Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-12-01337/USCOURTS-caDC-12-01337-0/pdf.json

Parties Involved:
Bloomberg L.P.
Amicus Curiae for Respondent
Comcast Cable Communications, LLC
Petitioner
Federal Communications Commission
Respondent
National Cable & Telecommunications Association
Amicus Curiae for Petitioner
The Tennis Channel, Inc.
Intervenor for Respondent
United States of America
Respondent

Document Text:

United States Court of Appeals 

FOR THE DISTRICT OF COLUMBIA CIRCUIT

______ 

Argued February 25, 2013 Decided May 28, 2013 

No. 12-1337 

COMCAST CABLE COMMUNICATIONS, LLC, 

PETITIONER

v. 

FEDERAL COMMUNICATIONS COMMISSION AND UNITED 

STATES OF AMERICA, 

RESPONDENTS

THE TENNIS CHANNEL, INC., 

INTERVENOR

______ 

On Petition for Review of an Order 

of the Federal Communications Commission 

______ 

Miguel A. Estrada argued the cause for petitioners. With 

him on the briefs were Erik R. Zimmerman and Lynn R. 

Charytan. 

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 H. Bartow Farr III, Rick Chessen, Neal M. Goldberg, 

Michael S. Schooler, and Diane B. Burstein were on the brief 

for amicus curiae The National Cable & Telecommunications 

Association in support of petitioner. 

Peter Karanijia, Deputy General Counsel, Federal 

Communications Commission, argued the cause for 

respondents. With him on the brief were Catherine G. 

O’Sullivan and Robert J. Wiggers, Attorneys, U.S. 

Department of Justice, Sean A. Lev, General Counsel, Federal 

Communications Commission, Jacob M. Lewis, Associate 

General Counsel, and Laurel R. Bergold, Counsel. Richard K. 

Welch, Deputy Associate General Counsel, Federal 

Communications Commission, and James M. Carr and C. 

Grey Pash Jr., Counsel, entered appearances. 

 Robert A. Long Jr. argued the cause for intervenor. With 

him on the brief were Stephen A. Weiswasser and Mark W. 

Mosier.

Markham C. Erickson was on the brief for amicus curiae

Bloomberg L.P. in support of respondent. 

 Before: KAVANAUGH, Circuit Judge, and EDWARDS and 

WILLIAMS, Senior Circuit Judges. 

 Opinion for the Court filed by Senior Circuit Judge 

WILLIAMS. 

 Concurring opinion filed by Circuit Judge KAVANAUGH. 

 Concurring opinion filed by Senior Circuit Judge 

EDWARDS. 

WILLIAMS, Senior Circuit Judge: Regulations of the 

Federal Communications Commission, adopted under the 

mandate of § 616 of the Communications Act of 1934 and 

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virtually duplicating its language, bar a multichannel video 

programming distributor (“MVPD”) such as a cable company 

from discriminating against unaffiliated programming 

networks in decisions about content distribution. More 

specifically, the regulations bar such conduct when the effect 

of the discrimination is to “unreasonably restrain the ability of 

an unaffiliated video programming vendor to compete fairly.” 

47 C.F.R. § 76.1301(c); see also 47 U.S.C. § 536(a)(3). 

Tennis Channel, a sports programming network and 

intervenor in this suit, filed a complaint against petitioner 

Comcast Cable, an MVPD, alleging that Comcast violated 

§ 616 and the Commission’s regulations by refusing to 

broadcast Tennis as widely (i.e., via the same relatively lowpriced “tier”) as it did its own affiliated sports programming 

networks, Golf Channel and Versus. (Versus is now known 

as NBC Sports Network and was originally called Outdoor 

Life Network; for consistency with the order under review, we 

refer to it as “Versus.”) An administrative law judge ruled 

against Comcast, ordering that it provide Tennis carriage 

equal to what it affords Golf and Versus, and the Commission 

affirmed. See Tennis Channel, Inc. v. Comcast Cable 

Commc’ns, LLC, Memorandum Opinion and Order, 27 FCC 

Rcd. 8508, 2012 WL 3039209 (July 24, 2012) (“Order”). 

Comcast’s arguments on appeal are, broadly speaking, 

threefold. First, it contends that Tennis’s complaint was 

untimely filed under 47 C.F.R. § 76.1302(h), given the 

meaning that the Commission apparently assigned that section 

when it last modified its language. See In re Implementation 

of the Cable Television Consumer Protection and Competition 

Act of 1992, 9 FCC Rcd. 4415, ¶ 24, 1994 WL 414309 (Aug. 

5, 1994). Judge Edwards’s concurring opinion addresses that 

issue. The panel need not do so, as the limitations period 

doesn’t constitute a jurisdictional barrier. And as Judge 

Edwards notes, the Commission has launched a rulemaking 

apparently aimed in part at clearing up the confusion he 

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identifies. In re Revision of the Commission’s Program 

Carriage Rules, 26 FCC Rcd. 11494, 11522-23, ¶¶ 38-39, 

2011 WL 3279328 (Aug. 1, 2011). 

Second, Comcast poses a number of issues as to the 

meaning of § 616, including an argument that the Commission 

reads it so broadly as to violate Comcast’s free speech rights 

under the First Amendment. We need not reach those issues, 

as Comcast prevails with its third set of arguments—that even 

under the Commission’s interpretation of § 616 (the 

correctness of which we assume for purposes of this decision), 

the Commission has failed to identify adequate evidence of 

unlawful discrimination. 

Many arguments within this third set involve complex 

and at least potentially sophisticated disputes. See, e.g., Order 

¶¶ 71-74 (relating to calculation of “penetration rates” for 

purposes of determining whether Comcast treated Tennis 

more or less favorably than did other MVPDs and of 

measuring the degree of harm caused by any such difference). 

But Comcast also argued that the Commission could not 

lawfully find discrimination because Tennis offered no 

evidence that its rejected proposal would have afforded 

Comcast any benefit. If this is correct, as we conclude below, 

the Commission has nothing to refute Comcast’s contention 

that its rejection of Tennis’s proposal was simply “a straight 

up financial analysis,” as one of its executives put it. Joint 

Appendix (“J.A.”) 300. 

* * * 

Comcast, the largest MVPD in the United States, offers 

cable television programming to its subscribers in several 

different distribution “tiers,” or packages of programming 

services, at different prices. Since Versus’s and Golf’s 

launches in 1995, Comcast—which originally had a minority 

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interest in the two networks, and now has 100% ownership—

has generally carried the networks on its most broadly 

distributed tiers, Expanded Basic or the digital counterpart 

Digital Starter. Order ¶ 12; J.A. 1223-24. 

Tennis Channel, launched in 2003, initially sought 

distribution of its content on Comcast’s less broadly 

distributed sports tier, a package of 10 to 15 sports networks 

that Comcast’s subscribers can access for an extra $5 to $8 per 

month. In 2005, Tennis entered a carriage contract that gave 

the Comcast the “right to carry” Tennis “on any . . . tier of 

service,” subject to exclusions irrelevant here. Comcast in 

fact placed Tennis on the sports tier. 

In 2009, however, Tennis approached Comcast with 

proposals that Comcast reposition Tennis onto a tier with 

broader distribution. Order ¶¶ 12, 33. Tennis’s proposed 

agreement called for Comcast to pay Tennis for distribution 

on a per-subscriber basis. Tennis provided a detailed 

analysis—which is sealed in this proceeding—of what 

Comcast would likely pay for that broader distribution; even 

with the discounts that Tennis offered, the amounts are 

substantial. Neither the analysis provided at the time, nor 

testimony received in this litigation, made (much less 

substantiated) projections of any resulting increase in revenue 

for Comcast, let alone revenue sufficient to offset the 

increased fees. 

Comcast entertained the proposal, checking with 

“division and system employees to gauge local and subscriber 

interest.” J.A. 402. After those consultations, and based on 

previous analyses of interest in Tennis, Comcast rejected the 

proposal in June 2009. Tennis then filed its complaint with 

the Commission in January 2010, which led to the order now 

under review. By way of remedy, the ALJ ordered, and the 

Commission affirmed, that Comcast must “carry [Tennis] on 

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the same distribution tier, reaching the same number of 

subscribers, as it does [Golf] and Versus.” Order ¶ 92. 

The parties agree that Comcast distributes the content of 

affiliates Golf and Versus more broadly than it does that of 

Tennis. The question is whether that difference violates § 616 

and the implementing regulations. There is also no dispute 

that the statute prohibits only discrimination based on

affiliation. Thus, if the MVPD treats vendors differently 

based on a reasonable business purpose (obviously excluding 

any purpose to illegitimately hobble the competition from 

Tennis), there is no violation. The Commission has so 

interpreted the statute, Mid-Atlantic Sports Network v. Time 

Warner Cable Inc., 25 FCC Rcd. 18099, ¶ 22 (2010), and the 

Commission’s attorney conceded as much at oral argument, 

see Oral Arg. Tr. at 24-25; see also TCR Sports Broad. 

Holding L.L.P. v. FCC, 679 F.3d 269, 274-77 (4th Cir. 2012) 

(discussing the legitimate, non-discriminatory reasons for an 

MVPD’s differential treatment of a non-affiliated network). 

In contrast with the detailed, concrete explanation of 

Comcast’s additional costs under the proposed tier change, 

Tennis showed no corresponding benefits that would accrue to 

Comcast by its accepting the change. Testimony from one of 

Comcast’s executives identifies some of the factors it 

considers when deciding whether to move a channel to 

broader distribution: 

In deciding whether to carry a network and at 

what cost, Comcast Cable must balance the costs 

and benefits associated with a wide range of 

factors, including: the amount of the licensing 

fees (which is generally the most important 

factor); the nature of the programming content 

involved; the intensity and size of the fan base for 

that content; the level of service sought by the 

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network; the network’s carriage on other MVPDs; 

the extent of [most favored nation]1 protection 

provided; the term of the contract sought; and a 

variety of other operational issues. 

J.A. 408, ¶ 32. Of course the record is very strong on the 

proposed increment in licensing fees, in itself a clear negative. 

The question is whether the other factors, and perhaps ones 

unmentioned by Comcast, establish reason to expect a net 

benefit. 

But neither Tennis nor the Commission offers such an 

analysis on either a qualitative or a quantitative basis. Instead, 

the best the Commission offers, both in the Order and at oral 

argument, is that Tennis charges less per “rating point” than 

does either Golf or Versus. Order ¶ 78 n.243; Oral Arg. Tr. at 

25-29. But those differentials are not affirmative evidence 

that acceptance of Tennis’s 2009 proposal could have offered 

Comcast any net gain. Even if we were to assume arguendo 

that low charges per ratings point are the be-all and the end-all 

of assigning a network to a broadly accessible tier (and the 

record does not support such an assumption), the cost-perratings-point evidence would at most show that (by this 

particular criterion) Tennis’s gross cost is not as high as that 

of either Golf or Versus. It does not show any affirmative net 

benefit. As to the assumption about cost per ratings point, the 

sealed record suggests (consistent with Comcast’s evidence 

about the factors guiding its tier placement decisions) that a 

very high price per rating point is by no means an absolute 

barrier to placement in a broadly available tier. J.A. 51, 1112. 

