Commission in the 2010 Order simply followed the
definitional structure used by Congress in the 1992 Cable Act. We can discern no reason for Congress in
the 1992 Cable Act or for the Commission in the 2010 Order to exclude programmers from certain
program access rules because they distribute more than one type of programming subject to the rules.
Rather, Congress's definition of "satellite cable programming vendor" and the Commission's definition
of "terrestrial cable programming vendor" reflect the definitions of the underlying programming these
vendors distribute, which are defined to exclude certain other types of programming.92 Thus, we find no
basis for interpreting the Commission's definitions to mean that a single entity cannot be both a
"terrestrial cable programming vendor" and a "satellite cable programming vendor."93
(ii)

Cablevision

17.
We also find that Cablevision is a proper defendant to Count I. In the 2010 Order, the
Commission established that an entity listed in Section 628(b) (i.e., a cable operator, a satellite cable
programming vendor in which a cable operator has an attributable interest, or a satellite broadcast
programming vendor) can be held liable for the "unfair act" of a terrestrial cable programming vendor
that it wholly owns, controls, or with which it is under common control.94 The D.C. Circuit upheld the
Commission's decision on this point.95 Here, Defendants concede that Cablevision (a "cable operator") is
under common control with MSG LP because it shares a common controlling shareholder with MSG LP
(the Dolan family).96


92 See 47 U.S.C. 548(i)(1) ("The term `satellite cable programming' has the meaning provided under section 605
of this title, except that such term does not include satellite broadcast programming.") (emphasis added); 47 C.F.R.
76.1000(l) (defining "terrestrial cable programming" as "video programming which is transmitted terrestrially or
by any other means other than satellite and which is primarily intended for direct receipt by cable operators for their
retransmission to cable subscribers, except that such term does not include satellite broadcast programming or
satellite cable programming
") (emphasis added).
93 Defendants contend that it would be "untenable" for the Commission (i) in determining whether MSG LP is a
proper defendant under a Section 628(b) claim, to classify MSG LP as a "satellite cable programming vendor" even
when it is acting as a distributor of terrestrial cable programming because it distributes other satellite programming
not at issue in the dispute; and (ii) in determining whether MSG LP is a "terrestrial cable programming vendor" for
purposes of the definition of that term in Section 76.1000(m), to rule that MSG LP is not a "satellite cable
programming vendor" when it acts as a distributor of terrestrial cable programming even though it also distributes
satellite programming not at issue in the dispute. See Defendants' Post-Discovery Reply Brief at 57 n.212. There is
no basis for Defendants' contention with respect to Section 76.1000(m), however, because we find that MSG LP is
both a "satellite cable programming vendor" and a "terrestrial cable programming vendor" under the applicable
definitions.
94 See 2010 Order, 25 FCC Rcd at 786-87, 57 ("We conclude that Section 628(b) allows complaints against the
entities listed in Section 628(b) based on the unfair acts of their affiliated programmers delivering programming by
terrestrial means, where the facts establish that the programmer is wholly owned by, controlled by, or under
common control with one or more of these entities.").
95 See Cablevision II, 2011 WL 2277217, at *19-*21.
96 See Defendants' Post-Discovery Reply Brief at 59 n.221; see also AT&T Post-Discovery Reply Brief at 35.
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REDACTED VERSION

18.
Accordingly, because Cablevision (a "cable operator") is under common control with
MSG LP (a "terrestrial cable programming vendor"97 alleged to have engaged in an "unfair act" under
Section 628(b)), Cablevision is a proper defendant to Count I. Defendants object, however, to the
Commission's conclusion in the 2010 Order that a cable operator under common control with a terrestrial
cable programming vendor will be "deemed responsible" for the programmer's decision to withhold
programming from a competing MVPD because the programmer's actions are designed to benefit its
affiliated cable operator.98 The D.C. Circuit agreed with the Commission and upheld this decision.99 In
any event, the record of this proceeding supports the Commission's conclusion on this issue. Defendants
assert that MSG LP has "enter[ed] into a mutually beneficial arrangement which provides MSG value and
consideration in exchange for allowing Cablevision [to] effectuate an aspect of product differentiation."100
Thus, Defendants contend, the Commission cannot presume that MSG LP's decision to withhold
programming from AT&T was designed to benefit Cablevision exclusively.101 While the record reflects
Defendants' position that Cablevision will benefit from this arrangement by differentiating its video
service and thereby providing it with a competitive advantage over AT&T,102 Defendants provide no
evidence of any "value and consideration" that MSG LP has received from this arrangement. In fact, by
foregoing licensing fees and advertising revenue by withholding MSG HD and MSG+ HD from


97 See supra 15-16.
98 See Defendants' Post-Discovery Answer to Supplement at 138-39; see also 2010 Order, 25 FCC Rcd at 786-87,
57.
99 See Cablevision II, 2011 WL 2277217, at *20 ("But the Commission has determined, reasonably in our view, that
discriminatory practices by terrestrial programmers will often be intended in part to benefit a cable operator under
common ownership. . . . For example, if a cable operator has one DBS competitor and one wireline competitor but
considers the latter a greater threat to its dominant position, exclusive arrangements between an affiliated terrestrial
programmer and the DBS company that keep must-have programming from the wireline company will redound to
the cable operator's benefit.") (citations omitted).
100 Defendants' Post-Discovery Reply Brief at 50-51; see also id. at 59, 60-61.
101 See Defendants' Post-Discovery Answer to Supplement at 139; see also Defendants' Post-Discovery Reply Brief
at 50 n.188 ("The arrangement enabling Cablevision to use MSG HD/MSG+ HD as a competitive differentiator
offers benefits to both Cablevision and MSG, as is typical with such arrangements.").
102 See Defendants' Answer at 2-3 ("MSG HD and MSG+ HD represented a way not just for Cablevision to
differentiate itself from then-existing video competitors like DBS; it also constituted an investment in the future that
would differentiate Cablevision from all video programming providers cable and satellite."), at 5 (stating that
Defendants are not prohibited from "employing a lawful pro-competitive strategy of product differentiation, simply
because it may result in making AT&T's video offering less attractive to a subset of its potential customer base"), at
14-15 ( 8) ("Defendants rejected . . . all . . . attempts by AT&T to obtain a license for MSG HD and MSG+ HD . . .
consistent with . . . their desire to continue to utilize MSG HD and MSG+ HD as a product differentiator for
Cablevision."), at 34 (stating that Defendants opted to "use MSG HD and MSG+ HD as a means of differentiating
themselves in the marketplace"), at 41 (stating that Defendants "regard MSG HD and MSG+ HD as a worthwhile
way to differentiate the Cablevision video product offering from U-verse TV"); Defendants' Post-Discovery Answer
to Supplement
at 7 ("AT&T lacks a license to distribute MSG HD and MSG+ HD as a result of a product
differentiation strategy aimed at distinguishing Cablevision's video service offerings in Connecticut."), at 93 ("[T]he
decision not to license MSG HD and MSG+ HD to AT&T was undertaken in furtherance of a product differentiation
strategy designed to distinguish Cablevision's video offering from AT&T."), at 97 (stating that forced sharing would
require a firm to share its "competitive advantages"), at 98-99 (stating that its product differentiation strategy "may
make AT&T's video program offerings appear less attractive to some small segment of customers"); see also
Defendants' Answer
at 10, 59; Defendants' Post-Discovery Answer to Supplement at 123; Defendants' Post-
Discovery Reply Brief
at 49.
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AT&T,103 MSG LP is acting counter to its economic interests in order to support Cablevision's product
differentiation strategy.104 Moreover, while Defendants assert that MSG LP receives "substantial
promotional, marketing and other benefits" from Cablevision, they provide no support for this
assertion.105 Thus, Defendants have offered no facts that would undermine the Commission's conclusion
in the 2010 Order, as applied here, that MSG LP's withholding of MSG HD and MSG+ HD from AT&T
is designed to benefit Cablevision and that Cablevision (in addition to MSG LP) is therefore an
appropriate defendant under Count I.106
b.

Defendants' Withholding of MSG HD and MSG+ HD from AT&T Is
an "Unfair Act"

19.
In Count I, AT&T alleges that the Defendants have engaged in the "unfair act" of
withholding MSG HD and MSG+ HD from AT&T while at the same time licensing these networks to
certain of AT&T's competitors in the state of Connecticut.107 As discussed in further detail below, we


103 Cablevision has stated in an SEC filing that MSG's programming operations "`derive[] [their] revenues from
affiliation fees paid by cable television operators (including our cable television systems), DBS operators and
telephone companies that provide video service and from sales of advertising. Increases in [such] . . . revenues
result from a combination of changes in rates and changes in the number of viewing subscribers.'" AT&T
Complaint
at 6 n.10 (quoting Cablevision Systems Corp., Form 10-Q at 44 (July 30, 2009)); see also AT&T
Complaint
at 34, 62; AT&T Reply at 16, 17 n.23, 22, 26; AT&T Post-Discovery Opening Brief at 24 n.44, 30;
AT&T Post-Discovery Reply Brief at 21-22.
104 See Defendants' Answer at 40 (stating that exclusive distribution arrangements "`sacrifice' revenue from
alternative potential distributors"), at 74 (stating that there is nothing "`undue' for a vertically-integrated cable
company to forego distribution revenue that may be available from licensing its programming to an unaffiliated
competitor in order for the distribution arm of the business to differentiate its product offering"), at 75 ("Firms
routinely opt to forego revenue that might otherwise be gained from licensing an input to non-affiliates in order to
benefit another arm of a shared enterprise."); Defendants' Post-Discovery Answer to Supplement at 119;
Defendants' Post-Discovery Reply Brief at 51, 59; see also AT&T Complaint at 62 ("Absent an interest in
thwarting AT&T's competitive entry thus benefitting Cablevision's distribution business Madison Square
Garden, as a programming vendor, would have every economic incentive to license the HD format of MSG and
MSG Plus to AT&T."); AT&T Reply at 16, 22 ("It makes sense for Defendants to refuse to deal with AT&T only
because they are willing to sacrifice such programming revenues to protect MVPD revenues . . . .") (emphasis in
original), at 26 ("[B]ecause of vertical integration, Madison Square Garden is willing to sacrifice revenues simply to
benefit Cablevision's distribution business."); AT&T Post-Discovery Opening Brief at 24-25 ("If Madison Square
Garden were truly an independent corporation, it would have no incentive to refuse to license MSG HD and MSG+
HD to AT&T; indeed, Madison Square Garden's failure to maximize revenue in this regard would violate the
company's fiduciary duties to its shareholders. There is only one plausible explanation for Madison Square
Garden's selective withholding strategy namely, that its licensing decisions are intended to benefit Cablevision's
video distribution business by denying AT&T access to critical programming."), at 30; AT&T Post-Discovery Reply
Brief
at 21-22.
105 See Defendants' Answer at 75.
106 See 2010 Order, 25 FCC Rcd at 786-87, 57. As noted above, MSG LP provides both satellite-delivered
programming and terrestrially delivered programming. Thus, even if Cablevision were not a proper defendant to
Count I, this would not undermine our finding that MSG LP is a proper defendant nor would it prevent us from
issuing a remedy. See supra 14.
107 See AT&T Complaint at 6 (referring to Defendants' "outright refusal to license" the HD versions of MSG and
MSG+ to AT&T); id. at 53 (referring to Defendants' "outright refusal to provide" AT&T with the HD versions of
MSG and MSG+ on any terms); id. at 83, 84, 86; York/Lauricella/Thun Decl. at 45; AT&T Supplement at 2
(referring to "Defendants' withholding of the HD feeds of MSG and MSG Plus"); id. at 7-9 (referring to
(continued....)
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conclude that (i) the D.C. Circuit's decision to vacate the Commission's ruling that withholding of
terrestrially delivered, cable-affiliated programming is categorically "unfair" does not prevent the
Commission from addressing on a case-by-case basis whether withholding is "unfair"; (ii) Congress and
the Commission have provided guidance on how to interpret the term "unfair act"; thus, the issue of
whether Defendants' withholding here is an "unfair act" does not present a new or novel issue that would
preclude Bureau action on delegated authority; and (iii) applying this precedent and guidance to the facts
presented, AT&T has satisfied its burden of demonstrating that Defendants' withholding in this case is an
"unfair act."108
(i)

The D.C. Circuit's Ruling in Cablevision II Affirms the
Commission's Authority to Address Whether Withholding Is
an "Unfair Act" on a Case-by-Case Basis

20.
In the 2010 Order, the Commission defined three acts involving terrestrially delivered,
cable-affiliated programming as categorically "unfair" under Section 628(b): exclusive contracts,
discrimination, and undue or improper influence.109 The Commission defined these three acts as
categorically "unfair" because Congress had made a conclusive legislative judgment in Section 628(c)(2)
that these same acts are categorically "unfair" with respect to satellite-delivered, cable-affiliated
programming.110 Moreover, the Commission found that these acts involving terrestrially delivered, cable-
affiliated programming like comparable acts involving satellite-delivered, cable-affiliated programming
have the potential to impede entry into the video distribution market and to hinder existing competition
in the market.111 The D.C. Circuit disagreed, holding that the Commission cannot assume that
congressional judgments regarding satellite programming necessarily apply to terrestrial programming.112
Moreover, the D.C. Circuit explained that the Commission in deciding to label certain conduct as "unfair"
simply because it might negatively affect competition failed to consider whether that conduct is "unfair"
despite it being procompetitive in some cases.113 The D.C. Circuit stated:
(Continued from previous page)


Defendants' "refusal to license" the HD versions of MSG and MSG+ to AT&T); see also AT&T Complaint at iv and
6, 66, 68, 76, 110 (discussing other MVPDs that have access to MSG HD and MSG+ HD). Defendants admit
that "it is true that AT&T cannot obtain access to MSG HD and MSG+ HD." See Defendants' Post-Discovery
Answer to Supplement
at 94.
108 We note that, in addition to letters filed by the Parties, Commission staff held a joint meeting on June 27, 2011
with the Parties to discuss the impact of the D.C. Circuit's decision on the complaint. See Letter from Aaron M.
Panner, Counsel for AT&T, to Marlene Dortch, Secretary, FCC, File No. CSR-8196-P (June 20, 2011) ("AT&T June
20th Letter
"); Letter from Howard J. Symons, Counsel for Defendants, to William T. Lake, Chief, Media Bureau,
FCC, File No. CSR-8196-P et al. (June 22, 2011) ("Defendants' June 22nd Letter"); Letter from Aaron M. Panner,
Counsel for AT&T, to Marlene Dortch, Secretary, FCC, File No. CSR-8196-P (June 24, 2011) ("AT&T June 24th
Letter
"); Letter from Howard J. Symons, Counsel for Defendants, to Marlene H. Dortch, Secretary, FCC, File No.
CSR-8196-P et al. (June 29, 2011) ("Defendants' June 29th Letter"); Letter from Aaron M. Panner, Counsel for
AT&T, to Marlene Dortch, Secretary, FCC, File No. CSR-8196-P et al. (June 29, 2011) ("AT&T June 29th Letter").
109 See 47 C.F.R. 76.1001(b).
110 See 2010 Order, 25 FCC Rcd at 778-79, 48; see also 47 U.S.C. 548(c)(2).
111 See 2010 Order, 25 FCC Rcd at 778-79, 48.
112 See Cablevision II, 2011 WL 2277217, at *21 (stating that the Commission "failed to justify its assumption that
just because Congress treated certain acts involving satellite programming as unfair, the same acts are necessarily
unfair in the context of terrestrial programming").
113 See id. at *23.
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[W]e take no position on the ultimate issue of exactly how the Commission should define
the inherently ambiguous statutory term "unfair." See Chevron, 467 U.S. at 84243. But if
the Commission believes that conduct involving the withholding of terrestrial programming
should be treated as categorically unfair, as opposed to assessing fairness on a case-by-
case basi
s or perhaps adopting a public interest exception mirroring the one for satellite
programming, see 47 U.S.C. 628(c)(2)(D), (c)(4), then it must grapple with whether its
definition of unfairness would apply to conduct that appears procompetitive and, if so,
whether that result would comport with section 628.114
The D.C. Circuit proceeded to "vacate that portion of the Commission's order treating certain acts of
terrestrially delivered programming withholding as categorically unfair and remand to the Commission
for further proceedings consistent with this opinion."115
21.
We find the court's language to be clear that the Commission may address on a case-by-
case basis whether conduct involving terrestrially delivered, cable-affiliated programming is "unfair."116
While Defendants do not dispute this point,117 they argue that the Commission must first conduct a notice-
and-comment rulemaking before it can adopt a case-by-case approach.118 According to Defendants, when
a court vacates an agency's order or rule, the effect is to return to the rule that existed before the vacated
rule took effect.119 Defendants argue that, prior to the 2010 Order, the Commission had reached a
definitive interpretation of its rules that withholding of terrestrially delivered programming can never be
"unfair."120 Citing D.C. Circuit precedent, Defendants argue that the Commission can change this


114 See id. at *24 (emphasis added).
115 See id.
116 Defendants speculate that the D.C. Circuit expected that the Commission would first conduct a rulemaking on
remand and then would conduct any case-by-case assessments after the remand proceeding is completed. See
Defendants' June 22nd Letter
at 5; Defendants' June 29th Letter at 5-6. We reject this view because there is no
discussion in the court's opinion as to when a remand proceeding must be conducted and whether it must precede
any case-by-case assessments.
117 See Defendants' June 22nd Letter at 5 ("the court did not rule out the assessment of `unfairness' on `a case-by-
case basis'").
118 See id. at 2-5; Defendants' June 29th Letter at 2-9.
119 See Defendants' June 22nd Letter at 2; Defendants' June 29th Letter at 2.
120 See Defendants' June 22nd Letter at 2; Defendants' June 29th Letter at 3. Defendants cite the following
Commission-level cases in support of their position. See DirecTV, Inc. v. Comcast Corp., 13 FCC Rcd 21822,
21838, 32 (CSB 1998) ("We are not persuaded that the facts alleged are sufficient to constitute a Section 628(b)
violation. . . . [W]e decline to find that, standing alone, Comcast's decision to deliver Comcast SportsNet
terrestrially and to deny that programming to DirecTV is `unfair.'"), aff'd, 15 FCC Rcd 22802, 22808 14 (2000)
(noting that the Bureau declined to find that "standing alone, [Comcast's] decision to deliver Comcast SportsNet
terrestrially and to deny that programming to [Complainants] is `unfair'" and stating that "[c]omplainants have
submitted nothing to cause us to question the Bureau's reasoning on this issue"); RCN Telecom Services of New
York, Inc. v. Cablevision Systems, Inc. et al
., 14 FCC Rcd 17093, 17105-06, 25 (CSB 1999) ("We are not
persuaded that the facts alleged are sufficient to establish a Section 628(b) violation. . . . [W]e decline to find that,
standing alone, Defendants' decision to deliver the overflow programming terrestrially via MetroChannels and to
deny that programming to Complainants is `unfair' under Section 628(b)."), aff'd, 16 FCC Rcd 12048, 12053, 15
(2001) (stating that "no basis exists to warrant reversal" of the Bureau's decision).
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substantive interpretation of its rule only after a notice-and-comment rulemaking.121 We disagree. An
agency may, through adjudication, interpret an ambiguous term in its governing statute or its
regulations.122 While Defendants rely on D.C. Circuit precedent to claim that the Commission must
conduct a notice-and-comment rulemaking before the Commission can change its substantive
interpretation of the term "unfair," the pre-2010 Order decisions they cite do not purport to interpret the
term "unfair" in any Commission "rule." Rather, those decisions address the term "unfair" in Section
628(b) of the Act.123 As the D.C. Circuit has explained, an agency does not have to engage in notice-and-
comment rulemaking to alter its interpretation of a statutory term.124 Accordingly, any alleged change in
the interpretation of the meaning of "unfair" is not an amendment to a "rule" requiring notice-and-
comment rulemaking. In any event, prior to the 2010 Order, the Commission never adopted a definitive
interpretation of its rules holding that conduct involving terrestrially delivered, cable-affiliated
programming, including withholding, is always "fair" or never "unfair." In fact, the Commission held
that "unfair acts" involving terrestrially delivered, cable-affiliated programming can be cognizable under
Section 628(b).125 The pre-2010 Order cases cited by Defendants merely establish that withholding of
terrestrially delivered, cable-affiliated programming is not unfair "standing alone" or on a per se basis.
The D.C. Circuit has agreed with this interpretation of the Commission's previous decisions.126 The
Commission never stated or implied that it could not rule in an individual case that withholding of
terrestrially delivered, cable-affiliated programming is "unfair" based on the facts presented. Thus, the


121 See Defendants' June 22nd Letter at 2-3; Defendants' June 29th Letter at 2-3 (citing Paralyzed Veterans v. D.C.
Arena L.P
., 117 F.3d 579, 586 (D.C. Cir. 1997); Alaska Professional Hunters Ass'n, Inc. v. FAA, 177 F.3d 1030,
1033-34 (D.C. Cir. 1999)).
122 See BP West Coast Products, LLC v. FERC, 374 F.3d 1263, 1272 (D.C. Cir. 2004) ("When Congress authorizes
an agency to adjudicate complaints arising under a statute, the agency's interpretations of that statute announced in
the adjudications are generally entitled to Chevron deference."); St. Luke's Hosp. v. Sebelius, 611 F.3d 900, 907
(D.C. Cir. 2010) ("Within the context of an agency adjudication, the Secretary generally may lawfully interpret a
regulation notwithstanding its retroactive effect.").
123 See DIRECTV, 15 FCC Rcd at 22084, 4 and 22807, 13; RCN, 16 FCC Rcd at 12049-50, 4 and 12053, 15.
At the time of these pre-2010 Order decisions, the Commission's rule (47 C.F.R. 76.1001) mirrored the
prohibition against "unfair acts" in Section 628(b) and did not give any additional content to the statutory term
"unfair." See Gonzales v. Oregon, 546 U.S. 243, 257 (2006) (stating that "the existence of a parroting regulation
does not change the fact that the question here is not the meaning of the regulation but the meaning of the statute"
and holding that heightened deference not due to Attorney General's interpretation of its regulation that merely
paraphrases statutory text).
124 See Alaska Professional Hunters, 177 F.3d at 1034 ("an agency has less leeway in its choice of the method of
changing its interpretation of its regulations than in altering its construction of a statute"); Paralyzed Veterans, 117
F.3d at 586 ("The government is certainly correct in suggesting that the doctrine of deference to an agency's
interpretation of its own regulation and Chevron deference are analogous. But Congress . . . has said more,
specifically on the subject of regulations. Under the APA, agencies are obliged to engage in notice and comment
before formulating regulations, which applies as well to `repeals' or `amendments.'").
125 See 2010 Order, 25 FCC Rcd at 759-60, 22 ("The Commission itself has specifically held that unfair acts
involving terrestrially delivered, cable-affiliated programming can be cognizable under Section 628(b)."). While the
cases cited by the Commission pertained to moving programming from satellite to terrestrial delivery, the
Commission never stated or implied that this is the only conduct that might be "unfair" under Section 628(b).
126 See Cablevision II, 2011 WL 2277217, at *12 (noting that the "Commission pointed out that it had recognized
that complaints concerning terrestrial withholding might, under some circumstances, be cognizable under" Section
628(b) and stating further that the pre-2010 Order cases "addressed only the permissibility of an across-the-board
ban on terrestrial withholding").
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status quo ante with respect to "unfair acts" involving terrestrially delivered, cable-affiliated
programming does not preclude assessing such conduct on a case-by-case basis.127
22.
Defendants also argue that a rulemaking is envisioned by Section 628(c)(1) and, in any
event, is the appropriate vehicle to define whether conduct is "unfair" because this issue will impact more
than the parties to this complaint.128 We disagree. First, an agency is free to interpret statutes either
through rulemaking or adjudication.129 Second, Section 628(d) specifically authorizes case-by-case
adjudication as one option at the Commission's disposal for enforcing Section 628(b).130 Third, as
discussed below, our determination as to whether Defendants have engaged in an "unfair act" is based on
applying well-known precedent and guidelines established by Congress and the Commission to the
specific facts of this case.131
23.
Defendants also contend that it would be unfair to the Parties if the Commission were to
proceed to address whether Defendants have engaged in an "unfair act" without first allowing
supplemental record development on the issue, including discovery and briefing.132 We find this
argument unavailing. AT&T's complaint was filed, and the pleading cycle closed, several months before
the Commission had established certain acts involving terrestrially delivered, cable-affiliated
programming as categorically "unfair" in the 2010 Order. As discussed below, AT&T put forth evidence
in its complaint as to whether Defendants' withholding amounted to an "unfair act," and Defendants filed
a response to those claims.133 Moreover, as discussed in further detail below, we apply well-known


