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TCR Sports Broadcasting Holding, LLP v. FCC & USA, No. 11-1151 (4th Cir.)

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Released: May 27, 2011

REDACTED PUBLIC VERSION

BRIEF FOR RESPONDENTS
IN THE UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

NO. 11-1151

TCR SPORTS BROADCASTING HOLDING, L.L.P.,
D/B/A MID-ATLANTIC SPORTS NETWORK,
PETITIONER,
V.
FEDERAL COMMUNICATIONS COMMISSION
AND UNITED STATES OF AMERICA,
RESPONDENTS.

ON PETITION FOR REVIEW OF AN ORDER OF THE
FEDERAL COMMUNICATIONS COMMISSION

CHRISTINE A. VARNEY
PETER KARANJIA
ASSISTANT ATTORNEY GENERAL
DEPUTY GENERAL COUNSEL


CATHERINE G. O'SULLIVAN
RICHARD K. WELCH
NANCY C. GARRISON
ACTING ASSOCIATE GENERAL COUNSEL
ATTORNEYS


JAMES M. CARR
UNITED STATES
COUNSEL
DEPARTMENT OF JUSTICE

WASHINGTON, D.C. 20530
FEDERAL COMMUNICATIONS COMMISSION

WASHINGTON, D.C. 20554
(202) 418-1740


TABLE OF CONTENTS

Table of Contents .............................................................................................. i
Table of Authorities......................................................................................... iii
Glossary........................................................................................................... vi
Jurisdictional Statement ....................................................................................2
Statement of Issue Presented.............................................................................3
Statutes and Regulations ...................................................................................3
Counterstatement of the Case............................................................................3
Counterstatement of Facts.................................................................................5
A. Statutory And Regulatory Background.................................................5
B. The Carriage Dispute Between TWC And MASN...............................8
C. The Bureau Order ...............................................................................11
D. The Order On Review .........................................................................12
Summary of Argument....................................................................................19
Standard of Review .........................................................................................23
Argument.........................................................................................................26
I. The Commission Correctly Concluded That The Program Carriage
Statute Does Not Prohibit Cable Operators From Rejecting
Carriage Proposals For Reasons Unrelated To A Programming
Vendor's Affiliation.................................................................................26
II. The Commission Acted Within Its Discretion In Finding That
TWC Based Its Rejection Of MASN's Proposal On A Cost-
Benefit Analysis Unrelated To Affiliation...............................................30
i

A. Record Evidence, Including Sworn Testimony And
Contemporaneous Documentation, Supported The
Commission's Finding That TWC Did Not Refuse Carriage
"On The Basis Of Affiliation Or Nonaffiliation." ..............................30
1. The Record Reflected Low Demand For MASN's
Programming In North Carolina. ....................................................35
2. The Record Demonstrated That TWC Would Incur High
Costs If It Carried MASN On An Analog Tier...............................41
3. The Record Confirmed TWC's Concerns About Bandwidth
Constraints.......................................................................................44
B. MASN's Challenges To TWC's Sworn Testimony Are
Meritless. .............................................................................................47
1. MASN's Quibbles With The Substance Of TWC's
Testimony Are Unavailing..............................................................47
2. MASN Is Wrong In Arguing That The FCC Should Have
Disregarded TWC's Sworn Testimony Because It Was Not
Contemporaneous Evidence............................................................52
III. Substantial Evidence Supported The Commission's Finding That
TWC Applied The Same Cost-Benefit Analysis To MASN That It
Applied To Its Own Affiliated Networks. ...............................................55
IV. The Commission's Order Does Not Harm Competition Or
Consumers................................................................................................63
Conclusion.......................................................................................................65
ii

TABLE OF AUTHORITIES

CASES


Adeyemi v. District of Columbia, 525 F.3d 1222
(D.C. Cir. 2008).................................................................................... 53, 54
Allentown Mack Sales & Serv., Inc. v. NLRB, 522
U.S. 359 (1998) ...........................................................................................25
Baltimore Sun Co. v. NLRB, 257 F.3d 419 (4th Cir.
2001)............................................................................................................25
Citizens to Preserve Overton Park, Inc. v. Volpe,
401 U.S. 402 (1971) ....................................................................................24
Consolo v. FMC, 383 U.S. 607 (1966) ...........................................................25
Diamond v. Colonial Life & Accident Ins. Co., 416
F.3d 310 (4th Cir. 2005)....................................................................... 58, 62
EEOC v. Sears Roebuck & Co., 243 F.3d 846 (4th
Cir. 2001).....................................................................................................53
Globalstar, Inc. v. FCC, 564 F.3d 476 (D.C. Cir.
2009)............................................................................................................57
Goldstein v. Chestnut Ridge Volunteer Fire Co.,
218 F.3d 337 (4th Cir. 2000).......................................................................35
Harris v. Mayor of Baltimore, 2011 WL 1739994
(4th Cir. May 6, 2011).................................................................................58
Jackson v. Gonzales, 496 F.3d 703 (D.C. Cir. 2007)......................................54
Kasey v. Sullivan, 3 F.3d 75 (4th Cir. 1993)............................................ 25, 46
McKennon v. Nashville Banner Publ'g Co., 513
U.S. 352 (1995) ...........................................................................................53
Merrick v. Farmers Ins. Group, 892 F.2d 1434 (9th
Cir. 1990).............................................................................................. 53, 54
National Ass'n of Regulatory Util. Comm'rs v.
FCC, 533 F.2d 601 (D.C. Cir. 1976)...........................................................28
Ngarurih v. Ashcroft, 371 F.3d 182 (4th Cir. 2004) ................................ 25, 47
NLRB v. Grand Canyon Mining Co., 116 F.3d 1039
(4th Cir. 1997) .............................................................................................24
iii

NLRB v. HQM of Bayside, LLC, 518 F.3d 256 (4th
Cir. 2008).............................................................................................. 24, 65
Ohio Valley Envtl. Coal. v. Aracoma Coal Co., 556
F.3d 177 (4th Cir. 2009)....................................................................... 23, 24
Price v. Thompson, 380 F.3d 209 (4th Cir. 2004) ..........................................50
Price Waterhouse v. Hopkins, 490 U.S. 228 (1989) .......................................53
Snyder v. Phelps, 580 F.3d 206 (4th Cir. 2009),
aff'd, 131 S. Ct. 1207 (2011).......................................................................57
St. Mary's Honor Ctr. v. Hicks, 509 U.S. 502
(1993) ..........................................................................................................54
Trinity Am. Corp. v. EPA, 150 F.3d 389 (4th Cir.
1998)............................................................................................................38

ADMINISTRATIVE DECISIONS


Applications for Consent to the Assignment and/or
Transfer of Control of Licenses, 21 FCC Rcd
8203 (2006) ........................................................................................ 7, 8, 12
Comcast Corp., 22 FCC Rcd 17938 (2007)......................................................8
Implementation of Sections 12 and 19 of the Cable
Television Consumer Protection and Competition
Act of 1992
, 9 FCC Rcd 2642 (1993)............................................... 6, 27, 63

STATUTES AND REGULATIONS


Cable Television Consumer Protection and
Competition Act of 1992, 2(a)(5), 106 Stat.
1460 ...............................................................................................................5
Cable Television Consumer Protection and
Competition Act of 1992, 2(b)(2), 106 Stat.
1463 ........................................................................................................ 6, 63
5 U.S.C. 706(2)(A).......................................................................................23
28 U.S.C. 2342(1) ..........................................................................................2
28 U.S.C. 2344 ...............................................................................................2
42 U.S.C. 1983 .............................................................................................35
47 U.S.C. 541(c)...........................................................................................28
iv

47 U.S.C. 536(a)(3) ............................................... 1, 5, 12, 19, 23, 26, 58, 64
47 U.S.C. 405(a)...........................................................................................57
47 U.S.C. 402(a).............................................................................................2
47 U.S.C. 155(c)(5) ......................................................................................13
47 C.F.R. 76.1300-76.1302..........................................................................6
47 C.F.R. 76.1302(g)(1) ...............................................................................12
47 C.F.R. 76.1301(c)....................................................................................27

OTHERS


S. Rep. No. 102-92 (1991) ................................................................................5


v

GLOSSARY

AAA American
Arbitration
Association

Adelphia Order
Applications for Consent to the
Assignment and/or Transfer of Control
of Licenses
, 21 FCC Rcd 8203 (2006)

Arbitration Award
Decision & Award, TCR Sports Broad.
Holding, L.L.P. v. Time Warner Cable
Inc.
, No. 71-472-E-00697-07 (Am.
Arb. Ass'n June, 2, 2008) (Margolis,
Arb.) (JA___)

Arvan Decl.
Declaration of Steve Arvan (JA____)

Bureau Order
TCR Sports Broad. Holding, L.L.P.
d/b/a Mid-Atlantic Sports Network v.
Time Warner Cable Inc.
, 23 FCC Rcd
15783 (Med. Bur. 2008) (JA____)

Conway Decl.
Declaration of Paul Conway (JA____)

Denison Decl.
Declaration of John Denison (JA____)

FCC Federal
Communications
Commission

HD high
definition

Hevey Decl.
Declaration of Carol Hevey (JA____)

Hevey Supp. Decl.
Supplemental Declaration of Carol
Hevey (JA____)

Horowitz Decl.
Declaration of Howard Horowitz
(JA____)

Kelly Decl.
Declaration of Brian Kelly (JA____)

vi

Kelly Supp. Decl.
Supplemental Declaration of Brian
Kelly (JA____)

Kent Decl.
Declaration of Jerald L. Kent (JA____)

King Decl.
Declaration of Joe King (JA____)

MAP Media
Access
Project

MASN Mid-Atlantic
Sports
Network

MLB
Major League Baseball

MVPD
multichannel video programming
distributor

Order
TCR Sports Broad. Holding, L.L.P.
d/b/a Mid-Atlantic Sports Network v.
Time Warner Cable Inc.
, 25 FCC Rcd
18099 (2010) (JA____)

Portelli Supp. Decl.
Supplemental Declaration of Anthony
Portelli (JA____)

Program Carriage Order
Implementation of Sections 12 and 19
of the Cable Television Consumer
Protection and Competition Act of
1992
, 9 FCC Rcd 2642 (1993)

PSPPE per-subscriber-per-major-pro-event

Rosenberg Decl.
Declaration of Andrew Rosenberg
(JA____)

RSN
regional sports network

Third Hevey Decl.
Third Declaration of Carol Hevey
(JA____)

vii

Tr.
Transcript of Arbitration Hearing, TCR
Sports Broadcasting, L.L.P. v. Time
Warner Cable Inc.
, No. 71-472-E-
0069707 (May 20 & 21, 2008)
(JA____)

TWC
Time Warner Cable





viii

IN THE UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

NO. 11-1151

TCR SPORTS BROADCASTING HOLDING, L.L.P.,
D/B/A MID-ATLANTIC SPORTS NETWORK,
PETITIONER,
V.
FEDERAL COMMUNICATIONS COMMISSION
AND UNITED STATES OF AMERICA,
RESPONDENTS.

ON PETITION FOR REVIEW OF AN ORDER OF THE
FEDERAL COMMUNICATIONS COMMISSION

BRIEF FOR RESPONDENTS

Federal law prohibits a cable operator from discriminating in its
distribution of video programming "on the basis of" a programming vendor's
"affiliation or nonaffiliation" with the cable operator. 47 U.S.C. 536(a)(3).
The Mid-Atlantic Sports Network ("MASN"), a programming vendor that is
unaffiliated with Time Warner Cable ("TWC"), contends that TWC violated
that law when it declined MASN's demand for carriage on TWC's most
widely distributed tier of cable programming in North Carolina. After
reviewing an extensive evidentiary record, however, the Federal

Communications Commission ("Commission" or "FCC") determined that
TWC did not unlawfully discriminate against MASN. The Commission
concluded that TWC rejected MASN's carriage proposal for legitimate and
nondiscriminatory reasons not because MASN was unaffiliated with TWC,
but because the sparse demand in North Carolina for MASN's programming
(principally baseball games of the Baltimore Orioles and Washington
Nationals) did not justify the
cost of carrying the network
on MASN's terms. In this case, MASN asserts that the FCC abused its
discretion and improperly weighed the evidence in denying MASN's
discrimination claim.

