Broadband Cable Association of Pennsylvania


June 1, 2012

News Corp. confirmed it's considering transforming one of its cable channels into a national sports network, challenging Walt Disney's ESPN.

The company's Speed cable channel, which focuses on Nascar auto racing, could become a more general-interest sports network, Fox Networks Chief Operating Officer David Haslingden said yesterday at an investor conference. Speed is available in more than 80 million homes in North America, according to its website. "There's a lot of optionality with Speed, and it could be turned into a broader sports network," he said. "We haven't decided yet whether we'll do that, but it's a great option we have."

Fox would be able to pair the channel with its 20 regional networks, which broadcast professional and collegiate athletics to local US markets. Pay-TV companies such as Comcast Corp. and DirecTV pay more for sports networks than any other type of channel on basic cable packages, according to research firm SNL Kagan. ESPN will command $5.06 per subscriber per month this year, the most of any cable channel. New York Post

Lawyers for television broadcasters warned about dramatic changes to the TV industry should an Internet startup continue to be allowed to stream their video, as a two-day hearing ended Thursday without a ruling.

Aereo, backed by Barry Diller's IAC Interactive Corp., is being sued by a group of major broadcasters on grounds it violates copyright laws by transmitting proprietary broadcast signals to viewers' different devices through a network of tiny antennas. Attorneys representing Aereo said broadcasters had failed to prove the service represents an irreparable threat to their business. They said the delay between Aereo's unveiling of its business plan last year and the broadcasters' filing of lawsuits in March was proof they weren't sure Aereo was a threat. Aereo is "ultimately good for broadcasters who should have a vested interest in the number of viewers that can access their channels," Aereo attorney Michael Elkin told the court.

The broadcasters-which include News Corp.'s Fox Broadcasting, Comcast Corp.'s NBC, Walt Disney Co.'s ABC, CBS Corp., and a unit of Univision Communications Inc.-are seeking an injunction to stop the transmission, citing copyright infringement. News Corp. also owns Dow Jones & Co., publisher of Dow Jones Newswires and The Wall Street Journal. Broadcasters argued the right to monetize their own content through digital distribution deals rather than allow Aereo to take pick up their signals without paying and transmit them to viewers for a fee. "Our clients have the right to develop that market with their own content," Steven Fabrizio, an attorney for the broadcasters, said during closing arguments in a Manhattan district court.

Bruce Keller, another lawyer for the networks, warned "you won't be seeing Sunday night football on any broadcaster" if networks' business model is undermined by Aereo. The lawyers said even big TV events like the Super Bowl would become too expensive for networks to carry. District Judge Alison Nathan concluded two days of arguments in a Manhattan courtroom Thursday without a ruling, which isn't expected until late next month at the earliest. The closing arguments included further debate about whether Aereo's technology qualifies as a recording device, rather than a retransmission service, and if it creates a public performance for viewers that would require a special license under copyright laws.

Attorneys also debated if a widely-cited court ruling on Cablevision Systems Corp.'s creation of a remote, digital recording device served as an accurate precedent in the Aereo hearing. Earlier Thursday, Sherry Brennan, a senior vice president at Fox responsible for overseeing distribution deals, testified Aereo Chief Executive Chet Kanojia had sounded "angry" when she raised concerns about protecting Fox content and if ratings firm Nielsen would measure Fox shows distributed over Aereo. She recounted a phone discussion last year, before the launch of the service.

Broadcast attorneys used Ms. Brennan's testimony in contrast to statements by Mr. Kanojia in court Wednesday. He had testified that industry executives and officials, ranging from Comcast CEO Brian Roberts to the Federal Communications Commission, hadn't voiced concerns over his proposed business during discussions about the Aereo business in 2011. Ms. Brennan echoed the broadcasters' view that Aereo represents an irreparable harm to their business, which earns money from advertising revenue and so-called retransmission fees that distributors pay networks to carry their content.

Aereo doesn't foresee paying retransmission fees, and Nielsen currently doesn't measure ratings captured over Aereo technology-meaning broadcasters would see no financial benefit from its service under its current business model. That, Ms. Brennan said, could set a harmful precedent for the networks' business. "There's little reason to think other distributors who are paying us those fees would continue to do so," Brennan told the court, recalling recent suggestions from Time Warner Cable Inc. CEO Glenn Britt that Aereo's potential legal success would allow other distributors to challenge the retransmission fees they pay broadcasters.

