UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT Thurgood Marshall U.S. Courthouse 40 Foley Square, New York, NY 10007 Telephone: 212-857-8500 MOTION INFORMATION STATEMENT Docket Number(s): Caption [use short title] Motion for: Set forth below precise, complete statement of relief sought: MOVING PARTY: OPPOSING PARTY: c57c32Plaintiff c57c32Defendant c57c32Appellant/Petitioner c57c32Appellee/Respondent MOVING ATTORNEY: OPPOSING ATTORNEY: [name of attorney, with firm, address, phone number and e-mail] Court-Judge/Agency appealed from: Please check appropriate boxes: FOR EMERGENCY MOTIONS, MOTIONS FOR STAYS AND INJUNCTIONS PENDING APPEAL: Has movant notified opposing counsel (required by Local Rule 27.1): Has request for relief been made below? c57c32Yes c57c32No c57c32Yes c57c32No (explain): Has this relief been previously sought in this Court? c57c32Yes c57c32No Requested return date and explanation of emergency: Opposing counsel’s position on motion: c57c32Unopposed c57 Opposed c57 Don’t Know Does opposing counsel intend to file a response: c57 Yes c57 No c57 Don’t Know Is oral argument on motion requested? c57c32Yes c57c32No (requests for oral argument will not necessarily be granted) Has argument date of appeal been set? c57c32Yes c57c32No If yes, enter date:__________________________________________________________ Signature of Moving Attorney: ___________________________________Date: ___________________ Has service been effected? c57c32Yes c57c32No [Attach proof of service] ORDER IT IS HEREBY ORDERED THAT the motion is GRANTED DENIED. FOR THE COURT: CATHERINE O’HAGAN WOLFE, Clerk of Court Date: _____________________________________________ By: ________________________________________________ Form T-1080 Case: 11-4780 Document: 21-1 Page: 1 11/22/2011 454324 1 11-4780 Panel assignment & decision without argument Cablevision Sys. Corp. v. FCC and USA Request to have motion for stay assigned to same panel that heard stay request in Case No. 11-1404 and to decide motion without oral argument Federal Communications Commission Cablevision Sys. Corp. & MSG Holdings ? Peter Karanjia Samuel L. Feder Federal Communications Commission 445 12th Street, SW Washington, DC 20554 (202) 418-2836 Peter.Karanjia@fcc.gov Jenner & Block Washington, DC 20001 1099 New York Ave., NW (202) 639-6092 sfeder@jenner.com Federal Communications Commission ? ? ? ? 11/25/11 The present motion is related to an emergency motion ? ? ? for stay filed by opposing counsel. /s/Peter Karanjia 11/22/2011 ? In the UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT IN RE: CABLEVISION SYSTEMS CORP. AND ) MSG HOLDINGS, L.P., ) CABLEVISION SYSTEMS CORP. AND MSG ) HOLDINGS, L.P., ) ) PETITIONERS )No. 11-4780 V. ) FEDERAL COMMUNICATIONS COMMISSION ) AND UNITED STATES OF AMERICA, ) ) RESPONDENTS ) MEMORANDUM IN OPPOSITION TO PETITIONERS’ MOTION FOR STAY AND IN SUPPORT OF FCC’S CROSS-MOTION FOR SUBMISSION, WITHOUT ORAL ARGUMENT, TO THE SAME PANEL THAT HEARD PETITIONERS’ PRIOR REQUEST FOR A STAY PETER KARANJIA DEPUTY GENERAL COUNSEL JACOB M. LEWIS ASSOCIATE GENERAL COUNSEL C.GREY PASH,JR. COUNSEL FEDERAL COMMUNICATIONS COMMISSION WASHINGTON, D. C. 20554 (202) 418-1751 Case: 11-4780 Document: 21-2 Page: 1 11/22/2011 454324 25 TABLE OF CONTENTS Introduction ............................................................................................. 2 Background ............................................................................................. 4 1. The Regulatory Setting ................................................................ 4 2. The Verizon And AT&T Complaints And The Media Bureau Rulings .......................................................... 7 3. The Commission Orders Affirming The Media Bureau Decisions ...................................................... 9 Argument ................................................................................................ 11 The Stay Request Should Be Denied. ..................................................... 11 1. Cablevision Has Failed To Make A Strong Showing That It Is Likely To Succeed On The Merits. ............................. 12 a. Significant Hindrance ............................................................. 12 b. The Presumption And The Record Evidence ......................... 13 c. The Unfairness Requirement ................................................. 16 d. The First Amendment ............................................................ 17 2. Cablevision Has Failed To Demonstrate That It Will Suffer Irreparable Injury Absent A Stay. .................................... 17 3. A Stay Would Harm Other Parties And The Public Interest ...... 19 Conclusion .............................................................................................. 