JURISDICTIONAL STATEMENT

The FCC released the order on review on December 22, 2010. TCR
Sports Broad. Holding, L.L.P. d/b/a Mid-Atlantic Sports Network v. Time
Warner Cable Inc., 25 FCC Rcd 18099 (2010) (JA____) ("Order"). MASN
filed a timely petition for judicial review of the Order on February 17, 2011,
within the 60-day deadline established by 28 U.S.C. 2344. This Court has
jurisdiction to review the Order under 47 U.S.C. 402(a) and 28 U.S.C.
2342(1).
2

STATEMENT OF ISSUE PRESENTED

Whether the FCC acted within its discretion in concluding, based on
substantial record evidence, that TWC did not discriminate on the basis of
affiliation when it refused to accept MASN's terms for carriage on TWC's
North Carolina cable systems.

STATUTES AND REGULATIONS

Pertinent statutes and regulations are appended to MASN's brief.

COUNTERSTATEMENT OF THE CASE

In 2007, TWC declined MASN's demand for carriage throughout
North Carolina on TWC's most widely distributed tier of cable service
(known as the "analog" tier). TWC did so after MASN refused to consider
alternative proposals by TWC, including carriage of MASN on TWC's
"digital" tier (a tier with about
of subscribers) or carriage of
MASN on TWC's analog tier only in eastern parts of North Carolina. After
negotiations broke down, MASN filed for arbitration under a procedure
established by the FCC. In June 2008, an arbitrator ruled that TWC had
unlawfully discriminated against MASN on the basis of MASN's lack of
affiliation with TWC. Arbitration Award (JA____).
TWC filed a petition for FCC review of the Arbitration Award. The
FCC's Media Bureau denied TWC's petition and affirmed the arbitrator's
decision. TCR Sports Broad. Holding, L.L.P. d/b/a Mid-Atlantic Sports
3

Network v. Time Warner Cable Inc., 23 FCC Rcd 15783 (Med. Bur. 2008)
(JA____) ("Bureau Order").
After TWC sought further administrative review of the Bureau Order,
the FCC granted TWC's application for review, reversed the Bureau Order,
and ruled that TWC did not unlawfully discriminate against MASN. Order
1 (JA____). The agency found substantial evidence that very few cable
subscribers in North Carolina were interested in watching the games of the
professional baseball teams from Baltimore and Washington MASN's core
programming. Order 13-18 (JA____-____). For example,

of households with televisions in any of the major North Carolina
viewing areas watched MASN during the relevant period, as compared with
of households in Baltimore. The record also
showed that TWC would incur costs of approximately
per year if
it carried MASN. Order 19-20 (JA___-____). And TWC's executives
submitted sworn and unrefuted testimony that "[c]onsiderations of
affiliation never played a role" in their decision-making. Order n.117
(JA____) (quoting Hevey Decl. 10 (JA____)). Based on the full record, the
FCC concluded that TWC had provided legitimate and nondiscriminatory
reasons for rejecting MASN's carriage proposal. MASN now petitions this
Court to vacate the FCC's Order.
4

COUNTERSTATEMENT OF FACTS

A. Statutory And Regulatory Background

In the early 1990s, Congress observed that cable operators and cable
programmers often have common owners. See Cable Television Consumer
Protection and Competition Act of 1992 ("1992 Cable Act"), 2(a)(5), 106
Stat. 1460; S. Rep. No. 102-92, at 24-27 (1991). This "vertical integration"
between producers and distributors of cable programming gave cable
operators "the incentive and ability to favor their affiliated programmers" and
to "make it more difficult for noncable-affiliated programmers to secure
carriage on cable systems." 1992 Cable Act, 2(a)(5), 106 Stat. 1460.
To address concerns about the potentially anticompetitive effects of
such integration, Congress in 1992 directed the FCC to establish regulations
to prevent cable operators and other multichannel video programming
distributors ("MVPDs") from "discriminating in video programming
distribution on the basis of affiliation or nonaffiliation of vendors in the
selection, terms, or conditions for carriage of video programming provided by
such vendors." 47 U.S.C. 536(a)(3). The Commission complied with this
statutory mandate in 1993 by promulgating rules for adjudicating cable
program carriage complaints. Implementation of Sections 12 and 19 of the
Cable Television Consumer Protection and Competition Act of 1992, 9 FCC
5

Rcd 2642 (1993) (Program Carriage Order); see also 47 C.F.R. 76.1300-
76.1302 (FCC's implementing rules).
In adopting these rules, the Commission recognized that Congress
carefully balanced the public interest in preventing unfair and exclusionary
conduct by vertically integrated MVPDs against the public interest in
allowing legitimate business practices in a competitive marketplace. See
Program Carriage Order, 9 FCC Rcd at 2643 1 ("we have endeavored to
serve the congressional intent to prohibit unfair or anticompetitive actions
without restraining the amount of multichannel programming available by
precluding legitimate business practices common to a competitive
marketplace"). "In implementing the provisions of" the program carriage
statute, the Commission explained, "our regulations must strike a balance that
not only pr[o]scribes behavior prohibited by the specific language of the
statute, but also preserves the ability of affected parties to engage in
legitimate, aggressive negotiations." Id. at 2648 14. Thus, the Commission
"follow[ed]" Congress's "directive to `rely on the marketplace, to the
maximum extent feasible, to achieve greater availability' of the relevant
programming." Id. at 2648 15 (quoting 1992 Cable Act, 2(b)(2), 106 Stat.
1463).
6

In 2006, the FCC took further action to deter unlawful discrimination
on the basis of affiliation when it granted applications to transfer control of
Adelphia's cable systems to TWC and Comcast. See Applications for
Consent to the Assignment and/or Transfer of Control of Licenses, 21 FCC
Rcd 8203 (2006) ("Adelphia Order"). As a condition for approving those
transactions, the Commission required TWC and Comcast "to engage in
commercial arbitration" with any unaffiliated regional sports network
("RSN") "that is unable to reach a carriage agreement with either firm, should
1
the RSN elect to use the arbitration remedy." Id. at 8287 189.
Under the Adelphia Order's new arbitration procedure, if Comcast or
TWC denies carriage to "an RSN unaffiliated with any MVPD," the RSN
"may submit its carriage claim to arbitration." Adelphia Order, 21 FCC Rcd
at 8287 190. The arbitrator must decide whether carriage is required under
the FCC's program carriage rules and, if so, which party's final offer will
govern the terms of carriage. Id. at 8288 190. Within 30 days after

1 For purposes of this arbitration condition, the FCC defined an RSN as
"any non-broadcast video programming service" that (1) "provides live or
same-day distribution within a limited geographic region of sporting events"
of any team that is a member of various specified sports leagues (including,
inter alia, Major League Baseball and the National Basketball Association),
and (2) "in any year, carries a minimum of either 100 hours of programming"
covering such events or "10% of the regular season games of at least one
sports team" that satisfies the first criterion. Adelphia Order, 21 FCC Rcd at
8336.
7

publication of the arbitrator's decision, any "party aggrieved by the
arbitrator's award may file with the Commission a petition seeking de novo
review of the award." Id. at 8339.
The Commission offered this arbitration remedy only to RSNs because
it recognized the unique appeal of those networks to cable subscribers.
"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 8259
2
124.

B. The Carriage Dispute Between TWC And MASN

MASN owns the rights to televise nearly all the games of two Major
League Baseball ("MLB") teams: the Baltimore Orioles and the Washington
Nationals. MASN began televising Nationals games in 2005 and Orioles
games in 2007. Bureau Order 7-8 (JA____). MASN is not affiliated with
any MVPD.

2 The Commission suspended the arbitration remedy in September 2007,
"with the exception of those disputes in which" the remedy had "already been
invoked." Comcast Corp., 22 FCC Rcd 17938, 17946-47 24 (2007).
Because MASN requested arbitration before the FCC suspended the remedy,
the suspension did "not affect" the arbitration between MASN and TWC. Id.
at 17947 n.66.
8

TWC owns multiple cable systems in several states. It is the largest
provider of pay television service in North Carolina, Bureau Order 5
(JA____), and is affiliated with several RSNs, Order 6 & n.68 (JA____-
____, ____).
In March 2005, MASN approached TWC with a proposal for carriage
of MASN on TWC's North Carolina cable systems. Bureau Order 10
(JA____). During negotiations with MASN, TWC was open to "discussing
carriage of MASN on a digital sports tier in North Carolina." Letter from
Michelle Kim, Vice President, TWC, to David C. Frederick, Counsel for
MASN, July 27, 2006, at 1 (JA____); see also Rosenberg Decl. 3 (JA___).
TWC also inquired whether MASN would be willing to consider carriage on
3
an analog tier in TWC's cable systems in eastern North Carolina. Rosenberg
Decl. 5 (JA___). MASN rejected both suggestions, insisting that it was
entitled to carriage on one of TWC's two analog tiers throughout the state.

3 Analog tiers are dedicated to the transmission of programming in an
analog (as opposed to digital) format. TWC offers two analog tiers: a
"basic" tier, which includes broadcast stations and public access services; and
a "cable programming services" or "expanded basic" tier, which includes a
number of cable programming networks as well as the basic tier channels.
All of TWC's customers subscribe to the basic tier, and approximately
of TWC's customers subscribe to the expanded basic tier. Order 5
(JA____). "[R]oughly
of TWC's customers" in North Carolina i.e.,
more than
"subscribe to TWC's digital basic tier, which features a
multitude of additional programming services." Id.; see also Third Hevey
Decl. 21 (JA___).
9

Id. 3, 5 (JA____-____). MASN asserted that TWC's carriage of MASN
on a digital tier "would be discriminatory" because TWC carries its affiliated
RSNs on analog tiers, which reach more subscribers. Letter from David C.
Frederick, Counsel for MASN, to Michelle Kim, Vice President, TWC,
August 2, 2006, at 1 (JA____).
In May 2007, after it became clear that MASN "refused to consider
carriage on a tier other than an analog tier," TWC rejected MASN's demand
for carriage. Letter from Henk Brands, Counsel for TWC, to David C.
Frederick, Counsel for MASN, May 16, 2007, at 1 (JA____). TWC
explained that it was "unconvinced that MASN's programming" would be
"sufficiently popular in North Carolina to justify adding [MASN] to an
analog tier." Id. at 2 (JA____). Nonetheless, TWC reiterated its willingness
to discuss carriage of MASN on a digital tier. Id. at 1-2 (JA____-____); see
also Order n.6 (JA___).
Less than a month later, MASN filed a formal arbitration demand with
the American Arbitration Association ("AAA"), invoking the Adelphia
Order's arbitration remedy. Arbitration Demand, June 5, 2007 (JA____).
MASN contended that, by refusing to carry MASN on an analog tier, TWC
was discriminating against MASN. Id. at 19-24 (JA____-____).
10

The following year, an arbitrator upheld TWC's claim, Arbitration
Award at 11-16 (JA____-____), and awarded MASN carriage on TWC's
North Carolina cable systems on the terms proposed by MASN. Id. at 22
4
(JA____).