 1

 A “most favored nation” provision grants the distributor “the 

right to be offered any more favorable rates, terms, or conditions 

subsequently offered or granted by a network to another 

distributor.” J.A. 1376. 

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In the absence of evidence that the lower cost per ratings 

point is correlated with changes in revenues to offset the 

proposed cost increase for Tennis’s broader distribution, the 

discussion of cost per ratings point is mere handwaving. 

A rather obvious type of proof would have been expert 

evidence to the effect that X number of subscribers would 

switch to Comcast if it carried Tennis more broadly, or that Y 

number would leave Comcast in the absence of broader 

carriage, or a combination of the two, such that Comcast 

would recoup the proposed increment in cost. There is no 

such evidence. (Conceivably Tennis could have shown that 

the incremental losses from carrying Tennis in a broad tier 

would be the same as or less than the incremental losses 

Comcast was incurring from carrying Golf and Versus in such 

tiers. The parties do not even hint at this possibility, nor 

analyze its implications.) 

Not only does the record lack affirmative evidence along 

these lines, there is evidence that no such benefits exist. After 

Tennis proposed the broader distribution of its content on 

Comcast’s network, Comcast executives surveyed employees 

in various geographic divisions to gauge interest in the 

proposal. The executive in charge of the northern division 

reported that there was “[n]o interest whatsoever” in moving 

Tennis to a broader distribution, J.A. 349, because there had 

never been “a request or a complaint to move Tennis Channel 

to a more available tier,” id. at 350. Perhaps more telling is 

the natural experiment conducted in Comcast’s southern 

division. There Comcast had in 2007 or 2008 acquired a 

distribution network from another MVPD that had distributed 

Tennis more broadly than did Comcast. When Comcast 

repositioned Tennis to the sports tier (a “negative repo” in 

MVPD lingo), thereby making it available to Comcast’s 

general subscribers only for an additional fee, not one 

customer complained about the change. 

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When we asked at oral argument about the absence of 

evidence of benefit to Comcast from the proposed tier change, 

Commission counsel pointed not to any such evidence but to 

the ALJ’s remedy (affirmed by the Commission), which gave 

Comcast the alternative of narrowing the exposure of Golf and 

Versus (rather than broadening that of Tennis). Such a change 

was the Commission’s alternative remedy for bringing the 

three networks to tiering parity. But the discriminatory act 

alleged by the Commission was Comcast’s refusal to broaden 

its distribution of Tennis, not a refusal to narrow its 

distribution of Golf and Versus. The latter may make 

complete sense in terms of providing an evenhanded remedy. 

But evidence that such a change would have afforded 

Comcast a net benefit—for example, by generating 

incremental sports tier fees exceeding incremental losses from 

the removal of Golf and Versus from lower priced tiers—

would in itself have little bearing on the lawfulness of 

Comcast’s rejection of Tennis’s actual proposal to extend 

distribution of the latter’s content. It is thus unsurprising that 

no one organized data to test the profitability of this 

hypothetical tiering change. 

This is not to say that the record lacks evidence of 

important similarities between Tennis on the one hand and 

Golf and Versus on the other. See, e.g., Order ¶¶ 51-55. If 

accompanied by evidence that (assuming Golf and Versus had 

been on the sports tier at the time of Tennis’s proposal in 

2009) a shift of them to broader coverage would have yielded 

incremental revenue equivalent to what Tennis demanded in 

2009, the comparative data might have done the job. But no 

such evidence was offered. 

Neither Tennis nor the Commission has invoked the 

concept that an otherwise valid business consideration is here 

merely pretextual cover for some deeper discriminatory 

purpose. Instead, both Tennis and the Commission challenge 

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Comcast’s cost-benefit analysis as insufficiently rigorous. 

While Tennis and the Commission both label that analysis 

“pretextual,” see Tennis Br. at 18; Resp’ts’ Br. at 31, their 

actual claim is that the cost-benefit analysis was too hastily 

performed to justify Comcast’s rejection of Tennis’s proposal, 

thus supporting an inference that discrimination was the true 

motive. In light of the evidence surveyed above, and the lack 

of evidence from which one might infer any net benefit, 

Comcast’s haste is irrelevant. 

We note that the FCC’s Media Bureau found that Tennis 

had established a prima facie case and that the Commission 

assumed without deciding that in those circumstances Tennis 

retained the burden of proof throughout the proceeding. 

Order ¶ 38. We will assume arguendo, in favor of the 

Commission, that the Media Bureau was correct in its finding 

of a prima facie case and that in those circumstances it could 

shift the burden to the respondent. But that assumption is of 

no use to the Commission where the record simply lacks 

material evidence that the Tennis proposal offered Comcast 

any commercial benefit. 

Without showing any benefit for Comcast from incurring 

the additional fees for assigning Tennis a more advantageous 

tier, the Commission has not provided evidence that Comcast 

discriminated against Tennis on the basis of affiliation. And 

while the Commission describes at length the “substantial 

evidence” that supports a finding that the discrimination is 

based on affiliation, Resp’ts’ Br. at 25-31, none of that 

evidence establishes benefits that Comcast would receive if it 

distributed Tennis more broadly. On this issue the 

Commission has pointed to no evidence, and therefore 

obviously not to substantial evidence. See Guardian Moving 

& Storage Co., Inc. v. ICC, 952 F.2d 1428, 1433 (D.C. Cir. 

1992). 

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* * * 

The petition is therefore 

 

 Granted. 

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KAVANAUGH, Circuit Judge, concurring: Video 

programming distributors such as Comcast deliver video 

programming networks to consumers. Under Section 616 of 

the Communications Act, a video programming distributor

may not discriminate against an unaffiliated programming 

network in a way that “unreasonably restrain[s]” the 

unaffiliated network’s ability to compete fairly. Applying

that statute in this case, the FCC found that Comcast 

discriminated against the unaffiliated Tennis Channel network 

by refusing to carry that network on the same cable tier that 

Comcast carries its affiliated Golf Channel and Versus

networks. The FCC also found that the discrimination 

unreasonably restrained the Tennis Channel’s ability to 

compete fairly. As a remedy, the FCC ordered Comcast to 

carry the Tennis Channel on the same tier that it carries the 

Golf Channel and Versus.

As the Court’s opinion explains, the FCC erred in 

concluding that Comcast discriminated against the Tennis 

Channel on the basis of affiliation. I join the Court’s opinion 

in full. I write separately to point out that the FCC also erred 

in a more fundamental way. Section 616’s use of the phrase

“unreasonably restrain” – an antitrust term of art – establishes

that the statute applies only to discrimination that amounts to 

an unreasonable restraint under antitrust law. Vertical 

integration and vertical contracts – for example, between a 

video programming distributor and a video programming 

network – become potentially problematic under antitrust law 

only when a company has market power in the relevant 

market. It follows that Section 616 applies only when a video 

programming distributor possesses market power. But 

Comcast does not have market power in the national video 

programming distribution market, the relevant market 

analyzed by the FCC in this case. Therefore, as I will explain 

in Part I of this opinion, Section 616 does not apply here.

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Applying Section 616 to a video programming distributor 

that lacks market power not only contravenes the terms of the 

statute, but also violates the First Amendment as it has been 

interpreted by the Supreme Court. As I will explain in Part II

of this opinion, the canon of constitutional avoidance thus 

strongly reinforces the conclusion that Section 616 applies 

only when a video programming distributor possesses market 

power.

I

Section 616 of the Communications Act requires the FCC

to:

prevent a multichannel video programming distributor 

from engaging in conduct the effect of which is to 

unreasonably restrain the ability of an unaffiliated video 

programming vendor to compete fairly by 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) (emphasis added); see 47 C.F.R. 

§ 76.1301(c). The statutory text establishes that a Section 616 

violation has two elements. First, the video programming 

distributor must have discriminated against an unaffiliated 

video programming network on the basis of affiliation. 

Second, the video programming distributor’s discrimination 

must have “unreasonably restrain[ed]” the unaffiliated 

network’s ability “to compete fairly.”

Congress enacted Section 616 (over the veto of President 

George H.W. Bush) as part of the Cable Television Consumer 

Protection and Competition Act of 1992, known as the Cable 

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Act. The Cable Act included numerous provisions designed

to curb abuses of cable operators’ bottleneck monopoly power 

and to promote competition in the cable television industry. 

When the Act was passed, however, the video programming 

market looked quite different than it looks today. At the time, 

most households subscribed to cable in order to view 

television programming. And as Congress noted, “most cable 

television subscribers [had] no opportunity to select between 

competing cable systems.” Cable Television Consumer 

Protection and Competition Act of 1992, Pub. L. No. 102-

385, § 2(a)(2), 106 Stat. 1460, 1460 (1992). Congress 

decided to proactively counteract the bottleneck monopoly

power that cable operators possessed in many local markets.

The Cable Act employs a variety of tools to advance 

competition. Some provisions directly prohibit practices that 

Congress viewed as anticompetitive in the market at the time. 

For example, the Act prohibits local franchising authorities 

from granting exclusive franchises to cable operators. See id.

§ 7(a), 106 Stat. at 1483. Similarly, the Act’s “must-carry” 

provisions require cable operators to carry a specified number 

of local broadcast stations. See id. § 4, 106 Stat. at 1471.

In other parts of the Act, Congress borrowed from

antitrust law, authorizing the FCC to regulate cable operators’ 

conduct in accordance with antitrust principles. For example, 

the Act requires the FCC, when prescribing limits on the 

number of cable subscribers or affiliated channels, to take 

account of “the nature and market power of the local 

franchise.” See id. § 11(c), 106 Stat. at 1488. Similarly, the 

Act allows rate regulation only of those cable systems that are 

not subject to effective competition. See id. § 3, 106 Stat. at 

1464.

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The provision at issue in this case, Section 616, 

incorporates traditional antitrust principles. Section 616 does

not categorically forbid a video programming distributor from 

extending preferential treatment to affiliated video 

programming networks or lesser treatment to unaffiliated 

video programming networks. Rather, to violate Section 616, 

a video programming distributor must discriminate among 

video programming networks on the basis of affiliation, and

the discrimination must “unreasonably restrain” an

unaffiliated network’s ability to compete fairly. 47 U.S.C. 

