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                            Before the
                Federal Communications Commission
                      Washington, D.C. 20554

                                )
In the Matter of:               )
                                )
BELL ATLANTIC VIDEO SERVICES    )
COMPANY,                        )
                                )
       v.                         )CSR-4983-P
                                )
RAINBOW PROGRAMMING             )
HOLDINGS, INC., and             )
CABLEVISION SYSTEMS             )
CORPORATION,                    )
                                )
Program Access Complaint        )
Pursuant to 47 C.F.R.  76.1002 )
                                )


                  MEMORANDUM OPINION AND ORDER

    Adopted:  July 10, 1997Released:  July 11, 1997

By the Chief, Cable Services Bureau:

                         I.  INTRODUCTION

      1.  On March 28, 1997, Bell Atlantic Video Services Company ("BVS" or "Complainant") filed
a program access complaint ("Complaint") against Rainbow Programming Holdings, Inc. ("Rainbow") and
Cablevision Systems Corporation ("Cablevision") (collectively referred to as "Defendants") alleging
discrimination by Rainbow in the sale of satellite cable programming and the exercise of undue influence
by Cablevision in violation of Sections 628 (b) and (c) of the Communications Act of 1934, as amended
("Communications Act"), and Section 76.1002(a) and (b) of the Commission's rules.

      2.  Based on the record before us and pursuant to the Commission's rules, we find that Rainbow
discriminated against BVS in the sale of satellite cable programming in violation of Section 628(c)(2)(B)
of the Communications Act and Section 76.1002(b) of the Commission's rules.  In light of this finding, this
Order does not address BVS's claim that Cablevision has exercised undue influence over Rainbow in
violation of Section 628(c)(2)(A) of the Communications Act and Section 76.1002(a) of the Commission's
rules or whether Rainbow's actions constituted unfair methods of competition in violation of Section 628(b)
of the Communications Act and Section 76.1001 of the Commission's rules.

                         II.  BACKGROUND

      3.  In the Cable Television Consumer Protection and Competition Act of 1992 ("1992 Cable
Act"), Congress found that as a result of increased vertical integration between cable operators and cable
programmers, "[v]ertically integrated program suppliers . . . have the incentive and ability to favor their
affiliated cable operators over nonaffiliated cable operators and programming distributors using other
technologies."  To address certain unfair competitive practices restricting competition between cable
operators and other multichannel video programming distributors, Congress enacted new Section 628 of the
Communications Act, which contains both a general prohibition against such practices and provisions
directing the Commission to adopt rules proscribing specific conduct.  Section 628(b) states:

     It shall be unlawful for a cable operator, a satellite cable programming vendor in which a
     cable operator has an attributable interest, or a satellite broadcast programming vendor to
     engage in unfair methods of competition or unfair or deceptive acts or practices, the purpose
     or effect of which is to hinder significantly or to prevent any multichannel video
     programming distributor from providing satellite cable programming or satellite broadcast 
     programming to subscribers or consumers.

Section 628(c)(2)(A) directs the Commission to promulgate regulations that:

     establish effective safeguards to prevent a cable operator which has an attributable interest
     in a satellite cable programming vendor or a satellite broadcast programming vendor from
     unduly or improperly influencing the decision of such vendor to sell, or the prices, terms,
     and conditions of sale of, satellite cable programming or satellite broadcast programming
     to any unaffiliated multichannel video programming distributor[.]

Section 628(c)(2)(B) states that the Commission's regulations shall also:

     prohibit discrimination by a satellite cable programming vendor in which a cable operator
     has an attributable interest or by a satellite broadcast programming vendor in the prices,
     terms, and conditions of sale or delivery of satellite cable programming or satellite
     broadcast programming among or between cable systems, cable operators, or other
     multichannel video programming distributors, or their agents or buying groups . . . . 

      4.  There are several exceptions to this general rule against discrimination.  Section 628(c)(2)(B)
allows a programming vendor to: (i) impose reasonable requirements for creditworthiness, offering of
service, and financial stability and standards regarding character and technical quality; (ii) establish different
prices, terms, and conditions to take into account actual and reasonable differences in the cost of creation,
sale, delivery, or transmission of satellite cable programming or satellite broadcast programming; (iii)
establish different prices, terms, and conditions that take into account economies of scale, cost savings, or
other direct and legitimate economic benefits reasonably attributable to the number of subscribers served
by the distributor; or (iv) enter into an exclusive contract that is otherwise permitted under the Commissions
regulations.