20 Case: 11-4780 Document: 21-2 Page: 2 11/22/2011 454324 25 The Federal Communications Commission (the Commission or FCC) hereby opposes petitioners’ motion for a stay of two FCC orders pending judicial review. Less than two weeks ago, this Court denied an earlier request for a stay filed under the All Writs Act by the same petitioners, seeking to stay companion decisions of the FCC’s Media Bureau. See In re: Cablevision Systems Corp., No. 11-4104 (2d Cir., Nov. 9, 2011). 1 After the Commission affirmed the decisions of its Media Bureau, petitioners now seek a second stay of the agency’s action – even though their second request (this time, for a stay of the Commission’s orders in the same proceedings) involves the same issues and virtually identical arguments. Petitioners’ new request for a stay should be denied for the same reasons. And because the Court has already considered and rejected petitioners’ arguments, there is likewise no basis for imposing a temporary administrative stay in this case. In seeking a second stay, petitioners do not even attempt to argue that the Commission-level orders affirming the decisions of the FCC’s Media Bureau suffer from any separate and additional infirmity not present in the Bureau orders – which this Court declined to stay. See Mot. at 7-19. In short, petitioners’ renewed arguments offer nothing new. Because petitioners’ stay request is in all material respects identical to their earlier request (and subject to the same stay criteria), the Commission cross-moves 1 A copy of the Court’s order is attached hereto as Exhibit A. Case: 11-4780 Document: 21-2 Page: 3 11/22/2011 454324 25 - 2 - to submit the motion to the same panel that considered petitioners’ earlier stay request in Case No. 11-4104 and to decide the motion without argument. This would serve the interest of judicial economy by obviating the need for a new panel to familiarize itself with the issues raised by petitioners and by avoiding the necessity for counsel (all of whom are located in Washington, D.C.) to present argument addressing the same issues once again. INTRODUCTION The FCC orders presently before the Court affirmed orders of the agency’s Media Bureau, finding that cable television operator Cablevision Systems Corp. and its affiliated programmer Madison Square Garden, L.P. (MSG) had violated Section 628(b) of the Communications Act, 47 U.S.C. § 548(b). That section prohibits “unfair acts” by cable operators and affiliated programmers that have the “purpose or effect” of “hinder[ing] significantly or prevent[ing]” their competitors from providing “satellite cable programming” to consumers. In 2010, the Commission recognized the unique characteristics of regional sports programming – in particular that it is highly valued by consumers and is non-replicable because a competing video provider cannot provide the same programming. Based on those characteristics, the FCC established a rebuttable presumption that withholding of regional sports programming, including the High Definition (HD) version of such programming, has the anticompetitive purpose or effect prohibited by Section 628(b). That ruling was recently upheld by the D.C. Circuit. See Cablevision Sys. Case: 11-4780 Document: 21-2 Page: 4 11/22/2011 454324 25 - 3 - Corp. v. FCC, 649 F.3d 695, 709 (D.C. Cir. 2011) (Cablevision II). Cablevision’s violations arose from MSG’s withholding of “must have” HD sports programming from Verizon and AT&T, competitors of Cablevision that provide video services to consumers in New York City, Buffalo, and Connecticut. The withheld programming includes games of the New York Knicks, New York Rangers, Buffalo Sabres, New York Islanders, and New Jersey Devils, the exclusive rights to which MSG owns in the relevant areas. The FCC’s Media Bureau – and, in the orders affirming the Bureau, the full Commission – required Cablevision to license that withheld programming to Verizon and AT&T. Shortly after the Media Bureau issued its orders in September 2011, Cable- vision sought from this Court a stay, pursuant to the All Writs Act, of the Bureau orders, pending action by the Commission on Cablevision’s applications for administrative review of those orders. In re: Cablevision Systems Corp., No. 11- 4104. After considering briefing on the stay application and hearing oral argument, the Court denied the application on November 9th. On November 10th, the Commission issued the orders now before the Court affirming the Bureau’s action. Five days later, Cablevision returned to this Court, once again seeking a stay of the requirement that it make the withheld programming available to Verizon and AT&T. This time, Cablevision seeks a stay of the Commission’s orders pending judicial review of those orders, but nothing else material to this motion has changed. The motion should be denied. Case: 11-4780 Document: 21-2 Page: 5 11/22/2011 454324 25 - 4 - BACKGROUND 1. The Regulatory Setting Congress enacted legislation in 1992 to address concerns about competition and barriers to new entry in the video distribution market by, inter alia, adding Section 628 to the Communications Act, 47 U.S.C. § 548. See Cablevision II, 649 F.3d at 709. Section 628(b) prohibits cable operators and cable-owned networks from engaging in “unfair methods of competition or unfair or deceptive acts or practices, the purpose or effect of which is to hinder significantly or to prevent any multichannel video programming distributor [“MVPD”] from providing satellite cable programming or satellite broadcast programming to subscribers or consumers.” 