§ 536(a)(3).

The phrase “unreasonably restrain” is of course a 

longstanding term of art in antitrust law. See, e.g., Leegin 

Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 877, 

885 (2007) (“[T]he Court has repeated time and again that § 1 

outlaws only unreasonable restraints.”) (internal quotation 

marks and alteration omitted); State Oil Co. v. Khan, 522 U.S. 

3, 10 (1997) (“Although the Sherman Act, by its terms, 

prohibits every agreement ‘in restraint of trade,’ this Court 

has long recognized that Congress intended to outlaw only 

unreasonable restraints.”); Business Electronics Corp. v. 

Sharp Electronics Corp., 485 U.S. 717, 723 (1988) (“Since 

the earliest decisions of this Court interpreting [Section 1 of 

the Sherman Act], we have recognized that it was intended to 

prohibit only unreasonable restraints of trade.”).

When a statute uses a term of art from a specific field of 

law, we presume that Congress adopted “the cluster of ideas 

that were attached to each borrowed word in the body of 

learning from which it was taken.” FAA v. Cooper, 132 S. Ct. 

1441, 1449 (2012) (internal quotation mark omitted); see also 

Buckhannon Board & Care Home, Inc. v. West Virginia 

Department of Health and Human Resources, 532 U.S. 598, 

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5

615 (2001) (Scalia, J., concurring) (“Words that have 

acquired a specialized meaning in the legal context must be 

accorded their legal meaning.”); McDermott International, 

Inc. v. Wilander, 498 U.S. 337, 342 (1991) (“In the absence of 

contrary indication, we assume that when a statute uses such a 

term [of art], Congress intended it to have its established 

meaning.”); Morissette v. United States, 342 U.S. 246, 263

(1952) (“[A]bsence of contrary direction may be taken as 

satisfaction with widely accepted definitions, not as a 

departure from them.”); ANTONIN SCALIA & BRYAN A.

GARNER, READING LAW: THE INTERPRETATION OF LEGAL 

TEXTS 73 (2012) (where “a word is obviously transplanted 

from another legal source, . . . it brings the old soil with it”) 

(internal quotation mark omitted); cf. FTC v. Phoebe Putney 

Health System, Inc., 133 S. Ct. 1003, 1015 (2013) (reading 

statute “in light of our national policy favoring competition”).

From the “term of art” canon and Section 616’s use of the 

antitrust term of art “unreasonably restrain,” it follows that 

Section 616 incorporates antitrust principles governing 

unreasonable restraints.

So what does antitrust law tell us? In antitrust law, 

certain activities are considered per se anticompetitive.

Otherwise, however, conduct generally can be considered 

unreasonable only if a firm, or multiple firms acting in 

concert, have market power. See Leegin Creative Leather 

Products, 551 U.S. at 885-86; Copperweld Corp. v. 

Independence Tube Corp., 467 U.S. 752, 775 (1984); see also 

Standard Oil Co. v. United States, 283 U.S. 163, 179 (1931).

This case involves vertical integration and vertical 

contracts. Beginning in the 1970s (well before the 1992 

Cable Act), the Supreme Court has recognized the legitimacy 

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6

of vertical integration and vertical contracts by firms without 

market power. See, e.g., Leegin Creative Leather Products, 

551 U.S. 877; State Oil Co., 522 U.S. 3; Business Electronics, 

485 U.S. 717; Continental T. V., Inc. v. GTE Sylvania Inc., 

433 U.S. 36 (1977). Vertical integration and vertical 

contracts become potentially problematic only when a firm 

has market power in the relevant market. That’s because, 

absent market power, vertical integration and vertical 

contracts are procompetitive. Vertical integration and vertical 

contracts in a competitive market encourage product

innovation, lower costs for businesses, and create efficiencies

– and thus reduce prices and lead to better goods and services 

for consumers. See Douglas H. Ginsburg, Vertical Restraints: 

De Facto Legality Under the Rule of Reason, 60 ANTITRUST 

L.J. 67, 76 (1991) (“Antitrust law is a bar to the use of vertical 

restraints only in markets in which there is no apparent 

interbrand competition to protect consumers from a 

potentially welfare-decreasing restraint on intrabrand 

competition.”); Dennis L. Weisman & Robert B. Kulick, 

Price Discrimination, Two-Sided Markets, and Net Neutrality 

Regulation, 13 TUL. J. TECH. & INTELL. PROP. 81, 99 (2010) 

(“[M]onopoly power in one market is a necessary condition 

for anticompetitive effects in almost all models of 

anticompetitive vertical integration.”); see also 3B PHILLIP E.

AREEDA & HERBERT HOVENKAMP, ANTITRUST LAW ¶ 756a, at 

9 (3d ed. 2008) (vertical integration “is either competitively 

neutral or affirmatively desirable because it promotes 

efficiency”); ROBERT H. BORK, THE ANTITRUST PARADOX

226 (1978) (“vertical integration is indispensable to the 

realization of productive efficiencies”). 

Not surprisingly given its procompetitive characteristics, 

vertical integration and vertical contracts are common and 

accepted practices in the American economy: Apple’s 

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7

iPhones contain integrated hardware and software, Dunkin’ 

Donuts sells Dunkin’ Donuts coffee, Ford produces radiators

for its cars, McDonalds sells Big Macs, Nike stores are 

stocked with Nike shoes, Netflix owns “House of Cards,” and 

so on. As Professors Areeda and Hovenkamp have explained, 

vertical integration “is ubiquitous in our economy and 

virtually never poses a threat to competition when undertaken 

unilaterally and in competitive markets.” 3B AREEDA &

HOVENKAMP, ANTITRUST LAW ¶ 755c, at 6.

Following the lead of the Supreme Court and influential 

academic literature on which the Supreme Court has relied in 

the antitrust field, this Court’s case law has stated that vertical 

integration and vertical contracts are procompetitive, at least

absent market power. See Cablevision Systems Corp. v. FCC, 

649 F.3d 695, 721 (D.C. Cir. 2011) (vertical integration is 

“not always pernicious and, depending on market conditions, 

may actually be procompetitive”); National Fuel Gas Supply 

Corp. v. FERC, 468 F.3d 831, 840 (D.C. Cir. 2006) (“We 

began by emphasizing that vertical integration creates 

efficiencies for consumers.”); Tenneco Gas v. FERC, 969 

F.2d 1187, 1201 (D.C. Cir. 1992) (“[A]dvantages a pipeline 

gives its affiliate are improper only to the extent that they 

flow from the pipeline’s anti-competitive market power. 

Otherwise vertical integration produces permissible 

efficiencies that cannot by themselves be considered uses of 

monopoly power.”) (internal quotation marks omitted); see 

also Cablevision Systems Corp. v. FCC, 597 F.3d 1306, 1325 

(D.C. Cir. 2010) (Kavanaugh, J., dissenting) (“At least unless 

a company possesses market power in the relevant market, 

vertical integration and exclusive vertical contracts are not 

anti-competitive; on the contrary, such arrangements are 

‘presumptively procompetitive.’”) (quoting 11 HERBERT 

HOVENKAMP, ANTITRUST LAW ¶ 1803, at 100 (2d ed. 2005)).

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8

Now back to Section 616: Because Section 616 

incorporates antitrust principles and because antitrust law 

holds that vertical integration and vertical contracts are

potentially problematic only when a firm has market power in 

the relevant market, it follows that Section 616 applies only 

when a video programming distributor has market power in 

the relevant market.1 Section 616 thus does not bar vertical 

integration or vertical contracts that favor affiliated video 

programming networks, absent a showing that the video 

programming distributor at least has market power in the

relevant market. To conclude otherwise would require us to 

depart from the established meaning of the term of art 

“unreasonably restrain” that Section 616 uses. Moreover, to 

conclude otherwise would require us to believe that Congress 

intended to thwart procompetitive practices. It would of 

course make little sense to attribute that motivation to 

Congress.

How, then, did the FCC reach the opposite conclusion in 

this case? The short answer is that the FCC badly misread the 

statute. Contrary to the plain language of Section 616, the 

FCC stated that the term “unreasonably” modified 

“discriminating” not “restrain” – even though Section 616 

 1 Section 616 and the Cable Act provisions that incorporate

antitrust principles are not merely redundant of antitrust law. To be 

sure, the Federal Trade Commission and the U.S. Department of 

Justice Antitrust Division enforce federal antitrust laws, and private 

citizens may bring civil antitrust suits as well. But in the Cable 

Act, Congress authorized a separate enforcement agency, the FCC, 

to regulate certain practices of cable operators. For that reason, 

even Cable Act provisions such as Section 616 that mirror existing 

antitrust proscriptions serve an important regulatory purpose, akin 

to adding new police officers to enforce an existing law.

USCA Case #12-1337 Document #1438011 Filed: 05/28/2013 Page 19 of 51
9

says it applies only to discriminatory conduct that 

“unreasonably restrain[s]” the ability of a competitor to 

compete fairly. See Order ¶¶ 43, 85-86. Because the FCC did 

not read Section 616 as written, it did not recognize the 

antitrust term of art “unreasonably restrain” that is apparent

on the face of the statute. That erroneous reading of the text, 

in turn, led the FCC to mistakenly focus on the effects of 

Comcast’s conduct on a competitor (the Tennis Channel) 

rather than on overall competition. See id. ¶¶ 83-85.2 That 

was a mistake because the goal of antitrust law (and thus of 

Section 616) is to promote consumer welfare by protecting

competition, not by protecting individual competitors. See, 

e.g., NYNEX Corp. v. Discon, Inc., 525 U.S. 128, 135 (1998) 

(Sherman Act plaintiff “must allege and prove harm, not just 

to a single competitor, but to the competitive process, i.e., to 

competition itself”); Spectrum Sports, Inc. v. McQuillan, 506 

U.S. 447, 458 (1993) (“The purpose of the [Sherman] Act is 

not to protect businesses from the working of the market; it is 

to protect the public from the failure of the market.”);

Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 

488 (1977) (“The antitrust laws . . . were enacted for the 

protection of competition, not competitors.”) (internal 

quotation marks omitted); see also AREEDA & HOVENKAMP,

ANTITRUST LAW ¶ 755c, at 6 (“[E]ven competitively harmless 

vertical integration can injure rivals or vertically related firms, 

but such injuries are not the concern of the antitrust laws.”).

It is true that Section 616 references discrimination 

against competitors. But again, the statute does not ban such 

 2 Because the FCC’s Order never actually interpreted the 

phrase “unreasonably restrain,” we would have to remand even if 

we thought Section 616 reasonably could be applied to video 

programming distributors without market power. See SEC v. 

Chenery Corp., 318 U.S. 80 (1943).

