Cablevision Systems Corp. v. FCC & USA, No. 11-4104 (2nd Cir.)
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUITIN RE: CABLEVISION SYSTEMS CORP. AND )
MSG HOLDINGS, L.P.,
CABLEVISION SYSTEMS CORP. AND MSG )
FEDERAL COMMUNICATIONS COMMISSION )
AND UNITED STATES OF AMERICA, )
OPPOSITION OF FEDERAL COMMUNICATIONS COMMISSION
TO EMERGENCY REQUEST FOR A STAY
PURSUANT TO THE ALL WRITS ACT
DEPUTY GENERAL COUNSEL
JACOB M. LEWIS
ASSOCIATE GENERAL COUNSEL
COUNSELOR TO THE GENERAL COUNSEL
C. GREY PASH, JR.
FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON, D. C. 20554
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TABLE OF CONTENTS
Introduction ............................................................................................. 1
Background ............................................................................................. 3
1. The Regulatory Setting ................................................................ 3
2. The Verizon And AT&T Complaints .......................................... 10
3. The Media Bureau Rulings .......................................................... 12
4. The Bureau's Interim Stay Pending Administrative Review ...... 14
Argument ................................................................................................ 15
The Stay Request Should Be Denied. ..................................................... 15
A. Cablevision is Not Entitled To An Automatic Stay. ........................ 16
B. Cablevision Is Not Entitled To A Discretionary Stay. ..................... 18
1. Cablevision Fails To Show That It Is Likely
To Succeed On The Merits. ......................................................... 19
a. Significant Hindrance ............................................................. 19
b. The Presumption ..................................................................... 22
c. The Record Evidence ............................................................. 23
d. The Unfairness Requirement .................................................. 25
e. The First Amendment ............................................................. 27
2. Cablevision Has Failed To Demonstrate That It Will
Suffer Irreparable Injury Absent A Stay. .................................... 28
3. A Stay Would Harm Other Parties And The Public Interest ...... 29
Conclusion .............................................................................................. 30
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INTRODUCTIONSection 628 of the Communications Act prohibits "unfair acts" by cable
operators and affiliated programmers that have the "purpose or effect" of "hin-
der[ing] significantly or prevent[ing]" their competitors from providing "satellite
cable programming" to consumers. In an order issued last year, the Federal
Communications Commission (FCC or Commission) recognized the unique
characteristics of regional sports programming in particular the fact that it is
highly valued by consumers and is non-replicable because a competing video
provider cannot provide the same programming. Based on those characteristics,
the FCC established a rebuttable presumption that withholding of regional sports
programming, including the high definition version of such programming, has the
anticompetitive purpose or effect prohibited by Section 628(b). That ruling was
recently upheld by the D. C. Circuit.
In this case, the FCC's Media Bureau (the Bureau) issued two orders in
September 2011, finding that cable television operator Cablevision and its affili-
ated programmer Madison Square Garden LP (MSG) had violated Section 628(b)
of the Communications Act. The violations arose from MSG's withholding of
"must have" high definition sports programming from Verizon and AT&T, com-
petitors of Cablevision that provide video services to consumers in New York City,
Buffalo, and Connecticut. The withheld programming included games of the New
York Knicks, New York Rangers, Buffalo Sabres, New York Islanders, and New
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Jersey Devils, the exclusive rights to which MSG owns in the relevant areas.
After engaging in an extensive analysis of a voluminous record, the Bureau
concluded that Cablevision and MSG had failed to produce evidence that rebutted
the presumption that MSG's withholding of this programming from Verizon and
AT&T violated the statutory prohibition. Additional evidence including state-
ments of Cablevision's own senior executives confirmed that withholding the
highly coveted high definition feeds of "must have" sports programming had the
anticompetitive purpose or effect prohibited by Section 628 of the Communica-
tions Act. The Bureau therefore ordered MSG to enter into agreements to license
the programming to Verizon and AT&T on non-discriminatory rates, terms and
Cablevision and MSG have filed with the FCC an administrative appeal
from the Bureau orders for review by the full Commission. In the meantime, the
companies ask this Court to stay the Bureau's Orders under the All Writs Act, an
"extraordinary remedy that may be invoked only if the statutorily prescribed
remedy is clearly inadequate." Reynolds Metals Co. v. FERC, 777 F.2d 760, 762
(D.C. Cir. 1985) (citation and internal quotation marks omitted).
Such extraordinary relief is not warranted here. Cablevision and MSG are
unable to establish that they are likely to ultimately succeed on the merits of their
challenges to the Bureau's orders. Moreover, the crux of any stay request, particu-
larly one seeking drastic relief under the All Writs Act, is irreparable injury.
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Cablevision's cursory discussion of the irreparable injury it allegedly will suffer if
it is required to license the withheld programming to Verizon and AT&T while the
agency considers its administrative appeal falls far short of the stringent standards
for obtaining stays of administrative action. The Orders do not require Cablevision
to withhold any programming from its subscribers, and there is no basis for the
claim that the petitioners will suffer irreparable loss to their reputation, or
unrecoupable economic injury in the interim. On the other hand, the Orders
promote the public interest in promoting fair competition in the video
programming distribution market. A stay is unwarranted.