C. The Bureau Order

In October 2008, the FCC's Media Bureau denied a petition by TWC
requesting de novo review of the arbitrator's decision. Bureau Order 1
(JA____). In affirming the arbitrator's decision, the Bureau determined that
MASN had made a prima facie showing of unlawful discrimination on the
basis of affiliation, and that TWC's refusal to carry MASN on an analog tier
throughout North Carolina unreasonably restrained MASN's ability to
compete fairly. Id. 26-31 (JA____-____). Although the Bureau
acknowledged that TWC had "produced some evidence to buttress its claim"
that it did not deny carriage on the basis of affiliation, id. 32 (JA___), the
Bureau nonetheless concluded that the company had failed to produce
sufficient evidence to rebut MASN's prima facie case. Id. 32-41 (JA____-
____). In particular, the Bureau faulted TWC for failing to produce what it

4 The arbitrator who issued the Arbitration Award was the second arbitrator
assigned to this case. The AAA removed a previous arbitrator after TWC
filed a motion raising "doubts about" that arbitrator's "impartiality" and his
"appearance of bias." Arbitration Award at 3 (JA __).
11

regarded as sufficient "contemporaneous" documentary evidence
memorializing TWC's decision-making regarding MASN's demand for
carriage. Id. n.127 (JA___). The Bureau reasoned that this "dearth" of
contemporaneous documentary evidence "calls into question whether TWC
accorded any serious consideration to MASN's proposal." Id.
Concluding that MASN's final offer rather than TWC's more
closely approximated the "fair market value" of the right to carry MASN, the
Bureau ordered TWC to begin carrying MASN on an analog channel on its
5
North Carolina cable systems. Id. 42, 48, 55 (JA____- ____).

D. The Order On Review

In December 2010, the FCC granted TWC's application for review,
reversed the Bureau Order, and concluded that MASN had "failed to
demonstrate that TWC has impermissibly discriminated pursuant to [47
U.S.C. 536(a)(3)] and its implementing rules." Order 10 (JA____). The
Commission found that the Bureau "fail[ed] to give due credit to TWC's
proffered reasons for declining to carry MASN on an analog tier." Order
12 (JA____). The Commission explained that "although MASN has proven

5 Under the terms of the Adelphia Order and the FCC's rules, TWC was not
required to commence carriage of MASN (nor has it done so to date) while
the Commission reviewed the arbitrator's decision and the Bureau Order.
See Adelphia Order, 21 FCC Rcd at 8339; 47 C.F.R. 76.1302(g)(1); Order
n.7 (JA____).
12

a prima facie case of program carriage discrimination, TWC has provided
evidence establishing legitimate and non-discriminatory reasons for its
6
decision." Order 10 (JA____-____).
In addition to contemporaneous e-mail correspondence reflecting a
TWC executive's concern about lack of customer interest in the Orioles
games that MASN carried, see MASN Exh. 13 (JA __), TWC submitted
sworn testimony from executives who affirmed that "[c]onsiderations of
affiliation never played a role" in TWC's carriage decision. Order n.117
(JA___) (quoting Hevey Decl. 10 (JA____)).
7
After reviewing the entire record de novo, the Commission found
substantial evidence that, as part of an overarching cost-benefit analysis,
TWC's carriage decision was motivated by three legitimate and

6 The Commission noted that the parties disagreed about "the appropriate
legal framework for assessing program carriage discrimination" (Order 11
(JA____)) specifically, the applicable burden of proof once a claimant
establishes a prima facie case of discrimination. MASN contended that, after
a claimant makes such a showing, the burdens of production and persuasion
shift to the defendant to establish legitimate and nondiscriminatory reasons
for its carriage decision. By contrast, TWC argued that, after the claimant
establishes a prima facie case, the defendant must "produce evidence of
legitimate and non-discriminatory reasons for its carriage decision," and the
claimant "would then have the burden of showing" that the defendant's
asserted reasons "constitute pretexts for discrimination." Id. The
Commission found it unnecessary to resolve this burden-shifting question,
concluding that "TWC would prevail under either framework." Id.
7 See Order n.5 (JA___) (citing, inter alia, 47 U.S.C. 155(c)(5)).
13

nondiscriminatory considerations: (1) the weak demand for MASN's
programming in North Carolina; (2) the substantial rights fees that TWC
would incur in carrying MASN on an analog tier; and (3) the opportunity cost
of dedicating analog channel capacity to MASN. Order 13-20, 23
(JA____-____). In light of this evidence, the Commission accepted TWC's
explanation that it "determined that the benefits of adding MASN to an
analog tier in North Carolina would not outweigh the substantial costs."
Order 12 (JA____). This "refute[d] MASN's claim of unlawful program
carriage discrimination" because TWC's challenged carriage decision was
"not based on [MASN's] affiliation or non-affiliation." Order 11 (JA___).
Rather, TWC's rejection of MASN's demand for analog carriage on all of
TWC's North Carolina cable systems "was motivated by a variety of factors
. . . unrelated to MASN's affiliation status," including "MASN's lack of
strong appeal to North Carolina residents and the high cost of carrying
MASN." Order 12 (JA____).
First, record evidence supported TWC's assertion that "limited demand
for MASN's programming in North Carolina" played a critical role in TWC's
"refusal to carry MASN on an analog tier." Order 13 (JA____). The
record established that, despite carriage of MASN in North Carolina by four
MVPDs, MASN's Nielsen ratings in the state (a widely used measure of the
14

size of MASN's audience) were very low. In each of the major markets in
North Carolina, MASN scored ratings of less than
. In other words, less
than
percent of households with a television in the principal
North Carolina markets watched MASN. That negligible rating was less than
one fifteenth of the
rating that MASN achieved in Baltimore, the home of
the Orioles. Id. (JA____). Even if MASN's North Carolina ratings were
tripled to account for the fact that MASN was only available to about

in the state, those ratings would remain very
low,
. Order 13 (JA____).
The Commission further noted that "almost every other cable system in
North Carolina has declined to carry MASN." Order 18 (JA____). Even
cable operators that were unaffiliated with RSNs and therefore had no
incentive to engage in affiliation-based discrimination had rejected
MASN's proposal for carriage in North Carolina. For example, TWC
submitted evidence that Suddenlink a cable operator with no ownership
interest in any programming service refused to carry MASN on an analog
tier in North Carolina for many of the same reasons given by TWC. See Kent
Decl. 1-2, 4-5, 7 (JA____-____). The fact that cable operators with no
affiliated RSNs reached the same conclusion as TWC provided "independent
15

evidence that TWC did not engage in discrimination on the basis of
affiliation." Order 18 (JA____).
Second, the Commission found credible evidence that "the high cost"
of carrying MASN played a role in TWC's rejection of MASN's proposal.
Order 19 (JA____). MASN demanded a monthly rights fee of
for
each subscriber who received MASN. That translated into roughly

per year for TWC to carry MASN on an analog tier. Order 19 &
n.104 (JA____). TWC pointed out that this substantial rights fee "would
cause TWC to incur a loss absent either an increase in rates" which could
lead some subscribers to drop TWC's service "or MASN's attraction of a
large number of new TWC subscribers, an unlikely event given the thin
demand for MASN in North Carolina." Order 19 (JA____-____).
The record thus supported TWC's assessment that MASN's
"unremarkable ratings" could not justify its "considerable price." Order 19
(JA____). In particular, TWC produced evidence that "MASN provides
significantly less value to TWC's North Carolina subscribers than do other
RSNs." Id. For example, "MASN is more
,"
which carries the

) and
in the state than MASN does. Order n.105
(JA____-____). Evidence also showed that while RSNs generally charge
16

"about
per subscriber per month for a full ratings point," MASN is
"about
as expensive." Id. (JA____) (quoting Petition for Review
at 27 (JA____)).
Third, the Commission credited TWC's evidence that it considered
"the channel capacity demanded by MASN" when assessing the cost of
MASN's proposal. Order 20 (JA____). Analog carriage of MASN "would
require a full 6 MHz channel on TWC's analog tier for MASN as well as a
second `overflow' channel for MASN2, the service that carries games when
the Orioles and Nationals play simultaneously." Id. The record showed that
in the face of increasing competition from other MVPDs, TWC "is seeking to
free up as much spectrum as possible to add new HD [i.e., high definition]
services." Id. TWC explained that "allocating a full analog channel to
MASN" would "place TWC at a competitive disadvantage by imposing an
opportunity cost of two or three fewer HD services." Id.
The Commission rejected the Bureau's finding that TWC unlawfully
discriminated by treating MASN differently from News 14, a TWC-affiliated
news channel that for a brief time devoted a small fraction of its airtime to
televising games played by the National Basketball Association's Charlotte
Bobcats. Order 14 & n.70 (JA____-____). The Bureau had found that
although MASN's Orioles telecasts and News 14's Bobcats broadcasts were
17

"comparable in terms of demand" in North Carolina, TWC carried News 14
but refused to carry MASN on an analog tier. Bureau Order 29 (JA____).
The Commission pointed out that the Bureau's finding of discrimination
ignored substantial disparities in the cost of carrying News 14 and MASN.
The record demonstrated that it would cost TWC considerably more "both
in terms of money and bandwidth" to carry MASN on an analog tier than it
cost to carry Bobcats games on News 14. Order 14 (JA____). For one
thing, after TWC purchased the Bobcats rights for
, it did not incur
any additional
when carrying those games. By contrast,
carriage of MASN would impose on TWC

per subscriber per month. Id. (JA____-____).
Moreover, unlike carriage of MASN, carriage of the Bobcats games
did not require TWC to allocate a full analog channel. A mere "two percent"
of News 14's air time which consisted overwhelmingly of news and
weather reporting was devoted to Bobcats games. Id. (JA____). In light of
this evidence, the Commission concluded that legitimate concerns about cost
not impermissible considerations of affiliation caused TWC to treat
MASN differently from News 14.
The Commission also rejected MASN's argument that TWC applied a
different standard to MASN than it applied to its own affiliates. The agency
18

found evidence that TWC "evaluated MASN's demand for carriage in the
same manner that it has evaluated other such requests." Order 13
(JA____). Specifically, the Commission determined that TWC based its
decisions to carry its own affiliated RSNs on the same cost-benefit
considerations that informed its decision to reject MASN's proposal. Order
n.68 (JA____).
On the basis of its de novo review of the evidence, the Commission
concluded that TWC "has established legitimate reasons for its carriage
decision that are borne out by the record and are not based on" MASN's
nonaffiliation with TWC. Order 11 (JA____). The Commission therefore
vacated "the Bureau's directive that TWC carry MASN on an analog tier in
8
its North Carolina systems." Order 2 (JA____).

SUMMARY OF ARGUMENT

I. Congress enacted the program carriage statute to guard against
anticompetitive conduct that could "unreasonably restrain the ability" of
unaffiliated video programming vendors "to compete fairly." 47 U.S.C.
536(a)(3). For that reason, the statute bans only discrimination "on the
basis of" a programmer's "affiliation or nonaffiliation." Id.