USCA Case #12-1337 Document #1438011 Filed: 05/28/2013 Page 20 of 51
10

discrimination outright. It bans discrimination that 

unreasonably restrains a competitor from competing fairly. 

By using the phrase “unreasonably restrain,” the statute

incorporates an antitrust term of art, and that term of art 

requires that the discrimination in question hinder overall 

competition, not just competitors.

In sum, Section 616 targets instances of preferential 

program carriage that are anticompetitive under the antitrust 

laws. Section 616 thus may apply only when a video 

programming distributor possesses market power in the 

relevant market. Comcast has only about a 24% market share 

in the national video programming distribution market; it does 

not possess market power in the market considered by the 

FCC in this case. See Order ¶ 87.3

 Therefore, the FCC erred

in finding that Comcast violated Section 616.

II

To the extent there is uncertainty about whether the 

phrase “unreasonably restrain” in Section 616 means that the 

statute applies only in cases of market power or instead may 

have a broader reach, we must construe the statute to avoid 

“serious constitutional concerns.” Edward J. DeBartolo 

Corp. v. Florida Gulf Coast Building & Construction Trades 

Council, 485 U.S. 568, 577 (1988); see also Solid Waste 

Agency of Northern Cook County v. Army Corps of 

Engineers, 531 U.S. 159, 172 (2001).4 That canon strongly 

 3 In some local geographic markets around the country, a video 

programming distributor may have market power. This case does 

not call upon us to consider how Section 616 would apply to 

discrimination against unaffiliated networks in such local markets.

4 There is some debate about how serious the statute’s 

constitutional questions must be, and indeed whether the statute 

USCA Case #12-1337 Document #1438011 Filed: 05/28/2013 Page 21 of 51
11

supports limiting Section 616 to cases of market power. 

Applying Section 616 to a video programming distributor that 

lacks market power would raise serious First Amendment 

questions under the Supreme Court’s case law. Indeed, 

applying Section 616 to a video programming distributor that 

lacks market power would violate the First Amendment as it 

has been interpreted by the Supreme Court.

To begin with, the Supreme Court has squarely held that 

a video programming distributor such as Comcast both

engages in and transmits speech, and is therefore protected by 

the First Amendment. See Turner Broadcasting System, Inc. 

v. FCC, 512 U.S. 622, 636 (1994). Just as a newspaper 

exercises editorial discretion over which articles to run, a

video programming distributor exercises editorial discretion 

over which video programming networks to carry and at what 

level of carriage.

It is true that, under the Supreme Court’s precedents,

Section 616’s impact on a cable operator’s editorial control is 

content-neutral and thus triggers only intermediate scrutiny 

rather than strict scrutiny. See id. at 642-43. But the Supreme 

Court’s case law applying intermediate scrutiny in this 

context provides that the Government may interfere with a 

video programming distributor’s editorial discretion only 

when the video programming distributor possesses market 

power in the relevant market.

 

otherwise must be unconstitutional, for the avoidance doctrine to 

apply. See generally Richard A. Posner, Statutory Interpretation –

in the Classroom and in the Courtroom, 50 U. CHI. L. REV. 800, 

816 (1983) (criticizing the avoidance doctrine as a “judge-made 

constitutional ‘penumbra’”). That debate is irrelevant to my 

analysis here because I have concluded that it would indeed be 

unconstitutional to apply Section 616 absent market power.

USCA Case #12-1337 Document #1438011 Filed: 05/28/2013 Page 22 of 51
12

In its 1994 decision in Turner Broadcasting, the Supreme 

Court ruled that the Cable Act’s must-carry provisions might 

satisfy intermediate First Amendment scrutiny, but the Court

rested that conclusion on “special characteristics of the cable 

medium: the bottleneck monopoly power exercised by cable 

operators and the dangers this power poses to the viability of 

broadcast television.” Id. at 661. When a cable operator has 

bottleneck power, the Court explained, it can “silence the 

voice of competing speakers with a mere flick of the switch.” 

Id. at 656. In subsequently upholding the must-carry 

provisions, the Court reiterated that cable’s bottleneck 

monopoly power was critical to the First Amendment

calculus. See Turner Broadcasting System, Inc. v. FCC, 520 

U.S. 180, 197-207 (1997) (controlling opinion of Kennedy, 

J.).

5

 The Court stated that “cable operators possess[ed] a 

local monopoly over cable households,” with only one 

percent of communities being served by more than one cable 

operator. Id. at 197.

In 1996, when this Court upheld the Cable Act’s 

exclusive-contract provisions against a First Amendment 

challenge, we likewise pointed to the “special characteristics” 

of the cable industry. See Time Warner Entertainment Co. v. 

FCC, 93 F.3d 957 (D.C. Cir. 1996). Essential to our decision 

were “both the bottleneck monopoly power exercised by cable 

operators and the unique power that vertically integrated 

 5 In the 1997 Turner Broadcasting case, Justice Kennedy’s 

opinion represented the “position taken by those Members who 

concurred in the judgment[] on the narrowest grounds.” See Marks 

v. United States, 430 U.S. 188, 193 (1977) (internal quotation mark 

omitted). That opinion’s evaluation of anticompetitive behavior 

and the significance of bottleneck power analytically lay between 

that of Justice Breyer’s concurring opinion on the one hand and the 

dissent on the other.

USCA Case #12-1337 Document #1438011 Filed: 05/28/2013 Page 23 of 51
13

companies have in the cable market.” Id. at 978 (internal 

quotation marks and citation omitted).

But in the 16 years since the last of those cases was

decided, the video programming distribution market has 

changed dramatically, especially with the rapid growth of 

satellite and Internet providers. This Court has previously 

described the massive transformation, explaining that cable 

operators “no longer have the bottleneck power over 

programming that concerned the Congress in 1992.” Comcast 

Corp. v. FCC, 579 F.3d 1, 8 (D.C. Cir. 2009); see also 

Cablevision Systems Corp. v. FCC, 597 F.3d 1306, 1324 

(D.C. Cir. 2010) (Kavanaugh, J., dissenting) (“This radically 

changed and highly competitive marketplace – where no cable 

operator exercises market power in the downstream or 

upstream markets and no national video programming 

network is so powerful as to dominate the programming 

market – completely eviscerates the justification we relied on 

in Time Warner for the ban on exclusive contracts.”); 

Christopher S. Yoo, Vertical Integration and Media 

Regulation in the New Economy, 19 YALE J. ON REG. 171, 229 

(2002) (“It thus appears that the national market for MVPDs 

is already too unconcentrated to support the conclusion that 

vertical integration could have any anti-competitive effects.”).

In today’s highly competitive market, neither Comcast 

nor any other video programming distributor possesses 

market power in the national video programming distribution 

market. To be sure, beyond an interest in policing 

anticompetitive behavior, the FCC may think it preferable 

simply as a communications policy matter to equalize or 

enhance the voices of various entertainment and sports 

networks such as the Tennis Channel. But as the Supreme 

Court stated in one of the most important sentences in First 

USCA Case #12-1337 Document #1438011 Filed: 05/28/2013 Page 24 of 51
14

Amendment history, “the concept that government may 

restrict the speech of some elements of our society in order to 

enhance the relative voice of others is wholly foreign to the 

First Amendment.” Buckley v. Valeo, 424 U.S. 1, 48-49 

(1976).

Therefore, under these circumstances, the FCC cannot 

tell Comcast how to exercise its editorial discretion about

what networks to carry any more than the Government can 

tell Amazon or Politics and Prose or Barnes & Noble what 

books to sell; or tell the Wall Street Journal or Politico or the 

Drudge Report what columns to carry; or tell the MLB 

Network or ESPN or CBS what games to show; or tell

SCOTUSblog or How Appealing or The Volokh Conspiracy

what legal briefs to feature.

In light of the Supreme Court’s precedents interpreting 

the First Amendment and the massive changes to the video 

programming distribution market over the last two decades,

the FCC’s interference with Comcast’s editorial discretion 

cannot stand. In restricting the editorial discretion of video 

programming distributors, the FCC cannot continue to 

implement a regulatory model premised on a 1990s snapshot

of the cable market.

The Supreme Court’s precedents amply demonstrate that 

the FCC’s interpretation of Section 616 violates the First 

Amendment. At a minimum, the Supreme Court’s precedents 

raise serious First Amendment questions about the FCC’s 

interpretation of Section 616. Under the constitutional 

avoidance canon, those serious constitutional questions 

require that we construe Section 616 to apply only when a 

video programming distributor possesses market power.

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15

* * *

The FCC erred in concluding that Section 616 may apply

to a video programming distributor without market power. 

For that reason, in addition to the reasons given by the Court, 

the FCC’s Order cannot stand.

USCA Case #12-1337 Document #1438011 Filed: 05/28/2013 Page 26 of 51
EDWARDS, Senior Circuit Judge, concurring: I concur in 

Judge Williams’ cogent opinion for the court. It is clear from 

the record that, even accepting the FCC’s interpretation of 

Section 616, there is no substantial evidence of unlawful 

discrimination to support the Commission’s decision in this 

case. I write separately because I believe that Tennis 

Channel’s complaint was untimely filed under the applicable 

statute of limitations encoded in 47 C.F.R. § 76.1302(f)

(2010). I would rest on this ground alone if the statute of 

limitations requirements were jurisdictional, but they are not. 

Nonetheless, the issues raised by the statute of limitations 

issue are, in my view, very important because they highlight 

the agency’s failure to give fair notice to regulated parties of 

the rules governing the filing of complaints under Section 

616. And, as explained below, the FCC’s current 

interpretation of subsection 76.1302(f)(3) is not only 

incomprehensible but it fails to credit the sanctity of the 

parties’ contractual commitments. Hopefully, these matters 

will be addressed in the FCC’s pending rulemaking. See In re 

Revision of the Commission’s Program Carriage Rules,

Notice of Proposed Rulemaking, 26 FCC Rcd. 11494, 11522-

23, ¶¶ 38-39, 2011 WL 3279328 (Aug. 1, 2011). 

________________________

As explained in the opinion for the court, this case 

involves a complaint filed in 2010 by Tennis Channel, a 

sports programming network, with the Federal 

Communications Commission (“FCC” or “Commission”)

against Comcast Cable Communications, LLC (“Comcast”), a 

multichannel video programming distributor (“MVPD”). The 

complaint alleged that Comcast had discriminated against 

Tennis Channel, in violation of Section 616 of the 

Communications Act of 1934, 47 U.S.C. § 536(a)(3), when it 

declined to distribute Tennis Channel as broadly as Golf 

Channel and Versus, sports networks owned by Comcast.

