About 30 blocks from the Pacific Ocean in sunny Santa Monica, employees of the Tennis Channel excitedly met in a conference room to officially hear the almost-unthinkable - they had taken on Comcast Corp. and won big.
There were cheers and applause, hugs and tears. "Cathartic moment" was how the channel's spokesman, Eric Abner, described the meeting in a Thursday interview. The attitude was not that of spiking the football, he said, but rather, "we're closer to the end than ever before."
Federal Communications Commission administrative law Judge Richard L. Sippel ruled Tuesday that Comcast was discriminating against the Tennis Channel by placing it on a low-audience restricted sports package while treating Comcast-owned sports channels Golf and Versus more favorably. Those channels are available to almost all of Comcast's TV customers through a general-audience package that includes CNN, CNBC, and USA.
Sippel fined Comcast $375,000 and ordered it to fix the disparity between the Tennis Channel and Golf and Versus.
Sippel's ruling was a rare victory for an independent programmer, and Comcast said it would ask the FCC to review Sippel's decision, which could result in its being overturned or taken to the U.S. Court of Appeals.
Comcast responded quickly and clearly.
"Comcast has the contractual right to distribute Tennis Channel as it does currently, and [it] firmly believes that the exercise of that right to minimize costs to consumers is not discrimination," said Sena Fitzmaurice, Comcast vice president of government communications.
"We believe it is wrong for Tennis Channel to use the government to impose higher costs and prices on private enterprise and consumers and we look forward to the review process."
Ken Solomon, chairman and chief executive officer of the Tennis Channel, said he realized Comcast could fight on. But the firmly worded ruling gave him confidence the Tennis Channel could prevail against the media giant.
"This is not personal," Solomon said. "We begged them for a way to do this without a court case. It is fair to say that we put a significant amount of our chips in this case. We had nowhere else to turn."
He called the case "bloody and expensive," but with a prize. If ultimately successful, the Tennis Channel expects to expand from 30 million to 50 million U.S. homes. It's now available to about 2.5 million Comcast households that buy the sports package; in a general-audience digital package, it could expand to about 20 million Comcast homes, Tennis Channel officials believe. The channel also has carriage agreements with DirecTV, Dish, Time Warner Cable, and AT&T.
With more homes, the Tennis Channel's monthly per-subscriber income would soar and it could sell more national advertising. Advertisers seek channels that reach at least 40 million homes.
Solomon reeled off the reasons he believed the Tennis Channel could be more than a niche offering: 50 percent of the tennis audience is female; the channel owns many, many hours of programming of tennis matches; tour events are spread throughout the year; the female stars are as popular as the male stars, and famed players, such as Roger Federer and the Williams sisters, are global fan draws. Among its investors are venture funds and former tennis stars Andre Agassi and Pete Sampras.
"No one knew how big Seinfeld would be," Solomon said. "There are signs that this would be a big network. You look for a void in the market and then try to fill it."
Though the Tennis Channel has been carried on Comcast's sports package since 2005, the current dispute dates to 2008.
That year, the Tennis Channel acquired rights, along with ESPN2, to broadcast the U.S. Open matches. With those, the Tennis Channel had the rights to the sport's four Grand Slams - the Australian Open, the French Open, Wimbledon, and the U.S. Open. Tennis Channel officials thought with that level of programming, the channel should be available through a general-audience package with the Golf Channel and Versus.
The two sides negotiated for months, but Comcast said no, Solomon said. The Tennis Channel would stay in the sports package, which costs subscribers an additional $5 to $8 a month.
The Tennis Channel had other concerns, too. Comcast was moving 24-hour networks associated with professional sports leagues into the general-audience package. Without those channels in the sports package, Comcast customers could drop it, leaving the Tennis Channel with a shrinking audience.
Believing it was out of options to settle the issue amicably, the Tennis Channel filed the carriage complaint in early 2010.
"When does it end?" Solomon asked in reference to Comcast. "Do the right thing. We've found how to do business with everyone else. Let's do this."