Comcast Corp., the nation's largest cable operator, won a unanimous court victory in its long-running legal match with independently owned Tennis Channel Inc.
On Tuesday, the U.S. Court of Appeals for the District of Columbia ruled that Tennis Channel had failed to prove that Comcast had discriminated against it by placing the channel in a higher-priced sports tier with fewer subscribers.
"This could be absolutely devastating financially to the Tennis Channel," said media analyst Derek Baine of consulting firm SNL Kagan.
The decision reversed a finding last year by the Federal Communications Commission that Comcast had illegally put the tiny Santa Monica channel at a competitive disadvantage.
Tennis Channel has been lobbying for more than three years to be included in Comcast's basic service that feeds more than 21 million homes. That package already includes two Comcast-owned sports channels — the Golf Channel and NBC Sports Network.
"This move, getting into more Comcast homes, was going to move the Tennis Channel up to the next level, but it is tough to get traction when you are an independent channel," Baine said.
Tennis Channel, which turns a profit, had been banking on a big boost in subscribers, which would have generated tens of millions of dollars more through higher ratings and new subscriber fees.
The channel had planned to use the money to strengthen its programming roster, which currently includes coverage of 120 tennis tournaments a year.
It had hoped that a wider distribution and larger audience would make it easier for Tennis Channel investors to sell the channel eventually to a major media conglomerate for a premium price.
On Tuesday, Tennis Channel Chief Executive Ken Solomon said he was disappointed with the ruling but said it was far from game, set, match.
"We are thriving as a channel and we are going to survive this," Solomon said in a phone interview from Paris, where Tennis Channel has been broadcasting French Open tennis matches.
"We've never been treated fairly by Comcast in the 10 years that we've been in existence, but this is not over," he said. "We are not yet at the end of the marathon — we are only halfway."
His company said it would consider an appeal to the U.S. Supreme Court.
Comcast long has argued that the FCC simply went too far in its findings.
"We are pleased the Court of Appeals correctly rejected the claim that we discriminated against Tennis Channel," Sena Fitzmaurice, Comcast vice president for government communications, said Tuesday.
Last year, the FCC, after a lengthy analysis, agreed that Comcast had discriminated against the tennis operation by giving preferential treatment to the channels the cable company owned.
That 3-2 decision marked the first time that the government agency had found a cable operator in violation of anti-discrimination laws.
The appellate court, however, said in its 51-page ruling that Tennis Channel and the FCC had failed to provide enough proof that Comcast had shunted the channel to a less-favorable location simply because Tennis Channel was not affiliated with Comcast.
Comcast argued to the judges that Tennis Channel had agreed to be carried in the sports tier of channels when it negotiated a long-term contract with the cable company in 2005.
Comcast also pointed out that other big cable operators carried Tennis Channel in their sports tiers and that there was not enough consumer demand to warrant its inclusion in basic packages of channels.
"Comcast's decision to carry Tennis Channel was the product of legitimate business considerations, not affiliation," Fitzmaurice said.