USCA Case #12-1337 Document #1438011 Filed: 05/28/2013 Page 27 of 51
2

After launching in 2003, Tennis Channel sought carriage 

on Comcast’s “Sports Tier,” a package of sports networks that 

are accessible to Comcast subscribers for an added fee. Tennis 

Channel and Comcast executed a carriage contract in 2005 

pursuant to which Comcast retained unfettered authority to 

distribute Tennis Channel on any tier. Comcast elected to 

carry Tennis Channel on its Sports Tier. At the time when 

Tennis Channel entered into its contract with Comcast, Golf 

Channel and Versus were affiliated with Comcast and both 

networks were carried on more broadly distributed tiers. In 

2006 and 2007, Tennis Channel offered Comcast and other 

MVPDs equity in exchange for broader carriage. Comcast and 

several other MVPDs declined. In 2009, Tennis Channel 

again asked Comcast to move it to a tier with broader

distribution than the Sports Tier. The two parties discussed 

the possibility. After unproductive discussions, Tennis 

Channel broke off negotiations. In the end, Comcast (and 

other MVPDs as well) rejected Tennis Channel’s requests for 

broader carriage. In 2010, all major MVPDs – including 

Tennis Channel’s partial owners, DirecTV and Dish Network

– distributed Tennis Channel less broadly than Golf Channel 

and Versus.

After Comcast elected to stand on its contract rights and 

declined to distribute Tennis Channel more broadly, Tennis 

Channel filed a carriage complaint against Comcast under 

Section 616. The complaint alleged that Comcast 

discriminated against Tennis Channel on the basis of 

affiliation by distributing it more narrowly than Golf Channel 

and Versus. The Commission’s Media Bureau rejected 

Comcast’s statute-of-limitations defense on the pleadings and 

set the matter for a hearing before an Administrative Law 

Judge (“ALJ”). The ALJ issued an Initial Decision finding 

that Comcast had violated Section 616. In a 3-2 split decision, 

the FCC upheld the Media Bureau’s denial of Comcast’s 

statute of limitations defense and affirmed the ALJ’s 

USCA Case #12-1337 Document #1438011 Filed: 05/28/2013 Page 28 of 51
3

judgment on the merits against Comcast. See Tennis Channel, 

Inc. v. Comcast Cable Commc’ns, LLC (“Order”), 

Memorandum Opinion and Order, 27 FCC Rcd. 8508, 2012 

WL 3039209 (July 24, 2012).

In its petition for review, Comcast raises three principal 

claims. First, Comcast contends that Tennis Channel’s 

complaint should have been dismissed as untimely. Second, 

Comcast argues that the Commission’s Order misconstrues 

and misapplies Section 616. Finally, Comcast contends that 

the FCC’s Order violates the First Amendment because it 

impermissibly regulates Comcast’s speech based on its 

content. I will focus solely on the first contention, i.e., that 

Tennis Channel’s complaint was filed out of time.

FCC regulations state that “[a]ny complaint . . . must be 

filed within one year of the date on which . . . (1) The

multichannel video programming distributor enters into a 

contract with a video programming distributor that a party 

alleges to violate one or more of the rules contained in this 

section.” 47 C.F.R. § 76.1302(f)(1) (2010). Tennis Channel 

entered into its contract with Comcast in 2005; however, it did 

not file a complaint until 2010 – long after the one-year 

limitations period had expired. As Comcast notes, “[t]he 

parties’ contract allows Comcast to carry Tennis Channel on 

any tier that Comcast chooses. By seeking an order that 

compels Comcast to carry it more broadly, Tennis Channel is 

attempting to rewrite the terms of the contract. Permitting 

Tennis Channel to reopen the limitations period for that 

contract-based claim at any time – simply by making a

pretextual demand for broader carriage – would . . . directly 

contradict the entire purpose of the statute of limitations.” Br.

for Pet’r at 58-59. I agree.

The FCC’s Order says that the applicable limitations 

period is governed by 47 C.F.R. § 76.1302(f)(3), which states 

that “[a]ny complaint . . . must be filed within one year of the 

USCA Case #12-1337 Document #1438011 Filed: 05/28/2013 Page 29 of 51
4

date on which . . . (3) A party has notified a multichannel video 

programming distributor that it intends to file a complaint with 

the Commission based on violations of one or more of the rules 

contained in this section.” According to the FCC, Tennis 

Channel’s complaint was timely under (f)(3) because Tennis 

Channel filed it “within one year of notifying Comcast of its 

intent to do so.” Order, 27 FCC Rcd. at 8520 ¶ 30. I can find 

no merit in this position. As Comcast properly observes, the 

FCC’s “approach not only rewrites the statute of limitations, 

but also nullifies it by allowing a party to a carriage contract to 

bring suit at any time.” Br. for Pet’r at 58. 

Tennis Channel’s complaint seeks to modify the terms of 

the parties’ contract by demanding that Comcast move it to a 

tier with broader distribution. Tennis Channel has no right 

under the contract to pursue this demand and Comcast has no 

obligation to accede to it. Tennis Channel’s complaint thus 

raises a claim that the contract provisions giving Comcast 

unfettered authority to determine whether to carry Tennis 

Channel on its Sports Tier or some other tier violate Section 

616. Therefore, under subsection (f)(1), Tennis Channel had 

one year from the date of contract formation to file its 

complaint. Because Tennis Channel’s 2010 complaint was 

filed well beyond a year after contract formation, the 

complaint was time-barred. The FCC’s purported application 

of subsection (f)(3), in lieu of subsection (f)(1), flies in the 

face of the Commission’s longstanding interpretation of 47 

C.F.R. § 76.1302(f). The FCC has repeatedly explained that 

subsection (f)(3) applies only in cases where an MVPD denies 

or refuses to acknowledge a request to negotiate for carriage, 

which is not what happened in this case. The FCC was not 

free to simply abandon its longstanding construction of 

subsection (f)(3) without notice-and-comment rulemaking. 

Alaska Prof’l Hunters Ass’n, Inc. v. FAA, 177 F.3d 1030, 

1033-36 (D.C. Cir. 1999); see also Christopher v. SmithKline 

Beecham Corp., 132 S. Ct. 2156, 2167 (2012) (holding that 

USCA Case #12-1337 Document #1438011 Filed: 05/28/2013 Page 30 of 51
5

agencies must provide “fair warning of the conduct a 

regulation prohibits or requires”).

I. Background

A. The Statutory and Regulatory Framework

The Cable Television Consumer Protection and 

Competition Act of 1992, PUB. L. NO. 102-385, § 12, 106 

Stat. 1460, 1488 (1992), added Section 616 to the 

Communications Act of 1934. Section 616 requires the FCC 

to issue regulations “to prevent [an MVPD] from engaging in 

conduct the effect of which is to unreasonably restrain the 

ability of an unaffiliated video programming vendor to 

compete fairly by discriminating in video programming 

distribution on the basis of affiliation or nonaffiliation of 

vendors in the selection, terms, or conditions for carriage.”

47 U.S.C. § 536(a)(3). The Commission’s regulations define 

“affiliated” as an MVPD “ha[ving] an attributable interest” in 

the network. 47 C.F.R. § 76.1300(a)-(b). As noted above, the 

regulations also establish a statute of limitations for Section 

616 complaints. The applicable regulations state:

(f) Time limit on filing of complaints. Any 

complaint filed pursuant to this subsection must be filed 

within one year of the date on which one of the following 

events occurs:

(1) The multichannel video programming 

distributor enters into a contract with a video 

programming distributor that a party alleges to violate 

one or more of the rules contained in this section; or 

(2) The multichannel video programming 

distributor offers to carry the video programming 

vendor’s programming pursuant to terms that a party 

alleges to violate one or more of the rules contained in 

this section, and such offer to carry programming is 

USCA Case #12-1337 Document #1438011 Filed: 05/28/2013 Page 31 of 51
6

unrelated to any existing contract between the 

complainant and the multichannel video programming 

distributor; or 

(3) A party has notified a multichannel video 

programming distributor that it intends to file a complaint 

with the Commission based on violations of one or more 

of the rules contained in this section. 

47 C.F.R. § 76.1302(f). The FCC recodified subsection

76.1302(f) as subsection 76.1302(h) in 2012 without any 

substantive change. For the sake of consistency with the 

parties’ briefing and the FCC’s Order, I will refer to 

subsection 76.1302(f).

B. Facts and Procedural History

Comcast is the largest MVPD in the United States. It

offers cable television programming to its subscribers in 

several different distribution “tiers” – i.e., packages of 

programming services – at different prices. Core 

programming is contained in Comcast’s “Expanded Basic

Tier,” or its digital counterpart, the “Digital Starter Tier,”

which are its mostly widely distributed tiers. The more 

expensive “Digital Preferred Tier” provides customers with 

access to additional networks and is Comcast’s second most 

widely-distributed tier. Comcast’s Sports and Entertainment 

Package (“Sports Tier”) consists of a package of sportsrelated networks and is available to Comcast subscribers for 

an additional fee. The Sports Tier is not as widely distributed 

as the Expanded Basic, Digital Starter, and Digital Preferred 

tiers.

Golf Channel and Versus are cable sports networks that

were launched in 1995. Versus was known as the Outdoor 

Life Network when it launched and is now known as NBC 

Sports Network. (For the sake of consistency with the parties’

USCA Case #12-1337 Document #1438011 Filed: 05/28/2013 Page 32 of 51
7

briefing and the FCC’s Order, I will refer to the network as 

Versus.) Golf Channel provides coverage of golf tournaments 

and other golf-related programming. Versus provides 

coverage of numerous sports, including hockey, college 

football and basketball, lacrosse, hunting, and fishing. Both 

networks paid substantial sums beginning in 1995 to induce 

MVPDs, including Comcast, to distribute them broadly. Both 

networks are generally carried on Comcast’s Digital Starter or 

Expanded Basic tiers. Comcast owned a minority interest in 

Golf Channel and Versus when they launched in 1995 and 

subsequently became the controlling owner of both networks.

Tennis Channel, a network that provides tennis-related 

programming, launched in 2003. The evidence in the record 

indicates that, by that time, “it was more difficult for new 

networks to obtain broad distribution than in 1995 because the 

associated costs for cable operators had increased and because 

competition from satellite and telephone providers had 

reduced cable operators’ ability to absorb those costs.” Br. for 

Pet’r at 7 (citing Joint Appendix 422-25, 519-22). In 2005, 

Tennis Channel and Comcast entered into a carriage contract 

reserving to Comcast the right to choose on which tier to 

carry the network. Comcast chose to carry, and still carries, 

Tennis Channel on its Sports Tier. Tennis Channel negotiated 

agreements with other MVPDs that granted similar rights with 

respect to the network’s level of carriage.