8 Because the Commission found no unlawful discrimination by TWC, it
did not reach the merits of any other issues raised in this proceeding. Order
23 (JA____).
19

Contrary to MASN's suggestion, the program carriage statute does not
require vertically integrated cable operators to treat all affiliated and
unaffiliated networks equally. In particular, the statute does not foreclose
vertically integrated cable operators from declining to carry unaffiliated
programming services for legitimate business reasons having nothing to do
with affiliation. For example, a cable operator could reasonably conclude
that the benefits of carrying a particular unaffiliated network do not justify the
costs because the network has little appeal to the cable operator's subscribers.
Carriage decisions of this sort do not unreasonably restrain a programmer's
ability to compete fairly. They simply reflect the normal workings of the
competitive market for video programming.
II. In this case, MASN claims that TWC's refusal to give MASN
analog carriage throughout North Carolina was unlawfully based on MASN's
lack of affiliation with TWC. But TWC produced substantial evidence
including sworn testimony from its executives and contemporaneous
evidence that it based its carriage decision on legitimate business
considerations, including the limited demand for MASN in North Carolina,
the high cost of carrying MASN, and the opportunity cost of allocating scarce
channel capacity to MASN. The Commission reasonably determined that
20

even if TWC had the burden of rebutting MASN's prima facie case, it
provided sufficient evidence to carry that burden.
Regional sports programming is often regarded as "must-have"
programming because it provides live coverage of games played by local or
popular teams. But the teams featured by MASN (the Baltimore Orioles and
the Washington Nationals) are neither located in North Carolina nor popular
there a conclusion that is not altered by MLB's decision to deem them
"home teams." The record documented a lack of demand for MASN's
programming in the state. While coverage of Orioles and Nationals games
may be in demand in the Baltimore and Washington areas, it simply is not
"must have" programming in North Carolina. The record further
demonstrated that analog carriage on MASN's terms would impose
substantial costs on TWC: an annual rights fee of almost
and an
impediment to the launch of additional HD services that subscribers prefer.
In light of that evidence, the FCC reasonably determined that TWC based its
carriage decision on legitimate and nondiscriminatory business judgments.
None of MASN's challenges to TWC's evidence has merit. MASN
primarily contends that the Commission could not reasonably accept TWC's
sworn testimony in the absence of contemporaneous evidence. The
Commission rightly rejected that argument. The record in fact contains
21

contemporaneous evidence: An e-mail exchange between TWC executives in
2006 buttresses TWC's testimony that the limited demand for MASN in
North Carolina played a key role in TWC's rejection of MASN's proposal.
In any event, the Commission properly rejected the claim that TWC's
testimony should be disregarded because it did not constitute
contemporaneous documentation of TWC's decision. As the Commission
noted, nothing in the record suggests that cable operators typically document
their carriage deliberations, and nothing in the program carriage statute or
FCC rules requires such documentation. Indeed, in analogous cases, courts
have rejected arguments that only contemporaneous evidence will suffice to
rebut allegations of pretextual discrimination.
III. The Commission reasonably found that TWC applied the same
cost-benefit analysis to MASN that it uses to make all of its carriage
decisions. In particular, the agency concluded that the same considerations
that justified TWC's refusal to give MASN analog carriage on all of its North
Carolina cable systems also supported TWC's carriage of its affiliated RSNs.
MASN asserts that TWC applied a more stringent "ratings standard" to
MASN than to News 14, a TWC affiliate carried on an analog tier. It points
to evidence that Orioles games achieved marginally higher ratings in some
North Carolina markets than Charlotte Bobcats telecasts on News 14. But the
22

Commission explained that TWC had a legitimate reason for distinguishing
between MASN and News 14. The cost of analog carriage of MASN far
exceeded the cost of carrying Bobcats games on News 14, both in terms of
money and bandwidth.
IV. Contrary to the assertions of MASN and its amici, the
Commission's Order does not harm competition or consumers. In enacting
the program carriage statute, Congress carefully balanced the public interest
in preventing unfair and exclusionary conduct by vertically integrated
MVPDs against the public interest in allowing legitimate business practices
in a competitive market. Because the statute prohibits only discrimination
"on the basis of affiliation or nonaffiliation," 47 U.S.C. 536(a)(3), and
because the FCC reasonably concluded that TWC did not engage in any such
discrimination here, the FCC's decision fully comports with the public
interest.

STANDARD OF REVIEW

The FCC's Order must be upheld unless it is "arbitrary, capricious, an
abuse of discretion, or otherwise not in accordance with law." 5 U.S.C.
706(2)(A). "Review under this standard is highly deferential, with a
presumption in favor of finding the agency action valid." Ohio Valley Envtl.
Coal. v. Aracoma Coal Co., 556 F.3d 177, 192 (4th Cir. 2009). The Court
23

may not "substitute its judgment for that of the agency." Citizens to Preserve
Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971). "Deference is due
where the agency has examined the relevant data and provided an explanation
of its decision that includes a rational connection between the facts found and
the choice made." Ohio Valley, 556 F.3d at 192 (internal quotation marks
omitted).
MASN challenges the FCC's factual findings concerning TWC's
rejection of MASN's carriage proposal. The Court "must affirm" these
findings "as long as they are supported by substantial evidence on the record
as a whole." NLRB v. Grand Canyon Mining Co., 116 F.3d 1039, 1043-44
(4th Cir. 1997) (internal quotation marks omitted); see also MASN Br. 29
(acknowledging that "[t]he FCC's factual findings are reviewed under the
`substantial evidence' standard"). "Substantial evidence is such relevant
evidence as a reasonable mind might accept as adequate to support a
conclusion. It constitutes more than a scintilla but less than a preponderance
of evidence." NLRB v. HQM of Bayside, LLC, 518 F.3d 256, 260 (4th Cir.
2008) (internal quotation marks omitted).
This is the same deferential standard that applies when courts
determine whether there is sufficient evidence to justify a refusal to direct a
jury verdict. See Allentown Mack Sales & Serv., Inc. v. NLRB, 522 U.S. 359,
24

366-67 (1998) (in assessing whether an agency's decision is supported by
substantial evidence, the court "must decide whether on this record it would
have been possible for a reasonable jury to reach the [agency's] conclusion");
Kasey v. Sullivan, 3 F.3d 75, 79 (4th Cir. 1993) ("If there is evidence to
justify a refusal to direct a verdict were the case before a jury, then there is
substantial evidence.") (internal quotation marks omitted); see also Baltimore
Sun Co. v. NLRB, 257 F.3d 419, 428 (4th Cir. 2001).
Accordingly, the "possibility of drawing two inconsistent conclusions
from" the same evidentiary record "does not prevent an administrative
agency's finding from being supported by substantial evidence." Consolo v.
FMC, 383 U.S. 607, 620 (1966). Even assuming that the FCC could
reasonably "have reached a different conclusion" based on the record in this
case, "it is not [the Court's] task to reweigh the evidence and determine
which of the competing views is more compelling. It is instead to ensure that
substantial evidence supports the [Commission's] judgment." Ngarurih v.
Ashcroft, 371 F.3d 182, 189 (4th Cir. 2004) (internal quotation marks
omitted).
25

ARGUMENT

I.

THE COMMISSION CORRECTLY CONCLUDED THAT
THE PROGRAM CARRIAGE STATUTE DOES NOT
PROHIBIT CABLE OPERATORS FROM REJECTING
CARRIAGE PROPOSALS FOR REASONS UNRELATED
TO A PROGRAMMING VENDOR'S AFFILIATION.

By its terms, the cable program carriage statute only prohibits
discrimination "on the basis of" the "affiliation or nonaffiliation" of video
programming vendors. 47 U.S.C. 536(a)(3). It does not require cable
operators to accept requests for carriage by unaffiliated RSNs such as MASN
in all circumstances. Rather, as the Commission recognized, a cable operator
may treat an unaffiliated programmer differently from affiliated networks, "so
long as it can demonstrate that such treatment did not result from the
programmer's status as an unaffiliated entity." Order 12 (JA____).
MASN appears to argue for a much broader ban on discrimination.
According to MASN, "[t]reating an unaffiliated network worse than a cable-
affiliated network reflects discrimination `on the basis of affiliation or non-
affiliation' that Congress prohibited." MASN Br. 34 (quoting 47 U.S.C.
536(a)(3)). This categorical statement suggests that cable operators can
never differentiate between their affiliated networks and unaffiliated
programmers in any way that would benefit the affiliates.
26

MASN misconstrues the law. Under the program carriage statute, a
cable operator may permissibly choose to carry an affiliated network rather
than an unaffiliated network for reasons independent of the networks'
affiliation status for example, because the affiliated network is more
popular or less costly to carry than the unaffiliated network. In other words,
as two economists acknowledged in an amicus brief supporting MASN,
drawing distinctions between affiliated and unaffiliated programmers "may
be permissible if justified by legitimate business considerations." Litan-Hahn
Amicus Br. 3.
That conclusion not only comports with the text of the statute and the
Commission's corresponding regulation, see 47 C.F.R. 76.1301(c), but also
with "the congressional intent to prohibit unfair or anticompetitive actions
without . . . precluding legitimate business practices common to a competitive
marketplace." Program Carriage Order, 9 FCC Rcd at 2643 1.
MASN nonetheless implies that the program carriage statute bars cable
operators from making any carriage decisions that tend "to favor the interests
of [their] affiliated networks" even if such decisions are fully justified by
legitimate business judgments and are not based on affiliation. MASN Br.
55. In MASN's view, the statute and the FCC's rules impose a "federal
equal-treatment obligation" on vertically integrated cable operators. MASN
27

9
Br. 37. In this context, however, "equal treatment" cannot mean that
vertically integrated cable operators must treat affiliated and unaffiliated
networks identically, regardless of any differences in their popularity or
carriage costs. If that were the case, TWC, which carries all of its affiliated
RSNs on analog tiers, would be compelled to allocate analog channels to any
unaffiliated RSNs that requested carriage in North Carolina even the
networks of the Seattle Mariners and the Los Angeles Dodgers, baseball
teams located thousands of miles from North Carolina.
The law does not require such a counterintuitive result. Cable
operators need not treat all programmers equally. Congress has specified that
no cable system shall "be subject to regulation as a common carrier . . . by
reason of providing any cable service." 47 U.S.C. 541(c). Thus, unlike a
regulated common carrier, which must "serve indifferently all potential
10
users," a cable operator has no obligation to treat all cable programming

9 The amicus brief filed by Media Access Project ("MAP") suffers from the
same misconception. See, e.g., MAP Amicus Br. 22-23 (cable operators must
treat their affiliated programmers and their "non-affiliate competitors
equally"); see also Arbitration Award at 8 n.5 (JA____) (opining that, to the
extent employment-law standards apply, "the law that has developed around
`disparate impact,' or indirect, discrimination in employment would seem to
offer the closer analogy").
10 National Ass'n of Regulatory Util. Comm'rs v. FCC, 533 F.2d 601, 608
(D.C. Cir. 1976).
28

services "indifferently." It is free to exercise its discretion to carry or not
carry any cable networks it chooses, so long as it does not discriminate "on
the basis of" video programmers' "affiliation or nonaffiliation," 47 U.S.C.
536(a)(3), and otherwise complies with relevant statutory and regulatory
requirements.
Therefore, to engage in prohibited program carriage discrimination,
TWC would have had to treat MASN differently from TWC-affiliated
networks because MASN was not affiliated with TWC. The FCC found that
MASN established "a prima facie case of program carriage discrimination."
Order 10 (JA____). But after conducting a careful examination of the
record, the Commission reasonably concluded that TWC "provided evidence
establishing legitimate and non-discriminatory reasons for" its rejection of
MASN's carriage demand reasons unrelated to MASN's lack of affiliation
with TWC. Id. In the Commission's considered judgment, TWC's evidence
was "sufficient to refute MASN's prima facie case." Order 12 (JA____).
MASN argues that the record does not support the FCC's finding of no
affiliation-based discrimination. For the reasons discussed below, MASN's
claims lack merit.
29

II.

THE COMMISSION ACTED WITHIN ITS DISCRETION
IN FINDING THAT TWC BASED ITS REJECTION OF
MASN'S PROPOSAL ON A COST-BENEFIT ANALYSIS
UNRELATED TO AFFILIATION.

A. Record Evidence, Including Sworn Testimony And

Contemporaneous Documentation, Supported The
Commission's Finding That TWC Did Not Refuse
Carriage "On The Basis Of Affiliation Or
Nonaffiliation."

During the arbitration, TWC submitted substantial evidence that it
rejected MASN's carriage demand based on an evaluation of the relative
costs and benefits of carrying MASN. Carol Hevey, the TWC executive who
oversees the company's North Carolina cable systems, testified that
"[c]onsiderations of affiliation never played a role" in the decision. Hevey
Decl. 10 (JA____). She explained that "TWC makes carriage decisions on
the basis of a host of factors," including "present subscriber interest in
individual programming services," "channel-capacity constraints," and "cost
factors." Id. 9 (JA____). In a series of sworn declarations, Hevey
described how those factors led TWC to reject MASN's demand for analog
carriage throughout North Carolina.
After "discussions with TWC employees who are charged with
marketing in North Carolina," Hevey and her staff "determined that MASN's
programming would not be appealing to a large number of North Carolina
subscribers." Hevey Decl. 14 (JA____); see also Hevey Supp. Decl. 7-8
30

(JA____). A number of considerations informed that determination. Hevey
noted that "when Orioles games were carried on FSN-South in past years,
ratings in North Carolina were low considerably lower than ratings for
[Atlanta] Braves games" carried on FSN-South in North Carolina. Hevey
Decl. 15 (JA____). Furthermore, at the time MASN requested carriage, no
broadcast television or radio station in North Carolina carried Orioles or
Nationals games, and no North Carolina newspaper gave the games special
coverage. Id. 16 (JA____). The poor performance of the Orioles and
Nationals in recent years raised additional questions about the teams' ability
11
to spark fan interest in North Carolina. Id. 17 (JA____).
Contrary to MASN's assertion that TWC failed to "produce a single
contemporaneous document supporting even one" of the reasons offered by
Hevey (MASN Br. 45), contemporaneous e-mail correspondence
corroborates Hevey's testimony that the limited demand for Orioles games in
North Carolina played a key role in TWC's decision-making.