127 We note that in the cases cited by Defendants, the Commission did not find any anticompetitive effect resulting
from the conduct at issue, thus there was no basis to deem the conduct at issue in those cases "unfair." See
DIRECTV
, 15 FCC Rcd at 22807, 13 (finding no basis to conclude that the conduct at issue precluded MVPDs
from providing satellite cable programming); RCN, 16 FCC Rcd at 12053, 15 (same). Conversely, as discussed
below, we find anticompetitive effects from the withholding at issue in this case. See infra Section III.B.2.c. We
proceed to weigh these anticompetitive effects against the procompetitive benefits of Defendants' withholding and
conclude that, on balance, the conduct at issue here is "unfair." See infra 25-42.
128 See Defendants' June 22nd Letter at 3-4; Defendants' June 29th Letter at 2, 5-7.
129 See SEC v. Chenery Corp., 332 U.S. 194, 202-03 (1947).
130 See 47 U.S.C. 548(d).
131 See infra 25-42.
132 See Defendants' June 22nd Letter at 6; Defendants' June 29th Letter at 6-8.
133 See infra 26-27. As discussed above, AT&T filed an initial request for discovery, to which Defendants
objected in October 2009, several months before the Commission had established certain acts involving terrestrially
delivered, cable-affiliated programming as categorically "unfair" in the 2010 Order. See supra n.48. Despite the
need at the time to resolve the issue of whether Defendants' conduct was "unfair," Defendants took the position that
discovery was "neither necessary nor proper"; that the Commission had "before it all of the relevant evidence that it
needs to decide this matter"; and that, even if the Commission rejected Defendants' legal arguments, "the only
potentially material fact would be the extent to which the lack of access to MSG HD and MSG+ HD has caused
competitive harm by `hinder[ing] significantly' or `preventing' AT&T from providing satellite cable programming."
Defendants' Oct. 29th Discovery Objection at 2-3, 13. Moreover, even after release of the 2010 Order but before the
D.C. Circuit's decision in Cablevision II, Defendants argued that AT&T had not alleged one of the three acts
deemed categorically "unfair" in the 2010 Order and that AT&T was thus required to establish that Defendants had
engaged in an "unfair act." See Defendants' Post-Discovery Answer to Supplement at 8, 106-07 ("[AT&T's]
Supplemental Complaint fails to allege and/or establish that it has been subject to an unfair practice cognizable
under the new rules adopted by the Commission in the [2010 Order]. The [2010 Order] makes clear that, in
addition to having the burden of proving competitive harm . . ., a program access complainant also has the burden of
proving that the Defendant has engaged in an `unfair practice' proscribed by the Commission. While Defendants
(continued....)
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precedent and guidelines to assess whether Defendants' withholding here is an "unfair act," including a
test put forth by Defendants.134 All Parties have had ample opportunity, over the course of more than two
years, to address whether the conduct here is "unfair" under this precedent and guidelines.
(ii)

The Bureau Has Delegated Authority to Consider Whether
Withholding Is an "Unfair Act"

24.
Despite Defendants' claims to the contrary, the issue of whether Defendants' withholding
of MSG HD and MSG+ HD from AT&T is an "unfair act" is not a new or novel issue that would require
a Commission, rather than Bureau, decision.135 The following precedent and guidelines established by
Congress and the Commission require the Bureau to weigh the anticompetitive harms of an act against the
procompetitive benefits to determine whether or not, on balance, the act is "unfair." First, Congress has
set forth five factors in Section 628(c)(4) of the Act to assess when considering whether an exclusive
programming arrangement serves the "public interest." 136 In applying these factors, the Commission is
required to weigh the harms that an exclusive arrangement may cause in the video distribution market
against the benefits that may result in the video programming market.137 While Congress established
these factors for exclusive contracts involving satellite-delivered, cable-affiliated programming, we find,
consistent with Commission precedent, that they are also useful in assessing the potentially
anticompetitive and procompetitive aspects of withholding of terrestrially delivered, cable-affiliated
programming.138 Second, in the MDU Order,139 the Commission weighed the anticompetitive harms of
(Continued from previous page)


have acknowledged throughout this proceeding that AT&T has been declined a license for MSG HD and MSG+ HD
in furtherance of a product differentiation strategy, that circumstance does not, in and of itself, constitute an unfair
practice or relieve AT&T of its burden of proof regarding that element of its claim under the new rules."), and at
108, 134-35. Thus, even after the release of the 2010 Order but before the D.C. Circuit's decision in Cablevision II,
Defendants' position was that AT&T had the burden to establish an "unfair act." Defendants had every opportunity
to pursue this issue during discovery and in their post-discovery briefs.
134 See infra 25-42.
135 See Defendants' June 22nd Letter at 4; Defendants' June 29th Letter at 9; see also 47 C.F.R. 0.283(c).
136 See 47 U.S.C. 548(c)(4). This provision provides that, in determining whether an exclusive contract for
satellite-delivered, cable-affiliated programming in an area served by a cable operator is in the public interest, the
Commission shall consider "each of the following factors with respect to the effect of such contract on the
distribution of video programming in areas that are served by a cable operator: (A) the effect of such exclusive
contract on the development of competition in local and national multichannel video programming distribution
markets; (B) the effect of such exclusive contract on competition from multichannel video programming distribution
technologies other than cable; (C) the effect of such exclusive contract on the attraction of capital investment in the
production and distribution of new satellite cable programming; (D) the effect of such exclusive contract on
diversity of programming in the multichannel video programming distribution market; and (E) the duration of the
exclusive contract." 47 U.S.C. 548(c)(4); see also 47 C.F.R. 76.1002(c)(4).
137 See Time Warner Cable, Memorandum Opinion and Order, 9 FCC Rcd 3221, 3225, 25 (1994) ("Court TV
Exclusivity Petition
"); AT&T Complaint at 76 ("Congress anticipated that there may be some instances in which
exclusive video programming contracts are not unlawful. It therefore set forth safe harbor provisions [in Section
628(c)(4)]. In this particular regulatory context, then, Congress has already struck the balance between the
procompetitive and anticompetitive benefits of exclusivity.").
138 See Cablevision II, 2011 WL 2277217, at *22, *24 (explaining that, with the factors in Section 628(c)(4),
Congress "sought to balance the need for regulatory intervention in markets possessing significant barriers to
competition with its recognition that vertical integration and exclusive dealing arrangements are not always
pernicious and, depending on market conditions, may actually be procompetitive"); see also id. at *22 (noting that
the framework Congress adopted for exclusive arrangements involving satellite-delivered, cable-affiliated
(continued....)
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exclusive contracts between cable operators and owners of multiple dwelling units ("MDU") against the
procompetitive benefits of these contracts before concluding that these contracts are categorically
"unfair."140 Unlike the Section 628(c)(4) factors, which require the Commission to analyze the effects of
an exclusive arrangement in the video distribution and video programming markets, the MDU Order
requires a more general inquiry into the potential anticompetitive harms and procompetitive benefits of an
allegedly "unfair act."141 Third, the Commission's program access rules applicable to satellite-delivered,
cable-affiliated programming provide that withholding is permissible provided there is a "legitimate
business justification" for the conduct.142 If a defendant can demonstrate a "legitimate business
justification" for withholding content from a competitor (for example, due to a concern with the
distributor's history of defaulting on other programming contracts), then it is unlikely that the conduct can
be considered "unfair" under Section 628(b).
(Continued from previous page)


programming "accords with the generally accepted view in antitrust and other areas that exclusive contracts may
have both procompetitive and anticompetitive purposes and effects") (citations omitted). For example, the
Commission previously found that exclusive arrangements play an important role in the growth and viability of local
cable news networks. See New England Cable News Channel, Memorandum Opinion and Order, 9 FCC Rcd 3231,
3236, 37-39 and 3237, 43 (1994) ("NECN Exclusivity Petition"); see also S. Rep. No. 102-92 (1991), at 28,
reprinted in 1992 U.S.C.C.A.N. 1133, 1161 ("The Committee believes that exclusivity can be a legitimate business
strategy where there is effective competition."); Implementation of Sections 12 and 19 of the Cable Television
Consumer Protection and Competition Act of 1992: Development of Competition and Diversity in Video
Programming Distribution and Carriage
, First Report and Order, 8 FCC Rcd 3359, 3385, 65 (1993) ("1993
Order
") ("Particularly with respect to new programming, we recognize that there may well be circumstances in
which exclusivity could be shown to meet the public interest test, especially when the launch of local origination
programming is involved that may rely heavily on exclusivity to generate financial support due to its more limited
appeal to a specific regional market."); see id. at 3385, 65 n.83 ("[I]t is possible that local or regional news
channels could be economically infeasible absent an exclusivity agreement.").
139 See Exclusive Service Contracts for Provision of Video Services in Multiple Dwelling Units and Other Real
Estate Developments,
Report and Order and Further Notice of Proposed Rulemaking, 22 FCC Rcd 20235 (2007)
("MDU Order"), aff'd sub nom. Nat'l Cable & Telecomm. Ass'n v. FCC, 567 F.3d 659 (D.C. Cir. 2009).
140 See id. at 20243, 16 and 20248-49, 26 ("We further find that although exclusivity clauses may in certain cases
be beneficial, at least in the short term, to consumers, the harms of exclusivity clauses outweigh their benefits.").
141 In the MDU Order, the Commission acknowledged the procompetitive aspects of granting cable operators
exclusive access to MDUs, such as helping to obtain financing to wire an entire building, attracting investment in
marginally attractive MDUs, and attracting an MVPD into a new real estate development. See id. at 20247-48,
24-25. The anticompetitive harms included denying residents a choice in MVPD service, barring new entry and
competition for both video services and bundled services, and discouraging the deployment of broadband facilities.
See id. at 20244-47, 17-23.
142 Withholding of satellite-delivered, cable-affiliated programming, also known as a "refusal to sell," is a form of
non-price discrimination under the program access rules. See 1993 Order, 8 FCC Rcd at 3364, 14 and 3412-13,
116. Such conduct is permissible if there is a legitimate business reason for the conduct. See id. at 3412-13, 116
("We believe that the Commission should distinguish `unreasonable' refusals to sell from certain legitimate reasons
that could prevent a contract between a vendor and a particular distributor, including (i) the possibility of parties
reaching an impasse on particular terms, (ii) the distributor's history of defaulting on other programming contracts,
or (iii) the vendor's preference not to sell a program package in a particular area for reasons unrelated to an existing
exclusive arrangement or a specific distributor."); Bell Atlantic Video Servs. Co. v. Rainbow Programming Holdings
Inc. and Cablevision Sys. Corp.
, Memorandum Opinion and Order, 12 FCC Rcd 9892, 9899, 18 (CSB 1997) ("We
find that BVS has met its burden of establishing the elements of a non-price discrimination claim [and] that
Defendants have not met their burden of establishing that Rainbow has legitimate business reasons for refusing to
sell its programming to BVS . . . .").
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(iii)

Based on Established Precedent and Guidelines, Defendants'
Withholding Is an "Unfair Act"

25.
Applying the precedent and guidelines set forth above, as well as an additional test
advocated by Defendants, we find that Defendants' withholding of MSG HD and MSG+ HD from AT&T
is an "unfair act." As an initial matter, we note that AT&T as the complainant has the burden to establish
that Defendants' conduct is an "unfair act." Below, we begin by examining Defendants' procompetitive
justifications for their withholding of MSG HD and MSG+ HD from AT&T and then apply the precedent
and guidelines set forth above.
(a)

Defendants' Procompetitive Justifications for
Withholding

26.
AT&T has provided evidence that Defendants' decision to withhold MSG HD and
MSG+ HD from AT&T was intended to provide Cablevision with a competitive advantage over AT&T in
the video distribution market. AT&T provides various statements from Cablevision executives referring
to the significance of MSG HD and MSG+ HD as a competitive differentiator. For example,
Cablevision's Chief Operating Officer ("COO") stated that the refusal to sell MSG HD and MSG+ HD to
another wireline competitor (Verizon FiOS TV) in the New York DMA was one factor that would not
only impede this wireline competitor from obtaining new subscribers, but would also cause this wireline
competitor to lose subscribers it had already gained.143 In addition, Cablevision's COO has emphasized
that Cablevision's ability to provide MSG HD and MSG+ HD provides a competitive advantage over
competitors.144 [REDACTED
.145
].146 In addition, AT&T provides evidence that Cablevision has emphasized in
advertisements in various media both its ability to offer MSG HD and MSG+ HD and AT&T's inability


143 See AT&T Post-Discovery Opening Brief at 21-22 (quoting Cablevision's COO as stating that one of the factors
he believed would "slow or reverse" the defection of Cablevision customers to another wireline competitor (Verizon
FiOS TV) was that Verizon FiOS TV "lacks key components," including MSG HD and MSG+ HD, which have
"wide appeal for sports fan[s] in Cablevision territory") (citing Craig Moffett et al., Bernstein Research, Cablevision
(CVC): Management Commentary Supports Bullish View . . . Capital Intensity Falls, and Margins Rise
, at 4 (April
5, 2007)). Defendants do not deny that Cablevision's COO made this statement.
144 See AT&T Complaint at 65 (quoting Cablevision's COO in response to a question regarding how Cablevision is
competing with another wireline competitor (Verizon FiOS TV) as stating that "four of the nine professional sports
teams in New York. If you want to see them in HD, you have to get them from us") (citing Statement of Tom
Rutledge, COO, Cablevision Systems Corp., Cablevision Systems Corp. at Global Media and Communications
Conference
, Fair Disclosure Wire at 9 (Dec. 8, 2008)); see also AT&T Post-Discovery Opening Brief at 21.
Defendants do not deny that Cablevision's COO made this statement.
145 See AT&T Post-Discovery Opening Brief at 26 and Exhibit 13 [REDACTED
].
146 See id. at 27 and Exhibit 14.
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to offer these same networks, thus demonstrating the importance of these networks.147 For example,
AT&T provides numerous examples of Cablevision148 advertisements stating that (i) "iO delivers all the
HD games of all 9 NY areas teams. You won't get them all with phone company TV.";149 (ii) "Do you
want to see every Knicks games in HD? With iO TV you can. Verizon FiOS, DISH and AT&T you
can't.";150 and (iii) "No one has more NY sports in HD than iO TV."151
27.
Defendants do not dispute that their withholding of MSG HD and MSG+ HD from
AT&T is intended to provide Cablevision with a way to differentiate its service from AT&T and thereby
gain a competitive advantage.152 Defendants contend, however, that product differentiation strategies are
legitimate business decisions that are typically regarded as procompetitive.153 Defendants claim two
distinct consumer welfare benefits resulting from their withholding strategy: (i) more vigorous
competition in the video distribution market;154 and (ii) increased incentives of both Defendants and
AT&T to invest in their own programming.155


147 See AT&T Complaint at 65 and Exhibits 8-15; York/Lauricella/Thun Decl. at 15; AT&T Post-Discovery
Opening Brief
at 20-21; AT&T Post-Discovery Reply Brief at 15.
148 Cablevision markets its video service under the "iO TV" name.
149 See, e.g., AT&T Complaint at Exhibit 8; see also id. at Exhibit 10 ("iO delivers all the HD games of all 9 New
York areas teams. You won't get them all with Verizon FiOS, DISH or AT&T").
150 See, e.g., AT&T Complaint at Exhibit 11.
151 See, e.g., AT&T Complaint at Exhibits 9, 13-15; see also id. at Exhibit 12 ("Catch every HD game of all 9 NY
sports teams!"); see also Defendants' Post-Discovery Answer to Supplement, Exhibit E (providing Cablevision
advertisements listing "All HD games of all 9 NY sports teams" as a unique feature relative to another wireline
competitor (Verizon FiOS TV)).
152 See supra n.102.
153 See Defendants' Answer at 36 (stating that their decision to withhold MSG HD and MSG+ HD from AT&T
"promotes consumer welfare by enhancing output and intensifying competition among both content creators and
content distributors") and Exhibit 1 (Jeremy I. Bulow and Bruce M. Owen, Analysis of Competition and Consumer
Welfare Issues in AT&T's Program Access and 628(b) Complaint Against Cablevision and Madison Square Garden,
at 14-15 (stating that "the discretion to choose one's distribution channels, up to and including the decision to use a
single channel exclusively, usually is pro-competitive because it permits sellers to differentiate their products to
make them more attractive to consumers") ("Bulow/Owen Study")); see also Defendants' Answer at 6, 35 n.122, 40-
41, 58-59, 75, 82; Bulow/Owen Study at 14-21; Defendants' April 9th Letter at 8, 10; Defendants' Post-Discovery
Answer to Supplement
at 7, 93-99; Defendants' Post-Discovery Reply Brief at 5, 49-50.
154 See Bulow/Owen Study at 2; see also id. at 2-3 ("Product differentiation is competition in `product space,' and is
no less important to promoting consumer welfare."), at 16 ("exclusivity . . . permits MVPDs to compete more
vigorously by differentiating their products"), at 17 ("markets with differentiated products are more likely to exhibit
vigorous price competition than markets with homogeneous products"); see also Defendants' Answer at 34-41;
Defendants' Post-Discovery Answer to Supplement at 98-99; Defendants' Post-Discovery Reply Brief at 5-6, 50
n.187.
155 See Defendants' Answer at 57 ("[C]ompelling firms to share their legitimate competitive advantages with others
undermines incentives to invest."); Bulow/Owen Study at 16-17 (stating that exclusivity can "increase both the
quantity and quality of video programming (and thus, presumably, the diversity of program content) by increasing
incentives to invest in programming"); see id. at 2, 7, 15-16, 19-21; Defendants' April 9th Letter at 12; Defendants'
Post-Discovery Answer to Supplement
at 93 n.370 ("[I]f a cable operator is unable . . . to utilize programming it
develops as a product differentiator, the incentive to invest in and develop new programming diminishes, and
(continued....)
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(b)

Section 628(c)(4) Factors

28.
In this section, we apply the five factors set forth in Section 628(c)(4) to Defendants'
withholding of MSG HD and MSG+ HD from AT&T.156 We conclude that the anticompetitive harms of
Defendants' withholding in the video distribution market outweigh any procompetitive benefits in the
video programming market.
(i)

Development of Competition in Local and
National MVPD Markets

29.
We find that the first factor under Section 628(c)(4) the effect of the exclusive
arrangement on "the development of competition in local and national [MVPD] markets" weighs
against Defendants' withholding of MSG HD and MSG+ HD from AT&T.157 In previous cases applying
Section 628(c)(4), the Commission has found that an exclusive arrangement harms competition when the
network withheld is "popular" and "established" and when other MVPDs have expressed an interest in
carrying the network.158 The record evidence here reflects that MSG HD and MSG+ HD are popular and
established networks that most MVPDs in the state of Connecticut are either already carrying or have
requested to carry.159 Moreover, the Commission has found that competition may be harmed when an
exclusive arrangement denies only one competitor in the market from access to the network.160 As
discussed below, we conclude that the withholding at issue here "significantly hinders" at least one
competitor (AT&T) from competing in the state of Connecticut which in turn harms consumers by
(Continued from previous page)


program diversity will suffer."); see also Defendants' Answer at 34-41; Defendants' Post-Discovery Answer to
Supplement
at 93-98, 126, 135; Defendants' Post-Discovery Reply Brief at 5.
156 See 47 U.S.C. 548(c)(4); 47 C.F.R. 76.1002(c)(4).
157 See 47 U.S.C. 548(c)(4)(A); 47 C.F.R. 76.1002(c)(4)(i).
158 See Court TV Exclusivity Petition, 9 FCC Rcd at 3227, 37 (finding that Time Warner Cable's exclusive
arrangement with the "popular" Court TV network would limit the development of competition in the video
distribution market in New York City); NECN Exclusivity Petition, 9 FCC Rcd at 3235, 30-31 (finding that New
England Cable News ("NECN") channel's exclusive arrangement with cable operators would not have an effect on
competition in local or national video distribution markets that could not be offset by public interest benefits
considering that no MVPD had requested carriage of NECN); see also NewsChannel, Memorandum Opinion and
Order, 10 FCC Rcd 691, 694, 21 (CSB 1994) (finding that NewsChannel's exclusive arrangement with cable
operators would not have an effect on competition in the video distribution market considering that no competitor
had expressed an interest in carry the channel and that NewsChannel was a new service with unknown demand that
"cannot be considered popular programming") ("NewsChannel Exclusivity Petition"); Cablevision Indus. Corp.,
Memorandum Opinion and Order, 10 FCC Rcd 9786, 9789, 19 (CSB 1995) (finding that the Sci-Fi Channel's
exclusive arrangement with cable operators would limit the development of competition in local video distribution
markets considering that the Sci-Fi Channel was a "popular" and "established" service with 16.3 million subscribers
nationwide) ("Sci-Fi Exclusivity Petition"); Outdoor Life Network and Speedvision Network, Memorandum Opinion
and Order, 13 FCC Rcd 12226, 12233-35, 14-17 (CSB 1998) (finding that the exclusive arrangements proposed
by Outdoor Life Network and Speedvision Network would limit the development of competition in local and
national video distribution markets considering that each network had 13.5-14.5 million subscribers nationwide and
that MVPDs had expressed an interest in carrying the networks) ("Outdoor Life/Speedvision Exclusivity Petition").
159 See supra 7 (noting other MVPDs that carry MSG HD and MSG+ HD); infra 48-49, 63 (noting popularity of
RSNs, including HD RSNs such as MSG HD and MSG+ HD).
160 See Court TV Exclusivity Petition, 9 FCC Rcd at 3227, 37 and 3228, 39 (finding that Time Warner Cable's
exclusive arrangement with Court TV would harm competition in the New York City video distribution market,
despite the fact that DBS providers could carry the network, because one SMATV operator would be denied access).
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limiting video competition in that market.161 The impact on competition is particularly acute here in light
of the Commission's recognition that wireline entrants such as AT&T pose a greater competitive threat
than DBS to cable operators and data indicating that DBS operators do not constrain the price of cable
service to the extent that wireline MVPDs do.162 Accordingly, we find that this factor weighs against
Defendants' withholding.
30.
To be sure, Defendants argue that their withholding of MSG HD and MSG+ HD from
AT&T will promote, rather than harm, competition by allowing Cablevision to differentiate its service
from AT&T and by encouraging AT&T to develop a competitive response, which might include investing
in its own programming.163 We do not dispute that product differentiation strategies may be
procompetitive in many instances,164 but the key distinction here is that the product differentiation
strategy involves non-replicable and popular RSN programming.165 As the Commission has explained,
"when programming is non-replicable and valuable to consumers, such as regional sports programming,
no amount of investment can duplicate the unique attributes of such programming, and denial of access to
such programming can significantly hinder an MVPD from competing in the marketplace."166 In other
words, given the non-replicable nature of the content on MSG HD and MSG+ HD, AT&T has no ability
to formulate a viable competitive response that would allow AT&T to compete for the many subscribers


161 See infra Section III.B.2.c; see also infra nn.313, 324 (noting that Defendants' claim of robust competition is
belied by the fact that incumbent cable market share in the New York DMA and Hartford/New Haven DMA far
exceeds the national average and that Cablevision has raised its rates in excess of inflation despite the number of
competitors in the market).
162 See 2010 Order, 25 FCC Rcd at 765, 29; Implementation of Section 3 of the Cable Television Consumer
Protection and Competition Act of 1992, Statistical Report on Average Rates for Basic Service, Cable Programming
Service, and Equipment
, MM Docket No. 92-266, Report on Cable Industry Prices, 24 FCC Rcd 259, 261, 3 (MB
2009); see also Implementation of Section 3 of the Cable Television Consumer Protection and Competition Act of
1992, Statistical Report on Average Rates for Basic Service, Cable Programming Service, and Equipment
, MM
Docket No. 92-266, Report on Cable Industry Prices, 26 FCC Rcd 1769, 1785, 34 (MB 2011). Indeed, Defendants
concede that they license MSG HD and MSG+ HD to DBS operators because, unlike AT&T, DBS operators do not
offer voice or broadband service. See Defendants' Answer at 59, 79; Bulow/Owen Study at 5; Defendants' Post-
Discovery Answer to Supplement
at 98; Defendants' Post-Discovery Reply Brief at 61; see also AT&T Complaint at
6; AT&T Reply at 15; AT&T March 30th Letter at 6; AT&T Supplement at 5-6; AT&T Post-Discovery Opening
Brief
at 2; AT&T Post-Discovery Reply Brief at 18 n.41, 24-25.
163 See Bulow/Owen Study at 2, 14-21; see also supra 27.
164 See 2007 Order, 22 FCC Rcd at 17835, 63 ("We recognize the benefits of exclusive contracts and vertical
integration . . ., such as encouraging innovation and investment in programming and allowing for `product
differentiation' among distributors.").
165 Despite Defendants' claims to the contrary, the games on MSG HD and MSG+ HD are not "replicated" on the
SD versions of the networks that AT&T carries. See Defendants' Post-Discovery Reply Brief at 16-17. As the
Commission has found previously, consumers do not consider the SD version of a particular channel to be an
adequate substitute for the HD version due to the different technical characteristics and sometimes different content.
See 2010 Order, 25 FCC Rcd at 784-85, 54-55.
166 2010 Order, 25 FCC Rcd at 750-51, 9; see also id. ("If particular programming is replicable, our policies
should encourage MVPDs or others to create competing programming, rather than relying on the efforts of others,
thereby encouraging investment and innovation in programming and adding to the diversity of programming in the
marketplace.").
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that highly value these networks.167 Indeed, even if MSG LP's exclusive rights to the sports
programming shown on MSG HD and MSG+ HD were to expire at some point in the future, two of the
teams shown on MSG are owned by Cablevision, thus eliminating any potential chance AT&T might
have in the future to acquire the rights to these games.168
(ii)

The Effect of Withholding on Alternative
Video Providers to Incumbent Cable
Operators

31.
We also find that the second factor the effect of the exclusive arrangement on
"competition from [MVPD] technologies other than cable" weighs against Defendants' withholding of
MSG HD and MSG+ HD from AT&T.169 In previous decisions, the Bureau has interpreted the term
"technologies other than cable" to mean alternative video providers that compete with incumbent cable
operators.170 Moreover, the Commission has found that this factor weighs against a proposed exclusive
arrangement even if some competitors are allowed to carry the network, as is the case with Defendants'
withholding strategy.171 We conclude below that the withholding of the popular and established MSG
HD and MSG+ HD networks at issue here "significantly hinders" at least one competitor (AT&T) from
serving as an alternative to incumbent cable operators in the state of Connecticut.172 Accordingly,
consistent with Commission precedent, we find that this factor weighs against Defendants' withholding.