47 U.S.C. § 548(b). Under Section 628, the FCC “has long imposed program access require- ments on vertically integrated cable companies in order to limit their ability to withhold satellite programming from competitors.” Cablevision II, 649 F.3d at 699. In 2010, the FCC adopted rules to close a “terrestrial loophole” in its “program access” rules under Section 628. 47 C.F.R. § 76.1001; Review of the Commission’s Program Access Rules, 25 FCC Rcd 746 (2010) (“2010 Order”). As the FCC’s Chairman observed at the time (id. at 820), prior rules gave “free rein to cable TV operators to lock up local sports events and other popular pro- gramming and withhold them from rival providers” where that programming was terrestrially delivered – i.e., transmitted to cable operators by fiber-optic lines Case: 11-4780 Document: 21-2 Page: 6 11/22/2011 454324 25 - 5 - rather than by satellite. The rules adopted in the 2010 Order established procedures under which the Commission will determine, on a case-by-case basis, whether various practices – including the withholding of terrestrially delivered programming by networks affiliated with cable operators – have the purpose or effect of significantly hinder- ing or preventing competition in violation of Section 628(b). Rather than requiring litigants to undertake needlessly repetitive examinations of the “purpose or effect” requirement so far as Regional Sports Networks (RSNs) are concerned, the Commission’s rules allow complainants to invoke a rebuttable presumption that an “unfair act” involving a terrestrially delivered, cable-affiliated RSN has the purpose or effect set forth in Section 628(b). 2010 Order, 25 FCC Rcd at 782-83, ¶ 52. The Commission has explained that the defendant may overcome the pre- sumption by establishing that the “unfair act” does not have the prohibited purpose or effect. Id.; see also id. at 750, ¶ 8. Recognizing the skyrocketing demand for High Definition (HD) program- ming, the unique characteristics of that medium, and the substantial evidence showing that consumers regard Standard Definition (SD) programming as an inadequate substitute for the HD experience (particularly for sports programming), the Commission also adopted a rebuttable presumption that withholding of an HD feed of RSN programming causes significant hindrance even if an SD feed of the network is made available to competitors. Id. at 784-85, ¶¶ 54-55. Case: 11-4780 Document: 21-2 Page: 7 11/22/2011 454324 25 - 6 - Cablevision sought judicial review of the 2010 Order. Earlier this year, the D.C. Circuit affirmed all but one aspect of that order. Cablevision II, 649 F.3d 695. As relevant here, the court upheld under the First Amendment and the Administrative Procedure Act the Commission’s decision to establish a rebuttable presumption of “significant hindrance” for “unfair acts” involving RSNs’ “must have” programming (in both HD and SD formats). The court concluded that in the 2010 Order, the Commission had “advanced compelling reasons to believe that withholding RSN programming is, given its desirability and non-replicability, uniquely likely to significantly impact the MVPD market.” 649 F.3d at 717. The court explained: When a vertically integrated cable programmer limits access to pro- gramming that customers want and that competitors are unable to duplicate—like the games of a local team selling broadcast rights to a single sports network—competitor MVPDs will find themselves at a serious disadvantage when trying to attract customers away from the incumbent cable company. To use a concrete example, we doubt that Philadelphia baseball fans would switch from cable to an alternative MVPD if doing so would mean they could no longer watch Roy Halladay, Cliff Lee, Roy Oswalt, and Cole Hamels take the mound, even if they thought the alternative MVPD was otherwise superior in terms of price and quality. Id. at 708. The court also found reasonable the Commission’s decision to extend the rebuttable presumption to HD RSN programming. Id. at 717. And it rejected as “meritless” Cablevision’s argument that “the Commission’s presumptions are impermissibly content-based and therefore deserve strict scrutiny” under the First Case: 11-4780 Document: 21-2 Page: 8 11/22/2011 454324 25 - 7 - Amendment. Id. “Given record evidence demonstrating the significant impact of RSN programming withholding,” the court explained, “the Commission’s presumptions represent a narrowly tailored effort to further the important governmental interest of increasing competition in video programming.” Id. at 718. Thus, the court concluded that the presumptions satisfy intermediate First Amendment scrutiny. Id. at 717-718. The court finally rejected as unripe Cablevision’s argument that given the asserted level of competition in the New York City market in which it operates, the rules adopted in the 2010 Order were unconstitutional as applied. Id. at 713. 