11 Hevey noted that the Orioles "have not reached the playoffs since 1997"
and (particularly at the time of the carriage discussions between TWC and
MASN) the Nationals were "a new team without much of a following even in
Washington, D.C." Hevey Decl. 17 (JA ___). The Nationals have yet to
enjoy a winning season since the team moved to Washington from Montreal
in 2005.
31

In August 2006, Mickey Carter, TWC's director of programming, e-
mailed Tom Smith, a marketing executive for TWC's cable systems in
eastern North Carolina. See MASN Exh. 13 (JA____). Carter asked Smith
whether his systems received Baltimore Orioles games on FSN-South. Smith
replied in a September 2006 e-mail that his systems received Orioles games
but not Atlanta Braves games. MLB black-out rules required FSN-South to
black out Braves games in eastern North Carolina because MLB had awarded
exclusive television rights for that region to the Orioles and Nationals. See
Order n.79 (JA____). Smith complained that the black-out rule precluding
coverage of the Braves was "a big sore spot" for TWC's systems in eastern
North Carolina: "We are in the Baltimore footprint [designated by MLB] and
have NO Baltimore fans to speak of. There is a HUGE Atlanta fan base here,
and we have no way to deliver what they want." MASN Exh. 13 (JA____);
see also Hevey Supp. Decl. 8 (JA____).
In another e-mail to Carter later that day, Smith expressed skepticism
that the Orioles could "create a fan base" in North Carolina: "[W]e've given
them 30 years to do so. In Wilmington, we even started carrying the old
Home Team Sports" a network that previously televised Orioles games
"back in 1985," yet the Orioles "have not ever been able to develop a
following" in North Carolina. MASN Exh. 13 (JA____).
32

MASN argues that TWC, in rejecting MASN's proposal, relied solely
"on a `gut' reaction that North Carolina `can't have many Orioles fans.'"
MASN Br. 47 (quoting MASN Exh. 13 (JA____)). To the contrary, as the e-
mail exchange makes clear, Smith confirmed Carter's impression that North
Carolina has few Orioles fans even in the eastern part of the state (which is
closest to Baltimore). MASN Exh. 13 (JA____). This contemporaneous
documentary evidence is consistent with and bolsters TWC's testimonial
12
evidence.
In her sworn testimony, TWC executive Hevey also recounted that she
and her staff "took account of the cost of MASN's programming." Hevey
Decl. 22 (JA____). She projected that if TWC had agreed to pay the rights
fee demanded by MASN "
per subscriber per month" cable bills
would have significantly increased for the vast majority of TWC's
subscribers, even though "very few of them are interested in watching
MASN." Id. Hevey estimated that TWC would have to pay MASN "almost
per year" for analog carriage, and that MASN would not generate
enough revenue to cover this substantial rights fee "unless its carriage would

12 Smith sent his e-mails to Carter in September 2006, long before MASN
requested arbitration. Thus, MASN is wrong in asserting (Br. 47) that "TWC
waited until after MASN initiated this proceeding to make any attempt" to
verify the lack of demand for Orioles games in North Carolina.
33

result in the addition or retention of almost
[TWC] subscribers" an
unlikely prospect given the minimal interest in MASN's programming in
North Carolina. Third Hevey Decl. 16 (JA____).
Finally, Hevey and her staff considered the opportunity cost associated
with analog carriage of MASN. Hevey Decl. 11-13 (JA____-____); Third
Hevey Decl. 8-10 (JA____-____). Hevey pointed out that because TWC
had no vacant channels on its analog tiers in North Carolina, analog carriage
of MASN would require TWC to delete an existing programming service (at
the risk of disappointing viewers of that service). Hevey Decl. 11 (JA____-
____). Moreover, if TWC allocated an analog channel to MASN, it would be
unable to use that channel to add two or three HD services to its program
lineup at a time when its competitors are expanding their HD offerings in
response to subscriber interest in such services. Third Hevey Decl. 9-10
(JA____).
In another sworn declaration, Brian Kelly (a TWC executive who
reports to Hevey) confirmed that he, Hevey, and other TWC employees
"participated in numerous discussions" concerning the weak demand in North
Carolina for MASN's telecasts of Orioles and Nationals games. Kelly Decl.
17 (JA____). They concluded that there was "relatively little interest in the
Orioles" in North Carolina "and even less in the Nationals." Id. (JA____-
34

____). When Kelly "personally made inquiries concerning the ratings" for
FSN-South's North Carolina telecasts of Orioles games in past seasons, he
discovered that those "ratings were low." Id. (JA____).
The FCC reasonably "credit[ed]" Hevey's and Kelly's testimony.
Order 21 (JA____). Indeed, the agency found substantial support in the
record for each of the three reasons TWC offered for denying MASN analog
carriage throughout North Carolina: (1) the low demand for MASN in the
state; (2) the high cost of carrying MASN on an analog tier; and (3) the costs
13
of allocating scarce channel capacity. Order 13-20 (JA____-____).
1. The Record Reflected Low Demand For MASN's

Programming In North Carolina.

Consistent with TWC's sworn testimony, the Commission found
substantial evidence that the demand for MASN in North Carolina was low.
In each of the state's major markets, MASN scored a rating of

a tiny fraction of MASN's
rating in Baltimore, the Orioles' home city.
Order 13 (JA____). Even if MASN's North Carolina ratings were tripled

13 Citing a case involving a First Amendment claim under 42 U.S.C.
1983, MASN suggests that this Court has viewed with skepticism "post
hoc" explanations for a defendant's conduct. MASN Br. 43 (citing Goldstein
v. Chestnut Ridge Volunteer Fire Co.
, 218 F.3d 337 (4th Cir. 2000)). In the
case MASN cites, however, the Court accepted such explanations because
they were "substantiated by the balance of the record." Goldstein, 218 F.3d
at 357. Here, as in Goldstein, the record supports the proffered explanation.
35

to account for the fact that MASN was only available to about

in the state, those ratings would remain at an anemic
level:
. Id.; Portelli Supp. Decl. 8 (JA____).
MASN complains that the Commission should have compared
MASN's North Carolina ratings to the ratings of other RSNs in "extended
inner" markets (i.e., markets outside the networks' home markets). MASN
Br. 59. But MASN offers no evidence that such a comparison would have
compelled the Commission to revise its assessment of consumer demand for
MASN in North Carolina. To the contrary, TWC submitted evidence
showing that other RSNs' ratings outside their home markets far exceed
14
MASN's ratings in North Carolina.
Furthermore, TWC was not alone in rejecting MASN's carriage
request. "[T]he fact that almost every other cable system in North Carolina
[had] declined to carry MASN" confirmed "a lack of interest in MASN's
programming statewide." Order 18 (JA____). Even cable operators that
were not vertically integrated chose not to carry MASN in North Carolina.
One of those cable operators, Suddenlink, rejected MASN's carriage demand

14 For example, the Pittsburgh Pirates' RSN scored a rating in Erie,
Pennsylvania; and the New York Mets' RSN posted a
rating in Albany,
New York. See Portelli Supp. Decl. Exh. 2 (JA____). These ratings are over
seven times greater than MASN's North Carolina ratings during the relevant
period.
36

for many of the same reasons given by TWC. Kent Decl. 1-2, 4-5, 7
(JA____-____).
MASN emphasizes that two cable operators Charter and Mediacom
"do carry MASN on an analog tier in North Carolina." MASN Br. 56. But
their carriage agreements with MASN confirm that demand for MASN in
North Carolina is
. Charter and Mediacom which are unaffiliated
with any RSNs are
of
their North Carolina cable systems. Those systems are located in the
northeastern part of the state, a popular vacation destination for residents of
15
the Baltimore-Washington area. Although Charter and Mediacom have



As a result, MASN reaches only
of
Charter's
subscribers and
of Mediacom's
subscribers
in North Carolina. Order 18 & n.94 (JA____); TWC Reply at 32-33 and
Exhibit 3 (JA____-____, ____).

15 Similarly, the record showed that TWC "inquired as to MASN's
willingness to agree to carriage of MASN on an analog tier only in its Eastern
North Carolina systems" (Order n.6 (JA__)), but MASN insisted on analog
carriage on every TWC system in the state (Rosenberg Decl. 5 (JA___)).
37

The record thus established that cable operators with no programming
affiliates and no incentive to discriminate on the basis of affiliation
independently "made the same decision as TWC to either distribute MASN to
only a limited percentage of [North Carolina] subscribers or to refrain from
distributing MASN at all." Order n.101 (JA____). The Commission
reasonably took account of that undisputed evidence. See Order 18
16
(JA____).
According to MASN (Br. 56), the fact that DirecTV and DISH
Network carry MASN on a widely distributed programming tier in North
Carolina "confirms the strong demand" for MASN in the state. Not so. The
Commission noted that DirecTV and DISH were the only two MVPDs that
distributed MASN broadly to their North Carolina subscribers: "[A]ll other
MVPDs [in the state] have made the same decision as TWC to either
distribute MASN to only a limited percentage of subscribers or to refrain
from distributing MASN at all." Order n.101 (JA____). Moreover, DirecTV
and DISH have a strong incentive to carry MASN because they have many
subscribers in Baltimore and Washington, MASN's home markets. The

16 MASN claims that after the record closed, it reached agreements with
more cable operators in North Carolina. MASN Br. 13 n.6, 56. Even if true,
that development is irrelevant. This Court's review of the FCC's Order "is
limited to the administrative record before the agency when it makes its
decision." Trinity Am. Corp. v. EPA, 150 F.3d 389, 401 n.4 (4th Cir. 1998).
38

Commission found evidence that when these satellite service providers make
their signals available to subscribers in the Baltimore and Washington areas,
the same signals and the same programming also become "available to
subscribers in North Carolina." Order 18 (JA____) (citing King Decl. 42
17
(JA____)).
MASN also makes much of DirecTV's claim that its North Carolina
advertising campaign featuring MASN triggered an increase in DirecTV's
subscriptions. MASN Br. 57-58 (citing MASN Exh. 78 (JA____-____)).
The record, however, indicated that TWC's failure to carry MASN has not
increased the level of customer defections to DirecTV or DISH. Hevey Supp.
Decl. 13 (JA____). If Orioles and Nationals games were "must have"
programming for North Carolinians, one would expect TWC subscribers to
have defected to DirecTV or DISH in droves.
MASN next argues that MLB's "home team" designation of the
Orioles and Nationals in North Carolina reflected the "actual and potential
demand for MASN's programming." MASN Br. 58. Yet the record

17 MASN speculates that if DirecTV and DISH believed that MASN could
not find an audience in North Carolina, they could have declined to pay
MASN for carriage rights in that state and used "spot beams" to carry MASN
only in the Baltimore-Washington area. MASN Br. 57. But the record
showed that neither DirecTV nor DISH has "a spotbeam that targets the
Baltimore/Washington area without covering North Carolina." TWC Pre-
Hearing Br. 39 n.132 (JA____).
39

demonstrated that neither team inspires much enthusiasm among North
Carolinians. A survey submitted by TWC showed that when 500 North
Carolina residents were asked which sports teams they follow, "only four
mentioned the Orioles, none mentioned the Nationals, and 25 other
professional sports teams received more mentions than the Orioles." Order
16 (JA____) (citing Horowitz Decl. 9-13 (JA____-____)). Even a
survey commissioned by MASN itself yielded similar results. When 100
North Carolina sports fans were asked to identify their favorite MLB team, 25
fans responded that they "[d]on't really follow MLB." Among the 75 fans
who identified a favorite MLB team, the Atlanta Braves ranked first with 20
votes. The Orioles, with only 9 votes, finished third behind the Braves and
the New York Yankees. The Nationals received just one vote. MASN Exh.
18
36 (JA____). In light of this evidence, the FCC justifiably declined to find
significance in MLB's "home team" designations. Order 16 (JA____).