167 See AT&T Post-Discovery Reply Brief at 20 ("AT&T can develop its own news channel or children's
programming, but cannot create its own professional basketball or hockey programming."); see also AT&T
Complaint
at ii, 63, 75, 77 n.54; York/Lauricella/Thun Decl. at 10, 12, 48; AT&T Reply at 27; AT&T Post-
Discovery Opening Brief
at 4, 13-14; AT&T Post-Discovery Reply Brief at 3, 15-16. As the Commission has
recognized previously, local and regional news channels are "readily replicable" programming. 2010 Order, 25
FCC Rcd at 750-51, 9.
168 See AT&T Complaint at 75 ("[N]o amount of investment by AT&T would allow AT&T to create an RSN in the
HD format carrying New York City's major professional sports teams, given Cablevision's refusal to allow it to do
so and especially given Cablevision's ownership of the New York Knicks and New York Rangers franchises.");
AT&T Post-Discovery Reply Brief at 22 ("Defendants not only have the exclusive rights to games of the Knicks,
Rangers, Islanders, and Devils, but also own the underlying Knicks and Rangers franchises. No competing provider,
regardless of its size and the investment it is willing to make, can replicate that content. Due to league restrictions
and exclusive contracts, AT&T cannot establish a new basketball or hockey team, nor can it independently record
existing teams' games to broadcast on its own RSN."); AT&T Post-Discovery Opening Brief at 13-14; see also
AT&T Complaint
at 23, 63; York/Lauricella/Thun Decl. at 48; AT&T Reply at 27; AT&T Post-Discovery
Opening Brief
at 2; AT&T Post-Discovery Reply Brief at 3, 15-16.
169 See 47 U.S.C. 548(c)(4)(B); 47 C.F.R. 76.1002(c)(4)(ii).
170 See Outdoor Life/Speedvision Exclusivity Petition, 13 FCC Rcd at 12233-34, 14-15 (referring to telephone
companies that "offer competition to incumbent cable operators"); Sci-Fi Exclusivity Petition, 10 FCC Rcd at 9789,
17 (stating that the first and second factors require the Commission to assess the development of competition to
"incumbent cable operators").
171 See Court TV Exclusivity Petition, 9 FCC Rcd at 3228, 39 (finding that this factor weighs against the proposed
exclusive arrangement despite the fact that the network was available to DBS operators); see also Sci-Fi Exclusivity
Petition
, 10 FCC Rcd at 9790, 21 (finding that this factor weighs against the proposed exclusive arrangement
despite the fact that the network was available to television receive-only and DBS operators); Outdoor
Life/Speedvision Exclusivity Petition
, 13 FCC Rcd at 12235-36, 19 (finding that this factor weighs against the
proposed exclusive arrangement despite the fact that the network was available to DBS operators); see also supra
7 (noting other MVPDs that carry MSG HD and MSG+ HD).
172 See infra Section III.B.2.c.
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(iii)

Attraction of Investment in New
Programming

32.
We find no basis to conclude that the third factor the effect of the exclusive
arrangement on "the attraction of capital investment in the production and distribution of new . . . cable
programming" weighs in favor of Defendants' withholding of MSG HD and MSG+ HD from AT&T.173
The Commission has noted that this factor recognizes that exclusive arrangements "are typically used by
suppliers to create incentives for distributors to aggressively promote and sell a particular product" and
"may be offered to engender distributor support for a fledgling service to help it gain a foothold in the
market."174 Moreover, the Commission has explained that when "a programmer requires the ability to
offer an added incentive to attract investment, carriage and support of the service, such that without the
incentive the programming service could not be launched or become viable, exclusivity may be in the
public interest."175 In previous cases, the Commission has found that this factor weighs in favor of an
exclusive arrangement when the network is a fledgling service that needs to offer exclusivity to
distributors in order to obtain carriage and attract capital investments.176 The Commission has found that
this factor weighs against an exclusive arrangement when the network is established and does not
currently need to offer exclusivity in order to obtain carriage and attract capital investments.177
33.
MSG HD and MSG+ HD are established networks launched in the late 1990s with
exclusive rights to televise the games of five major professional sports teams, which is some of the most
valuable and popular programming available.178 Defendants have not asserted, nor could they credibly
claim, that MSG HD and MSG+ HD are fledgling services that MVPDs will carry and promote only if
they can be guaranteed exclusivity with respect to AT&T. The importance of MSG HD and MSG+ HD
to consumers means that MVPDs will carry these networks without any guarantee of exclusivity.179
Indeed, in explaining why they do not offer AT&T access to MSG HD and MSG+ HD in markets not
served by Cablevision, Defendants do not claim that the reason is because MVPDs in those markets have


173 See 47 U.S.C. 548(c)(4)(C); 47 C.F.R. 76.1002(c)(4)(iii).
174 NECN Exclusivity Petition, 9 FCC Rcd at 3236, 33.
175 Id. at 3236, 34; see Court TV Exclusivity Petition, 9 FCC Rcd at 3228, 39; see also NewsChannel, 10 FCC
Rcd at 694-95, 23.
176 See NECN Exclusivity Petition, 9 FCC Rcd at 3236, 33-39 (finding that a fledgling, start-up, regional news
channel with a limited potential subscriber base may need the ability to offer exclusivity in order to attract
investment, promotion, and carriage); see also NewsChannel, 10 FCC Rcd at 694-95, 23-26 (finding that a new
regional and local news channel with a limited potential subscriber base that requires distributors to install
equipment in each headend to receive the programming requires the ability to offer exclusivity in order to secure
carriage commitments and to ensure its financial viability).
177 See Court TV Exclusivity Petition, 9 FCC Rcd at 3228-29, 42-50 (finding that an established network with a
growing subscriber base and nationwide appeal did not require the ability to offer exclusivity in order to gain
acceptance or to attract capital investments for its production, promotion, distribution, or carriage); see also Sci-Fi
Exclusivity Petition
, 10 FCC Rcd at 9790, 23-26 (finding that exclusivity was not vital for the continued viability
of a popular and established network); Outdoor Life/Speedvision Exclusivity Petition, 13 FCC Rcd at 12237-40,
22-25 (finding that networks did not face unique hurdles that required exclusivity).
178 See infra 48 ([REDACTED
]); Defendants' Answer at 9, 70 and Pontillo Decl. at 3 (stating that MSG HD
was launched in the fall of 1998 and MSG+ HD was launched in the spring of 1999).
179 See Court TV Exclusivity Petition, 9 FCC Rcd at 3228-29, 44 (noting that the popularity of a network "creates
incentives for all cable operators to market and add the service, particularly if a competitor carries it").
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demanded exclusivity with respect to AT&T as a condition for carriage of MSG HD and MSG+ HD.
Rather, Defendants claim that doing so would complicate Cablevision's product differentiation
strategy.180
34.
While Defendants put forth the theory that requiring MSG LP to share MSG HD and
MSG+ HD with AT&T will reduce the economic incentives of Cablevision to invest in the networks,181
they have put forth no evidence demonstrating that this theory motivated their withholding strategy. In
addition, Defendants put forth no evidence demonstrating that this withholding strategy has resulted in
increased investment in the networks or that it has improved the quantity and quality of programming on
the networks.182 At most, Defendants claim that MSG LP has "enter[ed] into a mutually beneficial
arrangement which provides MSG value and consideration in exchange for allowing Cablevision [to]
effectuate an aspect of product differentiation."183 Defendants provide no evidence concerning the "value
and consideration" that MSG LP has received from this arrangement. Nor have Defendants provided any
evidence that the "value and consideration" that MSG LP receives from Cablevision exceeds the licensing
fees and advertising revenues that MSG LP has foregone by withholding these networks from AT&T.
There is no dispute that MSG HD and MSG+ HD are established networks with valuable and popular
programming. Defendants have not alleged, let alone provided evidence, that the continued development
of these networks is contingent upon further financing from Cablevision, as opposed to revenues earned
from advertising and licensing fees charged to MVPDs.184 Even if MSG LP were reliant on further
financing from Cablevision, Defendants have not claimed that any alleged financing from Cablevision


180 See Defendants' Post-Discovery Answer to Supplement at 98 n.388 (stating that licensing MSG HD and MSG+
HD to AT&T in areas not served by Cablevision would "undercut Defendants' attempt to use those services as a
product differentiator because such a decision likely would dilute the efficacy of Defendants' marketing efforts,
engender customer confusion, and likely lead AT&T to intensify pressure to obtain the services for its subscribers
living in areas served by Cablevision"); see also Defendants' Post-Discovery Reply Brief at 49 n.184.
181 See Defendants' Answer at 57; Defendants' Post-Discovery Answer to Supplement at 93 n.370, 97, 126;
Bulow/Owen Study at 2, 15-17; see also supra 27.
182 See AT&T Post-Discovery Reply Brief at 22-23 ("Defendants have failed to identify any way in which their
refusal to license MSG HD and MSG+ HD has resulted in greater investment in the programming carried on those
channels. For example, Defendants have not asserted that the video providers to whom MSG HD and MSG+ HD
are licensed pay higher fees for this programming. Such above-market fees could theoretically lead to greater
investment, but Defendants have never alleged that Cablevision, DIRECTV, Comcast, Time Warner, RCN, or other
providers pay above-market rates for this programming in exchange for limited distribution."); see also id. at 2;
AT&T June 20th Letter at 4 ("Defendants' arguments suffer from a simple failure of proof; there is no evidence in
the record suggesting that Defendants' selective withholding strategy has actually resulted in increased output or
greater investment in the programming carried on MSG HD and MSG+ HD") (emphasis in original).
183 Defendants' Post-Discovery Reply Brief at 50-51; see also id. at 59, 60-61.
184 See Court TV Exclusivity Petition, 9 FCC Rcd at 3229, 49 ("[A]s Court TV grows, more of its financial needs
may be met with outside revenue from licensing fees from competitors."); NECN Exclusivity Petition, 9 FCC Rcd at
3237-38, 48 ("As consumer demand for the service develops, cable operator reliance on exclusivity as an incentive
to continue to carry NECN should change. Moreover, NECN's losses in the future can eventually be lessened by the
revenue and increased advertising that can be generated from increased distribution through sales to competing
distributors."). Indeed, as noted above, Cablevision has stated in an SEC filing that MSG LP earns revenues from
licensing fees and advertising sales. See supra n.103; AT&T Complaint at 6 n.10 (quoting Cablevision Systems
Corp., SEC Form 10-Q at 44 (July 30, 2009)); see also AT&T Reply at 17 n.23, 22, 26; AT&T Post-Discovery
Opening Brief
at 24 n.44, 30; AT&T Post-Discovery Reply Brief at 21-22.
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would be unavailable if MSG LP licensed MSG HD and MSG+ HD to AT&T.185 Similarly, Defendants
assert that MSG LP receives "substantial promotional, marketing and other benefits" from Cablevision,
but they provide no support for this assertion and, in any event, do not allege that Cablevision would
cease such support if MSG LP licensed MSG HD and MSG+ HD to AT&T.186 Accordingly, consistent
with Commission precedent, we find that the third factor does not weigh in favor of Defendants'
withholding.
(iv)

The Effect on Diversity of Programming in
the MVPD Market

35.
We find no basis to conclude that the fourth factor the effect of the exclusive
arrangement on "diversity of programming in the [MVPD] market" weighs in favor of Defendants'
withholding of MSG HD and MSG+ HD from AT&T.187 The Commission has explained that an
exclusive arrangement "may promote diversity in the programming market when used to provide
incentives for cable operators to promote and carry a new and untested programming service."188 In
previous cases, the Commission has found that this factor weighs in favor of exclusive arrangements for
new and untested networks,189 but not for established and successful networks.190


185 In applying the Section 628(c)(4) factors, the Commission has explained that it assesses whether exclusivity is
currently required to attract investment and carriage, not whether exclusivity was needed when the network was first
launched. See Court TV Exclusivity Petition, 9 FCC Rcd at 3228-29, 44; see also Defendants' Answer at 2, 10, 70
and Pontillo Decl. at 3 (stating that Cablevision was the only distributor willing to devote capital and channel
capacity to MSG HD and MSG+ HD when these networks were launched in 1998-1999). In any event, Defendants
concede that when AT&T began providing video service in Connecticut in 2006, MSG HD and MSG+ HD had
already been in existence for seven years and were already carried by other MVPDs. See Defendants' Answer at 7,
13 ( 6), 34; see also id. at 12 ( 4) (noting that MSG LP began to license MSG HD and MSG+ HD to other MVPDs
in 2005) and 17-18 ( 11); York/Lauricella/Thun Decl. at 9 (stating that AT&T launched its U-verse TV service in
Connecticut in 2006); AT&T Post-Discovery Reply Brief at 27 ([REDACTED
]). Thus, when AT&T
entered the market, MSG HD and MSG+ HD were already established and popular networks, thereby undermining
any suggestion that the networks were fledgling services dependent upon financing from Cablevision or that
Defendants were required to offer MVPDs exclusivity with respect to AT&T as an inducement to carry the
networks.
186 Defendants' Answer at 75.
187 See 47 U.S.C. 548(c)(4)(D); 47 C.F.R. 76.1002(c)(4)(iv).
188 NECN Exclusivity Petition, 9 FCC Rcd at 3237, 40.
189 See id. at 3237, 40-43 (finding that exclusivity will promote the financial survival of a regional news service
and thereby enhance diversity of programming); see also NewsChannel, 10 FCC Rcd at 695, 27-29 (finding that
exclusivity will promote the successful launch and financial survival of a new and unique regional news service and
thereby enhance diversity of programming).
190 See Court TV Exclusivity Petition, 9 FCC Rcd at 3229, 51 (finding that exclusivity is not currently needed for
an existing and successful service and is therefore not needed to promote diversity of programming); see also Sci-Fi
Exclusivity Petition
, 10 FCC Rcd at 9791, 27-29 (finding that exclusivity is not currently needed for an existing
and successful service and is therefore not needed to promote diversity of programming); Outdoor Life/Speedvision
Exclusivity Petition
, 13 FCC Rcd at 12240, 26 (finding that exclusivity is not currently needed for a network with
13.5-14.5 million subscribers that various MVPDs seek to carry and is therefore not needed to promote diversity of
programming).
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36.
As discussed above, MSG HD and MSG+ HD are established networks with valuable
and popular programming. Defendants do not allege that the continued carriage and development of these
networks is dependent on Defendants' withholding strategy. Thus, we find no basis to conclude that
Defendants' withholding strategy is needed to enhance diversity of programming. Defendants theorize,
however, that requiring MSG LP to share MSG HD and MSG+ HD with AT&T will reduce AT&T's
incentive to invest in its own programming, thereby reducing diversity of programming.191 As the
Commission has explained previously, however, RSN programming is non-replicable and "no amount of
investment can duplicate the unique attributes of such programming."192 Accordingly, consistent with
Commission precedent, we find that the fourth factor does not weigh in favor of Defendants' withholding.
(v)

Duration of Withholding

37.
We find that the fifth factor the duration of the exclusive arrangement weighs against
Defendants' withholding of MSG HD and MSG+ HD from AT&T.193 The Bureau has previously found
even a three-year exclusivity period to be excessive for a network that is popular and that MVPDs seek to
carry.194 The withholding here is of unlimited duration given that Defendants have provided no indication
that they will ever license MSG HD and MSG+ HD to AT&T on any terms.


191 See Defendants' Answer at 55-56; Bulow/Owen Study at 19-21; see also AT&T Complaint, Exhibit 6 (Letter from
Howard J. Symons, Counsel for Defendants, to Christopher M. Heimann, AT&T (July 23, 2009), at 2 ("AT&T
clearly has the resources to acquire, invest in, and develop its own programming.")); Defendants' April 9th Letter at
13; Defendants' Post-Discovery Answer to Supplement at 129.
192 2010 Order, 25 FCC Rcd at 750-51, 9; AT&T Complaint at 75 ("[N]o amount of investment by AT&T would
allow AT&T to create an RSN in the HD format carrying New York City's major professional sports teams, given
Cablevision's refusal to allow it to do so and especially given Cablevision's ownership of the New York Knicks and
New York Rangers franchises."); AT&T Post-Discovery Reply Brief at 22 ("[T]his is not a context where exclusivity
is likely to spur greater investment, for the simple reason that MSG HD and MSG+ HD cannot be replicated.
Defendants not only have the exclusive rights to games of the Knicks, Rangers, Islanders, and Devils, but also own
the underlying Knicks and Rangers franchises. No competing provider, regardless of its size and the investment it is
willing to make, can replicate that content. Due to league restrictions and exclusive contracts, AT&T cannot
establish a new basketball or hockey team, nor can it independently record existing teams' games to broadcast on its
own RSN.") (emphasis in original); see also AT&T Reply at 27; AT&T June 20th Letter at 4 ("[T]his is not a context
in which Defendants' withholding of programming will spur AT&T to develop competing programming of its
own.").
193 See 47 U.S.C. 548(c)(4)(E); 47 C.F.R. 76.1002(c)(4)(v).
194 See Sci-Fi Exclusivity Petition, 10 FCC Rcd at 9791, 30 n.78 (rejecting a three-year period of exclusivity given
that Sci-Fi Channel was a popular service that at least one MVPD had sought to carry). The Commission has
explained that in assessing the duration of an exclusive arrangement, it will "evaluate whether the proposed
exclusivity has been sufficiently tailored to provide exclusivity for the minimum time period reasonably required to
achieve the public interest benefits identified by the petitioner without imposing the kind of effect on the
development of competition in the distribution market that Congress sought to ameliorate through the program
access provisions." Court TV Exclusivity Petition, 9 FCC Rcd at 3226, 30; see also id. at 3230, 54 (finding a 15-
year period of exclusivity to be "excessive" and not consistent with the statute); NECN Exclusivity Petition, 9 FCC
Rcd at 3237-38, 44-51 (finding a seven-year period of exclusivity to be "reasonable" in light of the finding that
the public interest benefits of the proposed exclusive arrangement offset any effect on competition); Outdoor
Life/Speedvision Exclusivity Petition
, 13 FCC Rcd at 12240-41, 27 (finding it unnecessary to assess whether a
four-year period of exclusivity was appropriate in light of the lack of public interest benefits to offset the adverse
effects on competition in the local and national video distribution markets); NewsChannel, 10 FCC Rcd at 695-96,
30-35 (finding a seven-year period of exclusivity to be "reasonable" in light of the finding that the public interest
benefits of the proposed exclusive arrangement offset any effect on competition).
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(vi)

Conclusion

38.
The first, second, and fifth factors under Section 628(c)(4) suggest significant
anticompetitive harms resulting from Defendants' withholding of MSG HD and MSG+ HD from AT&T.
While the two remaining factors could potentially tip the scales in favor of a finding that Defendants'
withholding is procompetitive on balance, we find no basis on this record to conclude that Defendants'
withholding will promote the benefits of exclusive arrangements for the programming market (i.e.,
attraction of capital investment or increased programming diversity). Accordingly, applying the factors
set forth in Section 628(c)(4) and the Commission's interpretation of those factors, we conclude that the
anticompetitive harms of Defendants' withholding are not offset by any procompetitive benefits to the
programming market.
(c)

MDU Order


39.
In the MDU Order, the Commission weighed the anticompetitive harms of exclusive
contracts between cable operators and MDU owners against the procompetitive benefits and concluded
that, on balance, these contracts are categorically "unfair."195 Applying this analysis here, we find two
significant anticompetitive harms resulting from Defendants' withholding. First, as discussed below,
Defendants' withholding "significantly hinders" a wireline entrant from competing in the state of
Connecticut, which in turn harms consumers by limiting video competition in those markets.196 Second,
as the Commission has recognized previously, an act that impedes the ability of an MVPD to provide
video service can also impede the ability of an MVPD to provide broadband services.197 These
anticompetitive harms, however, may be outweighed by the procompetitive benefits of withholding.198
The only procompetitive benefit put forth by Defendants is that their withholding strategy will allow
Cablevision to differentiate its service from AT&T, thereby leading to more vigorous competition in the
video distribution market and increasing the incentives of both Defendants and AT&T to invest in their
own programming.199 While we do not preclude the possibility that the facts in an individual case may
reveal that the procompetitive benefits of product differentiation outweigh the anticompetitive harms of
withholding, we find no basis to reach that conclusion on the facts presented here. As discussed above,
the key distinction in this case is that the content withheld from AT&T is non-replicable and popular RSN
programming that "no amount of investment can duplicate."200 Because AT&T has no ability to
formulate a viable competitive response that would allow AT&T to compete for the many subscribers that