2. The Verizon and AT&T Complaints and the Media Bureau Rulings In July and August 2009, respectively, Verizon and AT&T filed complaints with the FCC alleging that Cablevision Systems Corp. (a vertically integrated cable operator) and its affiliate MSG (collectively, Cablevision or petitioners) had refused to provide them with access to the terrestrially delivered MSG HD and MSG+ HD networks in violation of the FCC’s program access rules. Cablevision admitted it had denied Verizon and AT&T access to HD feeds of MSG HD and MSG+ HD on any terms. It is also undisputed that Cablevision has licensed those networks to many of Verizon’s competitors in the New York City area (including Cablevision, Time Warner, Comcast, DIRECTV, and RCN) and in the Buffalo area (Time Warner, Comcast, and DIRECTV). The FCC’s Media Bureau found that Cablevision had violated Section Case: 11-4780 Document: 21-2 Page: 9 11/22/2011 454324 25 - 8 - 628(b) of the Communications Act by withholding the MSG HD and MSG+ HD RSNs from Verizon and AT&T. Verizon Tel. Cos., DA 11-1594 (MB Sept. 22, 2011) (MB Verizon Order); AT&T Serv., Inc., DA 11-1595 (MB Sept. 22, 2011) (MB AT&T Order). 2 The Bureau determined that Cablevision’s withholding was an “unfair act” under Section 628(b). MB Verizon Order ¶¶ 18-41. Based on Commission precedent applying the “significant hindrance” standard in Section 628(b), as well as the rebuttable presumption of “significant hindrance” for HD RSNs established in the 2010 Order, the Bureau also concluded that Cablevision’s withholding of MSG HD and MSG+ HD from Verizon had the “effect” of “signifi- cantly hindering” Verizon and AT&T from providing competing video services, including “satellite cable programming and satellite broadcast programming,” to consumers in their respective service areas in New York City, Buffalo, and Connecticut. MB Verizon Order ¶¶ 42-68. As a remedy, the Bureau ordered MSG to enter into agreements to license the withheld programming to Verizon and AT&T on non-discriminatory rates, terms, and conditions within 30 days of the release of the Orders, and prohibited Cablevision from preventing or otherwise impeding MSG from entering into those 2 The Bureau released both public and non-public versions of the orders. Confi- dential and financial information submitted by the parties pursuant to a protective order was redacted from the public versions. Petitioners have submitted to the Court under seal the redacted versions of the orders. Case: 11-4780 Document: 21-2 Page: 10 11/22/2011 454324 25 - 9 - agreements. MB Verizon Order ¶¶ 83, 84. 3. The Commission Orders Affirming the Media Bureau Decisions. Cablevision filed applications for review by the full Commission of the Media Bureau orders. In two companion orders released on November 10, 2011, the Commission affirmed the Bureau’s orders, rejecting all of Cablevision’s challenges. In the Matter of Verizon Tel. Cos., FCC 11-167 (Nov. 10, 2011) (FCC Verizon Order), ¶¶ 1, 7 (denying application for review “for the reasons discussed below and stated in the Bureau’s Order”); In the Matter of AT&T Serv., Inc., FCC 11-168 (Nov. 10, 2011) (FCC AT&T Order), ¶¶ 1, 7 (same). 3 The Commission rejected Cablevision’s claims that withholding of the disputed HD programming had not significantly hindered Verizon and AT&T because their provision of video programming had been financially successful without MSG’s HD programming. The Commission agreed with the Bureau that “‘the salient issue in assessing “significant hindrance” is whether an MVPD has been hindered relative to its competitors and whether the hindrance is substantial enough to eliminate the MVPD as a competitive choice for a meaningful number 3 As relevant here, the two companion orders are substantially identical; accordingly, unless otherwise indicated, the citations herein to the FCC Verizon Order also apply to the FCC AT&T Order. As with the Bureau orders, the Commission released both public and non-public versions of the FCC orders. Petitioners have submitted to the Court under seal the non-public versions of the orders. Case: 11-4780 Document: 21-2 Page: 11 11/22/2011 454324 25 - 10 - of consumers.’” FCC Verizon Order, ¶ 8. The Commission also pointed out that the court in Cablevision II had “specifically rejected the claim that ‘significant hindrance’ requires a showing