      5.  In Implementation of Sections 12 and 19 of the Cable Television Consumer Protection and
Competition Act of 1992:  Development of Competition and Diversity in Video Programming Distribution
and Carriage, MM Docket No. 92-265, First Report and Order ("Program Access Report and Order"), in
which the Commission adopted regulations pursuant to Section 628 of the Communications Act, the
Commission concluded that non-price discrimination is included within the prohibition against
discrimination set forth in Section 628(c)(2)(B).  While the Commission did not attempt to identify all types
of non-price discrimination that could occur, the Commission stated that "one form of non-price
discrimination could occur through a vendor's `unreasonable refusal to sell,' including refusing to sell
programming to a class of distributors, or refusing to initiate discussions with a particular distributor when
the vendor has sold its programming to that distributor's competitor."  The Commission cautioned,
however, that "unreasonable" refusals to sell should be distinguished from "certain legitimate reasons that
could prevent a contract between a vendor and a particular distributor . . . ."  Such legitimate reasons would
include:

     (i) the possibility of [the] parties reaching an impasse on particular terms, (ii) the
     distributor's history of defaulting on other programming contracts, or (iii) the vendor's
     preference not to sell a program package in a particular area for reasons unrelated to an
     existing exclusive arrangement or a specific distributor.

                  III.  SUMMARY OF THE PLEADINGS

      6.  BVS describes itself as an indirect wholly owned subsidiary of Bell Atlantic Corporation. 
BVS states that it offers multiple channels of video programming over an open video system operated by
Bell Atlantic-New Jersey ("Bell Atlantic") in Dover Township, New Jersey, and adds that it competes with
Adelphia Communications ("Adelphia"), the incumbent cable operator.

      7.  BVS asserts that Rainbow is a wholly owned subsidiary of Cablevision that distributes cable
programming, including SportsChannel New York and SportsChannel Philadelphia, via satellite to cable
operators for retransmission to subscribers.  BVS concludes that Rainbow therefore is a vertically
integrated satellite cable programming vendor and is subject to the restrictions of Section 628 of the
Communications Act and the Commission's program access rules.

      8.  BVS states that it has been trying unsuccessfully to obtain regional sports programming from
Rainbow since early October, 1996, when it first approached Rainbow about obtaining SportsChannel New
York.  According to BVS, on the day before the parties' first scheduled meeting, in November, 1996,
Rainbow cancelled the meeting and refused to reschedule it due to a personnel change.  BVS states that
Rainbow finally met with BVS on December 12, 1996, but failed to provide contract proposals it had
promised to prepare.  Although Rainbow's representative allegedly agreed to send the proposals by
December 31, 1996, and to try to meet again with BVS on January 8, 1997, BVS claims that Rainbow did
not send the proposals and rescheduled the meeting to January 24.  BVS states that Rainbow's
representative then cancelled the rescheduled meeting on the day before the meeting, explaining that he had
not yet received management approval to present a contract proposal.  BVS claims that it continued to
request contract proposals from Rainbow by telephone and letter and that Rainbow did not return the BVS
representative's telephone messages or respond to his letter.  BVS states that on March 5, 1997, in
compliance with Section 76.1003(a) of the Commission's rules, it notified Rainbow in writing of its intent
to file a program access complaint if, by March 17, 1997, Rainbow did not provide rate cards and draft
carriage agreements for SportsChannel New York and a package of SportsChannel New York,
SportsChannel Philadelphia, and PRISM.  According to BVS, Rainbow did not respond. 

      9.  BVS claims that, by cancelling scheduled meetings, refusing to return telephone calls, and
failing to provide promised contract proposals for BVS's review, Rainbow has refused to sell its
programming to BVS, or even enter into negotiations to do so, despite the fact that BVS has attempted on
multiple occasions to initiate discussions with Rainbow and has requested that Rainbow provide proposed
carriage agreements for BVS's consideration.  BVS states that Rainbow licenses its programming to BVS's
competitor, Adelphia.  BVS contends that Rainbow's refusal to provide programming to BVS while at the
same time providing programming to Adelphia is a violation of Section 628(b) and (c) of the
Communications Act and Section 76.1002(b) of the Commission's rules. 