195 See MDU Order, 22 FCC Rcd at 20243, 16 and 20248-49, 26.
196 See infra Section III.B.2.c; see also supra 29.
197 See 2010 Order, 25 FCC Rcd at 771-72, 36 (stating that a "wireline firm's decision to deploy broadband is
linked to its ability to offer video" and that an act that "imped[es] the ability of MVPDs to provide video service . . .
can also impede the ability of MVPDs to provide broadband services"); AT&T Complaint at 98 ("AT&T's
inability to obtain the HD format of MSG and MSG Plus reduces expected revenues from U-verse service by
making AT&T a less viable competitor in Connecticut. That, in turn, reduces incentives to extend the Project
Lightspeed broadband deployment to additional customers in Connecticut."); York/Lauricella/Thun Decl. at 55;
AT&T Reply at 34 n.43.
198 See Cablevision II, 2011 WL 2277217, at *23 (stating that "labeling conduct unfair simply because it might in
some circumstances negatively affect competition in the video distribution market" fails to consider whether such
conduct should be treated as unfair "despite it being procompetitive in a given instance").
199 See supra 27. As discussed above, there is no evidence of any procompetitive benefits from Defendants'
withholding strategy for the programming market. See supra 32-36.
200 2010 Order, 25 FCC Rcd at 750-51, 9; see also supra 30, 36.
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highly value these networks, we find that the anticompetitive harms of Defendants' withholding outweigh
the procompetitive benefits.
(d)

Legitimate Business Justification

40.
The Commission's program access rules applicable to satellite-delivered, cable-affiliated
programming permit withholding provided there is a "legitimate business justification" for the conduct.201
The only justification put forth by Defendants is that their withholding strategy will allow Cablevision to
differentiate its service from AT&T.202 While we do not preclude the possibility that product
differentiation may be a legitimate business justification for withholding terrestrially delivered, cable-
affiliated programming based on the facts presented in an individual case, we decline to reach that
conclusion here given the non-replicable and popular nature of the content withheld from AT&T. We
find that product differentiation is not a legitimate business justification here because AT&T has no
ability to formulate a viable competitive response that would allow AT&T to compete for the many
subscribers who, today, highly value these networks.203
(e)

FTC Definition

41.
Defendants have put forth their own test for assessing whether conduct is "unfair," which
is based on the Federal Trade Commission's Unfairness Policy Statement.204 We find that Defendants'
withholding of MSG HD and MSG+ HD from AT&T is "unfair" under this test as well. We thus need
not decide how much weight should be given to Defendants' proposed test. The first factor requires the
conduct at issue to "present an imminent, substantial, non-speculative threat of injury to consumers (as
opposed to competitors)."205 As discussed later herein, Defendants' withholding "significantly hinders"
AT&T from competing in the video distribution market in the state of Connecticut, which in turn harms
consumers by limiting competition in those markets and by impeding broadband deployment.206 The
second factor requires that the conduct at issue "must not be outweighed by any countervailing benefits to
consumers or competition that the practice produces."207 As discussed above, we conclude that the
anticompetitive harms of Defendants' withholding outweigh any procompetitive benefits.208 The third
factor requires that the act impose an injury that consumers could not reasonably avoid by "survey[ing]
the available alternatives, choos[ing] those that are most desirable, and avoid[ing] those that are
inadequate or unsatisfactory."209 As the Commission has explained previously, RSNs such as MSG HD


201 See 1993 Order, 8 FCC Rcd at 3412-13, 116.
202 See supra 27.
203 See supra 30, 36.
204 See Defendants' June 22nd Letter at 5 (citing FTC Unfairness Policy Statement, Dec. 17, 1980, reprinted in Int'l
Harvester Co.,
104 F.T.C. 949 (1984)); see also 15 U.S.C. 45(n) ("The Commission shall have no authority under
this section or section 57a of this title to declare unlawful an act or practice on the grounds that such act or practice
is unfair unless the act or practice causes or is likely to cause substantial injury to consumers which is not reasonably
avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to
competition.").
205 See Defendants' June 22nd Letter at 5.
206 See infra Section III.B.2.c; see also supra 29, 39.
207 See Defendants' June 22nd Letter at 5.
208 See supra 25-40.
209 See Defendants' June 22nd Letter at 5 (citing FTC Unfairness Policy Statement, Dec. 17, 1980, reprinted in Int'l
Harvester Co.,
104 F.T.C. 949 (1984)).
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and MSG+ HD are unique because they "purchase exclusive rights to show sporting events and sports
fans believe that there is no good substitute for watching their local and/or favorite team play an
important game."210 Moreover, the Commission has explained that RSN programming is "non-replicable
and valuable to consumers" and that "no amount of investment can duplicate the unique attributes of such
programming."211 Thus, by withholding MSG HD and MSG+ HD from AT&T, Defendants have
eliminated a competitive choice for those consumers who desire MSG HD and MSG+ HD.212
Accordingly, even applying the test advocated by Defendants, we find Defendants' withholding of MSG
HD and MSG+ HD from AT&T to be an "unfair act."
(f)

Conclusion

42.
After applying precedent and guidelines established by Congress and the Commission, as
well as an additional test advocated by Defendants, we conclude that the anticompetitive effects of
Defendants' withholding of MSG HD and MSG+ HD from AT&T outweigh any procompetitive benefits
and that Defendants' withholding is, on balance, an "unfair act."213
c.

Defendants' Withholding of MSG HD and MSG+ HD from AT&T
Has the "Effect" of "Significantly Hindering" AT&T

43.
As discussed below, we conclude that Defendants' withholding of MSG HD and MSG+
HD from AT&T in the state of Connecticut has the "effect" of "significantly hindering" AT&T from
providing a competing video service, including "satellite cable programming and satellite broadcast
programming," to subscribers and consumers in these DMAs.214 We begin by reviewing Commission
precedent on the "significant hindrance" standard. We then assess the "effect" of the conduct at issue.


210 See General Motors Corporation and Hughes Electronics Corporation, Transferors and The News Corporation
Limited, Transferee
, Memorandum Opinion and Order, 19 FCC Rcd 473, 535, 133 (2004) ("News/Hughes
Order
").
211 2010 Order, 25 FCC Rcd at 750-51, 9.
212 The fact that Defendants make the SD versions of MSG and MSG+ available to AT&T does not change our
conclusion. See supra 4 and infra 49 (noting the Commission's conclusion, as well as additional evidence
supporting the conclusion, that HD programming is growing in significance to consumers and that consumers do not
consider the SD version of a particular channel to be an adequate substitute for the HD version due to the different
technical characteristics and sometimes different content). Moreover, the fact that Defendants make MSG HD and
MSG+ HD available to DBS operators does not change our conclusion. Not all consumers can receive DBS service
due to signal obstructions and difficulties with antenna siting. See 2007 Order, 22 FCC Rcd at 17879, Appendix B,
13 (noting impact of signal obstruction on DBS reception); United States Government Accountability Office,
Telecommunications: Direct Broadcast Satellite Subscribership Has Grown Rapidly, But Varies Across Different
Types of Markets
, GAO-05-257 (April 2005), at 4, 13-14 (noting impact of signal obstruction on DBS reception)
(available at http://www.gao.gov/new.items/d05257.pdf). Moreover, as discussed above, Defendants acknowledge
that DBS operators do not present consumers with the same competitive choice as a wireline entrant such as AT&T
because DBS operators do not offer voice or broadband service. See supra n.162. Moreover, the Commission has
found that DBS operators do not constrain the price of cable service to the extent that wireline entrants do. See id.
213 [REDACTED
]
214 As an initial matter, Defendants claim that dismissal of the AT&T Complaint is warranted because AT&T is not
prevented or significantly hindered from providing any "satellite cable programming" or "satellite broadcast
(continued....)
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(i)

The "Significant Hindrance" Standard

44.
Defendants' claims notwithstanding, prior Commission decisions establish that the
"significant hindrance" standard does not require a complainant to demonstrate that it is completely
foreclosed from competing in the video distribution market or that its commercial viability is in
jeopardy.215 In 1993, in initially establishing the program access rules, the Commission stated that a
complainant alleging "significant hindrance" under Section 628(b) "must show that its ability to distribute
programming to customers has been hampered in some fashion" and that the Commission will focus on
whether the purpose or effect of the practice is "to hinder or harm the complainant relative to its
competitors."216 In 2007, the Commission found that MVPDs were "significantly hindered" as a result of
exclusive deals between cable operators and MDU owners, despite the fact that only 30 percent of
Americans lived in MDUs and the percentage of Americans living in an MDU subject to an exclusive
deal is lower.217 The Commission prohibited all such exclusive deals, regardless of the size of the MDU
or the number of MDUs in a given market area.218 In the 2010 Order, the Commission explained that, in
attempting to demonstrate "significant hindrance," a complainant "cannot simply rely on the fact that
some impairment to providing service may have occurred because of its lack of access to cable-affiliated,
terrestrially delivered programming."219 In the same decision, the Commission found "significant
(Continued from previous page)


programming" when the only programming being withheld is terrestrially delivered. See Defendants' Post-
Discovery Answer to Supplement
at 12-13, 26-28, 132; Defendants' Post-Discovery Reply Brief at 8, 10; see also
Defendants' Answer
at 31. The Commission, and now the D.C. Circuit, have considered and rejected this argument.
See Cablevision II, 2011 WL 2277217, at *10-*11 ("The problem with petitioners' argument is that it wrongly
assumes an MVPD's lack of commercial attractiveness will never prevent or significantly hinder it from providing
satellite programming."); 2010 Order, 25 FCC Rcd at 768-69, 32, 770-71, 35, and 774-75, 39.
215 See Bulow/Owen Study at 3 ("There is no evidence in the complaint that MSG's HD program services are
essential for entry (successful or otherwise) into the business. To the contrary, AT&T itself offers apparently viable
retail video distribution service in the Cablevision service areas without offering MSG HD and MSG+ HD.");
Defendants' April 9th Letter at 7-9 (stating that none of the evidence demonstrates that AT&T has been significantly
hindered from providing a competitively viable service); Defendants' Post-Discovery Answer to Supplement at 92-
93 (referring to whether Defendants could use MSG HD and MSG+ HD to hinder AT&T's "competitive viability"),
at 101 (stating that the DBS operators and telephone companies will "continue to offer video service irrespective of
whether a small number of cable-owned HD regional programming services are unavailable to AT&T"), Exhibit D
(Defendants, Reply to Verizon's Response to Defendants' Motion to Strike, File No. CSR-8185-P (filed Sept. 24,
2009), at 3 (referring to a practice that "entirely forecloses entry into the relevant marketplace")), Exhibit N (Bruce
M. Owen, Bundling Undermines the RSN Presumption, at 9 ("AT&T is apparently viable as a distributor of video
services . . . .") ("Owen Study")); Defendants' Post-Discovery Reply Brief at 6-7 ("AT&T has offered no evidence
suggesting that the commercial viability of U-verse TV is significantly impaired . . . ."), at 12 ("AT&T likewise has
failed to present any evidence that lack of access to MSG HD/MSG+ HD renders its provision of video service in
Connecticut uneconomic or commercially non-viable."), at 14 ("The record . . . offers no basis for concluding that
the commercial viability of AT&T's video offering is impaired in any material respect . . . ."); see also AT&T Post-
Discovery Reply Brief
at 3 (stating that Defendants have misinterpreted the statutory standard to require a showing
of total preclusion), and at 25.
216 1993 Order, 8 FCC Rcd at 3374, 41; see AT&T Reply at 20 n.25 ("AT&T's absolute level of competitive
success in Connecticut says little about whether, `relative' to Cablevision, AT&T has been hindered in its ability to
compete effectively and fairly by the denial of a vital programming input.") (emphasis in original).
217 See MDU Order, 22 FCC Rcd at 20235-36, 1, 20237, 3, 20239-41, 8-10, 20243-44, 16, and 20250-51,
29.
218 See id. at 20251, 33 and 20253-54, 38.
219 See 2010 Order, 25 FCC Rcd at 781, 51 n.200.
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hindrance" when withholding of an RSN resulted in a 33 percent to 40 percent reduction in expected DBS
market share.220 Finally, in March 2010, the Commission addressed bulk billing arrangements, which
allow an MVPD to provide service to every resident of an MDU at a significant discount from the usual
retail rate.221 The Commission explained that these arrangements may deter a second video provider from
serving a building because residents would have to pay twice, thereby increasing the second provider's
cost to consumers.222 But, while the Commission acknowledged that these arrangements "may make
entry by other MVPDs marginally less attractive," it further found that these arrangements are not present
in most MDUs223 and that it did not have a basis for finding that they "significantly hinder" MVPDs from
providing service where the record demonstrated that "many" consumers are willing to pay twice for
video service and some MVPDs have wired MDUs for service despite the presence of bulk billing
arrangements.224
45.
Thus, rather than requiring an MVPD to demonstrate complete foreclosure or that its
commercial viability is in doubt, we believe this precedent establishes that the salient issue in assessing
"significant hindrance" is whether an MVPD has been hindered relative to its competitors and whether
the hindrance is substantial enough to eliminate the MVPD as a competitive choice for a meaningful
number of consumers. For example, in the MDU Order and 2010 Order, although the Commission found
that MVPDs were "significantly hindered," there was no indication that MVPDs were incapable of
competing in the marketplace or that they were poised to exit the market without access to MDU residents
or to an RSN. This precedent is consistent with Section 628(b), which prohibits "unfair acts" that have
the purpose or effect "to hinder significantly or to prevent" an MVPD from providing programming to
subscribers or consumers.225 This language indicates that Congress intended "significant hindrance" to
mean something less than complete foreclosure, or prevention, from providing service. This
interpretation is also supported by the D.C. Circuit's decision upholding the 2010 Order. In rejecting
Defendants' argument that withholding of terrestrially delivered programming does not significantly
hinder an MVPD from providing "satellite cable programming or satellite broadcast programming," the
court explained that this argument "wrongly assumes an MVPD's lack of commercial attractiveness will
never prevent or significantly hinder it from providing satellite programming."226 The court also
explained that when an MVPD is denied access to "programming that customers want and that
competitors are unable to duplicate--like the games of a local team selling broadcast rights to a single


220 See id. at 768, 32 and 782, 52 n.202. Based on this evidence, as well as the non-replicability of RSNs, the
Commission established a rebuttable presumption that withholding of an RSN results in "significant hindrance."
See supra 3.
221 See Exclusive Service Contracts for Provision of Video Services in Multiple Dwelling Units and Other Real
Estate Developments,
Second Report and Order, 25 FCC Rcd 2460, 2461, 2, 2463, 10, and 2470, 26 (2010).
222 See id. at 2461, 2 and 2464, 12.
223 See id. at 2464, 12.
224 See id. at 2470, 26 ("second MVPD providers wire MDUs for video service even in the presence of bulk billing
arrangements and [] many consumers choose to subscribe to those second video services"). The Commission also
found that exclusive marketing arrangements, whereby an MVPD has the exclusive right to certain means of
marketing its service to residents of an MDU, do not result in "significant hindrance." See id. at 2471-72, 31 and
2473, 36. The record indicated that these arrangements, which are not present in "most" MDUs, confer a slight
advantage on the MVPD subject to the arrangement, but there is no indication that they "significantly hinder"
competitors from providing service. See id. at 2473, 36.
225 47 U.S.C. 548(b) (emphasis added).
226 Cablevision II, 2011 WL 2277217, at *10 (emphasis added).
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sports network--competitor MVPDs will find themselves at a serious disadvantage when trying to attract
customers away from the incumbent cable company."227
46.
We also reject Defendants' claim that the Commission should be guided exclusively by
antitrust precedent in applying the "significant hindrance" standard.228 Congress specifically adopted the
program access regime, including Section 628(b), as a new remedy separate and apart from antitrust
enforcement.229 Moreover, the Commission has previously explained that antitrust and program access
laws "address similar but not identical concerns."230
(ii)

The Record Supports Application of a Rebuttable
Presumption of "Significant Hindrance" for HD RSNs

47.
Because MSG HD and MSG+ HD are RSNs as defined by the Commission,231
Defendants' withholding of these networks from AT&T is subject to the rebuttable presumption of
"significant hindrance" established in the 2010 Order.232 Moreover, although Defendants license the SD
versions of MSG and MSG+ to AT&T, the Commission has established that this alone is not sufficient to
rebut the presumption applicable to the HD version.233 AT&T has put forth evidence that provides
additional support for the rebuttable presumption for HD RSNs. Although this evidence is not necessary
to bring the presumption into play, we nonetheless review the evidence given its presence in the record.
48.
In upholding the rebuttable presumption of "significant hindrance" for RSNs, the D.C.
Circuit explained that the Commission "advanced compelling reasons to believe that withholding RSN
programming is, given its desirability and non-replicability, uniquely likely to significantly impact the


227 See id.; see also id. at *11 ("But given petitioners' concession that the Commission can in principle regulate
terrestrial withholding when such withholding completely prevents an MVPD from competing, thus preventing that
MVPD from providing satellite programming, they have no basis for arguing that section 628 unambiguously
precludes the Commission from regulating where it has evidence that such withholding `hinder[s] significantly,' 47
U.S.C. 548(b), an MVPD from competing with the incumbent cable operator to deliver satellite programming to
customers.") (emphasis in original).
228 See Defendants' Post-Discovery Answer to Supplement at 52-53; Owen Study at 3 n.5 and 9; see also Defendants'
Answer
at 60-63; Defendants' April 9th Letter at 9.
229 See S. Rep. No. 102-92 (1991), at 29, reprinted in 1992 U.S.C.C.A.N. 1133, 1162 ("The legislation provides new
FCC remedies and does not amend existing antitrust laws. All antitrust and other remedies which can be pursued
under current law by multichannel video programming distributors are therefore unaffected by this section.").
230 See 1993 Order, 8 FCC Rcd at 3404, 102 ("[W]hile antitrust precedents and other regulatory approaches
address related concepts that might be particularly useful in defining the permissible factors for differentials, directly
importing these concepts into the Section 628 process risks confusing the two bodies of law involved, which address
similar but not identical concerns."); see also Court TV Exclusivity Petition, 9 FCC Rcd at 3226-27, 35 ("[I]t
would be flatly inconsistent with the Cable Act to find an exclusivity provision presumptively lawful simply because
it might not rise to the level of a Sherman Act violation."); AT&T Reply at 15 n.21, 18; Defendants' April 16th Letter
at 5; AT&T Post-Discovery Reply Brief at 7-8.
231 The record establishes that MSG HD and MSG+ HD satisfy the Commission's definition of an RSN. See supra
n.8 (defining RSN); Defendants' Answer at 86 ( 23) (admitting that MSG has exclusive rights to the New York
Knicks (NBA) and New York Rangers (NHL), among others, and that MSG+ has exclusive rights to the New York
Islanders (NHL) and New Jersey Devils (NHL), among others).
232 See supra 3.
233 See supra 4.
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MVPD market."234 AT&T has provided additional support for the Commission's conclusion that such
networks are non-replicable and critically important to consumers and competition.235 The record here


234 Cablevision II, 2011 WL 2277217, at *18.
235 See supra n.8; 2010 Order, 25 FCC Rcd at 750, 8 and 782-83, 52. Defendants contend that the fact that
certain MVPDs, including AT&T, choose not to carry certain RSNs in some markets demonstrates that RSNs are
not indispensable. See Defendants' Answer at 44-45; Defendants' Post-Discovery Answer to Supplement at 44;
Defendants' Post-Discovery Reply Brief at 21. We do not find that this undermines the rebuttable presumption
because the record here contains no evidence of the circumstances that led to the MVPDs' decision to refrain from
carrying an RSN. See AT&T Post-Discovery Reply Brief at 31. For example, the MVPDs' decisions to refrain from
carrying the RSNs may have been driven by the high cost of an RSN or an RSN's demand for unreasonable terms;
in such a situation, the fact of non-carriage may suggest that the RSN views itself as providing indispensable, "must
have" programming. [REDACTED
]
In addition, while Defendants state that all content is non-replicable due to copyright restrictions (see Defendants'
Post-Discovery Reply Brief
at 17; see also Defendants' Answer at 55; Defendants' Post-Discovery Answer to
Supplement
at 43), the Commission has previously recognized that RSNs are unique because they "typically
purchase exclusive rights to show sporting events and sports fans believe that there is no good substitute for
watching their local and/or favorite team play an important game." News/Hughes Order, 19 FCC Rcd at 535, 133;
see York/Lauricella/Thun Decl. at 12 ("Because the underlying rights to carry the games of these sports teams are
exclusive, MSG and MSG Plus carry programming that cannot be duplicated and for which there is no substitute.");
AT&T Complaint at 75 ("[N]o amount of investment by AT&T would allow AT&T to create an RSN in the HD
format carrying New York City's major professional sports teams, given Cablevision's refusal to allow it to do so
and especially given Cablevision's ownership of the New York Knicks and New York Rangers franchises."); AT&T
Post-Discovery Reply Brief
at 22 ("Defendants not only have the exclusive rights to games of the Knicks, Rangers,
Islanders, and Devils, but also own the underlying Knicks and Rangers franchises. No competing provider,
regardless of its size and the investment it is willing to make, can replicate that content. Due to league restrictions
and exclusive contracts, AT&T cannot establish a new basketball or hockey team, nor can it independently record
existing teams' games to broadcast on its own RSN."); see also AT&T Complaint at ii and 63, 77 n.54;
York/Lauricella/Thun Decl. at 10, 48; AT&T Reply at 27; AT&T Post-Discovery Opening Brief at 4, 13-14.
Moreover, Defendants have previously recognized in statements to investors the significance of non-replicable
content. See AT&T Post-Discovery Answer to Supplement at 21 (quoting Cablevision's COO as stating that
Cablevision "currently carr[ies] more regional HD than any of our competitors" and that "we have more HD and On
Demand HD that our competitors can't replicate") (citing Cablevision Q3 2007 Cablevision Systems Corp. Earnings
Conference Call
, Thomas StreetEvents, Final Transcript at 11 (Nov. 8, 2007)); see also AT&T Complaint at 65.
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contains MSG LP's statements from a previous litigation conceding that close substitutes do not exist for
sports content.236 Moreover, the record contains additional evidence supporting the Commission's
conclusion that RSNs are highly valued by consumers and important for competition.237 This evidence
includes [REDACTED
],238 and results from
a consumer survey demonstrating that a significant number of consumers in New York watch RSNs.239
49.
The D.C. Circuit also upheld the rebuttable presumption of "significant hindrance" for
HD RSNs,240 and the record here provides further support for the Commission's conclusion regarding the
growing significance of HD RSNs to consumers.241 This includes evidence showing that sales of HDTV