of complete foreclosure, stating that ‘[t]he problem with petitioners’ argument is that it wrongly assumes an MVPD’s lack of commer- cial attractiveness will never prevent or significantly hinder it from providing satel- lite programming.’” Id. at ¶ 11. The Commission concluded that “the record in this proceeding supports the conclusion that the withholding of HD RSN program- ming eliminated Verizon as a competitive choice for a meaningful – i.e., signifi- cant – number of consumers.” Id. at ¶ 9. The Commission likewise noted that the Bureau’s finding was consistent with the Commission’s adoption of a rebuttable presumption that withholding HD RSN programming will constitute significant hindrance, a conclusion that the Cablevision II court upheld, explaining that the “‘Commission advanced compelling reasons to believe that withholding RSN programming is, given its desirability and non-replicability, uniquely likely to significantly impact the MVPD market.’” Id. (citation omitted). The Commission further rejected Cablevision’s argument that it had been held to an impermissibly high standard in seeking to rebut the presumption of significant hindrance arising from the withholding of HD RSN programming. The Commission held that “a defendant cannot meet this burden by producing just any evidence, no matter how unpersuasive. Indeed, such a standard would effectively Case: 11-4780 Document: 21-2 Page: 12 11/22/2011 454324 25 - 11 - nullify the presumption.” FCC Verizon Order, ¶ 19 (citations omitted). The Commission held that the Bureau had fully considered all of the evi- dence, correctly rejecting Cablevision’s evidence as unreliable, insufficient, and unpersuasive in meeting the applicable presumption. FCC Verizon Order ¶¶ 22- 31. The Commission also affirmed the Bureau’s conclusion that Cablevision’s withholding was an “unfair practice” because it had “harmed competition and consumers in the impacted markets” and because these anticompetitive harms were not outweighed by any procompetitive benefits. Id. ¶ 32. Finally, the Commission affirmed the Bureau’s analysis of Cablevision’s First Amendment arguments, rejecting those arguments as meritless. FCC Verizon Order ¶ 33. ARGUMENT THE STAY REQUEST SHOULD BE DENIED Cablevision must satisfy the traditional requirements for obtaining a stay: “(1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies.” In re World Trade Ctr. Disaster Site Litig., 503 F.3d 167, 170 (2d Cir. 2007) (footnote, citations, and quotation marks omitted); see also In re: Cablevision Sys. Corp., No. 11-4104 (2d Cir., Nov. 9, 2011) (order denying prior stay) (citing same case). Case: 11-4780 Document: 21-2 Page: 13 11/22/2011 454324 25 - 12 - Once again, Cablevision has failed to satisfy these stringent requirements. 1. Cablevision Has Failed To Make a Strong Showing That It Is Likely To Succeed On The Merits. a. Significant Hindrance. In its present motion, Cablevision reiterates its earlier argument that the agency erred in finding that video programming distributors are significantly hindered by the withholding of HD RSN program- ming without “examin[ing] the impact” on the ability of Verizon and AT&T to stay in the market. See Mot. at 9-12. But as the Commission explained, the Bureau’s interpretation of “significant hindrance” was correct and consistent with Commission precedent. FCC Verizon Order ¶ 8. Contrary to Cablevision’s contention (Mot. at 10-11), if a competing MVPD like Verizon or AT&T is eliminated as a competitive choice for a meaningful number of consumers, it obviously will be hindered in its ability to provide satellite-delivered programming to those consumers. And the Commission reasonably determined that when there is such an impact on a “meaningful number” of consumers, the hindrance is “significant.” FCC Verizon Order ¶ 9. Moreover, the D.C. Circuit previously rejected Cablevision’s argument that the “commercial attractiveness [of withheld programming] has nothing to do with whether the MVPD can provide satellite programming,” Cablevision II, 649 F.3d at 708. The court recognized that the “lack of commercial attractiveness” due to withholding of “RSNs that are both nonreplicable and highly coveted” can “sig- Case: 11-4780 Document: 21-2 Page: 14 11/22/2011 454324 25 - 13 - nificantly hinder” a competing MVPD by, for instance, hindering its ability to compete for baseball fans. Id. at 708, 709. Thus, it was fully consistent with Cablevision II for the Commission to ask whether a “meaningful – i.e., significant – number” of consumers would eliminate Verizon or AT&T as a “competitive choice” for their video programming (including satellite-delivered programming) because of the inability of those MVPDs to offer “must have” RSN programming. b. The Presumption and the Record Evidence. Cablevision fares no better in renewing its claims that the agency held it to an impermissibly high standard in