BACKGROUND1. The Regulatory Setting
In the Cable Television Consumer Protection and Competition Act of 1992
(1992 Cable Act), Pub. L. No. 102385, 106 Stat. 1460, Congress found that the
"cable industry [had] become vertically integrated" and that "[v]ertically integrated
program suppliers ... have the incentive and ability to favor their affiliated cable
operators over nonaffiliated cable operators and programming distributors using
other technologies." 1992 Cable Act 2(a)(5), 106 Stat. 146061 (codified at 47
U.S.C. 521). To address these concerns about competition and barriers to new
entry in the video distribution market, Congress added Section 628 to the Com-
munications Act, 47 U.S.C. 548. See Cablevision Sys. Corp. v. FCC, 649 F.3d
695, 709 (D.C. Cir. 2011) ("Cablevision II") ("through section 628 `Congress
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intended to encourage entry and facilitate competition in the video distribution
market by existing and potential competitors to traditional cable systems by,
among other things, making available to those entities the programming they need
to compete in [that] ... market.'") (citation omitted).
Crafted in "broad and sweeping terms," Nat'l Cable & Telecomm. Ass'n v.
FCC, 567 F.3d 659, 664 (D.C. Cir. 2009), with the express "purpose of ... increas-
ing competition and diversity in the multichannel video programming market," 47
U.S.C. 548(a), Section 628(b) prohibits cable operators and cable-owned net-
works from engaging 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
Under Section 628, the FCC "has long imposed program access require-
ments on vertically integrated cable companies in order to limit their ability to
withhold satellite programming from competitors." Cablevision II, 649 F.3d at
699. In 2010, the FCC adopted rules to close a loophole in its "program access"
rules under Section 628. 47 C.F.R. 76.1001; Review of the Commission's Pro-
gram Access Rules and Examination of Programming Tying Arrangements, 25
FCC Rcd 746 (2010) ("2010 Order"). Before the Commission's action, the
agency's rules implementing Section 628 applied only to satellite-delivered pro-
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gramming that is, programming delivered by satellite from programmers (such as
AMC network) to multichannel video programming distributors or "MVPDs"
(such as petitioner Cablevision). As the FCC's Chairman observed in a statement
accompanying the 2010 Order (id. at 820), that limitation created a "terrestrial
loophole" in the program access rules that gave "free rein to cable operators to lock
up local sports events and other popular programming and withhold them from
rival providers" where that programming was terrestrially delivered i.e., trans-
mitted to cable operators by fiber-optic lines.
The rules adopted in the 2010 Order closed the terrestrial loophole by
establishing procedures under which the Commission will determine, on a case-by-
case basis, whether various practices including the withholding of terrestrially
delivered programming by networks affiliated with cable operators have the
purpose or effect of significantly hindering or preventing competition in violation
of Section 628(b). The rules place on the complainant the burden of demonstrating
in each case that the defendant cable operator or affiliated network has engaged in
an "unfair act" that has the "purpose or effect" of "significantly hindering or pre-
venting" the complainant from providing satellite cable programming or satellite
broadcast programming to subscribers or consumers, as required by Section
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628(b). 2010 Order, 25 FCC Rcd at 780-82, 50-51.1
The Commission recognized that some terrestrially delivered programming,
including Regional Sports Networks ("RSNs"), may be non-replicable and suffi-
ciently valuable to consumers that an "unfair act" regarding this programming
presumptively but not conclusively has the proscribed purpose or effect set
forth in Section 628(b). 2010 Order, 25 FCC Rcd at 750, 8 and 782-83, 52.
The Commission explained that RSN programming, in particular, is typically
"must have" programming for which there are "no good substitutes." Id. 52
(citing Adelphia Communications Corp., 21 FCC Rcd 8203, 8258 124, 8287
189 (2006)).2 Accordingly, rather than requiring litigants and the Commission
staff to undertake needlessly repetitive examinations of the same precedent and
evidence regarding RSNs, the Commission's rules allow complainants to invoke a
1 The Commission pointed to a statistical analysis showing that Comcast's with-
holding of a terrestrially delivered affiliated Regional Sports Network from
competing Direct Broadcast Satellite (DBS) operators caused the percentage of
television households subscribing to DBS to decrease by some 40 percent in
Philadelphia and 33 percent in San Diego. Id. at 32. Thus, by withholding
terrestrially delivered programming, the evidence showed, cable operators could
cause consumers to decide not to subscribe to competing MVPDs, thereby hin-
dering the ability of those MVPDs to provide satellite-delivered programming.
2 As the Commission's prior orders recognized, "`the basis for the lack of ade-
quate substitutes for regional sports programming lies in the unique nature of its
core component: 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.'" Adelphia Order, 21 FCC
Rcd at 8258-59, 124 (citation omitted).
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rebuttable presumption that an "unfair act" involving a terrestrially delivered,
cable-affiliated RSN has the purpose or effect set forth in Section 628(b). Id. at
782-83, 52. 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. Id.; see also id. at 750, 8.
Recognizing the skyrocketing demand for High Definition (HD) program-
ming, the unique characteristics of that medium and the substantial evidence
showing that consumers regard Standard Definition (SD) programming as an
inadequate substitute for the HD experience (particularly in the context of sports
programming), the Commission also adopted a rebuttable presumption that with-
holding of an HD feed of RSN programming will be presumed to cause significant
hindrance even if an SD feed of the network is made available to competitors.
2010 Order, 25 FCC Rcd at 784-85, 54-55.
Cablevision sought judicial review of the 2010 Order. On June 10, 2011,
the D.C. Circuit affirmed all but one aspect of that order. Cablevision II, 649 F.3d
695. The court first rejected Cablevision's argument that the Commission lacks
authority to regulate the withholding of terrestrially delivered, cable-affiliated
programming. Id. at 705-09. The court was unpersuaded by Cablevision's argu-
ment that "`to provide'" programming pursuant to Section 628(b) simply "mean[s]
`to furnish' or `to make available,'" id. at 705, and that the "commercial attractive-
ness" of the withheld programming therefore "has nothing to do with whether the
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[competing MVPD] can provide satellite programming," id. at 708.