      10.  BVS also claims that Cablevision has improperly influenced Rainbow's refusal to sell its sports
programming to BVS in violation of Section 628(c)(2)(A) of the Communications Act and Section
76.1002(a) of the Commission's rules.  In support of its claim, BVS states that Cablevision has asserted in
other Commission proceedings that it has no obligation to sell programming to video dialtone customers or
programmers.  BVS also describes press reports that suggest that Cablevision seeks to deny access to its
programming to telephone company affiliates, such as BVS.  BVS points to a program access complaint
filed against Cablevision by a programmer as evidence of Cablevision's general "disregard for the program
access rules."  BVS adds that because it believes Cablevision has sponsored Rainbow's refusal to sell
programming to BVS, it sent Cablevision a notice of its intent to file a program access complaint. 
According to BVS, Cablevision did not respond.

      11.  BVS requests that the Commission act in this matter on an expedited basis and order Rainbow
to sell its programming to BVS for distribution in Dover Township and any other area that BVS serves.  BVS
further requests that the Commission award it monetary damages, including attorney's fees.  BVS asks the
Commission to refer this matter to an administrative law judge for a determination as to the appropriate level
of monetary damages to be awarded.

      12.  In their Answer, Defendants dispute BVS's characterization of the course of communication
between the parties.  According to Defendants, Rainbow has acted reasonably throughout the course of its
dealings with BVS, and in fact, it is BVS that has acted unreasonably by "foreclosing access to the Dover
platform" and by resisting Rainbow's efforts to obtain a refund of the money it paid to Bell Atlantic as a
channel reservation deposit.

      13.  Defendants explain that in 1995 Rainbow paid $345,600 to Bell Atlantic in accordance with
the terms of Bell Atlantic's video dialtone tariff to reserve channel capacity on Bell Atlantic's Dover
Township video dialtone system.  Defendants state that Rainbow initially planned to distribute
programming directly to subscribers over the video dialtone system, but subsequently determined that a
video dialtone venture would never be commercially viable.  Rainbow states that it requested a refund of
its channel reservation deposit on September 25, 1996, and again on October 22, 1996, but Bell Atlantic
refused to grant the request.  Thereafter, on March 28, 1997, Rainbow filed a formal complaint against Bell
Atlantic alleging that Bell Atlantic violated Sections 201, 202, and 203 of the Communications Act, as well
as the terms of its video dialtone tariff.

      14.  Defendants state that SportsChannel New York and SportsChannel Philadelphia will not
negotiate a licensing agreement with BVS until BVS refunds Rainbow's channel reservation deposit. 
Defendants aver that Bell Atlantic's refusal to refund the channel reservation deposit justifies Rainbow's
refusal to sell its programming to BVS because Bell Atlantic's position in that matter raises legitimate
business concerns about Bell Atlantic's and/or BVS's "unwillingness to deal fairly with independent
programmers" and their history of defaulting on agreements.  Defendants request that the Commission
dismiss the Complaint with prejudice, require BVS to pay Defendants' costs and reasonable attorney's fees
incurred in defending the Complaint, and award such other relief as the Commission deems appropriate.

      15.  In its Reply, BVS states that Defendants never informed BVS that Rainbow was not willing
to sell its programming to BVS or that its willingness to sell its programming to BVS was tied to the issue
of the video dialtone channel reservation deposit.  BVS states that Rainbow did not even file its complaint
about the channel reservation deposit until after BVS served notice of its intent to file the instant program
access complaint.  In addition, BVS asserts that it has no history of defaulting on any type of contract,
including programming agreements, and that Defendants have not questioned BVS's "capability to fulfill
commercially reasonable contract terms."  BVS concludes that Defendants' proffered justification for
Rainbow's refusal to sell its programming to BVS is not a legitimate business excuse under the
Communications Act and the Commission's rules.

                         IV.  DISCUSSION

      16.  Congress enacted the 1992 Cable Act to promote competition, with the view that regulation
would be transitional until the video programming distribution market becomes competitive.  In enacting
the program access provisions, Congress' concern was the market power of wired cable companies.  The
program access provisions were designed to ensure that competition to cable develops and to encourage
nascent competition from emerging competitors.  In addition, through the Telecommunications Act of 1996
("1996 Act"), Congress sought to encourage telephone companies, such as BVS's parent company, Bell
Atlantic, to enter the video distribution business and thereby provide competition to traditional cable
operators.  In its open video system rulemaking proceeding pursuant to the 1996 Act, the Commission
recognized that access to video programming is a prerequisite to open video system operators' ability to
compete with cable operators.