18 This evidence is consistent with the e-mail from TWC executive Tom
Smith, observing in September 2006 that TWC's subscribers in eastern North
Carolina include "a HUGE Atlanta fan base" and "NO Baltimore fans to
speak of." MASN Exh. 13 (JA____). Unlike the Baltimore Orioles, the
Atlanta Braves have been one of the most successful MLB franchises over
the past two decades, winning 14 straight division titles (an MLB record) and
a World Series championship. It is thus not surprising that North Carolinians
prefer the Braves over the Orioles and Nationals.
40

MASN's observation that the Orioles have been televised in North
Carolina for more than two decades (Br. 58-59) is no more compelling. The
long history of Orioles telecasts in the state has not translated into robust
interest among fans. See MASN Exh. 13 (JA____) (although TWC started
carrying Orioles games in North Carolina in 1985, the Orioles "have not ever
been able to develop a following" there). Indeed, the record indicated that
"TWC received no appreciable subscriber complaints regarding either FSN-
South's cessation of Orioles telecasts or the absence of MASN" from TWC's
programming lineup. Order 15 (JA____) (citing Hevey Decl. 21
(JA____) and Kelly Decl. 18 (JA____)).
2. The Record Demonstrated That TWC Would Incur

High Costs If It Carried MASN On An Analog Tier.

Further buttressing the sworn testimony of TWC's executives,
substantial evidence confirmed that analog carriage of MASN would be
expensive for TWC. The Commission found that, to acquire the rights to
carry MASN, TWC would have to pay
per subscriber per month, or
approximately
per year for analog carriage. Order 19 & n.104
(JA____). TWC explained that it could not recover that cost unless it raised
rates (at the risk of losing subscribers) or MASN attracted a large number of
new TWC subscribers a dubious prospect given the meager demand for
41

MASN in North Carolina. See Hevey Decl. 22 (JA____); Third Hevey
Decl. 16 (JA____); Order 19 (JA____-____).
The record also showed that, "comparing MASN's considerable price
to its unremarkable ratings, MASN provides significantly less value to
TWC's North Carolina subscribers than do other RSNs." Order 19
(JA____). "On average, RSNs charge about
per subscriber per
month for a full ratings point. . . . MASN is about
as expensive."
Order n.105 (JA____) (quoting Petition for Review at 27 (JA____)). TWC
noted that "MASN is

." Id. (JA____-____). The Commission
further observed that "


." Id. (JA____).
MASN maintains that the FCC improperly "discounted" evidence that
MASN's license fees were "a relative bargain given the quantity of
professional sports programming MASN carries." MASN Br. 52, 59-60
(emphasis added). The cost evidence submitted by MASN calculated
MASN's market value by employing a "per-subscriber-per-major-pro-event"
("PSPPE") metric i.e., simply dividing the network's "annual per-
42

subscriber license fee by the total number of live major professional sporting
events" MASN presents. Order n.106 (JA____).
The FCC was justified in concluding that MASN's methodology was a
flawed proxy for value. The agency noted that MASN's PSPPE analysis
"appraises the value of RSNs based on the number of games carried, not
whether consumers actually watch those games." Order n.106 (JA____). By
focusing on the sheer number of professional games it televises, MASN's
cost analysis considerably overstates the network's value to North Carolina
subscribers. MASN presents more than 300 MLB games every year. Half of
those games feature the Washington Nationals. Yet MASN has not even
attempted to argue that North Carolinians have any interest in the Nationals
(a team that has yet to register a winning season since moving to Washington
in 2005). Because the quantity of games presented by MASN did not
translate into quality programming, it provided an unreliable barometer of
MASN's value.
The Commission reasonably concluded that "ratings evidence" offers a
"far better" measure of MASN's value than "PSPPE." Order n.106
(JA____). Using that benchmark, the agency acted well within its discretion
in affording greater weight to TWC's cost evidence, which compared the fees
43

MASN charged with the actual ratings it achieved. See Order n.105
(JA____).
MASN contends that because its "regression analysis included a
number of independent variables specifically designed to control for
demand," the Commission was wrong to assume that "MASN's analysis did
not adequately address consumer demand." MASN Br. 60. MASN
concedes, however, that its regression analysis did not include a ratings
variable. Id. at 60-61. Although it attempted to account for demand
indirectly, MASN's analysis included no component that reflects the level of
demand as precisely as ratings do. It was reasonable for the Commission to
give greater weight to cost evidence that accounted for consumer demand
more directly than MASN's regression analysis did.
3. The Record Confirmed TWC's Concerns About

Bandwidth Constraints.

The Commission found evidence that cable operators are "seeking to
free up as much spectrum as possible to add new HD services" in response to
competition from other MVPDs and subscriber interest in those services.
Order 20 (JA____) (citing Third Hevey Decl. 17 (JA____) and Kent Decl.
7 (JA____)); see also Conway Decl. 17 (JA____). The record also
established that TWC could use a single analog channel for two or three HD
services if it converted the channel to digital transmission. Third Hevey
44

Decl. 10 (JA____). The FCC reasonably determined that this evidence
supported TWC's assertion that "allocating a full analog channel to MASN"
would impose on TWC "an opportunity cost of two or three fewer HD
services." Order 20 (JA____).
MASN does not directly challenge the evidence documenting TWC's
bandwidth constraints. Instead, it argues that TWC could have made room
for MASN on an analog tier by bumping its own existing programming to
TWC's digital tier. MASN Br. 61-62; see also id. at 33 (TWC could have
"ma[de] room for MASN's programming on the analog tier"). This argument
ignores the substantial cost to TWC of displacing an existing service. As
TWC explained, migrating services to a digital tier "is always problematic:
any service carried on an analog tier over time acquires a following, and any
deletion therefore causes some subscribers to be dissatisfied." Hevey Decl.
11 (JA____-____). Moreover, the law does not require TWC to disrupt its
current programming to accommodate MASN. The program carriage statute
forbids discrimination in video programming on the basis of affiliation (see
Section I, supra); it does not require cable operators to grant preferential
treatment to unaffiliated programmers.
MASN complains that "TWC offered no data" about the "HD channels
it could have offered if it denied MASN analog carriage." MASN Br. 62.
45

But the Commission reasonably rejected the premise that TWC had an
obligation to "put forth evidence quantifying the opportunity cost" associated
with analog carriage of MASN. Order n.111 (JA____). The record showed
that HD services generally are in great demand. See Conway Decl. 17-18
(JA____-____); Kent Decl. 7 (JA____). And analog carriage of MASN a
network with scant appeal in North Carolina would deprive TWC of an
opportunity to add two or three new HD services. See Third Hevey Decl.
10, 17 (JA____, ____-____). The Commission reasonably concluded that
this evidence demonstrated that concerns about bandwidth constraints were
"a legitimate and non-discriminatory reason for TWC's carriage decision."
Order 20 (JA____).
***
The evidence supporting TWC's explanation for its carriage decision is
plainly "more than a mere scintilla"; indeed, the evidence would be more than
enough "to justify a refusal to direct a verdict were the case before a jury."
Kasey, 3 F.3d at 79 (internal quotation marks omitted). Substantial evidence
therefore supports the FCC's conclusion that the reasons TWC gave for
rejecting MASN's carriage demand "are borne out by the record and are not
based on the programmer's affiliation or non-affiliation." Order n.111
(JA____). Even if there were sufficient evidence in the record to permit the
46

contrary conclusion, "it is not [the Court's] task to reweigh the evidence and
determine which of the competing views is more compelling. It is instead to
ensure that substantial evidence supports the [Commission's] judgment."
Ngarurih, 371 F.3d at 189 (internal quotation marks omitted). Applying that
deferential standard of review, the Court should affirm.

B. MASN's Challenges To TWC's Sworn Testimony Are

Meritless.

MASN asserts that there is "grave doubt" whether the reasons TWC
gave for rejecting MASN's proposal "were actually the considerations that
motivated TWC's decision." MASN Br. 48. MASN's challenges to TWC's
sworn testimony are meritless, and the FCC reasonably credited TWC's
explanation for its decision.
1. MASN's Quibbles With The Substance Of TWC's

Testimony Are Unavailing.

MASN first attacks the veracity of Carol Hevey's declaration that
"[c]onsiderations of affiliation never played a role" in TWC's carriage
decision. Hevey Decl. 10 (JA____). Although MASN points to nothing in
the record refuting this sworn statement, it claims that Hevey's assertion
"cannot be credited" because Hevey testified during the arbitration hearing
"that she was unaware of the FCC rules prohibiting reliance on" affiliation.
47

MASN Br. 44 (citing Tr. 255:1-13 (JA____)). MASN's argument is
unfounded.
To begin with, MASN mischaracterizes Hevey's testimony. In the
portion of the hearing transcript cited by MASN, the arbitrator asked Hevey
whether she was aware of the FCC's Adelphia Order. Hevey, a TWC
business executive (and not a lawyer), responded that she "wasn't familiar
with the details or the potential implications" of that order (Tr. 255:1-13
(JA____)). Hevey never testified, however, that she was unaware of the
federal prohibition on affiliation-based discrimination a ban that had been
in place for years before the Adelphia Order's arbitration mechanism was
adopted.
Even if Hevey had testified that she did not know about the ban, the
testimony in her declaration is evidence about a fact that "[c]onsiderations
of affiliation never played a role" in TWC's refusal to give MASN analog
carriage. Hevey Decl. 10 (JA____). That fact is true regardless of Hevey's
understanding of the legal obligations of cable operators under the program
carriage statute and the FCC's implementing rules and precedents. By
analogy, an employer who submits unrebutted testimony that "considerations
of gender never played a role" in his decision to fire a female employee
48

would not be liable for sex discrimination even if the employer had never
heard of Title VII and had no idea about its "potential implications."
Moreover, in response to one of the arbitrator's questions concerning
the Adelphia Order, Hevey testified that TWC's decision whether to carry
MASN "was really related to subscriber interest and the various business
aspects of potential carriage. . . . [T]he primary considerations were business
considerations." Tr. 256:1-9 (JA____). Thus, Hevey's live testimony was
fully consistent with her sworn declarations that TWC's decision rested on
legitimate business judgments, not impermissible considerations of
affiliation. See Hevey Decl. 11-22 (JA____-____); Hevey Supp. Decl.
19
6-11 (JA____-____); Third Hevey Decl. 15-19 (JA____-____).