rebutting the “significant hindrance” presumption and improperly shifted the burden of proof. See Mot. at 12-16. The Commission made clear that the presumption did not shift the burden of proof to defendants, but – like any rebuttable presumption – simply required defendants to come forward with sufficient evidence to rebut or meet the presumption. FCC Verizon Order ¶ 20; see also Cablevision II, 649 F.3d at 716 (under a rebuttable presumption, “it is sensible and timesaving to assume the truth of [the inferred] fact ... until the adversary disproves it”) (citation and quotation marks omitted). Here, Cablevision’s evidence “was insufficient to rebut the presumption,” FCC Verizon Order ¶ 19, which itself was based on substantial evidence, Cablevision II, 649 F.3d at 716-17. Cablevision protests that it submitted “reams of evidence” that rebutted the presumption and that the Commission offered “no plausible explanation” for finding this evidence insufficient. Mot. at 13-14. Much of Cablevision’s Case: 11-4780 Document: 21-2 Page: 15 11/22/2011 454324 25 - 14 - “evidence,” however, merely addressed whether Verizon and AT&T had been able to gain subscribers in the market. See id. at 13. But as the Commission explained, “the salient issue in assessing ‘significant hindrance’ is whether an MVPD has been hindered relative to its competitors and whether the hindrance is substantial enough to eliminate the MVPD as a competitive choice for a meaningful number of consumers.” FCC Verizon Order ¶ 8; see also ¶¶ 22-23 (the Bureau “considered all evidence presented by Defendants [and] properly found that the evidence presented was insufficient and unpersuasive.”). Evidence that Verizon and AT&T enjoyed some general success in the market did not address that key question. FCC Verizon Order ¶ 11. Cablevision also asserts (Mot. at 12) that the “impact of a presumption should have been slight in this case,” and incorrectly suggests that the evidence must be “‘viewed in the light most favorable to’” the party resisting application of a rebuttable presumption. Mot. at 14 (citing ITC Ltd. v. Punchgini, Inc., 482 F.3d 135, 147-48 (2d Cir. 2007)). But ITC, on which Cablevision relies, involved an appeal from a grant of summary judgment, and in that procedural context it is axiomatic that the evidence must be viewed in the light most favorable to the non- movant. Here, by contrast, the administrative agency’s action must be sustained if it is based on substantial evidence – a very deferential standard. See, e.g., Cellular Phone Task Force v. FCC, 205 F.3d 82, 89 (2d Cir. 2000) (“the possibility of drawing two inconsistent conclusions from the evidence does not prevent an Case: 11-4780 Document: 21-2 Page: 16 11/22/2011 454324 25 - 15 - administrative agency’s finding from being supported by substantial evidence.”) (citation and quotation marks omitted). Contrary to Cablevision’s claims (Mot. at 12-14), as the Commission explained, “a defendant cannot meet [its] burden by producing just any evidence, no matter how unpersuasive. Indeed, such a standard would effectively nullify the presumption. Rather, … the evidence put forth to rebut a presumption must be substantial, sufficient, persuasive, or exculpatory, and not amount to merely ‘general allegations and inconclusive evidence.’” FCC Verizon Order ¶ 19 (citing cases and FCC precedent). As the Commission found, and as the Bureau orders comprehensively detailed, there was ample evidentiary support for the conclusion that Cablevision had engaged in unfair acts that had the effect of significantly hindering Verizon and AT&T from providing competing video services. See FCC Verizon Order ¶¶ 19-23; see also MB Verizon Order ¶¶ 18-68; MB AT&T Order ¶¶ 19-69. Indeed, as the Commission noted, Cablevision’s own Chief Operating Officer had stated that Verizon’s inability to offer the withheld HD channels would impede Verizon from obtaining new subscribers and would cause Verizon to lose subscribers it already had gained. FCC Verizon Order ¶¶ 7, 10 & n.51. Finally, Cablevision complains that the Commission should not have found defects in the survey evidence it submitted (Mot. at 13-15), but the Commission explained in detail why that evidence was deficient. FCC Verizon Order ¶¶ 13-18. Case: 11-4780 Document: 21-2 Page: 17 11/22/2011 454324 25 - 16 - c. The Unfairness Requirement. Cablevision further contends that the Commission “failed to properly assess whether withholding can be procompetitive.” Mot. at 16. On the contrary, the Commission clearly explained why it agreed with the Bureau that Cablevision’s withholding of this “must have” HD RSN programming was “unfair” within the meaning of the statute. In particular, “the Bureau specifically found that the withholding at issue here harmed competition and consumers in the impacted markets.” FCC Verizon Order ¶ 32; see also MB Verizon Order ¶ 27. Cablevision next repeats