In 2006 and 2007, Tennis Channel offered Comcast and 

other MVPDs equity in exchange for broader carriage. Two 

satellite companies – DirecTV and Dish Network – accepted 

that offer, became partial owners of Tennis Channel, and 

increased their distribution of the network. But Comcast and 

at least one other MVPD declined the offer. In 2009, Tennis 

Channel presented Comcast with two proposals for broader 

distribution on Comcast’s Digital Starter or Digital Preferred 

tiers. Comcast argues that it saw no economic benefit in 

USCA Case #12-1337 Document #1438011 Filed: 05/28/2013 Page 33 of 51
8

Tennis Channel’s proposals, and Tennis Channel broke off 

negotiations in June 2009. Tennis Channel’s tier placement 

position vis-à-vis Golf Channel and Versus was the same in 

2010 as it had been in 2005 when Comcast and Tennis 

Channel executed their carriage contract. Indeed, as noted 

above, in 2010, all major MVPDs – including DirecTV and 

Dish Network – distributed Golf Channel and Versus more 

broadly than Tennis Channel. 

In December 2009, Tennis Channel notified Comcast of 

its intent to file a Section 616 complaint. In January 2010, 

Tennis Channel filed its complaint asserting that it was

necessitated by Comcast’s discriminatory refusal to 

provide Tennis Channel with the broader carriage that it 

provides to the similarly situated sports networks it owns 

(such as the Golf Channel and Versus) and that is 

otherwise appropriate in light of Tennis Channel’s 

quality and performance.

Compl. at i. The FCC’s Media Bureau rejected Comcast’s 

argument that the complaint was time-barred and referred to 

the matter to an ALJ. The Tennis Channel, Inc. v. Comcast 

Cable Commc’ns LLC, Hearing Designation Order, 25 FCC 

Rcd. 14149, 2010 WL 3907080 (Oct. 5, 2010). After a sixday hearing, the ALJ found that Comcast had violated Section 

616 and ordered Comcast to carry Tennis Channel “at the 

same level of distribution” as Golf Channel and Versus. 

Tennis Channel, Inc. v. Comcast Cable Commc’ns, LLC, 

Initial Decision, 26 FCC Rcd. 17160, 2011 WL 6416431 

(Dec. 20, 2011). Comcast appealed to the full Commission, 

which ruled 3-2 to reject Comcast’s statute-of-limitations 

defense and uphold most of the ALJ’s decision. Tennis 

Channel, Inc. v. Comcast Cable Commc’ns, LLC, (“Order”), 

Memorandum Opinion and Order, 27 FCC Rcd. 8508, 2012 

WL 3039209 (July 24, 2012). After Comcast filed a petition 

USCA Case #12-1337 Document #1438011 Filed: 05/28/2013 Page 34 of 51
9

for review with this court, we granted its motion to stay the 

Order pending our final decision in this case.

II. Analysis

The parties agree that Tennis Channel’s complaint must 

be dismissed if it was untimely. Comcast contends that the 

complaint should have been dismissed pursuant to 47 C.F.R. 

§ 76.1302(f)(1). The FCC, however, concluded that the 

applicable statute of limitations was governed by 47 C.F.R. 

§ 76.1302(f)(3). Order, 27 FCC Rcd. at 8519-22 ¶¶ 28-34. 

The agency found that Tennis Channel’s complaint was 

timely because it was filed in January 2010, one month after 

Tennis Channel notified Comcast of its intent to file and 

seven months after Comcast declined Tennis Channel’s 

demand to relocate to a different distribution tier. Id. at 8519-

20 ¶ 30 & n.105. 

Comcast is right that the FCC’s application of the statute 

of limitations in this case cannot be reconciled with the 

agency’s original and consistent view that subsection (f)(3) 

only applies where a “defendant unreasonably refuses to 

negotiate [for carriage] with [a] complainant.” 1998 Biennial 

Regulatory Review – Part 76 – Cable Television Service 

Pleading and Complaint Rules (“1999 Order on 

Reconsideration”), Order on Reconsideration, 14 FCC Rcd. 

16433, 16435 ¶ 5, 1999 WL 766253 (Sept. 29, 1999). The 

FCC concedes that Tennis Channel’s complaint is time-barred

under this interpretation of the rule. See Br. for Resp’ts at 64 

(“[T]he rule as originally promulgated was limited to denials 

or to refusals to negotiate for carriage . . . .”). The

Commission has never properly amended the statute of 

limitations regulations to embrace the interpretation that it 

now advances. It is therefore clear that Tennis Channel filed 

its complaint out of time.

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10

A. Standard of Review

The governing law makes it plain that this court owes no 

deference to the Commission’s current interpretation of 47 

C.F.R. § 76.1302(f)(3). A court “must defer to [an agency’s] 

interpretation [of a regulation] unless an alternative reading is 

compelled by . . . indications of the [agency’s] intent at the 

time of the regulation’s promulgation.” Thomas Jefferson 

Univ. v. Shalala, 512 U.S. 504, 512 (1994). An agency’s 

interpretation of its own regulation is entitled to no deference 

if it has, “under the guise of interpreting a regulation, 

[created] de facto a new regulation,” Christensen v. Harris 

Cnty., 529 U.S. 576, 588 (2000), or subjected a party to 

“unfair surprise,” Christopher, 132 S. Ct. at 2166-70. See also

Akzo Nobel Salt, Inc. v. Fed. Mine Safety & Health Review 

Comm’n, 212 F.3d 1301, 1304-05 (D.C. Cir. 2000) (holding 

that deference is inappropriate when the agency “flip-flops,” 

offering a litigation position that differs from interpretations 

previously adopted by the agency, or when the agency offers 

contradictory interpretations on appeal). If an agency’s 

present interpretation of a regulation would essentially amend

the contested regulation, then the modification can only be 

made in accordance with the notice and comment 

requirements of the APA. Alaska Prof’l Hunters, 177 F.3d at 

1033-36.

B. The Applicable Statute of Limitations

1. Regulatory History of the Statute of Limitations

The FCC promulgated the statute of limitations for 

Section 616 complaints in 1993, pursuant to notice-andcomment rulemaking, as part of its original implementation of 

Section 616. See 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, Second Report and 

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Order, 9 FCC Rcd. 2642, 2652-53 ¶ 25, 1993 WL 433631 

(Oct. 22, 1993). Subsection (f)(3), as originally promulgated, 

read as follows: 

Any complaint filed pursuant to this subsection must be 

filed within one year of the date on which one of the 

following events occurs . . . (3) the complainant has 

notified a multichannel video programming distributor

that it intends to file a complaint with the Commission 

based on a request for carriage or to negotiate for 

carriage of its programming on defendant’s distribution 

system that has been denied or unacknowledged, 

allegedly in violation of one or more of the rules 

contained in this subpart.

Id. at 2676. Thus, as promulgated, subsection (f)(3) plainly 

applied only when an MVPD denied or refused to 

acknowledge a request to negotiate for carriage. The FCC 

does not dispute that the complaint in this case is untimely 

under the regulation as written in 1993. Br. for Resp’ts at 64.

Therefore, if the Commission has never acted to modify the 

substance of the regulation since its promulgation in 1993 it 

follows a fortiori that Tennis Channel’s complaint is 

untimely. A review of this regulation’s history shows that the 

substance of subsection (f)(3) never has been amended by the 

Commission to give it the meaning that the agency now seeks 

to ascribe to it.

1994 Amendment: In 1994, the FCC issued an order in 

response to an industry group petition for partial 

reconsideration of the Section 616 regulations. See

Implementation of the Cable Television Consumer Protection 

and Competition Act of 1992 Development of Competition 

and Diversity in Video Programming Distribution and 

Carriage (“1994 Amendment”), Memorandum Opinion and 

Order, 9 FCC Rcd. 4415, 1994 WL 414309 (Aug. 5, 1994).

The petitioners in that action “contend[ed] that Section 

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76.1302 . . . [was] too narrowly drafted because it [did] not 

specifically afford standing to file a complaint to any MVPD 

aggrieved by a violation of Section 616. Petitioners urge[d] 

the Commission to amend the scope of Section 76.1302 to 

affirmatively afford standing to file a complaint to any third 

party MVPD aggrieved by carriage agreements between other 

MVPDs and programming vendors that violate Section 616.” 

Id. at 4416 ¶ 8. The FCC accepted the suggestion and 

amended several regulatory provisions to achieve the end 

sought. Subsection (f)(3) was edited in the following ways:

Any complaint filed pursuant to this subsection

paragraph must be filed within one year of the date on 

which one of the following events occurs . . . (3) the 

complainant A party has notified a multichannel video 

programming distributor that it intends to file a complaint 

with the Commission based on a request for carriage or 

to negotiate for carriage of its programming on 

defendant’s distribution system that has been denied or 

unacknowledged, allegedly in violations of one or more 

of the rules contained in this subpart section.

Cable TV Act of 1992 – Development of Competition and 

Diversity in Video Programming; Distribution and Carriage, 

59 Fed. Reg. 43,776-01, 43,777-78 (Aug. 25, 1994)

(strikethrough and emphasis added). 

The language deleted from subsection (f)(3) was excised 

solely to avoid any suggestion that (f)(3) was meant to 

reference only complaints by video programmers. There is 

nothing in the Commission’s 1994 action to suggest that the 

agency meant to make any substantive change to subsection 

(f)(3) beyond allowing for broader standing for MVPDs. 

Quite the contrary. The Memorandum Opinion and Order 

expressly states that the sole purpose of the regulatory edits 

was to afford standing to file a Section 616 complaint to any 

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third party MVPD aggrieved by carriage agreements between 

other MVPDs and programming vendors:

The Commission has determined that it is in the public 

interest to grant [the] petition and to amend our 

implementing rules to specifically afford standing to 

MVPDs to file complaints under Section 616 of the 1992 

Cable Act. 

1994 Amendment, 9 FCC Rcd. 4418-19 ¶ 24. The FCC also 

stated that the same procedural rules would apply to 

complaints filed by MVPDs. Id. at 4419 ¶ 24 n.47 (“As noted 

in the [original implementation], a one-year statute of 

limitations will be applied to program carriage complaints.”).

1999 Order on Reconsideration: Any questions about 

the meaning of subsection (f)(3) following the 1994 edits 

were answered in 1999. As part of its 1998 biennial 

regulatory review process, the Commission issued a Report 

and Order after notice and comment to “reorganize and 

simplify the Commission’s Part 76 Cable Television Service 

pleading and complaint process rules.” 1998 Biennial 

Regulatory Review – Part 76 – Cable Television Service 

Pleading and Complaint Rules, Report and Order, 14 FCC 

Rcd. 418, 418 ¶ 1, 1999 WL 377764 (Jan. 8, 1999). The 

Commission subsequently issued an order denying a petition 

for reconsideration of these changes filed by EchoStar 

Communications Corporation. 1999 Order on 

Reconsideration, 14 FCC Rcd. 16433. The order is relevant 

here because it carefully explains the statute of limitations for 

Section 616 complaints.