19 MASN asserts (Br. 44) that the arbitrator who heard Hevey's live
testimony "did not accept her account of TWC's reasons for rejecting
MASN's carriage proposal." The arbitrator, however, made no findings
regarding Hevey's credibility. The arbitrator's sole credibility finding
concerned a different TWC witness (TWC's expert, Joe King) and involved
no conclusions based on King's demeanor. The arbitrator concluded that
King's testimony should receive less "weight" than that offered by MASN's
expert (Mark Wyche) simply because "Mr. King's testimony was offered
more for the purpose of attacking Mr. Wyche's theories rather than advancing
TWC's own arguments regarding demand." Arbitration Award at 14 n.12
(JA____). Under the arbitrator's flawed reasoning, any witness who presents
rebuttal evidence is deemed less credible than the witness whose testimony he
is rebutting. The Commission rightly rejected the arbitrator's conclusion,
noting that "it is not unreasonable for TWC's witnesses to assume a purely
defensive posture in refuting claims of unlawful discrimination." Order n.84
(JA____).
49

MASN next posits that TWC could not plausibly have considered all of
the factors identified by Hevey because TWC executives concededly did not
engage in "extended discussion[s]" about the demand for MASN's
programming and "quickly concluded" that MASN would have little appeal
in North Carolina. MASN Br. 45-46 (quoting Hevey Supp. Decl. 7
(JA____) and Kelly Decl. 17 (JA____)). MASN's conclusion does not
follow from its premise. Busy executives are required to make quick cost-
benefit decisions all the time, and there is no reason to believe that TWC's
executives were incapable of reaching a "quick[]" decision without "extended
discussion" in light of MASN's limited appeal to subscribers and its high cost
(both in terms of money and bandwidth).
Nor is there any basis for MASN's assertion (Br. 45) that factual
"errors" in Hevey's declaration "undercut the FCC's reliance" on her
testimony. This Court has recognized that "mere mistakes of fact are not
evidence of unlawful discrimination." Price v. Thompson, 380 F.3d 209, 214
n.1 (4th Cir. 2004). The "errors" identified by MASN do not undermine
Hevey's credibility.
MASN points out (Br. 45) that Hevey's initial declaration incorrectly
stated the total amount that TWC would have to pay MASN annually for
analog carriage. See Hevey Decl. 22 (JA____) (stating amount as

50

rather than
). But that declaration correctly stated that
MASN demanded a monthly rights fee of "
." Id. And
there is no sound basis for doubting TWC's honest and well founded
belief that a rights fee of
per subscriber per month was too much to
pay for a programming service that very few North Carolina subscribers
would watch. Id. In any event, the Commission did not rely on the

amount, see Order 19 (JA____), and it was justified in declining to
20
disregard Hevey's entire declaration on the basis of the error.
The second "error" cited by MASN was not an error at all. Hevey did
not err when she "asserted that the satellite video providers that carry MASN
in North Carolina have not advertised" that fact. MASN Br. 46 (citing Hevey
Decl. 20 (JA____)). That statement was accurate when Hevey made it.
The DirecTV advertising campaign described by MASN (Br. 46) was
launched later. See Hevey Supp. Decl. 12 (JA____).

20 In a subsequent declaration, Hevey accurately stated that TWC's annual
rights payment to MASN would amount to "
." Third
Hevey Decl. 16 (JA____). MASN claims that this figure "overstates the
true cost, because TWC may sell advertising time on MASN's programming
and would receive
."
MASN Br. 45. As TWC explained, however, advertising spots on MASN


Order n.104 (JA____) (citing TWC Reply at 36 (JA____)).
51

MASN's next target is TWC executive Brian Kelly's declaration.
MASN maintains that Kelly's representations regarding the Orioles' low
ratings do not reflect the "actual reasons" for TWC's decision because
Orioles games garnered higher ratings in some North Carolina markets than
the Charlotte Bobcats basketball games carried on an analog tier by TWC's
affiliate, News 14. MASN Br. 47-48. But TWC never claimed that it
declined to give MASN analog carriage solely because of the Orioles' poor
ratings. TWC also took into account the cost of carrying MASN on an analog
tier. See Hevey Decl. 11-13, 22 (JA____-____, ____); Third Hevey Decl.
8-19 (JA____-____). That cost far exceeded the cost of carrying Bobcats
games on News 14, "both in terms of money and bandwidth." Order 14
(JA____-____); see also Part III, infra.
2. MASN Is Wrong In Arguing That The FCC Should

Have Disregarded TWC's Sworn Testimony Because
It Was Not Contemporaneous Evidence.

MASN suggests that the Commission should have disregarded TWC's
sworn testimony because it was not "contemporaneous evidence" but instead
what MASN characterizes as "post hoc" explanation for its carriage decision.
52

21
MASN Br. 48. The cases cited by MASN do not support its argument. In
fact, courts have repeatedly held in the analogous context of employment
discrimination cases that the absence of contemporaneous evidence does not
diminish the credibility of a defendant's proffered reasons for an employment
decision. See, e.g., Merrick v. Farmers Ins. Group, 892 F.2d 1434, 1438 (9th
Cir. 1990) (rejecting argument that an employer's reasons for not promoting
an employee "lack[ed] credibility" because they "were not documented until
after the commencement of" litigation); Adeyemi v. District of Columbia, 525
F.3d 1222, 1228 (D.C. Cir. 2008) ("declin[ing] to find any significance in the
timing of [the defendant's] explanation" or "the absence of contemporaneous

21 MASN states that "[a] company accused of unlawful discrimination may
not seek to justify its conduct based on a `post hoc rationale' that is `invented
for the purposes of litigation.'" MASN Br. 42 (quoting EEOC v. Sears
Roebuck & Co
., 243 F.3d 846, 853 (4th Cir. 2001)). In Sears, however, the
defendant "offered different justifications at different times." Sears, 243 F.3d
at 852. Unlike the defendant in Sears, TWC has not offered shifting
explanations for its decision. Rather, it has consistently maintained that it
denied MASN analog carriage throughout North Carolina because the costs
of carriage exceeded the benefits. Nor is this a situation in which the
defendant's asserted reason for its decision did not actually "motivate it at the
time of the decision," Price Waterhouse v. Hopkins, 490 U.S. 228, 252
(1989) (plurality opinion), or where it is impossible for the defendant to have
acted for the reason it offered, see McKennon v. Nashville Banner Publ'g Co.,
513 U.S. 352, 359-60 (1995) (because employee's "misconduct was not
discovered until after she had been fired," employer "could not have been
motivated by knowledge it did not have" at the relevant time).
53

evidence," and rejecting plaintiff's argument that the defendant had
"manufactured its justifications after the fact").
As these courts have noted, "the absence of contemporaneous evidence
is hardly unusual" in discrimination cases. Adeyemi, 525 F.3d at 1228. Nor
is it unusual for a company to "wait[ ] to memorialize the reasons" for a
challenged employment decision until after litigation is commenced.
Merrick, 892 F.2d at 1438; see also St. Mary's Honor Ctr. v. Hicks, 509 U.S.
502, 514 n.5 (1993) (it would be "highly fanciful" to assume that employers
maintain contemporaneous records of their reasons for not hiring someone).
Just as "Title VII has never been understood to impose" a requirement that
employers "publish a contemporaneous statement of reasons every time they
make a hiring or firing decision," Jackson v. Gonzales, 496 F.3d 703, 710
(D.C. Cir. 2007), the program carriage statute and the Commission's
implementing rules do not require cable operators to produce
contemporaneous documentation of their carriage decisions. Order 21
54

22
(JA____). Nor was there any evidence in the record "that cable operators
typically document their internal carriage discussions." Id. Therefore, it was
reasonable for the FCC in this case to reject MASN's claim that the lack of
contemporaneous documentation cast doubt on TWC's testimonial evidence.

III. SUBSTANTIAL EVIDENCE SUPPORTED THE

COMMISSION'S FINDING THAT TWC APPLIED THE
SAME COST-BENEFIT ANALYSIS TO MASN THAT IT
APPLIED TO ITS OWN AFFILIATED NETWORKS.

TWC explained that it "makes carriage decisions on the basis of a host
of factors" that it uses to assess "the relative value associated with the service
or services under consideration." Third Hevey Decl. 2 (JA____).
"Although each decision takes into account the unique facts and
circumstances of each individual situation," the same basic considerations
guide TWC's analysis in every case. Id. Like most other business decisions,
the decision whether to carry a particular service hinges on whether the
benefits of doing so (in terms of increased subscriber and advertising
revenues) outweigh the attendant costs (including out-of-pocket costs and

22 MASN argues that the Commission "misse[d] the point" in noting that
TWC was under no obligation to "`memorialize any aspect of [its] decision
making process'" because "MASN has never argued that TWC violated a
regulatory, record-keeping obligation." Br. 48 (quoting Order 21
(JA____)). It is MASN, not the Commission, that misses the point. The FCC
was not required to draw an adverse inference from TWC's failure to produce
more contemporaneous documentation where there was no requirement to
create and maintain such documentation in the first place.
55

opportunity costs). Id. 3 (JA____). Here, TWC "determined that the
benefits of adding MASN to an analog tier in North Carolina would not
outweigh the substantial costs." Order 12 (JA____).
MASN's assertion (Br. 49-55) that TWC did not apply the same
criteria to its affiliated networks that it applied to MASN is baseless. As the
FCC noted, TWC "evaluated MASN's demand for carriage in the same
manner that it has evaluated other such requests." Order 13 (JA____). In
particular, "TWC provided testimonial evidence that it routinely considers
`present subscriber interest in individual programming services' as a factor in
its carriage decisions concerning both affiliates and non-affiliates" alike. Id.
(citing Hevey Decl. 9-10 (JA____)). Thus, the same legitimate business
considerations that supported TWC's refusal to give MASN statewide analog
carriage also justified TWC's analog carriage of its affiliated RSNs. Order
n.68 (JA____).
TWC's analog carriage of each of its affiliated RSNs was justified
because it generates high revenues or entails low costs. Some of TWC's
affiliated RSNs carry popular professional teams in markets with a large fan
base. For example, SportsNet New York carries New York Mets games in
New York City, and Turner South carried Atlanta Braves games in central
and western North Carolina. Order n.68 (JA____). Those networks have
56

generated much higher ratings and revenues than MASN could muster in
North Carolina. Other TWC-affiliated RSNs, such as Metro Sports and Time
Warner Cable SportsNetRochester, cost much less to carry than MASN
because they cover minor league and local high school sports. Id. By
contrast, analog carriage of MASN throughout North Carolina would have
yielded low revenues and imposed high costs a combination of factors that
made carriage unprofitable under the same overall cost-benefit analysis that
applies to TWC's affiliated RSNs. See Part II.A.1-3, supra. In light of this
evidence, the Commission reasonably found that TWC did not apply more
stringent standards to MASN than it applied to its own affiliates. See Order
23
13 & nn.66-68 (JA____-____).
In support of its assertion that TWC held MASN to a "minimum
ratings" standard that TWC allegedly does not apply to its own affiliates
(MASN Br. 50), MASN emphasizes that Orioles games achieved higher

23 Because the FCC found that TWC applied the same cost-benefit criteria
to its affiliated networks that it applied to MASN, the premise underpinning
the argument of MASN's economist amici i.e., that the FCC erred in failing
to apply its economic analysis to a "control group" consisting of TWC's own
RSNs (see Litan/Hahn Amicus Br. 11-15) is flawed. The Court should not
consider that argument in any event because MASN never presented it to the
Commission or the Court. See 47 U.S.C. 405(a); Globalstar, Inc. v. FCC,
564 F.3d 476, 483 (D.C. Cir. 2009) (courts lack jurisdiction to review claims
that have not first been presented to the FCC); Snyder v. Phelps, 580 F.3d
206, 216 (4th Cir. 2009) (an issue waived by appellant cannot be raised by
amicus curiae), aff'd, 131 S. Ct. 1207 (2011).
57

ratings in some North Carolina markets than the Charlotte Bobcats basketball
games carried on an analog tier by TWC's affiliate, News 14. MASN Br. 51.
But TWC never maintained that it based its rejection of MASN's proposal
solely on the Orioles' low ratings. Nor is there any evidence that it applied a
"minimum ratings" test to MASN. Rather, TWC explained that in this case
as in all of its carriage decisions it weighed a number of factors, including
not only the network's potential for raising revenues (as reflected by ratings),
but also the out-of-pocket and opportunity costs of carrying the network. See
Hevey Decl. 9-13, 22 (JA____-____, ____); Third Hevey Decl. 4-19
(JA____-____).
Because TWC bases its carriage decisions on several interrelated
factors not just ratings the evidence that Orioles games posted higher
ratings in North Carolina than News 14's Bobcats broadcasts does not itself
establish discrimination "on the basis of affiliation or nonaffiliation," 47
U.S.C. 536(a)(3). Cf. Harris v. Mayor of Baltimore, 2011 WL 1739994, *7
(4th Cir. May 6, 2011) (when employer bases a promotion decision on
multiple factors, disappointed applicant cannot prove discrimination under
Title VII merely by presenting evidence that she is more experienced than
employees who received promotions); Diamond v. Colonial Life & Accident
Ins. Co., 416 F.3d 310, 319 (4th Cir. 2005) (same).
58