The court explained:
When a vertically integrated cable programmer limits access to pro-
gramming that customers want and that competitors are unable to
duplicate--like the games of a local team selling broadcast rights to a
single sports network--competitor MVPDs will find themselves at a
serious disadvantage when trying to attract customers away from the
incumbent cable company. To use a concrete example, we doubt that
Philadelphia baseball fans would switch from cable to an alternative
MVPD if doing so would mean they could no longer watch Roy
Halladay, Cliff Lee, Roy Oswalt, and Cole Hamels take the mound,
even if they thought the alternative MVPD was otherwise superior in
terms of price and quality.
The court also upheld under the First Amendment and the Administrative
Procedure Act the Commission's decision to establish a rebuttable presumption of
"significant hindrance" for "unfair acts" involving RSNs' "must have" program-
ming (in both HD and SD format). The court concluded that in the 2010 Order,
the Commission had "advanced compelling reasons to believe that withholding
RSN programming is, given its desirability and non-replicability, uniquely likely to
significantly impact the MVPD market." 649 F.3d at 717. The court also found
reasonable the Commission's decision to extend the rebuttable presumption to
RSN HD programming. Noting the record evidence cited in the 2010 Order of
"cable operators' marketing campaigns touting the carriage of HD programming,
and record comments describing the rapidly growing demand for HD televisions,"
the court concluded that "the Commission's determination that the impact of RSN
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SD programming withholding will extend to RSN HD programming `is a
predictive judgment that [the agency] is entitled to make and to which we defer.'"
Cablevision II, 649 F.3d at 717 (citation omitted).
The D.C. Circuit further rejected as "meritless" Cablevision's argument that
"the Commission's presumptions are impermissibly content-based and therefore
deserve strict scrutiny" under the First Amendment. Cablevision II, 649 F.3d at
717. "Given record evidence demonstrating the significant impact of RSN pro-
gramming withholding," the court explained, "the Commission's presumptions
represent a narrowly tailored effort to further the important governmental interest
of increasing competition in video programming." Id. at 718. Thus, the court
concluded that the presumptions satisfy intermediate First Amendment scrutiny.
The court explained that by "imposing liability only when complainants
demonstrate that a company's unfair act has `the purpose or effect' of `hinder[ing]
significantly or ... prevent[ing]' the provision of satellite programming, 47 U.S.C.
548(b), the Commission's terrestrial programming rules specifically target activi-
ties where the governmental interest is greatest." 649 F.3d at 712-13. The court
concluded that the Commission had "satisfied its constitutional burden" in light of
the substantial record showing, for example, that cable operators continue to
control two-thirds of the market nationally and more in some local markets, that
the largest cable operators are still substantially vertically integrated with the most
popular cable program networks and with nearly half of all regional sports
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networks, and that cable prices have risen in excess of inflation. Id. at 712.
The court also rejected as unripe Cablevision's argument that given the
asserted level of competition in the New York City market in which it operates, the
rules adopted in the 2010 Order were unconstitutional as applied. The court held
that "because petitioners' as-applied challenge depends on facts about the New
York City market that are absent from the administrative record, we believe that
further factual development in a ruling by the Commission with respect to a
specific complaint would significantly advance our ability to deal with the legal
issues presented." Cablevision II, 649 F.3d at 713. "[I]f petitioners are correct
about the state of competition in the market they serve," the court added, they
would have "powerful evidence" in a subsequent enforcement proceeding "that
their terrestrial programming withholding has no significant impact on the delivery
of satellite programming." Id. (emphasis added).
The D.C. Circuit vacated and remanded only one part of the 2010 Order
the FCC's decision to treat certain acts involving terrestrially delivered, cable-
affiliated programming as categorically "unfair." See Cablevision II, 649 F.3d at
720-22. The Court took "no position on ... how the Commission should define the
inherently ambiguous statutory term `unfair'" and indicated that it was open to the
Commission to "assess fairness on a case-by-case basis." Id. at 722-23.
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2. The Verizon and AT&T Complaints
In July and August 2009, respectively, Verizon and AT&T filed complaints
with the FCC claiming that Cablevision Systems Corp. (a vertically integrated
cable operator) and its affiliate MSG LP (collectively Cablevision) had refused to
provide them with access to the terrestrially delivered MSG HD and MSG+ HD
networks in violation of the FCC's program access rules. See Verizon Tel. Cos.,
DA 11-1594 7 (MB Sept. 22, 2011) ("Verizon Order"). MSG owns exclusive
rights to produce and exhibit within a specific geographic region the games of the
New York Knicks, New York Rangers and Buffalo Sabres. Id. 6. MSG+ owns
exclusive rights to produce and exhibit within a different region the games of the
New York Islanders and New Jersey Devils, and also televises local and national
college football and basketball games. Id. 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. Id.3
Verizon, an MVPD that provides "FiOS" video service, alleged that Cable-
vision had refused to provide Verizon with access to the MSG HD and MSG+ HD
networks in the New York City and Buffalo metropolitan areas beginning in 2006,
3 It is undisputed that MSG LP is "affiliated" with Cablevision for purposes of the
Commission's attribution rules because Cablevision and MSG LP share a com-
mon controlling shareholder (the Dolan family) and thus are under common
control. See id.