Ms.; Brennan said she was aware that Aereo was already an established company supported by Mr. Diller at the time of her conversation with Mr. Kanojia last spring. But Fox hadn't sued Aereo at the time, in part because it didn't have active customers then, and because Fox is often presented with plans by potentially threatening distribution ventures that never take off, Ms. Brennan said. "We don't rush to sue people because we don't like their idea," she said. Also Thursday, an expert witness outlined the history of video-recording devices, ranging from the introduction of the Sony Betamax in the late 1970s to newer technology introduced by TiVo, in an effort to explain Aereo technology. Wall Street Journal

A new tax on satellite television service passed the Illinois Senate Thursday, but a spokesman for House Speaker Michael Madigan said the idea wouldn't get a vote Thursday in the House. That leaves the idea dead for the spring, since Thursday was the last day of the spring legislative session. Its chances for revival later were not clear Thursday.

House Bill 5440, which would impose a 5 percent tax on satellite service, was approved on a 30-27 vote in the Senate. The fee, which was supported by the cable industry, was expected to raise about $75 million, which would be used to bolster education funding. The satellite television industry says it would raise much less.

Subscribers to cable television services have to pay a 5 percent franchise fee, and Senate President John Cullerton, D-Chicago, said it would be fair to apply the same amount to satellite service. Cullerton said the fee would not necessarily be passed on to consumers. "I would suspect that in a competitive market, there's not any guarantee that any of the fees that are assessed will be passed onto the consumer," Cullerton said. Local-area lawmakers were split on the tax. Sen. Larry Bomke, R-Springfield, voted for it, while Sen. John Sullivan, D-Rushville, voted against it. Sen. Sam McCann, R-Carlinville, was not present for the vote. Speaking for Republicans, Sen. Dale Righter, R-Mattoon, said Illinois residents are "being nickled and dimed to death" with tax increases. Springfield (IL) State Journal-Register

Facebook's website suffered sporadic outages on Thursday, anywhere from half an hour to two hours according to various blogs, tweets and affected users, but the company said the problem has been fixed. "Earlier today, some users briefly experienced issues loading the site. The issues have since been resolved and everyone should now have access to Facebook," company spokesman Michael Kirkland told Reuters. The outages came as Facebook continued to grapple with the fallout of its botched May 18 IPO. The stock has plummeted nearly 23 percent from its IPO price, and numerous lawsuits have been filed in the wake of first-day trading glitches. Shares of Facebook closed up 5 percent at $29.60 Thursday on the Nasdaq. Reuters

House and Senate GOP leaders say they are nearing agreement on a state budget proposal to present to Gov. Corbett in closed door negotiations as early as next week. House Majority Leader Mike Turzai (R., Allegheny) told reporters at an impromptu news conference in the Capitol Wednesday, that the budget remains "a work in progress" and that the Senate's proposed $27.65 billion spending plan is a "good parameter" for ongoing discussions.

Corbett has said the Senate budget is unsustainable and that he is seeking a a so-called "spend number" closer to the $27.15 billion budget he presented in February. But Turzai and Senate Majority leader Dominic Pileggi (R., Delaware) said increased revenue collections in the past several months will allow the restoration of some funding - particularly in the area of higher education. Meanwhile, Turzai said he wants to see a little quid pro quo for the restoration of some $245 million in Corbett cuts to higher ed, namely that the state-supported schools would agree to freeze tuition for in-state students. "We want to see [funding restoration] tied to tuition," said Turzai, offering no specifics on the plan.

But Senate Appropriations Committee Chairman Jake Corman (R., Centre), who led the Senate effort to the restore the cuts, told Capitolwire news service, he doesn't see that as realistic. "My guess is the universities will not be able to guarantee zero in-state tuition. Not sure ...what the House is thinking on higher education." Turzai said he supports the Senate plan to restore $50 million to accountability block grants to pay for early childhood education and $84 million cut by Corbett from the human services block grant. Neither Turzai nor Pileggi suggested the legislature was planning to restore $150 million in emergency temporary general cash assistance for the disabled. "We think this allocation is the right allocation of limited funds," said Pileggi of the overall plan, which passed the Senate earlier this month. Neither House nor Senate Democratic leaders were invited to the talks. Pileggi said completing the budget by mid-June - two weeks ahead of the June 30 deadline - was optimistic, but "achievable."