236 See AT&T Post-Discovery Opening Brief at 14 (quoting MSG LP as stating in a complaint filed with a federal
district court that "`[c]lose substitutes do not exist'" for sports programming and that watching a particular sporting
event "`is not reasonably interchangeable with watching . . . other sports or other leisure activities'") (quoting
Complaint, Madison Square Garden, L.P. v. National Hockey League, No. 07-CIV-8455 (S.D.N.Y.) (Sept. 28,
2007)). These statements pertain specifically to hockey, which accounts for four of the major professional sports
teams shown on MSG HD and MSG+ HD.
237 See 2010 Order, 25 FCC Rcd at 750-51, 8-9 and 782-83, 52.
238 See AT&T Post-Discovery Reply Brief at 29; Defendants' Post-Discovery Answer to Supplement, Declaration of
Adam Levine (Jan. 5, 2011), Attachment ([REDACTED
]) ("Levine Jan. 2011 Decl.").
239 This survey was originally submitted by Verizon in connection with its complaint against Defendants regarding
the withholding of MSG HD and MSG+ HD from Verizon in the New York DMA and the Buffalo DMA. See
AT&T Post-Discovery Opening Brief
at 19-20 and Exhibit 6 (Declaration of Chris Stella (Aug. 13, 2009) ("Stella
Decl.") and Global Marketing Research Services Survey of Paid Television Subscribers in NY and Buffalo
Designated Market Areas (Aug. 7, 2009) ("Verizon/GMRS Survey")). AT&T states that, given the proximity of
Connecticut to New York City and the fact that part of the area AT&T serves in Connecticut is in the New York
DMA (i.e., Fairfield County, CT), the Verizon/GMRS Survey is "highly probative of the competitive significance of
MSG HD and MSG+ HD in Connecticut." Id. at 20. The Verizon/GMRS Survey entailed two telephone surveys of
subscribers to paid video programming services in the New York and Buffalo DMAs conducted between July 28 and
August 4, 2009. See Stella Decl. at 3; Verizon/GMRS Survey at 4. In the New York DMA, a total of 851
interviews were conducted, and the survey data had a margin of error of +/- 3.4 percent at a confidence interval of
95 percent. See Stella Decl. at 5; Verizon/GMRS Survey at 4. When asked how often they watch a regional sports
channel, 39 percent of respondents in the New York DMA stated at least several times per week. See
Verizon/GMRS Survey
at 2 and Question 8. In addition, when asked how important it is to watch a game of a team
they closely follow, 58 percent of respondents in the New York DMA stated that it was "very important" or
"somewhat important." See id. at Question 6. While Defendants contend that there are a number of flaws with the
Verizon/GMRS Survey, Defendants have identified no specific issues pertaining to these two questions. See
Defendants' Post-Discovery Answer to Supplement
at 21-22, 64 and Exhibit D; Declaration of Professor Eric T.
Bradlow (Dec. 23, 2010), at 10-15, 21 ("Bradlow Decl."); Declaration of Professor Carol A. Scott (Jan. 5, 2011),
at 6(a), 8-11 ("Scott Decl."); Declaration of Professor Dilip Soman (Dec. 23, 2010), at 10-11, 20 ("Soman
Decl."); Defendants' Post-Discovery Reply Brief at 29; see also Verizon, Response to Defendants' Motion to Strike
in Part Verizon's Reply, File No. CSR-8185-P (filed Sept. 14, 2009), at 12-13 (noting that, despite a typo in the
survey results, all of the respondents subscribed to cable or satellite television service and all of the respondents
were responsible for making decisions about which cable provider is used by the household).
240 See Cablevision II, 2011 WL 2277217, at *19.
241 See 2010 Order, 25 FCC Rcd at 784-85, 54-55. Among other evidence, the Commission in the 2010 Order
noted the following: DTV sales are growing at 50 percent per year; the Consumer Electronics Association ("CEA")
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sets are growing, with a significant number of consumers in the New York DMA owning HDTV sets;242
those consumers that have purchased HDTV sets highly value HD programming;243 HD homes are more
likely to watch sports programming than non-HD homes;244 MVPDs have stressed the importance of
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has estimated that, by 2011, the number of HDTVs sold in the United States will reach 170 million, which is roughly
one set for every two Americans; more than 45 percent of American households own an HD television set, up from
less than 20 percent in 2006; a 2005 CEA survey concluding that "45 percent of HDTV sports fans would consider
switching to another source of HD sports if superior to their current package." See id. at 784-85, 54 n.216.
242 See Verizon/GMRS Survey at Question 3 (67 percent of subscribers in the New York DMA have an HDTV set);
see also AT&T Complaint at 59 and Exhibit 7 (2007 CEA HD Sports Fan Study concluding that 48 percent of non-
HDTV owners expect to purchase an HD display within two years) (citing Consumer Electronics Association,
Second Annual Inside the Mind of the HD Sports Fan Study (Jan. 2007), at 3 ("2007 CEA HD Sports Fan Study"));
Thun/Lauricella/Rawls Reply Decl. at 8 (2009 Forrester Research report concluding that 71 percent of households
will have at least one HDTV and more than half will have two or more by 2014) (citing James L. McQuivey, Ph.D.,
et al., Forrester Research, US HDTV Forecast, 2009 to 2014: Multi-HDTV Owners Become the Default Buyers
(Sept. 3, 2009)); AT&T Post-Discovery Opening Brief at 15-16 and Exhibit 4 at Slides 6, 136 (LRG/HDTV 2009
Report
concluding that (i) as of October 2009, nearly half of all households had an HDTV set and an additional 37
percent of households were "very interested" or "somewhat interested" in purchasing HDTV in the next year; and
(ii) estimating an increase in the number of HD households from 67 million in 2010 to 105 million in 2014) (citing
Leichtman Research Group, HDTV 2009: Consumer Awareness, Interest and Ownership (4Q2009), at 6
("LRG/HDTV 2009 Report")); see also Defendants' Post-Discovery Answer to Supplement at 42 (data from
Leichtman Research Group indicating that 46 percent of U.S. households have an HDTV set, an increase from 45
percent cited by the Commission in the 2010 Order) (citing Press Release, Leichtman Research Group, Nearly Half
of U.S. Households Have an HDTV Set (Nov. 30, 2009), available at http://www.leichtmanresearch.com/
press/113009release.pdf); id. at 42 n.162 (2010 Nielsen data indicating that over 60 percent of homes have an
HDTV set) (citing George Winslow, Nielsen: More than 80% of Viewing Still in Standard-Def, Broadcasting and
Cable, Nov. 8, 2010, available at http://www.broadcastingcable.com/ article/ 459632-Nielsen_More_Than_
80_of_Viewing_Still _in_Standard_ Def.php ("Winslow/2010 Nielsen Article")).
243 See AT&T Post-Discovery Opening Brief, Exhibit 4 at Slide 59 (LRG/HDTV 2009 Report concluding that 45
percent of respondents watch more programs in HD than programs not in HD).
244 See AT&T Complaint at 58 and AT&T Post-Discovery Opening Brief at 16 (2008 Nielsen Report stating that
ratings for sporting events are 20 percent higher in HD homes compared to U.S. households as a whole) (citing
Nielsen Special Report, 2008 a Banner Year in Sports? (2008), at 3-4, available at http://pl.nielsen.com/
trends/documents/2008ABannerYear inSports December2008.pdf ("Nielsen 2008 Report")); see also AT&T
Complaint
at 59, Exhibit 7, York/Lauricella/Thun Decl. at 16 and AT&T Post-Discovery Opening Brief at 16
(2007 CEA HD Sports Fan Study concluding that (i) 57 percent of HDTV owners can be classified as sports fans;
and (ii) nearly one in three HDTV owner sports fans indicate they always or often use HD programming as the
determining factor for what they watch); AT&T Post-Discovery Opening Brief at 16 n.28 (2005 CEA Study stating
that (i) "`[n]early 60 percent of [HDTV] owners consider themselves sports fans'"; (ii) "`[n]early 50 percent of
HDTV owners cited HD sports programming as the primary force behind their HDTV purchase'"; and (iii) "`39
percent of HD sports fans are extremely disappointed when a sports event they want to watch is NOT in high-
definition'") (quoting Press Release, Consumer Electronics Association, Sports Fans Drive HD Television Sales
According to a New Survey
(Jan. 17, 2006), at 1, available at http://www.ce.org/Press/CurrentNews/press_
release_detail.asp?id=10928 ("2005 CEA Study")); id. at 17 and Exhibit 4 at Slides 60, 85 (LRG/HDTV 2009 Report
finding that the highest percentage of HD viewers (30 percent) listed sports as the type of channel they would add
first); id. at 17 n.31 and Exhibit 4 at Slide 85 (LRG/HDTV 2009 Report finding that 40 percent of households with
incomes above $75,000 cite sports programming as their "first choice" of HD programming); id. at 26 and Exhibit
13 ([REDACTED

]); Defendants' Post-Discovery Answer to Supplement at 42 n.162 (citing
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offering HD;245 and both AT&T and Cablevision advertise their HD offerings.246 The record also
contains additional evidence supporting the Commission's conclusion that, due to technical247 and
content248 differences between SD and HD, consumers do not consider the SD version of a particular
channel to be an adequate substitute for the HD version.249 Moreover, we note that both Congress and
the United States Court of Appeals for the Ninth Circuit have recently recognized the critical nature of
HD programming in today's video marketplace.250
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Winslow/2010 Nielsen Article, which states that 2010 Nielsen data shows that sports networks lead all other types of
programming in HD viewing).
245 See AT&T Post-Discovery Opening Brief at 27 and Exhibit 15 ([REDACTED
]); AT&T Post-Discovery Reply Brief at 31 and York Decl. at 4 (explaining that AT&T carries
all in-market professional sporting events today in both SD and HD, with the exception of MSG HD and MSG+ HD
(the subjects of this proceeding) and two Cox RSNs (which AT&T is currently negotiating to carry)).
246 See AT&T Complaint at 65 and Exhibits 8-15 (providing Cablevision advertisements emphasizing its ability to
offer all nine New York sports teams in HD); AT&T Post-Discovery Opening Brief at 20-21; AT&T Post-Discovery
Reply Brief
at 15; Defendants' Answer at 17-18 ( 11) and Exhibit 5 (noting AT&T's advertising and statements
emphasizing its HD offerings); Defendants' Post-Discovery Answer to Supplement at 21, 50-51, Exhibit C
(providing AT&T advertisements and statements emphasizing its HD offerings) and Exhibit E (providing
Cablevision advertisements emphasizing its HD offerings).
247 See Defendants' Answer at 66 (noting that HD has materially different resolution, depth, audio, and display than
SD), 78.
248 See id.; Levine Sept. 2009 Decl. at 13 (noting that content may differ between the SD and HD versions of a
network).
249 See 2010 Order, 25 FCC Rcd at 784-85, 54-55.
250 In Section 207 of the Satellite Television Extension and Localism Act of 2010 ("STELA"), Congress accelerated
the timetable pursuant to which satellite providers that carry local stations in HD must carry "qualified
noncommercial educational television stations" in HD. See Pub. L. No. 111-175, 207, 124 Stat. 1218 (amending
47 U.S.C. 338 (2006)). In affirming a federal district court's decision denying a motion for a preliminary
injunction, the United States Court of Appeals for the Ninth Circuit explained that Congress in passing Section 207
"recognized whether a program is offered in HD affects whether viewers watch it." See DISH Network Corp. v.
FCC
, 636 F.3d 1139, 1149 (9th Cir. 2011), amended by 2011 WL 3449485 (Aug. 9, 2011). The court held "it was
reasonable for Congress to conclude that allowing satellite carriers to delay offering PBS in HD would lead to
anticompetitive results." See id. The court also cited a New York Times article "stating that shortly before
STELA's passage, half of the country was watching television in HD format and that `HD may limit the number of
channels that viewers turn to, because once they can watch programs in HD, they have little desire to watch anything
of a lower quality.'" See id. (quoting Brian Stelter, Crystal-Clear, Maybe Mesmerizing, N.Y. Times, May 24, 2010,
B4).
Defendants claim that data in the record undermine the rebuttable presumption for HD RSNs. Based on data
indicating that 46 percent of U.S. households have an HDTV set (see supra n.242) and that 66 percent of those
households owning an HDTV set subscribe to HD service, Defendants claim that only 33 percent of households (46
percent * 66 percent) are capable of viewing HD RSN programming. See Defendants' Post-Discovery Answer to
Supplement
42 and Defendants' Post-Discovery Reply Brief at 19 n.56 (2009 data from Magid Media Futures)
(citing George Winslow, Mixed Picture: HD Penetration Up, But Viewer Confusion Persists, Multichannel News,
Dec. 12, 2009, available at http://www.multichannel.com/article/439945-Mixed_Picture_HD_Penetration_
Up_But_Viewer_ Confusion_ Persists.php?rssid=20059); see also Defendants' Answer at 46 (based on data
indicating that 45 percent of U.S. households have an HDTV set (see supra n.241) and that 57 percent of HDTV
owners can be classified as sports fans (see supra n.244), claiming that only 26 percent of households (45 percent *
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(iii)

Defendants Have Failed to Rebut the Presumption

50.
The 2010 Order provides that a defendant to a complaint alleging an "unfair act"
involving a terrestrially delivered, cable-affiliated RSN will have the opportunity to rebut the presumption
of significant hindrance.251 As an initial matter, Defendants contend that the facts of the withholding at
issue in the Philadelphia and San Diego cases used to support the Commission's adoption of a rebuttable
presumption for RSNs are distinct from the facts of this case.252 Accordingly, Defendants argue that it
would be inappropriate to apply the rebuttable presumption in this case.253 We disagree that these
distinctions are meaningful. First, Defendants contend that the RSNs at issue in the previous cases had
exclusive rights to the games of all of the local major professional sports teams in the market, whereas the
present case involves only two of the four RSNs in the New York DMA254 and two of six RSNs in the
Hartford/New Haven DMA.255 In fact, the percentage of major professional sports teams withheld in the
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57 percent) are sports fans that own HDTVs). As an initial matter, evidence cited by Defendants indicates that 56
percent not 33 percent of U.S. households are able to view HD programming. See Defendants' Post-Discovery
Answer to Supplement
42 (citing Winslow/2010 Nielsen Article, which states that 2010 Nielsen data shows that 56
percent of households are able to view HD programming). In any event, even if the 26 or 33 percent figures
calculated by Defendants are accurate, we find these percentages to be significant and that they support, rather than
undermine, the rebuttable presumption for HD RSNs. See AT&T Reply at 23. Indeed, as discussed above, the
Commission found that MVPDs were "significantly hindered" as a result of exclusive deals between cable operators
and MDU owners when the record reflected that 30 percent of Americans lived in MDUs and the percentage of
Americans living in an MDU subject to an exclusive deal is lower. See supra 44.
Defendants also claim that the rebuttable presumption for HD RSNs is undermined by 2010 Nielsen data indicating
that 13 percent of the viewing of cable programming networks is done in HD. See Defendants' Post-Discovery
Answer to Supplement
42 (citing Winslow/2010 Nielsen Article). We disagree. Far from indicating that HD
programming is not critical to many consumers, the article notes that this percentage reflects that many homes with
HDTV sets and HD service also have non-HDTV sets. See Winslow/2010 Nielsen Article. The article further notes
that Nielsen predicts an increase in HD viewing once HDTV sets spread into bedrooms where children and teens do
much of their viewing. See id.
251 See 2010 Order, 25 FCC Rcd at 782-83, 52.
252 See supra n.8; Defendants' Answer at 43 n.153; Defendants' Post-Discovery Answer to Supplement at 6-7, 10,
53-54, 57, 136-37; Owen Study at 2-9; Defendants' Post-Discovery Reply Brief at 54-55 n.202.
253 See Defendants' Post-Discovery Answer to Supplement at 10, 53-54, 57, 136-37; Defendants' Post-Discovery
Reply Brief
at 54-55 n.202.
254 See Defendants' Answer at 43 n.153; Defendants' Post-Discovery Answer to Supplement at 3 n.6, 53 n.211, 54;
Defendants' Post-Discovery Reply Brief at 54-55 n.202. In addition to MSG and MSG+, there are two additional
RSNs in the New York DMA: YES Network (showing the games of the New York Yankees of MLB and the New
Jersey Nets of the NBA) and SportsNet New York (showing the games of the New York Mets of MLB). See
Defendants' Post-Discovery Answer to Supplement
at 3 n.6, 54. AT&T has access to the SD and HD versions of
YES Network and SportsNet New York. See id. at 3 n.7, 54.
255 See Defendants' Answer at 43 n.153; Defendants' Post-Discovery Answer to Supplement at 3 n.6, 54;
Defendants' Post-Discovery Reply Brief at 54-55 n.202. In addition to MSG and MSG+, there are four additional
RSNs in the Hartford/New Haven DMA: YES Network; SportsNet New York; Comcast SportsNet New England
(showing the games of the Boston Celtics of the NBA) and NESN (showing the games of the Boston Red Sox of
MLB and the Boston Bruins of the NHL). See Defendants' Post-Discovery Answer to Supplement at 3 n.6, 54;
Defendants' Post-Discovery Reply Brief at 4, 28. AT&T has access to the SD and HD versions of YES Network,
SportsNet New York, Comcast SportsNet New England, and NESN. See Defendants' Post-Discovery Answer to
Supplement
at 3 n.7, 54. The record indicates that AT&T does not carry CSN New England and NESN in the New
York DMA. See Defendants' Post-Discovery Answer to Supplement at 49 (citing AT&T press release indicating
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New York DMA and Hartford/New Haven DMA is comparable to the percentage withheld in the San
Diego DMA.256 Second, Defendants note that the RSNs in the Philadelphia and San Diego cases show
professional baseball games, which they claim involve one of the nation's two most popular sports,
whereas MSG HD and MSG+ HD show professional basketball and hockey games only.257 The
Commission, however, included professional basketball and hockey, along with professional football,
baseball, and other sports, in the definition of an RSN and the accompanying rebuttable presumption.258
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that AT&T carries NESN in the Hartford/New Haven DMA), at 53 n.211 (stating that there are two RSNs other than
MSG and MSG+ in the New York DMA (YES Network and SportsNet New York)); see also Defendants' Answer,
Exhibit 6 (providing channel listing for AT&T U-verse TV in Bridgeport, CT (Fairfield County (New York DMA))
which lists MSG, MSG+, SportsNet New York, and YES Network, but does not list Comcast SportsNet New
England or NESN).
256 By "local major professional sports," we refer to football (NFL), baseball (MLB), basketball (NBA), and hockey
(NHL) teams whose home stadiums are located in the applicable DMAs. In the New York DMA, there are nine
local major professional sports teams, four of which (44 percent) are withheld from AT&T: football (New York
Giants and New York Jets); baseball (New York Yankees and New York Mets); basketball (New York Knicks
(withheld) and New Jersey Nets); and hockey (New York Rangers (withheld), New York Islanders (withheld), and
New Jersey Devils (withheld)). In the San Diego DMA, there are two local major professional sports teams, one of
which (50 percent) is withheld from competitors: football (San Diego Chargers) and baseball (San Diego Padres
(withheld)).
A somewhat different analysis is required for the Hartford/New Haven DMA, which has no "local major
professional sports" teams as defined above because the home stadiums of the local major professional teams are
located in the adjacent New York DMA or Boston DMA. As an initial matter, the record is unclear as to whether
there are communities within the Hartford/New Haven DMA where league rules would allow MVPDs to offer the
games on the networks featuring New York-area teams as well as the games on the networks featuring Boston-area
teams. To the extent that there are communities within the Hartford/New Haven DMA where league rules allow
MVPDs to offer games on only the networks featuring New York-area teams, then the percentage of teams withheld
in those communities is the same as in the New York DMA (44 percent). Assuming for the sake of argument that
there are communities within the Hartford/New Haven DMA where MVPDs can offer games on the networks
featuring both New York- and Boston-area teams, this results in a total of 13 major professional sports teams, four
of which (31 percent) are withheld from AT&T: football (New York Giants, New York Jets, New England
Patriots); baseball (New York Yankees, New York Mets, Boston Red Sox); basketball (New York Knicks
(withheld), New Jersey Nets, Boston Celtics); and hockey (New York Rangers (withheld), New York Islanders
(withheld), New Jersey Devils (withheld), Boston Bruins). This is similar to the percentage of major professional
sports teams withheld in the San Diego DMA (33 percent) if basketball teams (Los Angeles Lakers and Los Angeles
Clippers) and hockey teams (Los Angeles Kings and Anaheim Ducks) from the adjacent Los Angeles DMA are
included in the analysis.
We also note that in the Philadelphia DMA, there are four local major professional sports teams, three of which were
withheld from DBS operators: football (Philadelphia Eagles); baseball (Philadelphia Phillies (withheld)); basketball
(Philadelphia 76ers (withheld)); and hockey (Philadelphia Flyers (withheld)). While the percentage of local major
professional sports teams withheld in Philadelphia (75 percent) is greater than in either the New York DMA or the
Hartford/New Haven DMA, this does not undermine the fact that the percentage of teams withheld in the New York
DMA and the Hartford/New Haven DMA is similar to the San Diego DMA, where the Commission found that
withholding of an RSN resulted in "significant hindrance."
257 See Defendants' Post-Discovery Answer to Supplement at 136. Defendants do not provide support for the
assertion that baseball is "one of the nation's two most popular sports." See id. Even if true, Defendants do not
provide evidence that this is also true in the New York DMA and the Hartford/New Haven DMA.
258 See supra n.8 (stating definition of RSN). Moreover, MSG LP has conceded in a previous litigation that close
substitutes do not exist for professional hockey. See supra n.236.
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Had the Commission deemed basketball or hockey as insufficiently popular or otherwise not relevant, it
would not have included these sports in the definition of an RSN. Third, Defendants note that the
Philadelphia and San Diego cases involved complete withholding (both SD and HD), whereas the present
case involves withholding of only the HD version of the RSNs.259 As discussed above, however, the
Commission has already determined that withholding the HD version is rebuttably presumed to cause
"significant hindrance" even if an SD version of the network is made available to competitors.260 Fourth,
Defendants note that the Philadelphia and San Diego cases assessed the impact of withholding on DBS
operators only, whereas the present case involves a wireline MVPD that bundles its video service with
voice, data, and wireless services, which Defendants claim decreases the competitive significance of any
individual network.261 As discussed below, however, Defendants offer no empirical support for the claim
that bundling reduces the importance of RSNs to consumers when making a choice in a video provider.262
51.
In any event, the 2010 Order provides a defendant with the opportunity to bring forth
evidence tending to show that distinctions such as these or other facts rebut the presumption that
AT&T has been significantly hindered. 263 Defendants have the opportunity to introduce evidence tending
to show that, as they contend, these distinctions mean that AT&T's inability to access MSG HD and
MSG+ HD is "far less severe" than the withholding at issue in the Philadelphia and San Diego cases.264
As Defendants note, a rebuttable presumption does not shift the burden of proof to Defendants; rather, it
requires Defendants to come forward with evidence that rebuts or meets the presumption.265 Here,
Defendants have put forth two types of evidence to rebut the presumption: survey evidence and non-
survey evidence. With respect to the survey evidence, we find below that the results of the surveys
contradict the stated purpose of Defendants' product differentiation strategy and, in any event, the surveys
contain material flaws and deficiencies that render them insufficiently reliable to overcome the
Commission's presumption. With respect to the non-survey evidence, we find below that this evidence is
also unavailing because it fails to isolate the impact of the lack of MSG HD and MSG+ HD on the


259 See Defendants' Answer at 42, 44-45; Defendants' April 9th Letter at 8; Defendants' Post-Discovery Answer to
Supplement
at 7, 10, 53-54, 57, 136-37; Defendants' Post-Discovery Reply Brief at 54 n.202.
260 See supra 4.
261 See Defendants' Post-Discovery Answer to Supplement at 71-72; Owen Study at 2-9; Defendants' Post-Discovery
Reply Brief
at 54 n.202.
262 See infra 65.
263 The Commission adopted a rebuttable presumption for RSNs based on Commission precedent and the weight of
empirical data demonstrating that withholding of an RSN results in significant hindrance. See 2010 Order, 25 FCC
Rcd at 782-83, 52. The Commission specifically declined to adopt a per se prohibition on withholding of RSNs
because of data involving withholding of a single RSN in Charlotte which did not show a statistically significant
effect on predicted market share. See id. at 770-71, 35 (citing Adelphia Order, 21 FCC Rcd at 8271, 149 and
8271-72, 151 (concluding that withholding of a terrestrially delivered RSN in Charlotte did not show a statistically
significant effect on predicted market share, and noting that the RSN showed the games of the Charlotte Bobcats, a
relatively new team that did not yet have a strong enough following to induce large numbers of subscribers to switch
MVPDs)). Thus, despite the overwhelming evidence demonstrating the critical nature of RSNs to competition, the
Commission recognized the possibility that the facts in certain cases may reveal that withholding of an RSN does
not result in significant hindrance.
264 See Defendants' Post-Discovery Answer to Supplement at 53.
265 See id. at 14-15, 135; Defendants' Post-Discovery Reply Brief at 54-55; see also Cablevision II, 2011 WL
2277217, at *17 ("Reviewing the Commission's order, we think it clear that its rebuttable presumptions shift only
the burden of production.").
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willingness of consumers to choose AT&T. Thus, we conclude that Defendants have failed to rebut the
presumption that their withholding of MSG HD and MSG+ HD from AT&T has the "effect" of
"significantly hindering" AT&T.
(a)