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when the cable operator allowed Verizon to carry the SD versions of those net-
works. Cablevision admitted it had denied Verizon access to HD feeds of MSG
HD and MSG+ HDon any terms. It is also undisputed that Cablevision has
licensed those networks to many of Verizon's competitors in the New York City
area (including Cablevision, Time Warner, Comcast, DIRECTV, and RCN) and in
the Buffalo area (Time Warner, Comcast, and DIRECTV). Verizon Order, 6-9.
AT&T, an MVPD that provides "U-verse TV service," filed a similar
complaint alleging that Cablevision has refused to provide it with access to the
MSG HD and MSG+ HD networks in Connecticut. AT&T Serv., Inc., DA 11-1595
6-9 (MB Sept. 22, 2011)("AT&T Order").4 Cablevision has admitted those
3. The Media Bureau Rulings
The Chief of the FCC's Media Bureau, pursuant to delegated authority,
found that Cablevision violated Section 628(b) of the Communications Act by
withholding the MSG HD and MSG+ HD RSNs from Verizon and AT&T.
Verizon Tel. Cos., DA 11-1594 (MB Sept. 22, 2011); AT&T Serv., Inc., DA 11-
4 Both Verizon's and AT&T's complaints preceded the FCC's adoption of the
new rules in the 2010 Order. The Commission stated when it adopted that order
that a pending complaint could continue to be processed under the prior rules or
that the complaint could be supplemented to take advantage of the new rules.
2010 Order, 25 FCC Rcd at 789 64 & n.237. Both Verizon and AT&T
supplemented their complaints. See Verizon Order 11; AT&T Order 12.
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1595 (MB Sept. 22, 2011).5
The Bureau determined that Cablevision's withholding of MSG HD and
MSG+ HD from Verizon and AT&T was an "unfair act" under Section 628(b).
Verizon Order 18-41; AT&T Order 19-42. It concluded that "the anticom-
petitive effects of Defendants' withholding of MSG HD and MSG+ HD from
Verizon outweigh any precompetitive benefits." Verizon Order 41; see also
AT&T Order 42. Based on Commission precedent applying the "significant
hindrance" standard in Section 628(b), as well as the rebuttable presumption of
"significant hindrance" for HD RSNs established by the Commission in the 2010
Order, the Bureau also concluded that Cablevision's withholding of MSG HD and
MSG+ HD from Verizon had the "effect" of "significantly hindering" Verizon and
AT&T from providing competing video services, including "satellite cable pro-
gramming and satellite broadcast programming," to subscribers and consumers in
their respective service areas in New York City, Buffalo, and Connecticut. Verizon
Order 42-68; AT&T Order 43-69.
Noting that the D. C. Circuit in Cablevision II had upheld the rebuttable
presumption of "significant hindrance" for HD RSNs, the Bureau found that "the
5 The Bureau released both public and non-public versions of the orders. Peti-
tioners have submitted to the Court only the public version, from which confi-
dential and financial information submitted by the parties under seal pursuant to
a protective order was redacted. We have submitted to the Court under seal the
non-public versions of the orders.
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record here provides further support for the Commission's conclusion regarding
the growing significance of HD RSNs to consumers." Verizon Order 47; AT&T
Order 48. The Bureau pointed to evidence showing the rapidly increasing sales
of HDTV sets (with a significant number of consumers in New York City and
Buffalo owning HDTV sets) and that purchasers of HDTV sets highly value HD
programming. Id. The Bureau also noted that homes with HD service are more
likely to watch sports programming than homes without HD service, that MVPDs
have made large investments to support the growing demand for HD, and that
consumers do not consider the SD version of a channel to be an adequate substitute
for the HD version. Id. The Bureau concluded that Verizon and AT&T had sub-
mitted evidence "buttressing the application of that presumption here" and that
Cablevision had failed to come forward with evidence that rebutted the
presumption. Verizon Order 68; AT&T Order 69. Thus, the Bureau found that
Cablevision's withholding of the MSG HD and MSG+ HD programming "has the
`effect' of `significantly hindering'" Verizon and AT&T in their ability to provide
video programming, including satellite-delivered programming. Id.
As a remedy, the Bureau ordered MSG to enter into agreements to license
MSG HD and MSG+ HD to Verizon and AT&T on non-discriminatory rates,
terms, and conditions within 30 days of the release of the Orders, and prohibited
Cablevision from preventing or otherwise impeding MSG from entering into those
agreements. Verizon Order 83, 84; AT&T Order 84, 85.
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4. The Bureau's Interim Stay Pending Administrative Review
On September 28, 2011, Cablevision filed with the FCC petitions for admin-
istrative stays of both Bureau orders, as well as applications for review of those
orders by the full Commission. See 47 U.S.C. 155(c)(4). On October 11, 2011,
the Bureau stayed each Order "to the extent it would otherwise require MSG to
make the programming available to Verizon [and AT&T] on or before November
14, 2011." Verizon Tel. Cos., DA 11-1694 (MB Oct. 11, 2011) (Verizon Interim
Stay Order); AT&T Serv., Inc., DA 11-1695 (MB Oct. 11, 2011) (AT&T Interim
Stay Order). The Bureau explained that it had taken "this action on [its] own
motion to provide the Commission an opportunity to consider the Defendants'
[Stay] Petition and Application for Review," and that it "express[ed] no view whe-
ther Defendants' showings in the Petition satisfy any of the requirements for a
stay." Verizon Interim Stay Order, 1 & n.7; AT&T Interim Stay Order, 1 &
THE STAY REQUEST SHOULD BE DENIEDCablevision seeks a stay of the Media Bureau orders under the All Writs
Act. "[R]elief under the All Writs Act, 28 U.S.C. 1651 (1982), is an `extraordi-
nary remedy that may be invoked only if the statutorily prescribed remedy' is
clearly inadequate." Reynolds Metals Co. v. FERC, 777 F.2d 760, 762 (D.C. Cir.