Tellingly, as can be seen in the block-quoted passage 

below, the Commission’s 1999 Order on Reconsideration is 

directly contrary to the Commission’s interpretation of 47 

C.F.R. § 76.1302(f)(3) in this case:

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The dispute resolution processes in Part 76 for program 

access, program carriage and open video system 

complaints follow similar procedural rules that were 

designed to achieve an expedient resolution of 

complaints. The rules contain three like provisions which 

set forth a one year limitations period for bringing 

complaints. The rules list three events that trigger the 

running of the limitations period: (1) complainant and 

defendant enter into a contract alleged to violate the 

rules; (2) unrelated to an existing contract, defendant 

makes an offer to complainant that allegedly violates the 

rules; or (3) defendant unreasonably refuses to negotiate 

with complainant. In the Part 76 Order, the Commission 

clarified the appropriate interaction between the 

limitations period for alleging an existing contract 

violates the rules and the limitations period for alleging 

that an offer to the complainant violates the rules. . . . 

The rules adopted in the Part 76 Order explain that 

complaints based on allegedly discriminatory contracts 

must be brought within one year of entering into the 

contract and that an allegedly discriminatory offer to 

amend such contract made more than one year after the 

execution thereof does not reopen such contract to 

program access liability. For example, in the program 

access context, this amendment explains that an offer to 

amend an existing contract that has been in effect for 

more than one year does not reopen the existing contract 

to complaints that the provisions thereof are 

discriminatory.

Id. at 16435-36 ¶ 5 (underlining added). 

The 1999 Order on Reconsideration thus confirms that 

subsection (f)(3) applies only to refusals to negotiate for 

carriage and that proposals to amend a carriage contract do 

not reset the statute of limitations. This interpretation is

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perfectly consistent with the regulations as promulgated by 

the Commission in 1993. It confirms that the 1994 edits to the 

statute of limitations were not intended to alter the substance 

of the third trigger, only the scope of who could pursue 

Section 616 complaints. And the parties have not directed us 

to any further embellishments or clarifications by the 

Commission of 47 C.F.R. § 76.1302(f). Indeed, before the 

decision in this case, the Commission seems never to have

called into question the regulatory interpretation of subsection 

(f)(3) offered in 1993, 1994, and 1999.

2008 Media Bureau Decisions: As noted above, the 

Media Bureau rejected Comcast’s statute-of-limitations 

defense on the pleadings and set the matter for a hearing on 

the merits before an ALJ. The Tennis Channel, Inc. v. 

Comcast Cable Commc’ns LLC, Hearing Designation Order, 

25 FCC Rcd. 14149, 2010 WL 3907080 (Oct. 5, 2010). In so 

doing, the Media Bureau relied on two of its own decisions 

from 2008. In these earlier cases, the Media Bureau held that 

“Bureau precedent establishes that a complainant may have a 

timely program carriage claim in the middle of a contract term 

if the basis for the claim is an allegedly discriminatory 

decision made by the MVPD, such as tier placement, that the 

contract left to the MVPD’s discretion.” Id. at 14158 ¶ 15 

(citing NFL Enterprises LLC v. Comcast Cable Commc’ns, 

LLC, Hearing Designation Order, 23 FCC Rcd. 14,787, 14820

¶ 70 (Oct. 10, 2008); MASN v. Comcast Corp., Hearing 

Designation Order, 23 FCC Rcd. 14,787, 14,834-35 ¶ 105 

(Oct. 10, 2008)). Both cases settled before they were heard by 

an ALJ and without any appeal to or decision by the 

Commission. See id. at 14,156 ¶ 13 n.63.

These Media Bureau decisions are not controlling here

because their reasoning was never affirmed by the 

Commission. And, most significantly, the two cited Media 

Bureau decisions are directly contrary the Commission’s 

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interpretation of subsection (f)(3) that “an offer to amend an 

existing contract that has been in effect for more than one 

year does not reopen the existing contract to complaints that 

the provisions thereof are discriminatory.” 1999 Order on 

Reconsideration, 14 FCC Rcd. at 16436 ¶ 5. 

As we explained in Comcast Corp. v. FCC, 526 F.3d 763, 

769 (D.C. Cir. 2008), this court follows the “well-established 

view that an agency is not bound by the actions of its staff if 

the agency has not endorsed those actions.” It is true that “in 

the absence of Commission action to the contrary, the Media 

Bureau decisions have the force of law. 47 U.S.C. 

§ 155(c)(3). But this simply means that those rulings are 

binding on the parties to the proceeding. . . . [U]nchallenged 

staff decisions are not Commission precedent . . . .” Id. at 770.

Therefore, pursuant to the law of the circuit, it is quite clear 

that the 2008 Media Bureau decisions did not in any way 

disturb the FCC’s settled treatment of 47 C.F.R. § 76.1302(f). 

2. The Commission’s Changed Interpretation of 47 

C.F.R. § 76.1302(f) 

This regulatory history shows that the FCC had never, 

until the Order on review, ascribed to the statute of limitations 

the meaning it now claims. And the Commission concedes 

that under its longstanding interpretation of 47 C.F.R. 

§ 76.1302(f), which it has repeatedly articulated, Tennis 

Channel’s complaint in this action is untimely. 

Thus, there is much force to Comcast’s assertion that it 

had no notice that the Commission would abruptly change its 

view of subsection (f)(3) in this case. The problem is 

compounded because the Commission’s decision wholly fails 

to account for the 1999 Order on Reconsideration. The 

decision gives only a cursory response to Comcast’s argument 

that the (f)(3) trigger concerns only refusals to deal or similar 

conduct, merely stating that

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we find no support for that view in the text. Comcast 

relies upon the fact that the rule was originally 

promulgated with this limitation. However, the 

Commission removed the limiting language in 1994, and 

there is no support for reading it back in notwithstanding 

its willful deletion.

Order, 27 FCC Rcd. at 8521 ¶ 32. This response is rather 

astonishing in light of the Commission’s explanation of the 

1994 edits to the regulation and the 1999 Order on 

Reconsideration. As noted above, the Commission made it 

clear that the 1994 edits were intended solely to avoid any 

suggestion that subsection (f)(3) was meant to reference only 

complaints by video programming vendors. And in 1999, the 

Commission confirmed that the (f)(3) trigger relates to 

situations in which a “defendant unreasonably refuses to 

negotiate with [a] complainant,” nothing more. 1999 Order on 

Reconsideration, 14 FCC Rcd. at 16435 ¶ 5.

The FCC simply ignores this regulatory history, 

obviously because it cannot be squared with the 

Commission’s current interpretation of the applicable 

regulation. A court need not defer to an agency’s 

interpretation of a disputed regulation when an alternative 

reading is compelled by “indications of the [agency’s] intent 

at the time of the regulation’s promulgation.” Thomas 

Jefferson Univ, 512 U.S. at 512. This principle controls the 

disposition of this case, for it is undisputed that the 

Commission’s current interpretation of the regulation flies in 

the face of the agency’s intent at the time of promulgation of 

47 C.F.R. § 76.1302(f).

3. Subsection (f)(1) Prescribes the Applicable Statute 

of Limitations in This Case 

Under subsection (f)(1), the one-year statute of 

limitations begins running when an MVPD “enters into a 

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contract with a video programming distributor that a party 

alleges to violate [Section 616 and its implementing 

regulations].” 47 C.F.R. § 76.1302(f)(1). The Commission 

held that subsection (f)(1) was inapplicable here because

“Tennis Channel was not trying to demand a unilateral change 

in the existing terms of its contract with Comcast; it was 

asking that the existing contract be performed – that Comcast 

exercise its contractual discretion – consistent with its 

obligations under Section 616.” Order, 27 FCC Rcd. at 8521 

¶ 33. This is a perplexing statement, bordering on 

oxymoronic. 

Under the terms of the carriage contract, Comcast retains 

the unfettered right to carry Tennis Channel on a distribution 

tier of Comcast’s own choosing. Neither Tennis Channel nor 

the Commission argues that Tennis Channel retained an 

affirmative right under the contract to demand that Comcast 

reconsider its distribution tier. Instead, they argue that 

Comcast’s right to assign Tennis Channel to a tier of its 

choosing is somehow tantamount to Tennis Channel’s right to 

demand that Comcast revisit its initial exercise of that choice. 

The FCC’s Order elides this distinction, reasoning that 

because Comcast could have reassigned Tennis Channel it 

was under an obligation to consider Tennis Channel’s 

proposal. But nothing in the parties’ contract supports this 

view. Therefore, in demanding “that Comcast exercise its 

contractual discretion” to reassign Tennis Channel to a 

different tier, Tennis Channel was simply insisting on a 

material change in the contract’s terms. Subsection (f)(1) thus 

clearly applies, meaning that Tennis Channel’s claim became 

time-barred in 2006.

The FCC argues that if it is required to adhere to its 

original and longstanding interpretation of 47 C.F.R. 

§ 76.1302(f)(3) “a programming network effectively would be 

barred from complaining about any carriage-related 

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discrimination occurring more than one year after the 

execution of its contract.” Br. for Resp’ts at 67. One need 

only consider the record in this case to see that this is a 

shallow argument. Tennis Channel was in the same position 

relative to the affiliated Golf Channel and Versus networks in 

2010 as it was in 2005. That is, Tennis Channel was on a 

lower tier than the other two networks in 2005 when it 

negotiated the contract affording Comcast unfettered authority 

as to its placement and remained so in 2010. Tennis Channel 

argues that circumstances had changed by 2010 because its 

“quality and performance” had improved since entering into

the contract. Compl. at i. This argument is a classic non 

sequitur, however, because the parties’ contract does not 

require Comcast to take into account “quality and 

performance” in deciding whether to distribute Tennis 

Channel more broadly.

Most importantly, the parties’ agreement does not in any 

way suggest, as the Commission held, that Comcast is obliged 

to “exercise its contractual discretion” in considering whether 

to reassign Tennis Channel to a different tier. Indeed, the 

word “discretion” does not even appear in the contract

provision that Tennis Channel and the FCC cite. Tennis 

Channel introduced this term in its briefing and the 

Commission attempts to read it into the carriage agreement to 

abrogate Comcast’s lawful contract rights. The truth is that 

the parties’ contract simply confirms that Comcast has the 

sole and unfettered authority to determine the tier placement 

of Tennis Channel. By demanding that Comcast revisit its 

concededly lawful initial decision and consider placing it on 

the same tier as Golf Channel and Versus, Tennis Channel 

sought to reopen the contract. And, because this demand was 

nothing more than “an offer to amend an existing contract that 

has been in effect for more than one year,” 1999 Order on 

Reconsideration, 14 FCC Rcd. at 16436 ¶ 5, it “does not 

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reopen the existing contract to complaints that the provisions 

thereof are discriminatory,” id.