      17. BVS's Complaint alleges non-price discrimination by Rainbow in violation of Section
628(c)(2)(B) of the Communications Act and Section 76.1002(b) of the Commission's rules, which prohibit
discrimination by a satellite cable programming vendor in which a cable operator has an attributable interest
in the prices, terms, and conditions of sale of satellite cable programming between competing multichannel
video programming distributors ("MVPDs").  In its first order adopting the program access regulations, the
Commission set forth the elements of a non-price discrimination claim under Section 76.1002(b) of the
Commission's rules. The Commission stated that the burden is on the complainant to show that: (i) the
defendant is a satellite broadcast programming vendor or a vertically integrated satellite cable programming
vendor that meets the attribution standards outlined in the Commission's rules; and (ii) the defendant, as
between the complainant and another MVPD competitor, has engaged in some form of non-price
discrimination, such as an unreasonable refusal to sell its programming to the complainant.  To avoid a
decision in favor of the complainant where the defendant has refused to sell its programming to the
complainant, the defendant must establish that its refusal to sell its programming to the complainant is not
unlawfully discriminatory because it is justified by legitimate business reasons.

      18. We find that BVS has met its burden of establishing the elements of a non-price discrimination
claim, that Defendants have not met their burden of establishing that Rainbow has legitimate business
reasons for refusing to sell its programming to BVS, and that Defendants' other proffered defenses are
without merit.  Our findings are detailed further below.

      19.  With respect to the first element, that the defendant must be a satellite broadcast programming
vendor or a satellite cable programming vendor that meets the Commission's attribution standards, a satellite
cable programming vendor is defined in the Communications Act and the Commission's regulations as "a
person engaged in the production, creation, or wholesale distribution for sale of satellite cable programming
. . . ."  BVS claims that "Rainbow distributes SportsChannel New York and SportsChannel Philadelphia
via satellite primarily to cable operators for their retransmission to cable subscribers."  Defendants admit
that Rainbow is the managing partner in several partnerships that provide national and regional video
programming, including SportsChannel New York and SportsChannel Philadelphia.  Defendants further
admit that these services are distributed by satellite.  However, Defendants apparently deny BVS's
allegations that Rainbow distributes SportsChannel New York and SportsChannel Philadelphia and that these
services are distributed primarily to cable operators for their retransmission to subscribers.  Defendants do
not explain why they deny this aspect of BVS's allegation, nor do they provide any evidence in support of
their denial.  Furthermore, BVS has provided evidence that SportsChannel New York is licensed to Adelphia,
which Defendants admit.  Adelphia is a cable operator and as such transmits programming directly to
subscribers.  Accordingly, we find that Rainbow, as the managing partner of the partnership that distributes
SportsChannel New York, is a satellite cable programming vendor as that term is defined in Section 628(i)(2)
of the Communications Act and Section 76.1000(i) of the Commission's rules.

      20.  As for the Commission's attribution standards, under Section 76.1000(b) and the notes to
Section 76.501 of the Commission's rules, a cable operator will be considered to have an attributable interest
in a programming vendor if the cable operator holds five percent or more of the stock of the programmer,
whether voting or non-voting, or if the operator holds limited partnership equity interests of five percent or
more.  Defendants admit that Cablevision, a cable system operator, holds a majority interest in Rainbow
and that Rainbow is the managing partner of several partnerships that distribute national and regional video
programming.  Thus, we find that Cablevision has an attributable interest in Rainbow under the attribution
standards of Sections 76.1000(b) and 76.501 of the Commission's rules.

      21.  With respect to the element of discrimination between competing MVPDs, the Commission
has stated that in order to establish that another distributor is a competitor for purposes of showing
discrimination under Section 76.1002(b), there must be "some overlap in actual or proposed service area." 
In addition, the complainant must show that the defendant discriminates between the complainant and its
competitor in the sale of the programming in question.

      22.  BVS and Adelphia are both MVPDs as that term is defined in the Commission's regulations. 
BVS states that it competes against Adelphia in Dover Township, which Defendants do not deny.  BVS
supports its statement with affidavits that indicate that there is some overlap in the two MVPDs' service
areas.  We therefore find that BVS has met its burden of showing that BVS and Adelphia are competitors
in Dover Township, New Jersey.

      23.  BVS also states that Rainbow licenses SportsChannel New York to Adelphia.  Defendants
admit that SportsChannel New York is licensed to Adelphia.  We therefore find that Rainbow, as the
managing partner of the partnership that distributes SportsChannel New York, sells its SportsChannel New
York programming to BVS's competitor.

