News

Mark Cuban Cries Foul

11/25/2007 7:00 PM Eastern

HDNet co-founder and owner Mark Cuban is the latest independent programmer to cry foul to federal regulators about a distributor, expanding his dispute with DirecTV from a Texas court to Washington.

In filings with the Federal Communications Commission, Cuban claims his HDNet and HDNet Movies are being unfairly treated and discriminated against by both DirecTV and Liberty Media, which is seeking to buy News Corp.’s 38.5% stake in the satellite provider for $11 billion.

“The proposed transaction cannot be in the 'public interest’ as required by law without the addition of conditions to protect independent programmers carried by DirecTV at the time this application was filed,” HDNet said in its ex parte papers Nov. 13 regarding the proposed Liberty Media-DirecTV deal.

HDNet also charged that DirecTV is trying to “kill off” the network, and that at one point Liberty Media was seeking to acquire 50% of Cuban’s HD network.

HDNet asked the FCC to require DirecTV to continue to carry the network for four years after approval is granted for the Liberty Media deal.

In turn DirecTV, in a filing with the FCC last Tuesday, and in documents previously filed with the Texas court, denied HDNet’s charges.

“Sensing that it might not have much commercial leverage in next year’s renewal negotiations, HDNet has concocted a discrimination claim against DirecTV in hopes that the Commission will guarantee it carriage for years to come, at rates which HDNet, on the merits of its content, could not command otherwise,” DirecTV told the FCC.

Liberty Media declined to comment.

HDNet filed papers with the FCC Nov. 13, a day after winning a temporary restraining order from a 101st Judicial District Court judge in Dallas. It bars DirecTV from moving HDNet and HDNet Movies from the satellite provider’s most widely distributed HD offering to a mini-pay tier of HD networks.

Cuban claims that moving his two HD networks to that new $4.99 a month “HD Extra Pack” tier, with four other networks, violates his carriage deal with DirecTV.

HDNet and HDNet Movies are now part of DirecTV’s most comprehensive HD offering, which costs $9.99 a month. Subscribers would have to pay $4.99 in addition to the “HD Access” $9.99 fee to get the HD-only Extra Pack, a switch that HDNet claims will make it lose 75% of its subscriber base.

DirecTV responded to the lawsuit in Texas by stating it has no contractual obligation to carry HDNet in any basic package and that HD Access actually is a “technology or equipment fee,” not a tier.

A hearing on the temporary restraining order is scheduled in Dallas for Dec. 7.

But in the interim, Cuban and HDNet went to the FCC, making allegations against not only Liberty Media and DirecTV, but also Discovery Communications, which HDNet describes as “affiliated or controlled by” John Malone, Liberty Media’s chairman.

Discovery Holding, a publicly traded entity controlled by Liberty Media, owns a 66.7% interest in Discovery Communications.

HDNet isn’t the only independent programmer that’s visited the FCC this month. Hallmark Channel was also lobbying on behalf of rules that would promote competition and benefit standalone cable networks in dealings with distributors.

In the case of HDNet, it told the FCC that DirecTV’s actions will benefit Malone and “his Discovery-related affiliates, among others.”

Discovery HD Theater, which does not simulcast in standard definition, has not been moved to the HD-only Extra Pack, HDNet told the FCC.

HDNet also claimed that Liberty Media approached it about buying a stake in the service.

“Liberty, with full knowledge of our deteriorating relationship with DirecTV and the adverse and discriminatory carriage terms to which we were going to be subject, approached HDNet with the suggestion that it sell them a 50% interest in HDNet,” the network told the FCC. “When it became clear that HDNet was not coming to an agreement with DirecTV on its future carriage, Liberty ceased expressing an interest.”

HDNet also claimed Discovery Channel will no longer carry ads for it and HDNet Movies.

Discovery Communications filed papers with the FCC last Tuesday. As for its decision not to run HDNet ads anymore, Discovery said it is trying to get carriage for its own HD simulcast networks, so “any advertising encouraging viewers to contact their local cable operator and request carriage of a competing HD service places Discovery at a significant business disadvantage.”

HDNet alleged that DirecTV is targeting it because the satellite provider is trying to do original concert programming, which is one of the HD network’s bailiwicks, “for its own new network, 'The 101.’ ”

In its FCC filing, DirecTV said that it “was in no way motivated by the desire to favor programming affiliated with itself or its prospective largest shareholder, Liberty Media.”

Explaining why Discovery HD Theater will not be on the new HD-only tier, DirecTV told the FCC that the service “is treated differently not because it is affiliated with Liberty Media’s chairman, but because it is available free” to DirecTV.

Every programmer in the HD Extra Pack charges DirecTV a fee, according to the satellite provider.

DirecTV also said it has been broadcasting free concerts to subscribers since 1999, before HDNet launched.

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