Furthermore, Tennis Channel’s rights would not be so 

harmed by this outcome as the FCC suggests. Because most 

businesses hope to become more successful over time, Tennis 

Channel could have anticipated in 2005 that, at some point in 

the future, it might prefer placement on a more widely 

distributed tier. Therefore, when the carriage contract was 

formed, Tennis Channel could have bargained for a provision

to increase its distribution contingent upon improvements to 

its “quality and performance.” If Comcast had declined such 

terms on the basis of its nonaffiliation with Tennis Channel, 

that might have given rise to a Section 616 complaint under 

the existing regulations. 

Instead, it is Comcast’s contract rights that were

completely disregarded by the Commission’s actions in this 

case. Section 616 simply does not sanction what the 

Commission proposes to do here. The Commission may now 

be of the view that the controlling construction of subsection 

(f)(3) that it embraced in 1993, 1994, and 1999 is 

unsatisfactory because it may not account for some situations 

in which a party commits a violation of Section 616 that is 

unrelated to its lawful contractual commitments. But if that is 

so, then the FCC may amend subsection (f)(3) pursuant to 

notice-and-comment rulemaking, not by fiat in an 

adjudicatory action in which a party had no prior notice of the 

rule that the Commission seeks to enforce.

It is unnecessary to consider this possibility, however, 

because it is not properly before us. The bottom line here is 

that, under the Commission’s established construction of 47 

C.F.R. § 76.1302(f), the statute of limitations began to run

under subsection (f)(1) in 2005, not under subsection (f)(3) in 

2009. As a result, Tennis Channel’s complaint was out of time 

and should have been dismissed.

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4. The Commission’s Laches Argument

The Commission seemingly understood that its position 

made little sense, especially in light of the precedent 

established by its 1993, 1994, and 1999 orders. To 

compensate for the obvious weaknesses in its decision, the 

Commission layered a new rule of “laches” onto the

requirements of subsection (f)(3). Pursuant to this further 

amendment of the statute of limitations, the Commission 

stated:

[W]e read subsection 76.1302(f)(3) consistent with the 

doctrine of laches to impliedly require notification of an 

intent to file a complaint within a reasonable time period 

of discovery of the allegedly unlawful conduct. Because 

the allegedly unlawful conduct at issue here occurred 

within one year of the filing of the complaint, we need 

not determine precisely what period of time would be 

“reasonable” here.

Order, 27 FCC Rcd. at 8520 ¶ 30 n.105. Comcast justly 

objects to this unexpected and largely incomprehensible new 

rule of laches:

[T]his further rewriting of the limitations regulation, to 

add a malleable [laches] exception whose scope is known 

only to the FCC, only compounds the uncertainty that its 

interpretation produces.

The Order also does not attempt to explain how 

Tennis Channel satisfied its new laches requirement here. 

Nor could it, given that Tennis Channel has known since 

2005 that Comcast carried Golf Channel and Versus 

broadly, but did not file its complaint until 2010. . . . 

Under any reasonable application of laches, this 

deliberate, unexcused delay should have resulted in the 

dismissal of the complaint. The Order avoids that result 

USCA Case #12-1337 Document #1438011 Filed: 05/28/2013 Page 47 of 51
22

only by characterizing the evidence of Tennis Channel’s 

strategic conduct as irrelevant to the timeliness of its 

complaint. But it is arbitrary for the Order both to assert 

that its interpretation of the statute of limitations is 

backstopped by a “reasonable time” requirement, and to 

ignore the evidence that Tennis Channel, without basis, 

sat on its claim for years before bringing suit.

Br. for Pet’r at 60-61.

The Commission’s invocation of “laches” is also patently 

at odds with its claim that the terms of subsection (f)(3) 

plainly require the result reached in this case. The

Commission suggests that the (f)(3) trigger applies 

straightforwardly within one year after a complaining party 

gives notice that it intends to file a complaint. But if this were 

so clear, there would be no need for a rule of laches. The 

Commission instead acknowledges that subsection (f)(3) is 

confusing under its present view of the regulation because 

“[t]he third trigger does not specify precisely what 

impermissible conduct starts the clock.” Order, 27 FCC Rcd. 

at 8520 ¶ 30. The Commission’s Order relies in part on a 

2011 Notice of Proposed Rulemaking, in which the agency 

acknowledged that the terms of subsection 76.1302(f) are 

ambiguous and announced its intention to amend it for clarity.

Id. at 8520 ¶ 30 n.105 (citing In re Revision of the 

Commission’s Program Carriage Rules, Notice of Proposed 

Rulemaking, 26 FCC Rcd. 11494, 11522-23, ¶¶ 38-39, 2011 

WL 3279328 (Aug. 1, 2011)). The Commission’s position

here is thus amusing, to say the least: in the Order under 

review, the Commission suggests that (f)(3) is clear if 

overlaid with a new rule of laches; and yet, in the very same 

footnote, the Commission cites to a Rulemaking initiated for 

the purpose of resolving that subsection’s ambiguity. Id. The 

truth of the matter is that the Commission’s current position 

on the meaning of subsection (f)(3) is hopelessly confused 

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and far removed from the regulatory interpretations that it 

espoused in 1993, 1994, and 1999. 

C. The Commission’s Action in This Case Defies the 

APA and Requirements of Fair Notice

What is obvious here is that the FCC is essentially trying 

to rewrite its regulations without following the applicable 

notice-and-comment procedures required by the APA. The 

Commission may now be of the view that the controlling 

construction of subsection (f)(3) that it embraced in 1993, 

1994, and 1999 is unsatisfactory because it may not account 

for some situations in which a party commits a violation of 

Section 616 that is unrelated to its lawful contractual 

commitments. But if that is so, then the FCC must amend 

subsection (f)(3) pursuant to notice-and-comment rulemaking, 

not by fiat in an adjudicatory action in which a party had no 

prior notice of the rule that the Commission seeks to enforce. 

See generally HARRY T. EDWARDS, LINDA A. ELLIOTT &

MARIN K. LEVY, FEDERAL STANDARDS OF REVIEW § XIII.E 

(2d ed. 2013) (discussing the requirements of “fair notice”).

The court carefully explained this principle in Alaska 

Professional Hunters Association:

Our analysis . . . draws on Paralyzed Veterans of 

America v. D.C. Arena, 117 F.3d 579, 586 (D.C. Cir.

1997), in which we said: “Once an agency gives its 

regulation an interpretation, it can only change that 

interpretation as it would formally modify the regulation 

itself: through the process of notice and comment 

rulemaking.” We there explained why an agency has less 

leeway in its choice of the method of changing its 

interpretation of its regulations than in altering its 

construction of a statute. “Rule making,” as defined in 

the APA, includes not only the agency’s process of 

formulating a rule, but also the agency’s process of 

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modifying a rule. 5 U.S.C. § 551(5). See Paralyzed 

Veterans, 117 F.3d at 586. When an agency has given its 

regulation a definitive interpretation, and later 

significantly revises that interpretation, the agency has in 

effect amended its rule, something it may not accomplish 

without notice and comment. Syncor Int’l Corp. v. 

Shalala, 127 F.3d 90, 94-95 (D.C. Cir. 1997), is to the 

same effect: a modification of an interpretive rule 

construing an agency’s substantive regulation will, we 

said, “likely require a notice and comment procedure.”

177 F.3d at 1033-34; see also SBC Inc. v. FCC, 414 F.3d 486, 

498 (3d Cir. 2005) (“[I]f an agency’s present interpretation of 

a regulation is a fundamental modification of a previous 

interpretation, the modification can only be made in 

accordance with the notice and comment requirements of the 

APA.”); Shell Offshore Inc. v. Babbitt, 238 F.3d 622, 629 (5th 

Cir. 2001) (“[T]he APA requires an agency to provide an 

opportunity for notice and comment before substantially 

altering a well established regulatory interpretation.”).

The Supreme Court recently reinforced this point in 

Christopher v. SmithKline Beecham Corp., 132 S. Ct. 2156, 

2167 (2012), there holding that an agency is obliged to 

“provide regulated parties fair warning of the conduct [a 

regulation] prohibits or requires.” It follows, therefore, that an 

agency cannot change its interpretation of a regulation so as to 

cause “unfair surprise” to regulated parties. Id.; see also FCC 

v. Fox Television Stations, Inc., 132 S. Ct. 2307, 2317 (2012) 

(“A conviction or punishment fails to comply with due 

process if the statute or regulation under which it is obtained 

fails to provide a person of ordinary intelligence fair notice of 

what is prohibited, or is so standardless that it authorizes or 

encourages seriously discriminatory enforcement.”). Yet, in 

failing to provide any notice to MVPDs about how and when 

they may be subject to Section 616 claims, the FCC’s actions 

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25

against Comcast in this case constitute exactly that kind of 

“unfair surprise.”

In sum, the limitations period under 47 C.F.R. 

§ 76.1302(f)(3) does not apply here because the Commission 

has consistently held that the (f)(3) trigger is applicable only 

in situations when an MVPD denies or refuses to 

acknowledge a request to negotiate for carriage. Tennis 

Channel’s complaint does not include any such claim. Indeed, 

Tennis Channel, not Comcast, terminated discussions between 

the parties in 2009. Neither Comcast’s refusal to reassign 

Tennis Channel to a more broadly distributed tier nor Tennis 

Channel’s notice of its intention to file a Section 616 

complaint triggered a new statute of limitations period under 

47 C.F.R. § 76.1302(f)(3). Under the FCC’s governing 

regulations, “an offer to amend an existing contract that has 

been in effect for more than one year does not reopen the 

existing contract to complaints that the provisions thereof are 

discriminatory.” 1999 Order on Reconsideration, 14 FCC 

Rcd. at 16436 ¶ 5. The reason for the FCC’s rule is clear: to 

allow a video programming vendor to restart an expired 

limitations period simply by asking to negotiate a better deal 

under an existing agreement would render meaningless the 

limitations period in subsection (f)(1).

It is undisputed that the complaint was filed more than 

one year after Comcast and Tennis Channel entered into their 

carriage contract. The contract was executed in 2005 and the 

limitations period under 47 C.F.R. § 76.1302(f)(1) expired 

one year later. Tennis Channel’s complaint simply alleges that 

Comcast’s continued carriage pursuant to the terms of the 

2005 agreement is discriminatory. Therefore, the complaint is 

almost four years late and should be dismissed as time-barred.

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