      24. With respect to the requirement that a complainant show the existence of non-price
discrimination by defendant, the Commission has recognized that an "unreasonable refusal to sell" may
constitute non-price discrimination under Section 628(c)(2)(B).  However, the Commission has cautioned
that unreasonable refusals to sell must be distinguished from refusals to sell based on legitimate reasons. 
Defendants admit that Rainbow has not yet provided the requested programming to BVS but contend that
Rainbow's refusal to sell its programming to BVS is based on legitimate concerns about BVS's and/or Bell
Atlantic's history of defaulting on agreements.

      25. Based on the facts in the record, we are persuaded by BVS's claim that Rainbow unreasonably
has refused to sell its regional sports programming to BVS.  We do not agree that Bell Atlantic's refusal to
provide a refund of Rainbow's channel reservation deposit serves as a legitimate basis for Rainbow's refusal
to sell its programming to BVS.  The issue of the channel reservation deposit is the subject a separate,
unrelated dispute between Rainbow and Bell Atlantic.  Defendants offer no additional support which might
constitute a legitimate business reason for Rainbow's refusal to sell its programming to BVS.  We therefore
find that Rainbow's refusal to sell its programming to BVS is an unreasonable refusal to sell in violation of
Section 628(c)(2)(B) the Communications Act and Section 76.1002(b) of the Commission's rules.

      26.  We further find that the other defenses raised by Defendants are without merit.  With respect
to the claim that BVS has not demonstrated the requisite showing of harm, we note that neither the
Communications Act nor the Commission's program access rules require complainants in discrimination
proceedings based on Section 76.1002 of the Commission's rules to demonstrate harm.  The Commission
has concluded that Congress determined that a finding of discrimination in violation of the program access
rules pre-supposes the element of harm.

      27.  We also reject the defense that Rainbow's actions were not discriminatory.  Defendants' only
argument in support of this defense is that Bell Atlantic has acted unreasonably by "foreclosing access to the
Dover platform" and by refusing to refund Rainbow's channel reservation deposit.  These issues are not
relevant to the disposition of BVS's program access complaint.  We have determined above that Rainbow
provides SportsChannel New York to Adelphia but refuses to provide the same programming to BVS, and
that BVS competes with Adelphia in the Dover Township market.  We have rejected Rainbow's proffered
justification for its refusal to sell to BVS.  These findings establish the elements of unlawful discrimination
in the sale of satellite cable programming.

      28.  Because we find that Rainbow has violated Section 628(c)(2)(B) of the Communications Act
and Section 76.1002(b) of the Commission's rules, we do not address the question of whether Cablevision
has exercised undue or improper influence over the programming decisions of Rainbow in violation of
Section 628(c)(2)(A) of the Communications Act and Section 76.1002(a) of the Commission's rules. 
Similarly, given our finding that Rainbow has violated the specific provision of Section 628(c)(2)(B) of the
Communications Act, we do not address BVS's unfair method of competition argument pursuant to Section
628(b) of the Communications Act and Section 76.1001 of the Commission's rules.

                          V.  CONCLUSION

      29. We find that Rainbow unreasonably has refused to sell its SportsChannel New York
programming to BVS.  Defendants have not demonstrated that Rainbow's refusal to sell its programming to
BVS is justified by a legitimate business reason.  In addition, we reject the other defenses proffered by
Defendants.  We hereby order Rainbow to sell its SportsChannel New York programming to BVS for
distribution on Bell Atlantic's open video system in Dover Township, New Jersey.

      30. We decline to impose sanctions against Defendants at this time.  However, we will not
foreclose the imposition of appropriate administrative remedies, including forfeitures, should Defendants
fail to comply with the directives set forth herein. 

                      VI.  ORDERING CLAUSES

      31.  Rainbow Media Holdings, Inc., is hereby ORDERED to sell its programming to Bell Atlantic
Video Services Company on non-discriminatory terms for distribution on Bell Atlantic-New Jersey's open
video system in Dover Township, New Jersey, in accordance with the terms of this Memorandum Opinion
and Order.

      32.  IT IS FURTHER ORDERED that within 45 days after the release date of this Order Rainbow
Media Holdings, Inc., shall provide proposed licensing agreements to Bell Atlantic Video Services Company
with respect to the distribution of its SportsChannel New York programming in Dover Township, New
Jersey.

      33.  This action it taken pursuant to authority delegated by Section 0.321 of the Commission's
rules.

     FEDERAL COMMUNICATIONS COMMISSION



     Meredith J. Jones
     Chief, Cable Services Bureau