A lawsuit brought against Comcast today accuses the cable company of using its market power to try to run a regional sports network out of business.
The lawsuit was filed in U.S. District Court in Colorado by Altitude Sports, a network that broadcasts games played by the Denver Nuggets, Colorado Avalanche and other local professional and college teams. Altitude has been responding to Comcast since August 31, as the companies have not agreed on what price Comcast will pay to run the network.
Filing lawsuits is at least partially a negotiation tactic in cases like this one, but Altitude claims this is more than a simple price dispute. Comcast offers less than Altitude actual costs because it wants to drive Altitude out of business and then acquire the TV rights of the Denver teams themselves, Altitude claims.
"This complaint states that there is competitive behavior in the textbook," said attorney Altitude William Isaacson in a statement of the suit. "This lawsuit seeks to prevent Comcast from abusing its monopoly power to impose Altitude terms on driving it out of business and bartering for families in the Denver region."
Comcast would be able to "quickly and easily take over regional sports production" in the Denver area if it forces Altitude out of business, the lawsuit states.
Comcast dominates the Denver TV market
Comcast owns the regional sports networks in major cities such as New York, Boston, Chicago, Philadelphia and Washington, DC. But Altitude is owned by Kroenke Sports & Entertainment, which also owns Nuggets and Avalanche, so Comcast has to buy access to the channel to broadcast the top sports teams in Denver.
Comcast has a 57 percent share of the pay TV market in the Denver area, compared to DirecTV's 25 percent, the lawsuit states. Comcast's dominance of the market "has increased since the first Altitude agreement over 15 years ago, as part of an unprecedented wave of [pay-TV] consolidation, expansion and vertical integration," the lawsuit states. Altitude says this allows Comcast to exercise mononistic power, where a buyer becomes so large that it effectively controls the market.
In the recent negotiations, Altitude offered a five-year contract renewal with terms similar to the previous agreement, but Comcast called for "dramatic cuts in rates payable to Altitude," the Altitude lawsuit states. Comcast also proposed moving the Altitude channel from a cable package that reaches at least 70 percent of Comcast's local subscribers to one that only 15 percent of Comcast customers subscribe to, which will reduce the amount of Altitude that can be charged for TV advertising, the lawsuit states .  Comcast knows that these proposals "are financially unsustainable for Altitude or RSN [regional sports network]," Altitude said. The rates offered by Comcast "were completely unreasonable and unusable for Altitude given the costs it pays for the licensees and the production costs for this," the lawsuit states.
Comcast also rejected Altitude's offer of a one-year extension under the previous rates and terms, which would "give the parties more time to negotiate a long-term solution and avoid a situation where Altitude was superseded by Comcast, "it states in the lawsuit.
Here is one of the most important parts of the complaint, in which Altitude describes the allegations that Comcast's long-term plan is to purchase the broadcasting rights of Denver sports teams:
By negotiating fees and wagons that undermine an independent RSN and require that it is going to charge under the cost, Comcast knows that it can lead to any independent RSN going out of business. Comcast can then acquire the content by either purchasing RSN's TV rights themselves or by ensuring that RSN becomes part of another consolidated ownership. When Comcast acquires the content, subscribers return and reduce long-term losses. For these reasons, Comcast is incentivized to suffer a short-term temporary loss of subscribers to make huge long-term gains.
Comcast is now using its monopsony power in the wholesale acquisition of sports programming in the Denver DMA (designated market area) to propel Altitude as a competitor in this exact way.
After Comcast puts Altitude out of business, Comcast will try to buy Altitude or set up its own RSN to replace Altitude. This means that Comcast not only violates the antitrust laws ban on acquiring or maintaining monopoly power (monopsony) that buys in the Programming Market (the market where Altitude sells its productions); Comcast also illegally attempts to monopolize the production market (the market where Altitude and other RSNs compete to make programming) by replacing Altitude with Comcast's own captive RSN. Comcast's attempt to monopolize the production market is a separate and independent breach of antitrust laws.
Comcast has taken a completely different approach with RSNs it owns, says Altitude. "Comcast has not demanded or imposed drastic interest rate cuts or carriage reductions on its own affiliated RSNs across the country," Altitude said. For Comcast-owned networks, Comcast continues to "sign new contracts for prices equal to or higher than what it previously paid to Altitude," the lawsuit states.
Altitide's lawsuit asks the court for a declaratory judgment that Comcast violated antitrust laws and "disrupted" torture with Altitude's business relationship with sports teams and advertisers. Altitude also asked for damages and punitive damages and an order that Comcast "distribute Altitude & # 39; s programming on reasonable, non-discriminatory terms."
Comcast charges regional sports fee
Altitude was also blacked out on DirecTV, but the blackout ended in early November when the companies agreed on pricing and distribution terms. Both Comcast and DirecTV charge a monthly fee for the "Regional Sports Network" to cover the costs of distributing networks such as Altitude. Colorado Attorney General Phil Weiser is investigating the companies' decision to continue to charge the fee during the blackout.
While DirecTV owner AT&T made it difficult for customers to receive reimbursement for that fee during blackout, Comcast automatically granted partial bill credits to account for the darkened channel. Comcast justified its decision to charge the rest of the fee by noting that it also carries the AT&T SportsNet Rocky Mountain channel, which broadcasts baseball games from the Colorado Rockies, and the Pac-12 network that broadcasts college sports.
Altitude's lawsuit criticizes the Regional Sports Network fee, saying it constitutes a "monopoly fee" charged to consumers. "The fees that Comcast pays for regional sports programming in the Denver DMA dropped dramatically, but Comcast offered only a reduction of the token bill (as a consumer spending after consumer outbreaks)," Altitude said.
We contacted Comcast about Altitude's lawsuit and will update this article if we receive an answer.