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1985). In addition, a party seeking a stay must satisfy the traditional requirements
for such relief: (1) it will likely prevail on the merits; (2) it will suffer irreparable
harm unless a stay is granted; (3) other interested parties will not be harmed if a
stay is granted; and (4) a stay will serve the public interest. Thapa v. Gonzales,
460 F.3d 323, 334 (2d Cir. 2006).
A "stay is an `intrusion into the ordinary processes of administration and
judicial review,' ... and accordingly `is not a matter of right, even if irreparable
injury might otherwise result to the appellant.'" Nken v. Holder, 129 S. Ct. 1749,
1757 (2009) (citation omitted). Moreover, where, as here, an applicant seeks a stay
"that will affect government action taken in the public interest pursuant to a
statutory or regulatory scheme, the injunction should be granted only if the moving
party meets the more rigorous likelihood-of-success standard" rather than simply
demonstrating that it has presented a serious question on the merits that provides a
fair ground for litigation. Metro Taxicab Bd. of Trade v. City of New York, 615
F.3d 152, 156 (2d Cir. 2010), cert. denied, 131 S.Ct. 1569 (2011).
Cablevision has failed to satisfy these stringent standards.
A. Cablevision Is Not Entitled To An Automatic Stay.
Cablevision first contends that under Section 5(c) of the Communications
Act, 47 U.S.C. 155(c), it is entitled to an "automatic stay" of the Bureau orders
pending the Commission's action on its applications for review. This argument is
foreclosed by the Commission's longstanding interpretation of the Communica-
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tions Act an interpretation that has been upheld by the D.C. Circuit.
Section 5(c)(3) of the Act provides that Bureau orders issued on delegated
authority have "the same force and effect" as orders of the Commission "unless
reviewed as provided in paragraph (4) of this subsection." 47 U.S.C. 155(c)(3).
In turn, paragraph (4), 47 U.S.C. 155(c)(4), sets forth the review process under
which the Commission can review decisions of its subordinate bureaus.
As the Commission explained in Continental Cablevision of New Hamp-
shire, Inc., 96 F.C.C. 2d 926, 928 (1984), the language of Section 5(c)(3) refers to
"a proceeding which has been reviewed, not to the mere filing of an application for
review." Accordingly, although the Commission "may in its discretion" issue a
stay until review is completed, the agency's rules have long provided that actions
taken on delegated authority are otherwise "effective upon release of the document
containing the full text of such action." 47 C.F.R. 1.102(b). See 28 Fed. Reg.
"`Congress' use of a verb tense is significant in construing statutes.'"
Barscz v. Director, Office of Workers' Comp. Programs and Elec. Boat Corp., 486
F.3d 744, 750 (2d Cir. 2007) (quoting United States v. Wilson, 503 U.S. 329, 333
(1992)). Here, the tense of the word "reviewed" in Section 5(c)(3) (rather than
"under review" or "being reviewed," see Stay Request at 13) indicates a completed
review process not the mere commencement of that process. More than twenty-
five years ago, the D.C. Circuit upheld the Commission's interpretation of section
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5(c)(3) as a "permissible construction of the statute," and saw "no reason to set
aside a practice" that had at that time "been in effect for more than a quarter of a
century." Committee to Save WEAM v. FCC, 808 F.2d 113, 119 (D.C. Cir. 1986).
In an attempt to bolster its counter-textual reading of Section 5(c)(3), Cable-
vision invokes the general principles governing the finality of administrative deci-
sions under Section 10(c) of the Administrative Procedure Act, 5 U.S.C. 704.
Stay Request at 11. This argument fares no better. By its terms, the statutory
language on which Cablevision relies does not apply where (as here) a statute
expressly requires a litigant who seeks judicial review of an intermediate agency
order to exhaust its administrative remedies before the agency.6 Furthermore, the
Communications Act expressly provides that orders of the FCC's bureaus that are
issued on delegated authority have the "same force and effect" as orders of the
Commission unless the bureau orders have been "reviewed" by the Commission.
47 U.S.C. 155(c)(3).
It is hardly error, much less cause for "mandamus review" (Stay Request at
See 5 U.S.C. 704 ("Except as otherwise expressly required by statute, agency
action otherwise final is final for the purposes of this section whether or not
there has been presented or determined an application for a declaratory order,
for any form of reconsideration, or, unless the agency otherwise requires by rule
and provides that the action meanwhile is inoperative, for an appeal to superior
agency authority.") (emphasis added). See also 47 U.S.C. 155(c)(7) (provision
of the Communications Act expressly requiring exhaustion of administrative
remedies via filing of application for review before seeking judicial review).
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14), for the agency to adhere to its interpretation of a statute when that interpreta-
tion has long been embodied in rules that have been upheld on judicial review.
Cablevision's mere filing of an application for review therefore did not automatic-
ally stay the Bureau's orders. 7
Cablevision Is Not Entitled To A Discretionary Stay.
In the alternative, Cablevision seeks to obtain a discretionary stay from this
Court. Stay Request at 15-30. As we explain, it fails to show that it satisfies the
standards for such relief.
