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FCC vacates ruling in Massillon-Fox arbitration

Tue, 11/23/2010 - 7:15am
Brian Santo

The FCC has vacated the results of arbitration between Massillon Cable TV and Fox Sports Net Ohio, a ruling that hinges on a technical issue.

The American Cable Association said the process (referred to as "baseball-style arbitration") is stacked against small operators by its nature, and that the results of Massillon's action were predictable. The ACA says baseball-style arbitration simply does not work.

The larger point is that it is wrong for the FCC to assume that baseball-style arbitration will work any better with a combined Comcast-NBC Universal, and that some other, more effective remedy must be put in place as a condition of allowing that merger to go forward.

Massillon had sought to renegotiate a point in an ongoing contract with the Fox operation. An arbitrator ruled in favor of Massillon. Fox appealed to the FCC.

The FCC decided that current law does not permit the arbitration of disputes over ongoing contracts; arbitration is an option only during renegotiations over expiring contracts. Thus it vacated the arbitrator's ruling against Fox.

The ACA has protested, saying, "The Federal Communications Commission's ruling against Massillon Cable TV, a small cable operator in Ohio, provides further evidence that baseball-style commercial arbitration is not a viable remedy for smaller operators and that the agency needs to rethink how it crafts conditions in the Comcast-NBC Universal deal to ensure small operators and consumers are not harmed."

The Association continued: "Massillon – the one-and-only smaller cable operator that took the chance that baseball-style arbitration could be an effective remedy – invested $1 million in an FCC-designed process that was intended to remedy the harms of the News Corp.-DirecTV transaction. However, despite the fact that an independent arbitrator ruled in favor of Massillon three years ago and ordered News Corp. to pay Massillon's arbitration costs, the FCC last week struck down that decision and ruled in favor of News Corp., which now means significant new costs for Massillon and its customers."

The remedy that smaller operators are proposing is a set of rules that prevent Comcast-NBCU from charging smaller operators more than a clearly defined market-based rate and that a cost-effective process be established to enforce these rules.

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