Survey Evidence

52.
In the 2010 Order, the Commission declined to adopt specific evidentiary requirements
for assessing "significant hindrance," stating instead that the evidence required will vary based on the
facts and circumstances of each case.266 The Commission provided two illustrative examples of empirical
evidence that litigants might consider providing in assessing "significant hindrance."267 First, a litigant
might provide an appropriately crafted regression analysis that estimates what the complainant's market
share in the MVPD market would be if it had access to the programming and how that compares to its
actual market share.268 Second, a litigant might provide statistically reliable survey data indicating the
likelihood that customers would choose not to subscribe to or switch to an MVPD that did not carry the
withheld programming.269 The Commission explained that the reliability of the regression analysis,
survey data, or other empirical data will be assessed on a case-by-case basis.270
53.
In their effort to come forward with empirical evidence that would rebut the presumption,
Defendants have elected not to rely on a regression analysis. Rather, Defendants rely on four consumer
surveys purporting to demonstrate that MSG HD and MSG+ HD are not a significant factor to consumers
in the state of Connecticut when choosing an MVPD. For the reasons discussed below, we find that the
results of these surveys contradict the stated purpose of Defendants' product differentiation strategy and,
in any event, they suffer from significant flaws and deficiencies that render them unreliable for their
intended purposes in this proceeding.271
(i)

The Results of Defendants' Surveys
Contradict Their Product Differentiation
Strategy

54.
As discussed above, Defendants' stated reason for withholding MSG HD and MSG+ HD
from AT&T is to provide Cablevision with a way to differentiate its service from AT&T and thereby gain
a competitive advantage.272 Indeed, Defendants and their experts state that they expect at least some
consumers in the state of Connecticut to refrain from choosing AT&T because it lacks MSG HD and
MSG+ HD.273 Defendants' surveys, however, purport to demonstrate that the availability of MSG HD


266 See 2010 Order, 25 FCC Rcd at 785-86, 56.
267 See id.
268 See id.
269 See id.
270 See id.
271 Because all four of these surveys contain significant flaws and deficiencies, and we do not know what other
evidence Defendants chose not to present, we assign no significance to the fact that the four studies lead to
convergent results. See Soman Decl. at 9, 19; Defendants' Post-Discovery Reply Brief, Reply Declaration of
Professor Dilip Soman (Jan. 24, 2011), at 3.
272 See supra n.102 and 26-27.
273 See Defendants' Answer at 5 (stating that withholding MSG HD and MSG+ HD from AT&T "may result in
making AT&T's video offering less attractive to a subset of its potential customer base"); Bulow/Owen Study at 3
("There is no doubt that AT&T would be better off, at least in the short run, if MSG HD and MSG+ HD were
(continued....)
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and MSG+ HD is not a factor for consumers in the state of Connecticut when choosing an MVPD. If
consumers attach no significance to the availability of MSG HD and MSG+ HD, as Defendants' surveys
purport to show, then it is hard to explain why Defendants stress the importance of that HD programming
in their public statements and their advertising.274 Moreover, in that instance there appears to be no
reason for Defendants to withhold these networks from AT&T. Instead, Defendants would benefit by
licensing this content to AT&T and earning increased licensing fees and advertising revenues.275
Defendants do not attempt to explain the contradiction between the survey results and their real-world
actions, which further supports our conclusion below that these surveys contain significant flaws and
deficiencies that render them unreliable.
(ii)

Defendants' Survey Evidence Is Not Reliable

(a)

Defendants'/Radius Survey

55.
The Defendants'/Radius Survey entailed a telephone survey conducted in
February/March 2010 of 503 adults who subscribe to a pay television provider or rely on over-the-air
television reception; are decision-makers in their household for selecting a video provider; and live within
the New York DMA where Cablevision and Verizon FiOS TV service areas overlap.276 The survey used
(Continued from previous page)


available to it at a regulated price."); id. at 7 ("It is certainly true that Cablevision hopes to gain a marketing
advantage amongst a group of local sports fans who will regard the availability of MSG HD and MSG+ HD as a
selling point in Cablevision's favor relative to AT&T."); Defendants' Post-Discovery Answer to Supplement at 98-
99 (stating that withholding MSG HD and MSG+ HD from AT&T "may make AT&T's video program offerings
appear less attractive to some small segment of customers"); see also supra n.145 ([REDACTED
]).
274 See AT&T Post-Discovery Opening Brief at 22 ("Defendants would not emphasize this programming so heavily
in their advertisements and statements to investment analysts if the programming were not extremely valuable to
consumers in choosing between competing video providers.").
275 Indeed, as noted above, Cablevision has stated in an SEC filing that MSG LP earns revenues from licensing fees
and advertising sales. See supra n.103; AT&T Complaint at 6 n.10 (quoting Cablevision Systems Corp., SEC
Form 10-Q at 44 (July 30, 2009)) and at 62 ("Defendants' own conduct sacrificing the short-term benefits of
licensing MSG and MSG Plus in the HD format to AT&T is accordingly rational only if there is an
anticompetitive effect on AT&T.") (emphasis in original); AT&T Reply at 17 n.23 ("[T]here is no doubt that
Cablevision/Madison Square Garden is sacrificing licensing and/or advertising or other revenues from refusing to
license the HD format of MSG and MSG Plus to AT&T."); see also AT&T Complaint at 34; AT&T Reply at 16,
22, 26; AT&T Post-Discovery Opening Brief at 24 n.44, 30; AT&T Post-Discovery Reply Brief at 21-22.
276 See Defendants'/Radius Survey at 1. This survey were originally submitted by Defendants in connection with a
complaint filed by Verizon regarding Defendants' withholding of MSG HD and MSG+ HD from Verizon in the
New York DMA and the Buffalo DMA. Defendants filed this survey in the AT&T proceeding initially in April
2010 and again in January 2011 as an exhibit to their post-discovery answer. See Defendants' April 2010
Supplement
; Defendants' Post-Discovery Answer to Supplement at 58-60, Exhibit I (attaching Defendants'/Radius
Survey
), and Declaration of Leslie Shifrin (Aug. 6, 2010), at 13-15 ("Shifrin Aug. 2010 Decl."). Although the
study probed adults living in the New York DMA where Cablevision and Verizon FiOS TV service areas overlap,
Defendants state that it is reasonable to expect that the factors cited by household decision makers in Connecticut
would not be dramatically different from the factors cited by household decision makers in the neighboring New
York and New Jersey markets within the New York DMA where the study was conducted. See Defendants' April
2010 Supplement
at 3-4; Defendants' Post-Discovery Answer to Supplement at 58 n.231. The survey did not include
residents from the Hartford/New Haven DMA.
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open-ended, non-leading questions.277 Respondents could mention anything in response to the survey
questions.278 When asked for their reasons for selecting, switching to, or staying with their current video
service provider, [REDACTED
].279 Other factors were
mentioned far more frequently: price (70 percent), general satisfaction (67 percent), and customer
service/reliability (66 percent).280 The Defendants'/Radius Survey concludes that MSG HD and MSG+
HD are not "top of mind" or meaningful factors and, in fact, are [REDACTED
] for consumers when choosing a video provider.281
56.
We find this survey suffers from deficiencies that render it unreliable. Defendants' own
expert explains that an open-ended questioning technique has disadvantages, such as creating difficulties
in properly documenting the results.282 For example, to the extent that respondents stated they would not
switch video providers because they were "generally satisfied," one reason for their satisfaction with their
current provider may be that they receive MSG HD and MSG+ HD. While the study indicates that
exhaustive and non-directive probing was used to allow respondents to expand on their reasons for
selecting, switching to, or staying with their current video service provider,283 Defendants provide only a
broad outline and not the actual text of the questions and probing techniques used for the survey.284 This
omission renders it impossible to assess whether the probing questions asked were biased or misleading
and the nature and extent of the probing used to elicit responses. We also note, as Defendants' own
expert concedes, that the survey does not directly address the key issue of the impact of the lack of MSG
HD and MSG+ HD on the willingness of consumers to choose AT&T.285 While the Defendants'/Radius
Survey
concludes that MSG HD and MSG+ HD are not "top of mind" considerations, this does not


277 See Defendants'/Radius Survey at 2; Shifrin March 2010 Decl. at 6; Shifrin Aug. 2010 Decl. at 14;
Defendants' Post-Discovery Answer to Supplement at 60.
278 See Defendants'/Radius Survey at 2; Shifrin March 2010 Decl. at 6; Shifrin Aug. 2010 Decl. at 14;
Defendants' Post-Discovery Answer to Supplement at 60. Defendants provided declarations from experts in survey
and data analysis opining that the survey methodology was valid. See Bradlow Decl. at 18; Scott Decl. at 6(b),
13; Soman Decl. at 15-16.
279 [REDACTED
]. See Defendants'/Radius Survey at 4.
280 See id.
281 Defendants'/Radius Survey at 4; see also Defendants' April 2010 Supplement at 2; Defendants' Post-Discovery
Answer to Supplement
at 66. Defendants provided declarations from experts in survey and data analysis opining that
the results demonstrate that subscribers attach low importance to local sports in HD as a factor in their choice of
video service provider. See Bradlow Decl. at 18; Scott Decl. at 6(b), 13; Soman Decl. at 15-16.
282 See Scott Decl. at 13; see also AT&T Post-Discovery Reply Brief, Declaration of Philip Johnson (Jan. 31,
2011), at 5 ("Johnson Reply Decl.").
283 See Shifrin March 2010 Decl. at 6; Shifrin Aug. 2010 Decl. at 14; Defendants'/Radius Survey at 2;
Defendants' Post-Discovery Answer to Supplement at 60; Bradlow Decl. at 18; Soman Decl. at 16.
284 See Defendants'/Radius Survey at 2-3 ("Other reasons Open/Ended (using non-directive probing)").
285 See Scott Decl. at 6(b) ("[T]his methodology does not address the question of whether or not consumers would
switch subscription television providers in order to receive MSG HD or MSG+ HD . . . ."); see also AT&T Post-
Discovery Reply Brief
at 12 and Johnson Reply Decl. at 5.
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necessarily mean that these networks are not significant to many consumers.286 It is possible, for
example, that some respondents simply never thought of the possibility that they might lose MSG HD or
MSG+ HD programming. That MSG HD or MSG+ HD was not one of the first things that came to the
respondents' minds when attempting to recall their reasons for selecting, switching to, or staying with
their current video service provider does not mean that these networks are irrelevant in their decision-
making process.
(b)

Defendants'/OTX Surveys

57.
The Defendants'/OTX Surveys287 used a test versus control methodology.288 The
respondents were non-AT&T U-verse TV customers who are decision makers in their household for
selecting a video provider and who live in areas where Cablevision and AT&T U-verse TV service areas
overlap.289 The Control Group of 153 respondents saw an offer for AT&T U-verse TV that had no
reference to MSG HD or MSG+ HD, but did state, "You've never seen the game like this includes all 9
NY sports teams" (the "No-HD Offer").290 The Test Group of 150 respondents saw an offer for AT&T
U-verse TV that included a reference to MSG HD and MSG+ HD and stated, "Access to a robust offering
of HD channels including MSG HD and MSG Plus HD" (the "HD Offer").291 Based on these
descriptions, the respondents were asked how likely they would be to consider switching or not switching


286 See Johnson Reply Decl. at 5 ("[T]he Radius Survey only asked broad, open-ended questions about their
reasons for selecting or switching providers, but did not ask any specific `drill down' questions about the differences
in programming among the various providers. Without such information or knowledge, it is natural for respondents
to spontaneously name price and customer service as their primary reasons for selecting or switching providers.").
287 In April 2010, Defendants submitted a March 2010 OTX survey in this proceeding that it had previously
submitted in connection with a complaint filed by Verizon regarding Defendants' withholding of MSG HD and
MSG+ HD from Verizon in the New York DMA and the Buffalo DMA. See Defendants' April 2010 Supplement
(attaching Defendants'/OTX March 2010 Survey). The respondents to this survey were non-Verizon FiOS TV
customers who are decision makers in their household for selecting a video provider and who live in areas where
Cablevision and Verizon FiOS TV service areas overlap. See Defendants'/OTX March 2010 Survey at 2. Although
the survey probed adults living in the New York DMA where Cablevision and Verizon FiOS TV service areas
overlap and presented respondents with a Verizon channel line-up, Defendants state that there is no reason to expect
that the response to the OTX survey from New York DMA consumers in Connecticut would vary materially from
the results documented in the survey of New York DMA consumers in New York and New Jersey. See Defendants'
April 2010 Supplement
at 4. Defendants subsequently submitted a new OTX survey in January 2011 as an exhibit to
their post-discovery answer. See Defendants' Post-Discovery Answer to Supplement at 60-61, Exhibit I (attaching
"OTX Online Testing Exchange Assessing the Impact of AT&T Offering MSG HD/MSG+ HD on AT&T Customer
Acquisition" ("Defendants'/OTX July 2010 Survey")), Shifrin Aug. 2010 Decl. at 5-11. While the March 2010
OTX survey focused on Verizon's service area and channel line-up, the July 2010 OTX survey was conducted
among consumers in Connecticut markets served by both Cablevision and AT&T and presented respondents with an
AT&T channel line-up. See Defendants' Post-Discovery Answer to Supplement at 59 n.232; Defendants'/OTX July
2010 Survey
at 1. Neither survey included residents from the Hartford/New Haven DMA.
288 See Shifrin Aug. 2010 Decl. at 6; Defendants'/OTX July 2010 Survey at 1; Defendants' Post-Discovery Answer
to Supplement
at 61; see also Shifrin March 2010 Decl. at 3; Defendants'/OTX March 2010 Survey at 1.
289 See Defendants'/OTX July 2010 Survey at 2.
290 See id. at 1 and Appendix at 4; see also Shifrin Aug. 2010 Decl. at 6; Defendants' Post-Discovery Answer to
Supplement
at 61.
291 See Defendants'/OTX July 2010 Survey at 1 and Appendix at 1; see also Shifrin Aug. 2010 Decl. at 6;
Defendants' Post-Discovery Answer to Supplement at 61.
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to AT&T.292 Based on the responses, the survey concludes that the number of consumers more likely to
choose AT&T U-verse TV with MSG HD and MSG+ HD over AT&T U-verse TV without MSG HD and
MSG+ HD is not statistically significant.293
58.
We find that the Defendants'/OTX Surveys are flawed because there was no meaningful
difference between the offers viewed by the Control Group and the Test Group. The No-HD Offer (used
for the Control Group) did not make clear that MSG HD and MSG+ HD were not offered.294 For
example, the statement "You've never seen the game like this includes all 9 NY sports teams" appeared
directly before the statement "Access to a robust offering of HD channels," which likely misled some
respondents to believe that the No-HD Offer included MSG HD and MSG+ HD.295 We do not find that
the channel line-up provided with the offer was sufficient to mitigate this flaw.296 We find it unlikely that
respondents viewing the No-HD Offer would scour a list of hundreds of channels to determine which
channels were included, especially considering that the first page of the offer specifically emphasized the
amount of sports and HD channels available, thereby implying that MSG HD and MSG+ HD were
included. Moreover, as AT&T's expert notes, the survey designers could have avoided this problem by
using a "filter question" to determine whether respondents were aware of the absence of MSG HD and


292 See Defendants'/OTX July 2010 Survey at 3; see also Defendants' Post-Discovery Answer to Supplement at 61.
Defendants provided declarations from experts in survey and data analysis opining that the survey methodology was
valid. See Bradlow Decl. at 19; Scott Decl. at 6(c), 14-16; Soman Decl. at 17.
293 See Shifrin Aug. 2010 Decl. at 5; Defendants'/OTX July 2010 Survey at 3; Defendants' Post-Discovery Answer
to Supplement
at 60-61; see also Bradlow Decl. at 19; Scott Decl. at 6(c), 16; Soman Decl. at 17. The
Defendants'/OTX March 2010 Survey, which focused on Verizon's service area and channel line-up, used the same
methodology and produced similar results. The respondents to the Defendants'/OTX March 2010 Survey were non-
Verizon FiOS TV customers who are decision makers in their household for selecting a video provider and who live
in areas where Cablevision and Verizon FiOS TV service areas overlap. See Defendants'/OTX March 2010 Survey
at 2. The Control Group of 312 respondents saw an offer for Verizon FiOS TV that had no reference to MSG HD or
MSG+ HD, but did reference that Verizon FiOS TV offers "tons of sports, including all 9 NY sports teams." See id.
at 1 and Appendix at 3; see also Shifrin March 2010 Decl. at 9. The Test Group of 317 respondents saw an offer
for Verizon FiOS TV that included a reference to MSG HD and MSG+ HD and touted the availability of "all 9 NY
sports teams in HD." See Defendants'/OTX March 2010 Survey at 1 and Appendix at 1; see also Shifrin March
2010 Decl. at 9. Based on these descriptions, the respondents were asked how likely they would be to consider
switching or not switching to Verizon. See Defendants'/OTX March 2010 Survey at 2. Based on the responses, the
survey concludes that the number of consumers more likely to choose Verizon FiOS TV with MSG HD and MSG+
HD over Verizon FiOS TV without MSG HD and MSG+ HD is not statistically significant. See Shifrin March 2010
Decl. at 8; Defendants'/OTX March 2010 Survey at 3.
294 See Defendants'/OTX July 2010 Survey, Appendix at 4; Defendants'/OTX March 2010 Survey, Appendix at 3;
see also AT&T Post-Discovery Reply Brief at 2, 12-13 and Johnson Reply Decl. at 7 ("[B]ecause the survey
stimuli were so dense, it is likely that survey participants failed to notice the presence/absence of HD programming
of local sports programming in the stimuli.").
295 Defendants'/OTX July 2010 Survey, Appendix at 4. Similarly, in the Defendants'/OTX March 2010 Survey, the
reference to "tons of sports, including all 9 NY sports teams" appeared directly after a reference to "[m]ore than 335
all-digital channels, and over 70 in HD," which likely misled some respondents to believe that the No-HD Offer
included MSG HD and MSG+ HD. Defendants'/OTX March 2010 Survey, Appendix at 3; see also AT&T Post-
Discovery Reply Brief
at 13 and Johnson Reply Decl. at 7 ("With this juxtaposition, control survey participants
who did notice these statements might have inferred HD programming of NY sports teams.").
296 See Defendants'/OTX July 2010 Survey, Appendix at 5-6; see also Defendants'/OTX March 2010 Survey,
Appendix at 4.
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MSG+ HD from the No-HD Offer.297 The fact that the No-HD Offer mirrors AT&T's real-world
advertisements, which do not emphasize its lack of MSG HD and MSG+ HD, does not alter our
conclusion.298 We would not expect AT&T to emphasize in an advertisement those networks that it
cannot offer. The purpose of the study, however, was not to assess AT&T's advertisements but instead to
determine specifically whether respondents were more likely to choose AT&T U-verse TV with MSG HD
and MSG+ HD than without these networks.299 Thus, providing respondents viewing the No-HD Offer
with an adequate indication that MSG HD and MSG+ HD were not available was critical to the reliability
of the study.300 Given the misleading nature of the No HD Offer, however, it is entirely possible that
some respondents assumed or concluded that MSG HD and MSG+ HD were available, thereby
undermining the survey results.301 Accordingly, we find the failure of the No-HD Offer to adequately
indicate to respondents that MSG HD and MSG+ HD were not available or at least to avoid implying
that these channels were available renders the Defendants'/OTX Surveys unreliable.
59.
We nevertheless note for future guidance that the Defendants'/OTX Surveys present a
useful survey design for attempting to address the issue of whether withholding programming results in
"significant hindrance." The surveys appropriately sought to isolate the key variable at issue in this case
the impact of the lack of MSG HD and MSG+ HD on the willingness of consumers to choose AT&T.
Absent the failure to adequately indicate to respondents viewing the No-HD Offer that MSG HD and
MSG+ HD were not available, we would have proceeded to assess the results of the survey to determine
whether Defendants had rebutted the presumption of "significant hindrance."
(c)

Defendants' Win-Back Survey

60.
The Defendants' Win-Back Survey was an online survey conducted in November 2010 of
61 customers who accepted a Cablevision "win back" offer and switched from AT&T to Cablevision
between November 2009 and October 2010.302 The survey asked the following open-ended, non-leading
questions, to which respondents could answer with any reasons of their choosing:303
"(1) Why did you decide to leave AT&T U-verse TV service and subscribe to iO TV? Please be as
specific as possible and tell us all the reasons that may have influenced your decision to leave AT&T


297 See AT&T Post-Discovery Reply Brief at 13 and Johnson Reply Decl. at 7.
298 See Shifrin Aug. 2010 Decl. at 10-11; see also Shifrin March 2010 Decl. at 13-14; Bradlow Decl. at 19;
Scott Decl. at 16; Soman Decl. at 17.
299 To the extent AT&T's advertisements (as depicted in the No-HD Offer) lead real-world consumers to believe that
AT&T offers MSG HD and MSG+ HD, such advertisements may entice consumers to consider switching to AT&T,
but we find it unlikely that consumers choose a video provider based solely on an advertisement. Rather, we believe
it likely that most consumers compare the offerings of different video providers and ensure that the video service
provider they select has the channels and features they desire before switching to that provider. See Johnson Reply
Decl. at 8. Thus, in order to determine whether respondents would be more likely to choose AT&T U-verse TV if
it had MSG HD and MSG+ HD than if it did not, it was critical to provide respondents viewing the No-HD Offer
with an adequate indication that MSG HD and MSG+ HD were not available.
300 To be sure, overemphasizing the lack of a network may bias the study. The Defendants'/OTX Surveys, however,
took this to an extreme by obscuring the absence of MSG HD and MSG+ HD in the No-HD Offer and even
implying that the networks were offered.
301 See AT&T Post-Discovery Opening Brief at 2, 12-13 and Johnson Reply Decl. at 7.
302 See Defendants' Post-Discovery Answer to Supplement at 62 n.248 and Exhibit J at 1.
303 See id.
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U-verse TV service and choose iO TV service; and (2) What was the one main reason for your
decision to leave AT&T U-verse TV service and choose iO TV service?"304
[REDACTED
.305
].306 Defendants contend that this
demonstrates that absence of MSG HD and MSG+ HD does not significantly hinder AT&T.307
61.
We find this survey suffers from flaws and deficiencies that render it unreliable as
support for Defendants' positions. The study suffers from selection bias because the sample is made up
of customers who (i) initially selected AT&T, thereby indicating that lack of MSG HD and MSG+ HD
was not a significant factor to them, and (ii) find price to be an important consideration, as demonstrated
by their decision to accept a discounted offering to switch back to Cablevision.308 The sample is skewed
towards individuals who would not be expected to value MSG HD and MSG+ HD highly (given their
initial selection of AT&T) and who consider price a decisive factor (given their acceptance of the
discounted offer). Moreover, the survey was conducted online and there is no indication of any probing
performed to allow respondents to expand on their reasons for switching.309 Third, for the same reasons
discussed above regarding the Defendants'/Radius Survey, the Defendants' Win-Back Survey suffers from
the following deficiencies: (i) the open-ended questioning technique creates difficulties in properly
documenting the results; and (ii) the survey does not directly address the key issue of the impact of the
lack of MSG HD and MSG+ HD on the willingness of consumers to choose AT&T.310 Fourth, the survey
involved only 61 respondents, [REDACTED
].311
(b)

Non-Survey Evidence

62.
We also find that the non-survey evidence put forth by Defendants does not
individually or collectively rebut the presumption of "significant hindrance." First, Defendants provide
evidence purporting to demonstrate AT&T's general success in the state of Connecticut despite the lack
of MSG HD and MSG+ HD. 312 This evidence includes the following: (i) the allegedly robust level of