1. Cablevision Fails to Show That It Is Likely To Succeed On The Merits.
a. Significant Hindrance. Cablevision acknowledges that the D.C.
Circuit concluded "that there might be cases where particular terrestrial program-
ming would be so important to the MVPD's ability to market its satellite program-
ming that, without the terrestrial service, it would be significantly hindered in its
ability to furnish satellite service to willing consumers." Stay Request at 17.
Cablevision nonetheless claims that it was error for the Commission to find that
video programming distributors are significantly hindered by the withholding of
HD RSN programming without "examin[ing] the impact" on the ability of Verizon
and AT&T "to stay in the market." Id. at 18.
7 Needless to say, if the Commission acts on the pending applications for review
by November 14, see p. 15, supra, Cablevision's automatic stay argument and
indeed its entire All Writs Act request will be rendered moot.
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But as the Bureau explained, the Commission concluded in the 2010 Order
that the "significant hindrance" standard in Section 628(b) does not require an
MVPD to prove it is "incapable of competing in the marketplace" or is "poised to
exit the market." Verizon Order 44; AT&T Order 45. The "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." Verizon
Order 44; AT&T Order 45. Contrary to Cablevision's contention (Stay
Request at 18), the Bureau's approach was entirely proper: if a competing MVPD
like Verizon or AT&T is eliminated as a competitive choice for a meaningful
number of consumers, it obviously will be hindered in its ability to provide
satellite-delivered programming to those consumers. And the Bureau reasonably
determined that when there is such an impact on a "meaningful number" of
consumers, the hindrance is "significant."
Moreover, the D. C. Circuit previously rejected Cablevision's argument that
the "commercial attractiveness [of withheld programming] has nothing to do with
whether the MVPD can provide satellite programming," Cablevision II, 649 F.3d
at 708. The court recognized that the "lack of commercial attractiveness" due to
withholding of "RSNs that are both nonreplicable and highly coveted" can "sig-
nificantly hinder" a competing MVPD by, for instance, hindering its ability to
compete for baseball fans. Id. at 708. As the Bureau's Orders noted, the court
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"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 sports network competitor MVPDs will find
themselves at a serious disadvantage when trying to attract customers away from
the incumbent cable company.'" Verizon Order 45 (quoting Cablevision II, 649
F.3d at 708); AT&T Order 46 (same). Thus, it was fully consistent with Cable-
vision II for the Bureau to ask whether a "meaningful number" of consumers
would eliminate Verizon or AT&T as a "competitive choice" for their video pro-
gramming (including satellite-delivered programming) because of the inability of
those MVPDs to offer "must have" RSN programming. To the extent that Cable-
vision argues to the contrary, it is impermissibly seeking to relitigate issues that the
D.C. Circuit conclusively resolved against it. See NML Capital Ltd. v. Banco
Central de la Republica Argentina, 652 F.3d 172, 185 (2d Cir. 2011) ("Issue pre-
clusion bars successive litigation of an issue of fact or law actually litigated and
resolved in a valid court determination essential to a prior judgment.").
Finally, Cablevision claims that "there is not a shred of evidence in the
record suggesting that Verizon and AT&T's inability to offer high-definition
versions of the professional games shown on the MSG channels impedes their
ability to provide satellite programming to their customers." Stay Request at 19.
That is plainly incorrect. In addition to Cablevision's failure to submit probative
evidence that overcame the rebuttable presumption upheld by the D.C. Circuit in
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Cablevision II, there was ample record evidence "that RSNs are highly valued by
consumers and important for competition." Verizon Order 47; AT&T Order 48
(citing record materials). Indeed, the Bureau added: "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. Moreover,
in that instance there appears to be no reason for Defendants to withhold these
networks from Verizon. Instead, Defendants would benefit by licensing this con-
tent to Verizon and earning increased licensing fees and advertising revenues."
Verizon Order 53; AT&T Order 54. By emphasizing the allegedly irreparable
harm that it will suffer if it is unable to rely on its product differentiation strategy
(based on withholding of HD feeds of MSG and MSG+), see Stay Request at 29,
Cablevision only reinforces the Bureau's point.
The Bureau also identified record evidence that withholding the HD chan-
nels "was intended to provide Cablevision with a competitive advantage over
Verizon in the video distribution market." Verizon Order 25; AT&T Order 26.
The Bureau noted, for instance, that Cablevision's Chief Operating Officer had
"stated that the refusal to sell MSG HD and MSG+ HD to Verizon was one factor
that would not only impede Verizon from obtaining new subscribers, but would
also cause Verizon to lose subscribers it had already gained." Verizon Order 25
& n.127; see also AT&T Order 26. The Bureau also cited "evidence that
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Cablevision has emphasized in advertisements in various media both its ability to
offer MSG HD and MSG+ HD and Verizon's inability to offer these same net-
works, thus demonstrating the importance of these networks." Id. In short,
Cablevision's own words belie its contention that withholding of HD RSN pro-
gramming does not materially hinder its competitors.
b. The Presumption. Cablevision next claims that the Bureau held it to an
impermissibly high standard in rebutting the presumption and shifted the burden to
it to disprove liability. Stay Request at 19-21. In fact, the Bureau made clear that
its rebuttable presumption did not shift the burden of proof to defendants, but
simply required defendants to come forward with evidence to rebut or meet the
presumption. Verizon Order 50; AT&T Order 51. The Bureau reasonably
concluded that Cablevision failed to meet that burden.