its claim that the FCC “failed to properly assess whether withholding can be procompetitive.” Mot. at 16. Not so. As the D.C. Circuit recognized, “[w]hen a vertically integrated cable programmer limits access to programming that customers want and that competitors are unable to duplicate – like the games of a local team selling broadcast rights to a single sports network – competing MVPDs will find themselves at a serious disadvantage when trying to attract customers away from the incumbent cable company.” Cablevision II, 649 F.3d at 708. Thus, while “only Chrysler has the Hemi engine,” Mot. at 17, other companies can manufacture automobiles with similar characteristics. But if a sports fan wants to see the New York Rangers or the Buffalo Sabres in HD, “no amount of investment” will suffice to meet the demand if the programming is withheld. 2010 Order, 25 FCC Rcd at 750 ¶ 9; accord Cablevision II, 649 F.3d at 708. The Commission reasonably concluded that the unique and non-replicable Case: 11-4780 Document: 21-2 Page: 18 11/22/2011 454324 25 - 17 - nature of this programming made the anticompetitive harms of Cablevision’s withholding outweigh any procompetitive benefits. FCC Verizon Order ¶ 32. d. The First Amendment. Finally, Cablevision reiterates its oft-repeated (and oft-rejected) claim that the agency’s action violates the First Amendment. Mot. at 17. As the Commission observed, it is well settled that Section 628 of the Communications Act and the Commission’s implementing rules do not facially violate the First Amendment. FCC Verizon Order ¶ 33; see Cablevision II, 649 F.3d at 711-13 (discussing prior precedent). With respect to Cablevision’s as- applied First Amendment challenge to the Commission’s program access rules, the D.C. Circuit explained in rejecting that challenge as unripe: “if petitioners are correct about the state of competition in the market they serve,” then in any subsequent enforcement proceeding, they would have “powerful evidence that their terrestrial programming withholding has no significant impact on the delivery of satellite programming.” Cablevision II, 649 F.3d at 713 (emphasis added). But as shown above, ample record evidence supported the Commission’s conclusion that Cablevision was not correct about the state of competition in the markets it serves. The Commission reasonably concluded that its decision satisfies intermediate scrutiny and therefore fully comports with the First Amendment. 2. Cablevision Has Failed To Demonstrate That It Will Suffer Irreparable Injury Absent A Stay. “[A] finding of irreparable harm [is] an absolute requirement for an award of Case: 11-4780 Document: 21-2 Page: 19 11/22/2011 454324 25 - 18 - injunctive relief.” Stewart v. U.S.I.N.S., 762 F.2d 193, 199 (2d Cir. 1985) (citation omitted). Such harm must be “neither remote nor speculative, but actual and imminent,” and of a type that “cannot be remedied if a court waits until the end of trial to resolve the harm.” Grand River Enter. Six Nations, Ltd. v. Pryor, 481 F.3d 60, 66 (2d Cir. 2007) (internal quotation marks omitted); see also Wisconsin Gas Co. v. FERC, 758 F.2d 669, 674 (D.C. Cir. 1985) (injury must be “both certain and great … actual and not theoretical”). Cablevision’s vague and unsubstantiated claims repeat almost verbatim the assertions in its previous stay request and again fail to meet these stringent standards. The Commission’s orders do not require Cablevision to withdraw any programming from its subscribers. Instead, they require that the HD RSN programming provided by MSG and MSG+ be licensed to Verizon and AT&T just as it has been licensed to a number of other Cablevision competitors, including Comcast and RCN. Thus, Cablevision has not shown how the orders would cause it to suffer any loss of goodwill, customers, or revenue that could not be recouped if it ultimately prevailed on judicial review. See Mot. at 19. Indeed, Cablevision’s corporate affiliate (MSG) will derive new revenue from licensing fees paid by Verizon and AT&T – revenue that it previously had foregone. In any event, Cablevision’s unsupported assertions that some “advertising will have to be scrapped” and its speculation that it will lose some customers – an undefined number that Cablevision itself describes as “competitively insignificant” (Mot. at Case: 11-4780 Document: 21-2 Page: 20 11/22/2011 454324 25 - 19 - 19) – fail to meet the demanding standard necessary to stay an agency order pending judicial review. 4 3. A Stay Would Harm Other Parties and The Public Interest. In each of the orders, the Commission affirmed the Media Bureau’s finding that Cablevision’s withholding of this programming constitutes an “unfair act” that has significantly hindered Verizon and AT&T from providing a competing video service to subscribers and consumers in violation of the Communications Act and the FCC’s rules. A stay of the Commission’s orders would harm Verizon and AT&T by permitting that significant hindrance to remain in place. A stay also would not be in the public interest. Congress enacted Section 628 to “promote the public interest, convenience, and necessity by increasing competition and diversity in the multichannel video programming market.” 