304 Id.
305 See id. at 62 and Exhibit J.
306 See id., Exhibit J.
307 See id. at 62. Defendants' experts offered no opinions regarding the Defendants' Win-Back Survey
308 See AT&T Post-Discovery Opening Brief at 2, 13-14 and Johnson Reply Decl. at 9.
309 See Defendants' Post-Discovery Answer to Supplement at 62 n.248 and Exhibit J at 1.
310 See supra 56.
311 Johnson Reply Decl. at 9; see AT&T Post-Discovery Opening Brief at 2, 13.
312 Defendants also provide evidence regarding AT&T's investment in its video-capable network throughout the
nation, its enterprise value, its status as the ninth-largest MVPD in terms of subscribers nationwide, and AT&T's
statements regarding the overall success of AT&T U-verse TV on a nationwide basis. See Defendants' Post-
(continued....)
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competition in the state of Connecticut;313 (ii) statements AT&T has made regarding its success;314 (iii)
AT&T's decision to raise its rates;315 (iv) [REDACTED
316
];317 (v) AT&T's decision to continue to invest in and expand U-
verse penetration in the state of Connecticut;318 (vi) [REDACTED
];319 and (vii) the fact
(Continued from previous page)


Discovery Answer to Supplement at 3, 29-35, 39, 86-87, 103-104; see also Defendants' Answer at 16 ( 10), 53.
This pertains to nationwide data and not the pertinent issue of the impact of Defendants' withholding on the
willingness of consumers to choose AT&T in the state of Connecticut.
313 See Defendants' Answer at 15-16 ( 9), 38-39, 80, 128-29; Defendants' Post-Discovery Answer to Supplement at
48-49, 101. Defendants' claim of robust competition is belied by the fact that incumbent cable market share in the
New York DMA and Hartford/New Haven DMA far exceeds the national average and that Cablevision has raised its
rates in excess of inflation despite the number of competitors in the market. See infra n.324; 2010 Order, 25 FCC
Rcd at 763, 27 n.97 (citing Nielsen data indicating that the share of MVPD subscribers held by "wired cable
operators" in the New York DMA was 88.5 percent as of July 2009, while other data indicated that the market share
held by cable operators nationwide was approximately 63.5 percent); Defendants' Post-Discovery Answer to
Supplement
at 49 n.187 (stating that Cablevision's 2010 rate increases averaged about 3 percent); U.S. Department
of Labor, Bureau of Labor Statistics, News Release, Consumer Price Index December 2010, at 1 (stating that
during 2010, the Consumer Price Index increased by 1.5 percent for all items and by 0.8 percent for all items less
food and energy). Cablevision does not contend that increases in costs, such as programming costs, are primarily
responsible for its rate increases. While Defendants state that the portions of Connecticut where AT&T and
Cablevision compete are subject to "effective competition," the Commission has explained that the statutory
"effective competition" test serves a limited and defined purpose and is not relevant in assessing "significant
hindrance." See 2010 Order, 25 FCC Rcd at 763, 27 n.97; see also Defendants' Answer at 15-16 ( 9), 39, 80;
AT&T Reply at 31.
314 See Defendants' Post-Discovery Answer to Supplement at 4, 29-32 and Highly Confidential Appendix, Tabs 6-8;
Defendants' Post-Discovery Reply Brief at 2, 9, 12-13, 33 and Highly Confidential Reply Appendix, Tabs 11-12; see
also
Bradlow Decl. at 20; Soman Decl. at 18.
315 See Defendants' Post-Discovery Answer to Supplement at 49, 86 and Highly Confidential Appendix, Tab 26, 59;
Defendants' Post-Discovery Reply Brief at 12, 38 and Highly Confidential Reply Appendix, Tabs 25-26.
316 See Defendants' Post-Discovery Answer to Supplement at 31-32, 39 and Highly Confidential Appendix, Tabs 5,
19; Defendants' Post-Discovery Reply Brief at 12.
317 See Defendants' Post-Discovery Answer to Supplement at 39-40 and Highly Confidential Appendix, Tab 20.
318 See Defendants' Answer at 17 ( 11), 56, 68; Defendants' Post-Discovery Answer to Supplement at 4, 29, 33, 47-
48, 104 and Highly Confidential Appendix, Tabs 25-26; Defendants' Post-Discovery Reply Brief at 9, 45 and Highly
Confidential Reply Appendix, Tabs 19, 25, 45-46.
319 See Defendants' Post-Discovery Answer to Supplement at 17, 31-32, 36-38 and Highly Confidential Appendix,
Tabs 5, 7, 11-18; Defendants' Post-Discovery Reply Brief at 12, 33, and Highly Confidential Reply Appendix, Tabs
12, 35; see also Bulow/Owen Study at 9-11; Defendants' Post-Discovery Answer to Supplement, Highly Confidential
Appendix, Tab 17 [REDACTED
(continued....)
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that AT&T's subscriber count has increased,320 [REDACTED
,321
].322 Defendants' evidence purporting to
demonstrate AT&T's general success is contradicted by other evidence in the record indicating that
[REDACTED
;323
(Continued from previous page)


] See infra n.346; AT&T Post-Discovery Reply Brief at
3-4, 26-28; York Decl. at 6-7.
320 See Defendants' Answer at 6, 16; Defendants' Post-Discovery Answer to Supplement at 6, 29-30, 34-35 and
Highly Confidential Appendix, Tab 17; Levine Jan. 2011 Decl. at 4. We note that AT&T entered the video market
in Connecticut approximately five years ago with zero video customers. See supra n.185. We do not find it
dispositive that AT&T, as the new entrant in the video market, would experience an increase in subscribership
[REDACTED
].
321 See Defendants' Post-Discovery Answer to Supplement at 6, 34-35, and Exhibit G; Levine Jan. 2011 Decl. at 4.
322 See Defendants' Post-Discovery Answer to Supplement at 35-36; Levine Jan. 2011 Decl. at 4; Defendants'
Post-Discovery Reply Brief
at 4. [REDACTED
].
323 See York/Lauricella/Thun Decl. at 9 (stating that AT&T launched its U-verse TV service in Connecticut in
2006); AT&T Post-Discovery Reply Brief at 27 ([REDACTED
]
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;324
].325 In any event, we find that
Defendants' evidence, standing alone, fails to rebut the presumption of "significant hindrance" because it
fails to isolate how the absence of MSG HD and MSG+ HD has impacted AT&T's ability to provide a
competing video service. As discussed above, the relevant inquiry in assessing "significant hindrance" is
whether an MVPD has been hindered relative to its competitors and whether the hindrance is substantial
enough to eliminate the MVPD as a competitive choice for a meaningful number of consumers.326
Defendants' evidence purporting to demonstrate AT&T's general success in the state of Connecticut fails
to isolate the impact of the lack of MSG HD and MSG+ HD on the willingness of consumers to choose
AT&T.327 We note that a complainant attempting to establish that an "unfair act" has resulted in
"significant hindrance" could not simply rely on evidence that its service is generally performing poorly.
Rather, the complainant would need to provide evidence explaining how the "unfair act" has contributed
to such performance. Likewise, in coming forward with evidence to rebut the presumption here,
Defendants cannot simply rely on what they perceive to be AT&T's general success in the affected


324 See AT&T Post-Discovery Reply Brief at 26 ("AT&T still has a relatively small share of the video marketplace,
and is dwarfed by Cablevision in the areas where the two companies compete head-to-head."); see supra n.323.
Nielsen data indicate that, as of November 2010, the share of multichannel video subscribers held by "wired cable
operators" was 87.4 percent in the New York DMA and 86.1 percent in the Hartford/New Haven DMA. See ADS
and Wired-Cable Penetration by DMA: DMA Household Universe (November 2010) http://www.tvb.org/
planning_buying/184839/ 4729/72555. [REDACTED
] Thus, while the D.C. Circuit has stated that evidence of robust competition in a
market would provide "powerful evidence that [] terrestrial programming withholding has no significant impact on
the delivery of satellite programming," the record here contains no such evidence. Cablevision II, 2011 WL
2277217, at *15.
325 [REDACTED
] See AT&T Post-Discovery Reply Brief, Exhibit 5; see also AT&T Post-
Discovery Reply Brief at 4, 27; Defendants' Post-Discovery Reply Brief at 42 n.153 (citing data as of January 2010).
326 See supra 44-45.
327 See AT&T Reply at 25 ("[A]ny success of AT&T with respect to overall penetration in Connecticut does not
remotely suggest that Cablevision's conduct has not hindered or prevented AT&T from winning or keeping
subscribers. The key point is that there is a significant number of sports fans for whom RSN programming is a
priority, who are a driving force behind the demand for HD content, and for whom the must-have format of must-
have RSN programming is critical."); Thun/Lauricella/Rawls Reply Decl. at 8.
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markets without isolating the impact of the key variable here the presence or absence of MSG HD and
MSG+ HD.328

63.
Second, Defendants claim that MSG HD has lower ratings than many well-known SD
channels, thereby undermining the claim that lack of these networks has a significant impact on AT&T.329
Despite what they claim to be low ratings, however, Defendants continue to emphasize MSG HD and
MSG+ HD in advertisements and continue to withhold this programming from AT&T.330 As with the
survey results noted above, if Defendants believe that the ratings data mean that subscribers do not
significantly value MSG HD and MSG+ HD, then Defendants have little to gain from advertising the
availability of these networks and no reason to withhold these networks from AT&T and to forgo
substantial licensing fees and advertising revenues in the process. Defendants do not attempt to explain
this contradiction. Moreover, while the Commission has recognized the importance of ratings in
assessing the value of programming to viewers, it has also recognized that ratings "are not a perfect


328 While Defendants have attempted to provide such evidence with their surveys, we find that evidence flawed and
deficient for the reasons discussed above. See supra 52-61.
329 See Defendants' Answer at 45-46; Levine Sept. 2009 Decl. at 14; Bulow/Owen Study at 6-7; Defendants' Post-
Discovery Answer to Supplement
at 40-41; Levine Jan. 2011 Decl. at 5 (stating that MSG HD and MSG+ HD
have lower ratings than SD networks such as A&E, ABC, Bravo, CBS, CNN, ESPN, Food Network, Fox, Hallmark,
HGTV, Lifetime, MSG, MSG+, NBC, SNY, TNT, USA, and YES); Defendants' Post-Discovery Reply Brief at 19-
20. Defendants note that AT&T dropped three of these networks (Food Network, HGTV, and Hallmark) as a result
of carriage disputes, which Defendants argue belies the characterization of the lower rated MSG HD and MSG+ HD
networks as "must have." Defendants' Post-Discovery Answer to Supplement at 41. As an initial matter, we note
that AT&T subsequently reinstated carriage of two of these networks. See AT&T U-verse Resolves Contract
Dispute with Scripps Networks
, Kansas City Business Journal, Nov. 8, 2010, available at
http://www.bizjournals.com/kansascity/news/2010/11/08/ att-u-verse-resolves-contract-dispute.html. In any event,
Defendants provide no evidence of the circumstances that led to these carriage disputes, which may have resulted
from a disagreement among the parties as to business terms, rather than AT&T's lack of interest in carrying these
networks. [REDACTED

] The key distinction, however, is that the NFL Network is a non-
cable-affiliated network that has every incentive to license its programming to other MVPDs in order to maximize
licensing fees and advertising revenues. See AT&T Post-Discovery Reply Brief at 17-18; York Decl. at 3. In fact,
the NFL Network has sought binding arbitration in order to reach a carriage agreement with Cablevision. See NFL
Network Asks Cablevision for Binding Arbitration on Carriage Agreement
, available at http://www.bloomberg.com/
news/print/2010-10-25/nfl-network-asks-cablevision-for-mandatory-arbitration-on-carrying-channel.html. Thus,
while Cablevision can license the NFL Network should it choose to do so, AT&T has been unable to license MSG
HD and MSG+ HD under any circumstances.
330 See supra n.102 and 26-27. Defendants note that Charter, Cox, and DISH do not carry MSG HD and MSG+
HD in Connecticut and contend that this belies any suggestion that MSG HD and MSG+ HD are "must have"
networks. See Defendants' Post-Discovery Answer to Supplement at 44; Levine Jan. 2011 Decl. at 7. The record
here, however, contains no evidence of the circumstances that led to the MVPDs' decisions to refrain from carrying
MSG HD and MSG+ HD in Connecticut. See supra n.235 (noting that an MVPD's decision to refrain from carrying
an RSN may be driven by the high cost of an RSN or an RSN's demand for unreasonable terms, and that the fact of
non-carriage may suggest that the RSN views itself as providing indispensable, "must have" programming); see
AT&T Post-Discovery Reply Brief
at 31.
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predictor of consumer response to the withholding of a network."331 Ratings do not purport to measure
the intensity of some consumers' desire to view a network.332 While a network may have low ratings, it
may also have no good substitutes, thus prompting those subscribers who value the network to refrain
from subscribing to a video provider that does not carry the network. The Commission has recognized
that RSNs such as MSG HD and MSG+ HD are examples of networks that have "no good substitutes,"
explaining that RSNs "typically purchase exclusive rights to show sporting events and sports fans believe
that there is no good substitute for watching their local and/or favorite team play an important game."333
Thus, allegedly low ratings notwithstanding, those subscribers who value MSG HD and MSG+ HD are
likely reluctant to switch to an MVPD that does not offer these networks.334 In addition, ratings for HD


331 2007 Order, 22 FCC Rcd at 17817-18, 39.
332 See AT&T Reply at 21; Thun/Lauricella/Rawls Reply Decl. at 12; AT&T Post-Discovery Reply Brief at 4, 30.
333 News/Hughes Order, 19 FCC Rcd at 535, 133; see also supra n.235. Defendants argue that the Commission in
a Technical Appendix to the Comcast/NBCU merger approval decision found that there is some substitutability
between RSNs and local broadcast stations. See Defendants' Post-Discovery Reply Brief at 18-19 (citing Comcast
Corporation, General Electric Company and NBC Universal, Inc.
, Memorandum Opinion and Order, 26 FCC Rcd
4238, Appendix B, 4398-99, 53-55 (2011) ("If [an RSN and a local broadcast station] are at least partial
substitutes from the perspective of MVPDs, then the joint venture will be able to obtain a higher price for the two
programming assets due to the unavailability of this substitute programming if the two sides fail to reach an
agreement. . . . The results generally support the conclusion that joint ownership of these two types of programming
assets in the same region allowed the joint venture to charge a higher price for the RSN relative to what would be
observed if the RSN and the local broadcast affiliate were separately owned.") ("Comcast/NBCU Order")).
Defendants claim this undercuts the Commission's previous conclusion that RSNs have no close substitutes and
would require the Commission to acknowledge a greater degree of substitutability between MSG/MSG+ SD and
MSG/MSG+ HD. See id. We disagree. The Commission's analysis of this issue in the Comcast/NBCU Order was
limited to a study of Fox RSNs and Fox broadcast stations in selected markets. The analysis does not reach any
conclusions regarding the substitutability of MSG/MSG+ for local broadcast stations in the New York DMA and
Hartford/New Haven DMA. Moreover, the analysis does not assess the substitutability of HD and SD networks.
Defendants have also failed to put forth any analysis of the substitutability between MSG/MSG+ and local broadcast
stations in these DMAs or between MSG/MSG+ SD and MSG/MSG+ HD. We also note that Defendants have
specifically acknowledged in a complaint filed with a federal district court that "`[c]lose substitutes do not exist'"
for sports programming and that watching a particular sporting event "`is not reasonably interchangeable with
watching . . . other sports or other leisure activities.'" See AT&T Post-Discovery Opening Brief at 14 (quoting
Complaint, Madison Square Garden, L.P. v. National Hockey League, No. 07-CIV-8455 (S.D.N.Y.) (Sept. 28,
2007)).
334 [REDACTED
] See
Defendants' Post-Discovery Answer to Supplement at 80-82 and Highly Confidential Appendix, Tabs 52-56;
Defendants' Post-Discovery Reply Brief at 35-36 and Highly Confidential Reply Appendix, Tabs 15-17. Current
AT&T U-verse subscribers have chosen AT&T despite its lack of MSG HD and MSG+ HD, thus indicating that the
absence of these networks was not a critical factor in their choice of video provider. Thus, information pertaining to
the viewing preferences of AT&T's current subscribers does not demonstrate that potential subscribers interested in
MSG HD and MSG+ HD would switch to AT&T notwithstanding its lack of MSG HD and MSG+ HD. See
Defendants' Answer
at 49; Defendants' Post-Discovery Answer to Supplement at 17 (acknowledging that HD
penetration rates indicate only "preferences of consumers that have already decided to become U-verse
subscribers").
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networks are currently understated because not all households have HDTVs.335 As the Commission
recognized in the 2010 Order, however, HD is growing in importance to consumers.336 While the ratings
for MSG HD and MSG+ HD may appear low at present, [REDACTED
,337
].338 In light of the growing
significance of HD, we can expect ratings for the HD versions to continue to rise as more households
obtain HDTV sets and subscribe to HD service offerings.339
64.
Third, [REDACTED
.340
.341
.342
].343 Defendants, however, have


335 See supra nn.241-42 (discussing percentage of households with HDTVs); AT&T Reply at 21;
Thun/Lauricella/Rawls Reply Decl. at 10.
336 See supra 4.
337 See AT&T Post-Discovery Reply Brief at 29.
338 See supra n.238.
339 See supra 49.
340 See Defendants' Post-Discovery Answer to Supplement at 19-20 and Highly Confidential Appendix, Tabs 3-4;
[REDACTED
]. In any event, current AT&T
subscribers have chosen AT&T despite its lack of MSG HD and MSG+ HD, thus indicating that the absence of
these networks was not a critical factor in their choice of video provider. See supra n.334 (explaining that the
preferences of AT&T's current subscribers do not demonstrate that potential subscribers interested in MSG HD and
MSG+ HD would switch to AT&T notwithstanding its lack of MSG HD and MSG+ HD); Defendants' Answer at 49
("HD subscribership figures only provide a data point regarding the service level preferences of consumers that have
already decided to become U-verse subscribers."); Defendants' Post-Discovery Answer to Supplement at 17.
341 See Defendants' Post-Discovery Answer to Supplement at 19-20 and Highly Confidential Appendix, Tabs 3, 4A.
342 See id. at 18, 51-52.
343 See id. at 18 (stating that there are a "myriad of possible alternative explanations [that] remain entirely
unexplored" for AT&T's HD penetration rate in Connecticut) and 51-52; Bulow/Owen Study at 9 (stating that "many
factors may affect HD penetration rates, including, for example, pricing, characteristics of the service, marketing
effort, demographics, and competitive alternatives"); see also AT&T Post-Discovery Reply Brief at 27 n.65 ("A
multiple regression analysis can control for multiple potential explanatory variables in order to assess the causal
relationship (or lack thereof) between those variables and the subject being tested.").
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made no attempt to isolate the impact on AT&T's market penetration of the key factor at issue in this case
the presence or absence of MSG HD and MSG+ HD.344 Defendants have stated that "regression
analyses represent the Commission's preferred means of assessing the impact of the lack of access to
RSN programming," yet Defendants have made no attempt to present such an analysis here using these
market penetration data and other data obtained during the course of discovery.345 To the extent a party
relies on market share or penetration data in assessing "significant hindrance," a regression analysis is
critical to isolate the impact of the variable at issue and to provide meaning to raw market share or
penetration figures.346 Accordingly, we find that these data standing alone do not specifically address the
key issue of how the absence of MSG HD and MSG+ HD has impacted AT&T's ability to provide a
competing video service.
65.
Fourth, noting that AT&T bundles video with voice, data, and wireless service,
Defendants argue that this increases the number of variables a consumer considers in choosing a provider
and diminishes the relevance of any single variable, such as the availability of an HD RSN.347 We find
this argument unavailing. There is no empirical data in the record to support the claim that bundling of
video, voice, data, and wireless service shrinks the importance of HD RSNs to consumers in selecting a
video provider. In fact, Defendants' decision to emphasize the availability of MSG HD and MSG+ HD in
its advertising indicates Defendants' view that this programming is significant to consumers despite
bundling.348
66.
Fifth, Defendants argue that AT&T's claim that it is "significantly hindered" without
MSG HD and MSG+ HD is belied by the fact that AT&T offers a large amount of sports and HD
programming and has touted the availability of this programming in its advertising and other
statements.349 The Commission has rejected this same argument previously.350 As Defendants have


344 Indeed, in response to data provided by AT&T comparing its penetration rate for HD service in Connecticut to its
penetration rate for HD service in other areas that AT&T serves, Defendants stated that "[m]ere comparison of
AT&T's HD penetration rate in Connecticut with average HD penetration in other areas served by AT&T `does not
actually test the effect of MSG HD and MSG+ HD exclusion.'" Defendants' Answer at 50 (quoting Bulow/Owen
Study
at 9); Defendants' April 9th Letter at 9 ("AT&T made no effort to offer a meaningful regression analysis that
might demonstrate material differences in its penetration levels in Connecticut relative to other markets, taking into
account other relevant factors that might explain such differences, arguably attributable to its lack of MSG HD and
MSG+ HD."); see also AT&T Post-Discovery Reply Brief at 27.
345 Defendants' April 9th Letter at 9.
346 [REDACTED
] raw penetration
numbers are not dispositive absent a regression analysis isolating the magnitude of the impact of the lack of MSG
HD and MSG+ HD. [REDACTED
].
347 See Defendants' Answer at 53-54; Defendants' Post-Discovery Answer to Supplement at 67-72, 87-88 and Highly
Confidential Appendix, Tabs 2, 23, 74-76; Owen Study; Defendants' Post-Discovery Reply Brief at 13-14.
348 See supra 26; see also AT&T Reply at 22; AT&T Post-Discovery Opening Brief at 20-22.
349 See Defendants' Answer at 17-18 ( 11), 42-43, 53, and Exhibit 5 (AT&T advertisements emphasizing its HD
offerings); Defendants' April 9th Letter at 8; Defendants' Post-Discovery Answer to Supplement at 4-5, 21, 32-33,
(continued....)
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argued, the salient issue here is not the amount of sports or HD programming AT&T offers in general;
rather, the key issue is whether AT&T has been "significantly hindered" without MSG HD or MSG+
HD.351 The availability of other sports programming or other HD programming does not address the key
issue of how the absence of MSG HD and MSG+ HD has impacted AT&T's ability to provide a
competing video service.
67.
Sixth, Defendants provide evidence that [REDACTED
]352 and that
AT&T does well in customer satisfaction despite its lack of MSG HD and MSG+ HD.353 Both of these
factors are germane to the issue of whether current AT&T subscribers are satisfied with AT&T's service,
not whether potential subscribers, whom AT&T's business plan requires to be potentially available to be
won-over,354 would be unwilling to switch to AT&T given its lack of MSG HD and MSG+ HD. Current
AT&T subscribers have chosen AT&T despite its lack of MSG HD and MSG+ HD, thus indicating that
the absence of these networks was not a critical factor in their choice of video provider.355
68.
Seventh, Defendants argue that [REDACTED
(Continued from previous page)