Cablevision protests (Stay Request at 21) that the Commission was "funda-
mentally mistaken" because it treated the presumption as "evidence itself." Stay
Request at 21 (quoting Pizzarello v. United States, 408 F.2d 579, 583 (2d Cir.
1978)). But, as the D. C. Circuit held in Cablevision II, the presumption was itself
based on substantial record evidence. See 649 F.3d at 716-17. Moreover, the case
upon which Cablevision relies does not suggest that a presumption "disappears
entirely" (Stay Request at 20) whenever a litigant proffers what it characterizes as
"non-trivial evidence" (id.). Rather, the case makes clear that the limited effect of
a presumption results from the fact that it "disappears upon the introduction of
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evidence to overcome it." Pizzarello, 408 F.2d at 583 (citing cases). What the
Bureau found here, and explained in detail, was that Cablevision's evidence did
not overcome the presumption. Verizon Order 46-68; AT&T Order 47-69;
see also p. 25, infra (noting flaws in Cablevision's surveys).
c. The Record Evidence. Cablevision's next argument reduces to the con-
tention that the Bureau abused its discretion by incorrectly weighing the record
evidence. See Stay Request at 22 (asserting that "no rational decisionmaker could
find significant hindrance on the record below"). That claim is meritless. As the
Bureau comprehensively detailed, there was ample evidentiary support for the
conclusion that Cablevision had engaged in unfair acts that had the effect of sig-
nificantly hindering Verizon and AT&T from providing competing video services.
See Verizon Order 18-68; AT&T Order 19-69.
Cablevision contends that there was a "wealth of evidence" to the contrary,
including the general popularity of Verizon's and AT&T's video offerings. Stay
Request at 22. As the Bureau explained, however, any "general success" that
Verizon or AT&T may enjoy in the market for video programming does not "iso-
lat[e] the impact of the key variable here the presence or absence of MSG HD
and MSG+ HD." Verizon Order 61; AT&T Order 62. In other words, the key
question was whether Verizon's and AT&T's lack of access to the withheld HD
programming significantly hindered them from obtaining more customers (and
thus delivering satellite programming to those customers), notwithstanding their
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"general success" in the video distribution market.
Cablevision complains that the Bureau should not have found defects in the
survey evidence it submitted (Stay Request at 24), but the Bureau explained at
length why it found each survey deficient. Verizon Order 54-60; AT&T Order
55-61. The Radius Survey did "not directly address the key issue of the impact
of the lack of MSG and MSG+ HD on the willingness of consumers to choose"
Verizon or AT&T, Verizon Order 55; AT&T Order 56; the OTX Survey did not
make clear to respondents that the HD programming was not offered by Cable-
vision's competitors, Verizon Order 57; AT&T Order 58; and the Win-Back
Survey suffered from a fatal "selection bias," as it singled out respondents who
were more likely to consider HD programming an insignificant factor and price an
important consideration, Verizon Order 60; AT&T Order 61. Finally, as the
Bureau observed, "[i]f consumers attach no significance to the availability of MSG
HD and MSG + HD, as Defendants' surveys purport[ed] to show, then it is hard to
explain why Defendants stress the importance of that HD programming in their
public statements and their advertising," and Cablevision's steadfast withholding
of those networks from Verizon and AT&T would make little sense. Verizon
Order 53; AT&T Order 54.
This record evidence more than meets the highly deferential substantial-
evidence standard of review that would apply if the Court were reviewing the
merits of this case. See, e.g., Cellular Phone Task Force v. FCC, 205 F.3d 82, 89
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(2d Cir. 2000). Cablevision therefore does not come close to establishing that it is
likely to succeed on its abuse of discretion argument.
d. The Unfairness Requirement.
Cablevision also claims that the Bureau "provided no coherent explanation"
of why the withholding of HD programming in this case was "unfair." Stay
Request at 25-26. On the contrary, the Bureau "conclude[d] that the anticompeti-
tive harms of Defendants' withholding in the video distribution market outweigh
any procompetitive benefits in the video programming market." Verizon Order
27; AT&T Order 28. To be sure, it did not "preclude the possibility" that the
facts in a different case "may reveal that the procompetitive benefits of product dif-
ferentiation outweigh the anticompetitive harms of withholding," but the record in
this case established the contrary. The Bureau also emphasized that "the key
distinction here is that the product differentiation strategy involves non-replicable
and popular RSN programming." Verizon Order 29; AT&T Order 30. As the
Bureau explained, "the content withheld from Verizon is non-replicable and popu-
lar RSN programming that `no amount of investment can duplicate.'" Verizon
Order 38; AT&T Order 39.
Cablevision contends that "the same can be said of all product differentia-
tion." Stay Request at 25. Not so. As the D. C. Circuit recognized, "[w]hen a
vertically integrated cable programmer limits access to programming that custo-
mers want and that competitors are unable to duplicate like the games of a local
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team selling broadcast rights to a single sports network competing MVPDs will
find themselves at a serious disadvantage when trying to attract customers away
from the incumbent cable company." Cablevision II, 649 F.3d at 708. Thus, while
"only Chrysler has the Hemi engine," Stay Request at 25, other companies can
manufacture automobiles with similar characteristics. But if a sports fan wants to
see the New York Rangers or the Buffalo Sabres in HD, "no amount of invest-
ment" will suffice to meet the demand if the programming is withheld. 2010
Order, 25 FCC Rcd at 750 9. Accord Cablevision II, 649 F.3d at 708. The
Bureau reasonably concluded that the unique and non-replicable nature of this
programming made the anticompetitive harms of Cablevision's withholding
outweigh any procompetitive benefits.
e. The First Amendment. Finally, Cablevision reiterates its oft-repeated
(and oft-rejected) claim that the Bureau's orders violate the First Amendment.