47 4 Cablevision’s declarations do not add to the vague and speculative claims that petitioners have previously presented. For example, Mr. Hargis’s prediction that the FCC orders will result in “a $60 million impact [on] Cablevision” is based on the assumption that the orders will cause the company to lose “(say) 15,000 subscribers.” Hargis Decl. ¶ 11 (Mot., Exh. F). But the basis for that assumption is never explained, nor are any supporting documents supplied. Mr. Hargis further asserts that “Cablevision has spent more than $30 million on advertisements and marketing that include references to its rights to MSG HD and MSG + HD” (id., ¶ 8), but fails to specify that such advertising makes any reference to exclusive rights (or otherwise indicates that this HD programming is not available to competitors Verizon and AT&T). Thus, if Cablevision complied with the FCC’s orders, it would not have to “scrap” advertising that merely references its right to carry the MSG HD and MSG+ HD channels; such statements would remain true even if Verizon and AT&T were also authorized to carry those channels in the relevant markets (as other MVPDs are). Case: 11-4780 Document: 21-2 Page: 21 11/22/2011 454324 25 - 20 - U.S.C. § 548(a). In this case, the Commission found that Cablevision’s withholding of MSG HD and MSG+ HD from Verizon and AT&T harms consumers by limiting video competition for RSN programming in the New York City, Buffalo, and Connecticut markets. A stay would only perpetuate that harm. CONCLUSION The Court should submit the motion to the same panel that heard the request for stay in Case No. 11-4104, and this renewed motion for stay should be heard without argument. The motion for stay should be denied. Respectfully submitted, Petr Karnjia Deputy General Counsel Jacob M. Lewis Associate General Counsel /s/ C. Grey Pash, Jr. C. Grey Pash, Jr. Counsel Federal Communications Commission Washington, D. C. 20554 (202) 418-1751 November 22, 2011 Case: 11-4780 Document: 21-2 Page: 22 11/22/2011 454324 25 EXHIBIT A Case: 11-4780 Document: 21-2 Page: 23 11/22/2011 454324 25 FCC United States Court of Appeals FOR THE SECOND CIRCUIT At a stated term of the United States Court of Appeals for the Second Circuit, held at the Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in the City of New York, on the 9 th day of November, two thousand eleven, Present: Rosemary S. Pooler, Barrington D. Parker, Raymond J. Lohier, Jr., Circuit Judges. Cablevision Systems Corporation and MSG Holdings, L.P., Petitioners, v. 11-4104-op Federal Communications Commission and United States of America, Respondents, and AT&T Services, Inc., et al., Intervenors. Petitioners request a stay, under the All Writs Act, 28 U.S.C. § 1651, and Fed. R. App. P. 21, of two decisions issued by the Media Bureau of the Federal Communications Commission. Intervenors also move to transfer this action to the United States Court of Appeals for the District of Columbia. Upon due consideration, it is hereby ORDERED that the motion to transfer is DENIED, the request for a stay is DENIED, and the petition is DISMISSED. See In re World Trade Ctr. Disaster Site Litig., 503 F.3d 167, 170 (2d Cir. 2007); Minnette v. Time Warner, 997 F.2d 1023, 126-27 (2d Cir. 1993). FOR THE COURT: Catherine O’Hagan Wolfe, Clerk SAO-JM Case: 11-4104 Document: 85 Page: 1 11/09/2011 443157 1Case: 11-4780 Document: 21-2 Page: 24 11/22/2011 454324 25 11-4780 IN THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT Cablevision Systems Corporation and MSG Holdings, L.P., Petitioner v. Federal Communications Commission and the United States of America, Respondents. CERTIFICATE OF SERVICE I, Peter Karanjia, hereby certify that on November 22, 2011, I electronically filed the foregoing Memorandum In Opposition to Petitioners’ Motion for Stay and in Support of FCC’s Cross-Motion for Submission, Without Oral Argument, to the Same Panel that Heard Petitioners’ Prior Request for a Stay with the Clerk of the Court for the United States Court of Appeals for the Second Circuit by using the CM/ECF system. Participants in the case who are registered CM/ECF users will be served by the CM/ECF system. Samuel L. Feder Jenner & Block LLP 1099 New York Avenue, N.W. Suite 900 Washington, D.C. 20001 Counsel for Cablevision Systems Corporation and MSG Holdings, L.P. Aaron M. Panner Scott H. Angstreich Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C. 1615 M Street, N.W., Suite 400 Washington, D.C. 20036 Counsel for: AT&T Services, Inc., et al. /s/ Peter Karanjia Case: 11-4780 Document: 21-2 Page: 25 11/22/2011 454324 25