49-51, Exhibit C (providing AT&T's advertising and statements emphasizing its sports and HD offerings), and
Highly Confidential Appendix, Tab 10; Bradlow Decl. at 12-13; Soman Decl. at 12-13; Defendants' Post-
Discovery Reply Brief
at 20, 33 and Highly Confidential Reply Appendix, Tabs 3-6.
350 See 2010 Order, 25 FCC Rcd at 770, 34 ("The salient point for purposes of Section 628(b) is not the total
number of programming networks available or the percentage of these networks that are vertically integrated with
cable operators, but rather the popularity of the particular programming that is withheld and how the inability of
competitive MVPDs to access that programming in a particular local market may impact their ability to provide a
commercially attractive MVPD service.") (citing 2007 Order, 22 FCC Rcd at 12140, 38); see also Implementation
of the Cable Television Consumer Protection and Competition Act of 1992
Development of Competition and
Diversity in Video Programming Distribution: Section 628(c)(5) of the Communications Act: Sunset of Exclusive
Contract Prohibition
, Report and Order, 17 FCC Rcd 12124, 12139, 33 (2002) ("2002 Order") ("cable
programming be it news, drama, sports, music, or children's programming is not akin to so many widgets").
351 See Defendants' Post-Discovery Answer to Supplement at 20-21 ("The instant proceeding is not about whether
HD is important to consumers or whether sports fans in general prefer HD. It is about whether the absence of MSG
HD/MSG+ HD from the U-verse TV lineup significantly hinders AT&T from delivering satellite cable
programming.").
352See Defendants' Post-Discovery Answer to Supplement at 31-33, 37 and Highly Confidential Appendix, Tabs 5, 7,
9, 13-16; Defendants' Post-Discovery Reply Brief at 12, 33 and Highly Confidential Reply Appendix, Tab 12.
353 See Defendants' Post-Discovery Answer to Supplement at 32 and Highly Confidential Appendix, Tab 5;
Defendants' Post-Discovery Reply Brief at 33-34 and Highly Confidential Reply Appendix, Tab 13.
354 See AT&T Post-Discovery Reply Brief at 29 ("access to MSG HD and MSG+ HD is essential to a significant
subset of consumers, and [] AT&T has no way to meet that demand"); id. at 30 ("Devoted sports fans with HDTVs
are unlikely to switch to a competing provider that does not carry their favorite team's games in HD."); see also
AT&T Complaint
at 61 (stating that the inability to offer MSG HD and MSG+ HD impairs AT&T's ability to
attract new subscribers).
355 See Defendants' Answer at 49; Defendants' Post-Discovery Answer to Supplement at 17 (acknowledging that HD
penetration rates indicate only "preferences of consumers that have already decided to become U-verse
subscribers").
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]356 and that
AT&T has its own differentiating features, and could create additional features, that distinguish its video
service from that of Cablevision.357 We find this unavailing. The salient issue here is the significance of
one particular factor AT&T's inability to offer MSG HD and MSG+ HD. That there are other factors
that may impact AT&T's performance even more does not mean that access to MSG HD and MSG+ HD
is unnecessary for AT&T to compete effectively. In addition, unlike these other differentiating factors,
RSNs are non-replicable and have no close substitutes, thus eliminating AT&T's ability to match its
competitors' offering of MSG HD and MSG+ HD.358
(c)

Conclusion

69.
In the 2010 Order, the Commission established a rebuttable presumption that
Defendants' withholding of MSG HD and MSG+ HD from AT&T has the "effect" of "significantly
hindering" AT&T from providing a competing video service, including "satellite cable programming and
satellite broadcast programming," to subscribers and consumers in the state of Connecticut. AT&T has
submitted evidence buttressing the application of that presumption here. Defendants were required to come
forward with evidence that rebuts or meets the presumption and AT&T's evidence. Defendants have put
forth two types of evidence: survey evidence and non-survey evidence. With respect to the survey


356 See Defendants' Post-Discovery Answer to Supplement at 5-6, 18-19, 51-52, 73-80, and Highly Confidential
Appendix, Tabs 2, 9, 13, 34-51 ([REDACTED

]); Defendants' Post-Discovery Reply Brief at 34 (same); Defendants' Post-Discovery Answer to
Supplement at 83-86 and Highly Confidential Appendix, Tabs 2, 7, 9, 11, 25-26, 35, 43, 57, 59, 60-69
([REDACTED
]); Defendants'
Post-Discovery Reply Brief at 36-45 and Highly Confidential Reply Appendix, Tabs 12-13, 18-42 (same); see also
AT&T Post-Discovery Opening Brief
at 25-26 and Exhibits 7-12 ([REDACTED
]); Defendants' Post-Discovery Answer to Supplement
at 23-24 and Exhibit E (noting Cablevision's advertisements emphasizing its unique features); Defendants' Post-
Discovery Reply Brief
at 30, 38, 47.
357 See Defendants' Answer at 17-18 ( 11), 53-56; Defendants' Post-Discovery Answer to Supplement at 25-26.
Defendants note that AT&T features a "Total Home DVR" offering, offers special tie-ins with iPhone service
arrangements, [REDACTED
]. See
Defendants' Answer at 17-18 ( 11), 53-54, and Exhibit 5; Defendants' Post-Discovery Answer to Supplement at 25-
26, 32, 87-91, Exhibit C (noting AT&T's advertisements emphasizing its unique features, such as its DVR), and
Highly Confidential Appendix, Tabs 2, 5, 9, 23, 26, 33, 70-78; Defendants' Post-Discovery Reply Brief at 13, 30-32,
34 and Highly Confidential Reply Appendix, Tabs 1, 8-9, 14.
358 See supra 30; see also AT&T Post-Discovery Reply Brief at 3 ("A competitor may cut prices, run promotions,
improve customer service, or add new features to its video offering, but no amount of effort or investment will allow
a competing provider to offer home-team regional sports programming that has been locked up by an incumbent
cable operator."), at 15-16 ("Cablevision could develop an improved DVR technology of its own. But no amount of
investment or effort would allow AT&T to purchase or produce the home-team sports games that are shown on
MSG HD and MSG+ HD."), at 19.
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evidence, we conclude above that the results of these surveys contradict the stated purpose of Defendants'
product differentiation strategy and, in any event, the surveys themselves contain material flaws and
deficiencies that render them unreliable. With respect to the non-survey evidence, we conclude that this
evidence fails to isolate the impact of the lack of MSG HD and MSG+ HD on the willingness of
consumers to choose AT&T. Because the evidence here fails to rebut the presumption as supplemented
by AT&T's evidence, we conclude that Defendants' withholding of MSG HD and MSG+ HD from AT&T
has the "effect" of "significantly hindering" AT&T.359
3.

Remedy

70.
For the reasons set forth above, we conclude that Defendants have violated Section
628(b) of the Act and Section 76.1001(a) of the Commission's rules based on (i) their "unfair act" of
withholding MSG HD and MSG+ HD from AT&T; and (ii) our finding that this "unfair act" has the
"effect" of "significantly hindering" AT&T from providing a competing video service, including "satellite
cable programming and satellite broadcast programming," to subscribers and consumers in the state of
Connecticut. The Commission's rules provide for broad remedies for violation of the program access rules,
including "the establishment of prices, terms, and conditions for the sale of programming to the aggrieved
[MVPD]."360 We establish the following remedies for Defendants' violation of our rules.361
71.
First, we require MSG LP to enter into an agreement to license the MSG HD and MSG+
HD networks to AT&T on non-discriminatory rates, terms, and conditions within 30 days of the release
of this Order. We believe that 30 days will provide a sufficient time for MSG LP and AT&T to reach an
agreement on the terms of carriage while ensuring that AT&T receives prompt access to the
programming. In addition, in light of Defendants' steadfast withholding of this programming from
AT&T over the past several years, we are concerned that Defendants may use the negotiating process to
further delay AT&T's access to this programming by insisting that AT&T accept discriminatory rates,
terms, and conditions. To address this concern, we emphasize that MSG LP must offer to license MSG


359 We note that AT&T has submitted survey evidence in the record to demonstrate that Defendants' withholding of
MSG HD and MSG+ HD has "significantly hindered" AT&T. See supra n.239 (discussing Verizon/GMRS Survey);
AT&T Post-Discovery Opening Brief at 18-19 and Exhibit 5 (Leo J. Shapiro & Associates LLC, AT&T Connecticut
v. Madison Square Garden, L.P. and Cablevision Systems Corp.: A Study of Consumer Perception (Nov. 2010)); see
also Defendants' Post-Discovery Reply Brief
at 4, 22-29, Reply Declaration of Professor Eric T. Bradlow (Jan. 27,
2011), Reply Declaration of Professor Carol A. Scott (Jan. 29, 2011), Reply Declaration of Leslie Shifrin (Jan. 25,
2011), Reply Declaration of Professor Dilip Soman (Jan. 24, 2011). Other than our reliance on certain aspects of the
Verizon/GMRS Survey to provide further support for the rebuttable presumption of "significant hindrance" for HD
RSNs (see supra nn.239, 242), we need not consider this survey evidence here in light of Defendants' failure to
rebut the presumption.
360 The Commission's rules also provide for damages and specify further that the remedies set forth in the rules are
"in addition to and not in lieu of the sanctions available under title V or any other provision of the Communications
Act." 47 C.F.R. 76.1003(h).
361 We decline AT&T's suggestion that we institute a forfeiture proceeding under 47 U.S.C. 503(b) based on
Defendants' failure to comply with the Communications Act and the Commission's rules. See AT&T Complaint at
8, 112 and p.44. As an initial matter, as set forth below, we find that Defendants have not violated any of the
program access prohibitions set forth in Section 628(c) of the Act and Section 76.1002 of the Commission's rules.
See infra 77-82. While we find that Defendants have violated Section 628(b) of the Act and Section 76.1001(a)
of the Commission's rules, we do not believe that the particular facts and circumstances set forth herein justify the
initiation of a forfeiture proceeding. To the extent Defendants fail to comply with the terms of this Order, however,
we will consider further action, which may include the initiation of a forfeiture proceeding.
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HD and MSG+ HD to AT&T on non-discriminatory rates, terms, and conditions and, assuming AT&T's
acceptance, enter into such a contract with AT&T.362

72.
Second, as discussed above, Cablevision is a proper defendant to Count I because it is
under common control with MSG LP and is deemed responsible (along with MSG LP) for the
withholding of MSG HD and MSG+ HD from AT&T.363 Accordingly, we require that Cablevision shall
not prevent or otherwise impede MSG LP from entering into the license agreement described above and
provide that Cablevision (along with MSG LP) shall be held responsible and subject to further remedies
including, but not limited to, forfeitures and other penalties, if MSG LP fails to enter into such an
agreement.
4.

First Amendment

73.
Our action here comports with the First Amendment. As an initial matter, to the extent
Defendants' First Amendment claims amount to a facial challenge to the rules adopted in the 2010
Order
,364 the D.C. Circuit has already rejected that challenge.365 To the extent that Defendants are
challenging our decision based on the facts of this case, we reject these claims.366 As the D.C. Circuit and
Commission have explained previously, the program access rules are subject to intermediate scrutiny,
under which government action will be upheld if it "furthers an important or substantial governmental
interest; if the governmental interest is unrelated to the suppression of free expression; and if the
incidental restriction on alleged First Amendment freedoms is no greater than is essential to the
furtherance of that interest."367 We discuss below how our action here satisfies each of these three
elements.
74.
First, in Time Warner, the court found that the governmental interest Congress intended
to serve in enacting the program access provisions was "the promotion of fair competition in the video
marketplace," and that this interest was substantial.368 Moreover, the court noted Congress's conclusion
that "the benefits of these provisions the increased speech that would result from fairer competition in
the video programming marketplace outweighed the disadvantages [resulting in] the possibility of
reduced economic incentives to develop new programming."369 We find that this governmental interest
remains substantial today. In both the 2007 Order and 2010 Order, the Commission noted that (i)


362 If MSG LP insists on discriminatory rates, terms, and conditions, we will consider that a violation of this Order
without requiring AT&T to demonstrate any further "significant hindrance."
363 See supra 17-18.
364 See Defendants' Post-Discovery Answer to Supplement at 9-10, 123-28.
365 See Cablevision II, 2011 WL 2277217, at *13-*15.
366 See Defendants' Post-Discovery Answer to Supplement at 10, 128-30.
367 Time Warner Entertainment Co. L.P. v. FCC, 93 F.3d 957, 978 (D.C. Cir. 1996) (quoting Turner Broadcasting
System, Inc. v. FCC,
512 U.S. 622, 662 (1994) (quoting United States v. O'Brien, 391 U.S. 367, 377 (1968))); see
also Cablevision II
, 2011 WL 2277217, at *13; Cablevision I, 597 F.3d at 1311; 2010 Order, 25 FCC Rcd at 775,
41; 2007 Order, 22 FCC Rcd at 17837-38, 65.
368 Time Warner, 93 F.3d at 978. Moreover, one of Congress' express findings in enacting the 1992 Cable Act was
that "[t]here is a substantial governmental and First Amendment interest in promoting a diversity of views provided
through multiple technology media." 1992 Cable Act, 2(a)(6).
369 Time Warner, 93 F.3d at 979 (citing S. Rep. No. 102-92 (1991), at 26-28, reprinted in 1992 U.S.C.C.A.N. 1133,
1159-61).
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incumbent cable operators still have a dominant share of MVPD subscribers; (ii) there is evidence that
cable prices have risen in excess of inflation; and (iii) incumbent cable operators still own significant
programming.370 Based on these factors, the Commission concluded that "regulations intended to
promote competition in the video distribution market in accordance with the objectives of Congress are
still warranted."371 All of these same factors are present in this case.
75.
Second, in Time Warner, the court held that the governmental objective served by the
statutory program access provisions was unrelated to the suppression of free expression.372 Similarly, our
decision here to address Defendants' withholding of MSG HD and MSG+ HD from AT&T is not based
on programming content but is instead intended to address the "significant hindrance" that results to
AT&T's ability to provide a competing video service and the harm to competition in the video distribution
market. Our action here responds to concerns about competition, not content. Thus, our action is
content-neutral and unrelated to the suppression of free speech.
76.
Third, any alleged restriction on speech resulting from our decision here "is no greater
than is essential to the furtherance" of Congress's interest in promoting competition in the video
distribution market.373 The Commission has explained previously that withholding of cable-affiliated
programming from rival MVPDs "may harm the ability of MVPDs to compete with incumbent cable
operators, thereby resulting in less competition in the marketplace to the detriment of consumers."374 We
conclude here that Defendants' withholding of MSG HD and MSG+ HD from AT&T has resulted in such
harm.375 By adopting a remedy that requires Defendants to license these networks to AT&T on a non-
discriminatory basis, our remedy is tailored to further the substantial governmental interest of promoting
competition in the video distribution market for the benefit of consumers.

C.

Count II Unreasonable Refusal to Sell

77.
In Count II, AT&T claims that because Defendants distribute the SD versions of MSG
and MSG+ via satellite, the underlying programming content on those networks must be considered
satellite-delivered regardless of whether a particular version of the programming content (such as the HD
version) is distributed terrestrially.376 Thus, AT&T contends that, although Defendants distribute MSG
HD and MSG+ HD via terrestrial facilitates, the underlying programming content is the same as that
displayed on MSG SD and MSG+ SD and therefore must be considered satellite-delivered programming
to which the program access rules adopted pursuant to Section 628(c) apply.377 Accordingly, AT&T


370 See 2010 Order, 25 FCC Rcd at 775-76, 42; 2007 Order, 22 FCC Rcd at 17837-38, 65; see also Cablevision
II
, 2011 WL 2277217, at *14.
371 2010 Order, 25 FCC Rcd at 775-76, 42; see also 2007 Order, 22 FCC Rcd at 17837-38, 65.
372 See Time Warner, 93 F.3d at 978.
373 Id.
374 2010 Order, 25 FCC Rcd at 762-63, 26.
375 See supra Section III.B.2.c.
376 See AT&T Complaint at 2, 24, 93, 96; AT&T Reply at 32-36. AT&T brought Count II pursuant to Section
628(c) as well as Section 628(b). See AT&T Complaint at 90. We interpret AT&T's Section 628(b) claim in
Count II to be identical to Count I (i.e., that Defendants have engaged in an "unfair act" of withholding MSG HD
and MSG+ HD from AT&T that has the "purpose" or the "effect" of "significantly hindering" AT&T). Because we
consider this claim in addressing Count I, we will not consider it again in addressing Count II. Accordingly, we
strike Count II to the extent it is redundant with Count I.
377 See AT&T Complaint at 93, 96; AT&T Reply at 32-36.
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claims that Defendants' refusal to sell MSG HD and MSG+ HD to AT&T violates the program access
rules applicable to satellite-delivered programming under Section 628(c), specifically the prohibition on
unreasonable non-price discrimination.378
78.
We reject AT&T's arguments and deny Count II. Having found that the SD and HD
versions of the same network have different technical characteristics and content and are not considered
adequate substitutes by consumers, the Commission in the 2010 Order concluded that it would treat the
HD version of a particular network as a distinct service from the SD version of the same network.379
AT&T concedes that the Commission's finding on this point "was well-grounded in the record before the
Commission."380 The record here further supports that finding, demonstrating that the SD and HD
versions of MSG and MSG+ have different technical qualities as well as programming content.381
Because the Commission has already established that the HD and SD versions of a network are distinct,
we decline to conclude that distributing the SD version of a network via satellite converts a terrestrially
delivered HD version of the same network into satellite-delivered programming subject to Section 628(c).

D.

Count III Evasion

79.
In Count III, AT&T claims that Defendants have sought to evade the program access
rules applicable to satellite-delivered programming under Section 628(c) by distributing MSG HD and
MSG+ HD via terrestrial facilities.382 In response, Defendants contend that they have legitimate business
reasons for distributing MSG HD and MSG+ HD via terrestrial facilities.383 They explain that
Cablevision had an existing fiber network that was used to distribute MSG HD when it launched in 1998
and that satellite transponder costs would have been expensive and unnecessary.384 Defendants state that
they continue to believe that terrestrial distribution makes financial sense and note that switching now to
satellite delivery would add up-front costs for additional satellite uplink equipment and recurring monthly
costs for leasing transponder capacity.385 Moreover, they explain that the broad geographic distribution
provided by satellite technology is unnecessary for regional networks such as MSG HD and MSG+
HD.386 Defendants also submit that terrestrial distribution has certain technical advantages over satellite
distribution.387
80.
The Bureau informed the Parties that discovery was necessary for the resolution of Count
III.388 Despite having the opportunity to obtain relevant information through discovery, however, AT&T


378 See AT&T Complaint at 94-95. Unlike with terrestrially delivered programming, the rules applicable to
satellite-delivered programming adopted pursuant to Section 628(c) do not require a showing of "significant
hindrance." See 1993 Order, 8 FCC Rcd at 3377-78, 47-49.
379 See 2010 Order, 25 FCC Rcd at 784-85, 54-55.
380 AT&T Post-Discovery Reply Brief at 30.
381 See Defendants' Answer at 66-67, 78; Levine Sept. 2009 Decl. at 13.
382 See AT&T Complaint at 99-102.
383 See Defendants' Answer at 6, 12-13 ( 3-5), 69-71; Pontillo Decl. at 14-20.
384 See Defendants' Answer at 70-71; Pontillo Decl. at 14.
385 See Defendants' Answer at 12 ( 5), 71; Pontillo Decl. at 17.
386 See Defendants' Answer at 12 ( 5); Pontillo Decl. at 17.
387 See Defendants' Answer at 12 ( 5), 71; Pontillo Decl. at 18-19.
388 See Bureau Aug. 9th Letter at 1.
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has put forth no evidence that supports its allegations concerning Defendants' reasons for distributing
MSG HD and MSG+ HD terrestrially. Based on this lack of evidence of evasion, we deny Count III.

E.

Count IV Undue or Improper Influence

81.
In Count IV, AT&T claims that Cablevision is exercising undue or improper influence
over MSG LP's decision to withhold MSG HD and MSG+ HD from AT&T, in violation of Section
628(c)(2)(A) of the Act and Section 76.1002(a) of the Commission's rules.389 AT&T alleges only a
violation of Section 628(c), which does not apply to the terrestrially delivered MSG HD and MSG+
HD.390 AT&T thus appears to be arguing that MSG HD and MSG+ HD should be considered satellite-
delivered because the underlying programming content is delivered via satellite on MSG SD and MSG+
SD,391 an argument we reject for the same reasons discussed above in denying Count II.392 Accordingly,
we deny Count IV.

F.

Count V Discrimination

82.
In Count V, AT&T alleges that Defendants violated Section 628(c) by refusing to sell the
satellite-delivered MSG SD and MSG+ SD to AT&T in a package along with MSG HD and MSG+
HD.393 AT&T alleges that Defendants have offered and sold a package of the SD and HD versions of
MSG and MSG+ to other MVPDs.394 Among other arguments, Defendants assert in response that MSG
SD and MSG+ SD are licensed separately from MSG HD and MSG+ HD, thus precluding a claim that the
Defendants have treated AT&T differently than other MVPDs.395 The Bureau informed the Parties that
discovery was necessary for the resolution of Count V.396 Despite having the opportunity to obtain
relevant information through discovery, however, AT&T has put forth no evidence that would undermine
Defendants' assertions that MSG SD and MSG+ SD are licensed separately from MSG HD and MSG+
HD. Based on this lack of evidence of discrimination in the sale of satellite-delivered programming, we
deny Count V.


389 See AT&T Complaint at 103-106.
390 See Defendants' Answer at 72.
391 See AT&T Reply at 42-43.
392 See supra 78.
393 See AT&T Complaint at 110 ("Defendants' refusal to license the HD format of MSG and MSG Plus to AT&T
discriminatorily denies AT&T the same terms and conditions of program access that are available to Cablevision
and other competitors . . . ."); AT&T Reply at 37 ("Cablevision makes the HD format of MSG and MSG Plus
available to other MVPDs. But it has refused to make this term and condition of program access available to
AT&T."); id. at 38 n.50 (stating that the "differential treatment underlying the discrimination count" is that "it is
common practice to include HD rights in carriage agreements for the standard definition format . . . and Cablevision
does provide the HD format of MSG and MSG Plus to other MVPDs (but not to AT&T)"); see also
York/Lauricella/Thun Decl. at 33, 41-42. AT&T brought Count V pursuant to Section 628(c) as well as Section
628(b). See AT&T Complaint at 110. We interpret AT&T's Section 628(b) claim in Count V to be identical to
Count I (i.e., that Defendants have engaged in an "unfair act" of withholding of MSG HD and MSG+ HD from
AT&T that has the "purpose" or the "effect" of "significantly hindering" AT&T). Because we consider this claim in
addressing Count I, we will not consider it again in addressing Count V. Accordingly, we strike Count V to the
extent it is redundant with Count I.
394 See AT&T Complaint at 110; AT&T Reply at 37-38.
395 See Defendants' Answer at 78-79; Levine Sept. 2009 Decl. at 4, 13.
396 See Bureau Aug. 9th Letter at 1.
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IV.

ORDERING CLAUSES

83.
Accordingly,

IT IS ORDERED

that, pursuant to Sections 4(i), 4(j), and 628 of the
Communications Act of 1934, as amended, 47 U.S.C. 154(i), 154(j), and 548, and Section 76.1001 of
the Commission's rules, 47 C.F.R. 76.1001, Count I of the above-captioned complaint filed by AT&T
Services, Inc. and Southern New England Telephone Company d/b/a AT&T Connecticut against Madison
Square Garden, L.P. and Cablevision Systems Corporation

IS GRANTED

to the extent indicated herein.
84.

IT IS FURTHER ORDERED

that Madison Square Garden, L.P. shall enter into an
agreement to license the MSG HD and MSG+ HD networks to AT&T on non-discriminatory rates, terms,
and conditions within 30 days of the release of this Order and in accordance with the terms of this Order.
85.

IT IS FURTHER ORDERED

that Cablevision Systems Corporation shall not prevent
or otherwise impede Madison Square Garden, L.P. from entering into the license agreement with AT&T as
required by this Order.
86.

IT IS FURTHER ORDERED

that both Cablevision Systems Corporation and Madison
Square Garden, L.P. shall be held responsible and subject to further remedies including, but not limited
to, forfeitures and other penalties, if Madison Square Garden, L.P. fails to enter into the license agreement
with AT&T as required by this Order.
87.

IT IS FURTHER ORDERED

that Counts II, III, IV, and V of the above-captioned
complaint filed by AT&T Services, Inc. and Southern New England Telephone Company d/b/a AT&T
Connecticut against Madison Square Garden, L.P. and Cablevision Systems Corporation

ARE HEREBY
DENIED

for the reasons discussed herein.
88.

IT IS FURTHER ORDERED

that, pursuant to Section 76.1003(h)(1) of the
Commission's rules, 47 C.F.R. 76.1003(h)(1), this Order

SHALL BE EFFECTIVE

upon release.
89.
This action is taken pursuant to authority delegated by Section 0.283 of the
Commission's rules, 47 C.F.R. 0.283.
FEDERAL COMMUNICATIONS COMMISSION
William T. Lake
Chief, Media Bureau
67

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