Stay Request at 26-27. It is well settled that Section 628 of the Communications
Act and the Commission's implementing rules do not facially violate the First
Amendment. See Cablevision II, 649 F.3d at 711-13 (discussing prior precedent).
With respect to Cablevision's as-applied First Amendment challenge to the Com-
mission's program access rules, the D.C. Circuit explained in rejecting that chal-
lenge as unripe: "if petitioners are correct about the state of competition in the
market they serve, then, should they face an enforcement proceeding, they will
have powerful evidence that their terrestrial programming withholding has no
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significant impact on the delivery of satellite programming." Cablevision II, 649
F.3d at 713 (emphasis added). But as shown above, ample record evidence sup-
ported the Bureau's conclusion that Cablevision was not correct about the state of
competition in the markets it serves. The Bureau therefore properly rejected the
company's constitutional claim.
2. Cablevision Has Failed To Demonstrate That It Will Suffer
Irreparable Injury Absent A Stay.
"`[A] finding of irreparable harm [is] an absolute requirement for an award
of injunctive relief.'" Stewart v. U.S.I.N.S., 762 F.2d 193, 199 (2d Cir. 1985).
(quoting Triebwasser & Katz v. American Tel. & Tel. Co., 535 F.2d 1356, 1359 (2d
Cir. 1976)). Such harm must be "neither remote nor speculative, but actual and
imminent," and of a type that "cannot be remedied if a court waits until the end of
trial to resolve the harm." Grand River Enter. Six Nations, Ltd. v. Pryor, 481 F.3d
60, 66 (2d Cir. 2007) (internal quotation marks omitted); see also Wisconsin Gas
Co. v. FERC, 758 F.2d 669, 674 (D.C. Cir. 1985 (injury must be "both certain and
great ... actual and not theoretical"). Cablevision's vague and unsubstantiated
claims do not come close to meeting these stringent standards.
The orders do not require Cablevision to withdraw any programming from
its subscribers. Instead, they require that the HD RSN programming provided by
MSG and MSG+ be licensed to Verizon and AT&T as it has been licensed to a
number of other MVPDs. It is difficult to see how the orders could cause Cable-
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vision to suffer any "loss of reputation" or incur a "loss of customers" or "loss of
revenue" that could not be recouped if it ultimately prevailed on judicial review.
See Stay Request at 29. In any event, Cablevision's unsupported assertions that it
will have to "scrap some advertising" and its speculation that it will lose some
customers an undefined number that Cablevision itself describes as "competi-
tively insignificant" (Stay Request at 29) fail to meet the demanding standard
necessary to stay an agency order pending judicial review.
3. A Stay Would Harm Other Parties and The Public Interest.
In each of the orders at issue here, the Media Bureau found that Cable-
vision's withholding of this programming constituted an "unfair act" within the
meaning of the Communications Act and the FCC's rules. It also found that those
unfair acts had "the `effect' of `significantly hindering'" Verizon and AT&T "from
providing a competing video service ... to subscribers and consumers." Verizon
Order 1; AT&T Order 1. A stay of the Bureau's orders would harm Verizon
and AT&T by permitting that significant hindrance to remain in place.
A stay of the Bureau's orders would not be in the public interest. Congress
enacted Section 628 to "promote the public interest, convenience, and necessity by
increasing competition and diversity in the multichannel video programming
market." 47 U.S.C. 548(a). In this case, the Bureau found that Cablevision's
withholding of MSG HD and MSG+ HD from Verizon and AT&T harms
consumers by limiting video competition for RSN programming in the New York
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City, Buffalo, and Connecticut markets. See, e.g., Verizon Order 28, 40; AT&T
Order 29, 41. A stay would only perpetuate that harm.
CONCLUSIONFor the foregoing reasons, Cablevision's emergency request for stay should
Jacob M. Lewis
/s/ C. Grey Pash, Jr.
October 20, 2011
Case: 11-4104 Document: 51 Page: 33 10/20/2011 424607 34
IN THE UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
Cablevision Systems Corporation and MSG Holdings, L.P., Petitioner
Federal Communications Commission and the United States of
CERTIFICATE OF SERVICEI, C. Grey Pash, Jr., hereby certify that on October 20, 2011, I electronically
filed the foregoing Opposition of Federal Communications Commission to
Emergency Request for a Stay Pursuant to the All Writs Act with the Clerk
of the Court for the United States Court of Appeals for the Second Circuit by
using the CM/ECF system. Participants in the case who are registered
CM/ECF users will be served by the CM/ECF system.
Samuel L. Feder
Aaron M. Panner
Jenner & Block LLP
Scott H. Angstreich
1099 New York Avenue, N.W.
William J. Rinner
Kellogg, Huber, Hansen, Todd,
Washington, D.C. 20001
Evans & Figel, P.L.L.C.
Counsel for Cablevision Systems
1615 M Street, N.W., Suite 400
Corporation and MSG Holdings,
Washington, D.C. 20036
Counsel for: AT&T Services, Inc., et
Case: 11-4104 Document: 51 Page: 34 10/20/2011 424607 34
Paul, Weiss, Rifkind, Wharton &
2001 K Street, N.W.
Washington, D.C. 20006
Counsel for: Cablevision Systems
Corporation and MSG Holdings,
/s/ C. Grey Pash, Jr.
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