Comcast Accused of Anti-Competitive Practices in Denver

On November 18, plaintiff Altitude Sports & Entertainment filed a complaint against defendant Comcast (Altitude Sports & Entertainment, LLC v. Comcast Corporation and Comcast Cable Communications, LLC 1:19-cv-03253-WJM) for actual and attempted monopolization as well as tortious interference. The suit was filed in the District of Colorado. Altitude is represented by Armstrong Teasdale and Boies Schiller Flexner

The complaint explained the importance of Comcast’s dominant control of the Denver Designated Market Area (DMA), which covers 70 counties in three states: Colorado, Nebraska, and Wyoming. In the Denver DMA, 92 percent of cable customers get their service from Comcast and in most cases, Comcast is the only provider in the area. Comcast contracts with sports teams, leagues, and other content providers to have the right to produce and telecast sports programming to its subscribers and other multichannel video programming distributors (MVPDs) and Comcast owns and distributes this programming nationally and regionally. Altitude produces and telecasts regional sports programming from its Denver headquarters, its business is a Regional Sports Network (RSN). Altitude as an independent RSN, licenses the rights to telecast regional sports teams’ games, sports-related content, and other related entertainment content. Comcast has carried Altitude for the past 15 years, until August 31, when Comcast stopped showing the network after Altitude did not agree to Comcast’s demands. Altitude both relies on Comcast for coverage and competes with Comcast for content.  Outside of Denver, Comcast has acquired independent RSNs over the country to reduce competition for sports program licensing, along with other large mergers and acquisitions.

The complaint stated, “As the only cable provider for the vast majority of consumers in the Denver DMA, Comcast is able to use its power as a local cable monopoly to control consumers and use them to achieve its ends.” Further, “Comcast wants to own and centralize regional sports broadcasting in the Denver DMA—at the expense of quality and choice for consumers—so that it can keep its Regional Sports Fee without having to offer consumers programming from an independent RSN like Altitude… Comcast is a ‘rapid entrant’ and is therefore considered a direct competitor to Altitude for antitrust purposes.” Comcast charges for a sports package, which includes Altitude and a Regional Sports Fee. Comcast wants to eliminate or reduce Altitude as competition. It is an attempt to further monopolize the Denver market area as it has done in other markets around the country. Among other things, Comcast wanted to move Altitude to another less-widely distributed package that would force customers to pay an additional fee to see its programming, thus reducing its carriage from more mainstream consumer access to a channel package with fewer subscribers. On the other hand, Comcast had not made demands and had not imposed carriage reductions to its own RSNs, instead of charging MVPDs per subscriber license fees and other rates. The complaint alleged that Comcast’s proposal would put Altitude out of business.

RSNs rely on advertising and per-subscriber fees, moving an RSN into a less widely distributed package would cut an RSNs potential revenue in both of these areas. The complaint stated, “Comcast… is now demanding that Altitude accept rates significantly less than what Comcast has historically paid Altitude, and Comcast is insisting on carriage of Altitude in a package of services having approximately 15% penetration (rather than the 70% minimum penetration it had agreed upon for the prior 15 years).” Altitude attempted to renew its agreement twice, the first proposal was rejected and the second proposal was countered four months later.

The complaint alleged that Comcast has used its power as a wholesale purchaser to acquire RSNs. “By negotiating fees and carriage that undermine an independent RSN and require it to charge below its costs, Comcast knows that it can cause any independent RSN to go out of business. Comcast may then reacquire the content by either purchasing the RSN’s television rights themselves or by ensuring that the RSN becomes part of some other consolidated ownership. Once Comcast reacquires the content, the subscribers return, mitigating any longterm losses. For these reasons, Comcast is incentivized to suffer a short-term temporary loss of subscribers to achieve enormous long-term gains.” Comcast is able to do this because of its monopoly of the Denver DMA, the nature of the market, high barriers for buyers to enter and lack of alternatives for sellers.

“In 2015, Comcast began charging its subscribers a monthly Regional Sports Fee in the amount of $1.00. During the 2015 – 2019 time period, Comcast increased that fee in the Denver DMA by 800% to $8.00. During that same time period, Comcast increased the rates that it paid Altitude by only a nominal amount each year. The annual increases in Comcast’s Regional Sports Fee, therefore, bore no relationship to any increase in the cost of carrying Altitude’s programming. These dramatic increases are an indicator of Comcast’s market power… Comcast has started to provide a small, partial refund to customers of $1.25, but will not reimburse the full portion of the fee attributable to Altitude’s programming.” This is an example of how Comcast’s monopoly and anticompetitive actions hurt consumers. Also, consumers were still paying for Altitude even when Comcast blacked it out.

Altitude has sought “trebled compensatory damages, punitive damages, and injunctive relief under the antitrust laws of the United States, and for compensatory and punitive damages and injunctive relief under state law.”