Although the record contained evidence that ratings for Orioles games
slightly exceeded ratings for Bobcats games in some North Carolina markets
in 2006, the record also showed that analog carriage of MASN would entail
much greater costs than carriage of Bobcats games on News 14. After TWC
purchased the Bobcats rights
, it incurred no additional
in carrying Bobcats games. By contrast, carriage of MASN
would involve a
a rights fee of
per
subscriber per month. Order 14 (JA____-____); Kelly Supp. Decl. 6
(JA____). And unlike Bobcats games, which occupied a mere two percent of
News 14's air time (which was overwhelmingly devoted to news and
weather), carriage of MASN would require allocation of a full analog channel
and an "overflow" channel for MASN2 (the service that carries games when
the Orioles and Nationals play simultaneously). Order 14, 20 (JA____,
____); Kelly Supp. Decl. 6 (JA____). The FCC reasonably concluded that
this evidence of significant cost disparities substantiated TWC's assertion that
it had legitimate and nondiscriminatory business reasons for distinguishing
between MASN and News 14.
MASN next challenges the FCC's reliance on carriage costs as a
nondiscriminatory justification for TWC's decision. According to MASN
(Br. 52), cost considerations inherently favor affiliated networks over
59

unaffiliated networks because "once a cable operator has purchased the rights
to sports programming, it will have a powerful incentive to carry [that]
programming regardless of the price it paid or the programming's
popularity." This argument wrongly assumes that the cost of carrying an
affiliated network does not include the costs incurred by the cable operator in
establishing and operating the network including substantial licensing fees.
Because MASN's proposed approach discounts a major up-front component,
the FCC and TWC rightly declined to adopt it. Indeed, when TWC compared
the carriage costs of News 14 and MASN, it explained that "because TWC
owns News 14 and itself produces News 14's programming, the cost of
carriage for TWC is the service's net annual cost" roughly "

." Kelly Supp. Decl. 5 (JA____). This cost estimate refutes MASN's
suggestion that a cable operator's carriage of an affiliated network entails
little or no cost.
MASN is also incorrect in asserting that "TWC offered no evidence or
analysis" comparing the costs of carrying MASN with "the costs TWC incurs
in obtaining and producing affiliated sports programming." MASN Br. 52.
TWC submitted several sworn statements analyzing the comparative costs of
its affiliates and MASN. See Kelly Supp. Decl. 5-6 (JA____-____); Arvan
Decl. 3 (JA____); Denison Decl. 4 (JA____); see also Order 14
60

(JA____-____); id. n.68 (JA____). Based on that evidence, the FCC
reasonably concluded that "the high cost" of carrying MASN on an analog
tier was "a legitimate and non-discriminatory reason for TWC's carriage
decision." Order 19 (JA____).
Finally, MASN argues that the FCC erred in finding that the
opportunity cost of allocating channel capacity to MASN provided a
legitimate and nondiscriminatory reason for rejecting MASN's proposal.
MASN implies (Br. 53) that TWC did not apply "the same `opportunity cost'
test to its affiliated channels" that it applied to MASN. But MASN cites no
evidence to support its supposition. Moreover, MASN fails to appreciate the
uniquely burdensome bandwidth demands that its demand for carriage would
place on TWC. Analog carriage of MASN would require TWC to set aside
two analog channels: "a full 6 MHz channel" for MASN and "a second
`overflow' channel for MASN2, the service that carries games when the
Orioles and Nationals play simultaneously." Order 20 (JA____). MASN
has not identified a single TWC affiliate that places such heavy demands on
TWC's channel capacity. Accordingly, MASN cannot plausibly argue that
TWC's consideration of bandwidth constraints in this case was impermissibly
discriminatory.
61

MASN maintains that if TWC had "applied the same `opportunity cost'
test to its affiliated channels" that it applied to MASN, "TWC presumably
would have moved News 14 to a digital tier." MASN Br. 53. This argument
ignores the significant differences between News 14 and MASN. See Order
14 (JA____-____). Among other things, TWC "allocated an analog
channel" to News 14 "at a time when TWC's analog tier was not full." Id.
(JA____). By the time MASN requested carriage, however, "none of TWC's
North Carolina systems [had] vacant channels on their analog tiers." Hevey
Decl. 11 (JA____). Consequently, analog carriage of MASN would have
required TWC to delete an existing network (at the risk of displeasing
subscribers who watch that network). Id. (JA____-____). In addition, unlike
carriage of MASN, News 14's carriage of Bobcats games did not require the
allocation of two analog channels. Order 14, 20 (JA____, ____).
Even if MASN could show that a TWC affiliate that received analog
carriage occupied more channel capacity than MASN would require, such a
showing would not establish impermissible discrimination because TWC
bases its carriage decisions on multiple factors, not just bandwidth
constraints. See Diamond, 416 F.3d at 319. The record established that TWC
rejected MASN's proposal after weighing the costs and benefits of carrying
62

MASN on an analog tier the same cost-benefit analysis it applies to
affiliates and nonaffiliates alike.

IV. THE COMMISSION'S ORDER DOES NOT HARM

COMPETITION OR CONSUMERS.

MASN and its supporting amici argue that the Commission's Order
will harm competition and consumers. MASN Br. 63-64; MAP Amicus Br.
27-29; MLB Amicus Br. 10-13. They are mistaken.
In crafting the program carriage statute, Congress carefully weighed
the public interest in preventing unfair and exclusionary conduct by vertically
integrated MVPDs against the public interest in allowing legitimate business
practices in a competitive marketplace. See Program Carriage Order, 9 FCC
Rcd at 2643 1 (emphasizing "the congressional intent to prohibit unfair or
anticompetitive actions without . . . precluding legitimate business practices
common to a competitive marketplace"); see also id. at 2648 15 (noting
Congress's "directive to `rely on the marketplace, to the maximum extent
feasible, to achieve greater availability' of . . . programming") (quoting 1992
Cable Act, 2(b)(2), 106 Stat. 1463).
In weighing the public interest, Congress did not mandate that RSN
programming be made as widely available as possible even where, as here,
the demand in the relevant market is demonstrably weak and carriage on an
analog tier would have hampered the launch of additional HD channels that
63

viewers prefer. See Third Hevey Decl. 17 (JA____). Rather, Congress
chose to ban only discrimination "on the basis of" a programming vendor's
"affiliation or nonaffiliation" with an MVPD. 47 U.S.C. 536(a)(3).
Congress did not preclude vertically integrated cable operators from declining
to carry unaffiliated networks for legitimate business reasons as TWC did
here when it rejected MASN's proposal. Such legitimate business decisions
24
harm neither competition nor consumers.
In any event, the record shows that TWC was willing to negotiate with
MASN over digital carriage of its programming throughout North Carolina,
as well as analog carriage in eastern parts of the state. See Rosenberg Decl.
3, 5 (JA____-____). Those terms which MASN rejected out of hand
(id.) would have given thousands of TWC subscribers access to MASN.
In sum, the FCC's fact-bound decision in this case was firmly anchored
in the evidentiary record and the governing law, and will have none of the
dire consequences that MASN and its amici predict.

24 To the contrary, record evidence showed that consumers would be harmed
if the FCC mandated analog carriage of MASN on all of TWC's North
Carolina systems. To cover the
cost of such carriage,
TWC would have to raise cable rates for the vast majority of its subscribers,
even though "very few of them are interested in watching MASN." Hevey
Decl. 22 (JA____).

64

CONCLUSION

Ample evidence far "more than a scintilla," HQM of Bayside, 518
F.3d at 260 supported the Commission's finding that TWC denied MASN's
carriage proposal for legitimate and nondiscriminatory reasons unrelated to
MASN's status as a non-affiliate. Accordingly, the Court should deny the
25
petition for review and affirm the Commission's Order.
Respectfully
submitted,
CHRISTINE A. VARNEY
PETER KARANJIA
ASSISTANT ATTORNEY GENERAL
DEPUTY GENERAL COUNSEL


CATHERINE G. O'SULLIVAN
RICHARD K. WELCH
NANCY C. GARRISON
ACTING ASSOCIATE GENERAL
ATTORNEYS
COUNSEL


UNITED STATES
/s/ James M. Carr
DEPARTMENT OF JUSTICE

WASHINGTON, D.C. 20530
JAMES M. CARR

COUNSEL

FEDERAL COMMUNICATIONS
COMMISSION
WASHINGTON, D.C. 20554
(202) 418-1740
May 26, 2011

25 In the unlikely event that the Court grants MASN's petition and remands
the case to the Commission, it should decline MASN's invitation (Br. 64-65)
to impose a 60-day time limit on FCC proceedings on remand. Such an
extraordinary remedy is not warranted.
65

IN THE UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

TCR SPORTS BROADCASTING HOLDING, L.L.P.,
D/B/A MID-ATLANTIC SPORTS NETWORK,
PETITIONER,
v.
NO. 11-1151
FEDERAL COMMUNICATIONS COMMISSION AND

UNITED STATES OF AMERICA,
RESPONDENTS.



CERTIFICATE OF COMPLIANCE

Pursuant to the requirements of Fed. R. App. P. 32(a)(7), I hereby
certify that the accompanying "Brief for Respondents" in the captioned case
contains 13,977 words.

/s/ James M. Carr
James M. Carr

Counsel
Federal Communications Commission
Washington, D.C. 20554
(202) 418-1740 (Telephone)
(202) 418-2819 (Fax)

May 26, 2011


11-1151

IN THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT


TCR Sports Broadcasting Holding, LLP, Petitioner

v.

Federal Communications Commission and the United States of
America, Respondents.


CERTIFICATE OF SERVICE


I, James M. Carr, hereby certify that on May 26, 2011, I electronically filed
the foregoing Brief for Respondents with the Clerk of the Court for the
United States Court of Appeals for the Fourth 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.

Some of the participants in the case, denoted with asterisks below, are not
CM/ECF users. I certify further that I have directed that copies of the
foregoing document be mailed by First-Class Mail to those persons, unless
another attorney at the same mailing address is receiving electronic service.

David C. Frederick
Catherine G. O'Sullivan
Evan T. Leo
Nancy C. Garrison
Scott H. Angstreich
United States Department of Justice
Jeffrey M. Harris
Antitrust Division, Appellate Section
Kellogg, Huber, Hansen, Todd,
Room 3224
Evans & Figel, P.L.L.C.
950 Pennsylvania Avenue, N.W.
1615 M Street, N.W., Suite 400
Washington, D.C. 20530
Washington, DC 20036
Counsel for United States
Counsel for TCR Sports
Broadcasting Holding, L.L.P., d/b/a
Mid-Atlantic Sports Network


11-1151
Henk Brands
*Chrystiane B. Pereira
Paul, Weiss, Rifkind, Wharton
Andrew Jay Schwartzman
& Garrison, LLP
Media Access Project
2001 K Street, N.W.
1625 K Street, N.W.
Washington, D.C. 20006
Suite 1000
Counsel for Time Warner Cable Inc. Washington, D.C. 20006
Counsel for: Amicus Media Access
Project

Arnold M. Weiner
*Lisa S. Blatt
Law Office of Arnold M. Weiner
Robert A. Garrett
2002 Clipper Park Road
R. Stanton Jones
Suite 108
Arnold & Porter LLP
Baltimore, Maryland 21211
555 Twelfth Street, N.W.
Counsel for: Amicus Robert Litan
Washington, D.C. 20004
and Robert Hahn
Counsel for: Office of the
Commissioners of Baseball

*Thomas J. Ostertag

Office of the Commissioner of
Baseball
245 Park Avenue
New York, New York 10167


/s/ James M. Carr

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