`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF COLORADO
`
`
`Civil Action No.: __________________
`
`ALTITUDE SPORTS & ENTERTAINMENT, LLC,
`
`
`Plaintiff,
`
`v.
`
`
`COMCAST CORPORATION and
`COMCAST CABLE COMMUNICATIONS, LLC,
`
`
`Defendants.
`
`
`
`PLAINTIFF’S COMPLAINT
`DEMAND FOR JURY TRIAL
`
`
`
`
`
`
`
`
`KEVIN D. EVANS
`(kdevans@armstrongteasdale.com)
`ARMONSRONG TEASDALE
`4643 S. Ulster Street, Ste. 800
`Denver, CO 80237
`Telephone: (720) 200-0676
`Fax: (720) 200-0676
`
`WILLIAM A. ISAACSON
`(wisaacson@bsfllp.com)
`AMY J. MAUSER
`(amauser@bsfllp.com)
`ROBERT M. COOPER
`(rcooper@bsfllp.com)
`BOIES SCHILLER FLEXNER LLP
`1401 New York Avenue, NW
`Washington, DC 20005
`Telephone: (202) 237-2727
`Fax: (202) 237-6131
`
`SEAN RODRIGUEZ
`(srodriguez@bsfllp.com)
`BOIES SCHILLER FLEXNER LLP
`44 Montgomery Street, 41st Floor
`San Francisco, CA 94104
`Telephone: (415) 293-6800
` Fax: (415) 293-6899
`
`Attorneys for Plaintiff Altitude Sports & Entertainment, LLC f/k/a KSE Media Ventures, LLC
`
`
`
`Case 1:19-cv-03253-WJM Document 1 Filed 11/18/19 USDC Colorado Page 2 of 45
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`TABLE OF CONTENTS
`
`Page
`
`TABLE OF CONTENTS ................................................................................................................. i
`NATURE OF THE CASE .............................................................................................................. 1
`JURISDICTION AND VENUE ..................................................................................................... 6
`THE PARTIES................................................................................................................................ 7
`THE ROLE OF SPORTS NETWORKS AND HOW THEY OPERATE ..................................... 8
`SPORTS PROGAMMING IN THE DENVER DMA ................................................................. 10
`COMCAST’S STRATEGY TO INCREASE ITS DOMINANCE .............................................. 12
`PROFESSIONAL HOCKEY IN THE DENVER DMA .............................................................. 15
`RELEVANT MARKETS ............................................................................................................. 16
`COMCAST’S PROFITABLE PRIOR COURSE OF DEALING WITH ALTITUDE ................ 19
`A. Altitude’s Launch ........................................................................................................... 19
`B. Negotiation and Execution of Altitude’s Original Affiliation Agreement with
`Comcast.......................................................................................................................... 20
`C. The Renewal of the Affiliation Agreement for a Five-Year Term ................................ 21
`COMCAST HAS REVERSED ITS COURSE OF DEALING WITH ALTITUDE WITH
`THE GOAL OF PUSHING ALTITUDE OUT OF THE MARKET. .......................................... 22
`A. Comcast Is Seeking To Drive Altitude Out of the Market. ............................................ 22
`B. Comcast Knows its Proposals Are Not Economically Sustainable for Altitude. ........... 24
`ALTITUDE GOES DARK. .......................................................................................................... 26
`COMCAST HAS USED ITS MONOPSONY POWER AS A WHOLESALE PURCHASER
`OF REGIONAL SPORTS PROGRAMMING TO ACQUIRE RSNS. ........................................ 27
`COMCAST HAS BEEN ABLE TO MAINTAIN ITS MONOPSONY POWER IN THE
`REGIONAL SPORTS PROGRAMMING MARKET DUE TO THE HIGH BARRIERS TO
`ENTRY FOR OTHER BUYERS AND LACK OF ALTERNATIVES FOR SELLERS. ........... 28
`A. High Barriers to Entry Ensure Comcast’s Position in the Market Remains
`Entrenched. .................................................................................................................... 28
`B. Altitude and Other Sellers Do Not Have Reasonable Alternatives for Selling to
`Comcast.......................................................................................................................... 29
`THE REASONS COMCAST HAS PROVIDED FOR DRAMATICALLY DEPARTING
`FROM ITS PAST COURSE OF DEALING WITH ALTITUDE ARE PRETEXTUAL. ........... 31
`A. Marketplace Trends Demonstrate that It Is Not Economically Rational for Comcast
`to Discontinue Providing Distribution of Altitude......................................................... 31
`
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`
`i
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`Case 1:19-cv-03253-WJM Document 1 Filed 11/18/19 USDC Colorado Page 3 of 45
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`B. Local Sports Programming and RSNs Like Altitude Drive Subscribers to Stay
`with Cable and Not “Cut the Cord.” .............................................................................. 31
`C. Comcast Is Passing on the Cost of Carrying Altitude to its Subscribers and Is
`Even Making Money on Carrying Altitude in Some Cases. .......................................... 32
`COMCAST’S ANTICOMPETITIVE CONDUCT HAS HARMED ALTITUDE AND
`CONSUMERS. ............................................................................................................................. 34
`CLAIMS FOR RELIEF ................................................................................................................ 35
`COUNT ONE: Monopolization in Violation of the Sherman Act, Section 2 ........................ 35
`COUNT TWO: Attempted Monopolization in Violation of the Sherman Act, Section 2 ...... 36
`COUNT THREE: Monopolization in Violation of the Colorado Antitrust Act ..................... 37
`COUNT FOUR: Attempted Monopolization in Violation of the Colorado Antitrust Act ..... 38
`COUNT FIVE: Tortious Interference with Contractual Relations ......................................... 40
`COUNT SIX: Tortious Interference with Prospective Business Relations ............................ 40
`REQUEST FOR RELIEF ............................................................................................................. 41
`
`
`
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`
`
`
`
`ii
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`1.
`
`Plaintiff Altitude Sports & Entertainment, LLC (“Altitude”), by and through its
`
`undersigned counsel, brings this action for 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, against Defendants Comcast Corporation
`
`and Comcast Cable Communications, LLC (together “Comcast”), demanding a trial by jury. For
`
`its Complaint against Defendants, Plaintiff alleges the following:
`
`
`
`NATURE OF THE CASE
`
`2.
`
`Defendant Comcast is the largest multichannel video programming distributor
`
`(“MVPD”) in the United States. Comcast is also the dominant cable television provider in the
`
`Denver DMA (Designated Market Area).1 The Denver DMA covers 70 counties in three states:
`
`Colorado (48 counties), Nebraska (15 counties), and Wyoming (7 counties). In the Denver
`
`DMA, 92% of cable customers have their cable service from Comcast—and the great majority of
`
`those customers have no choice at all in cable provider; only Comcast cable reaches their
`
`neighborhood. Of all MVPD providers in the Denver DMA, Comcast has the largest market
`
`share, approximately 57%, with the next largest MVPD provider, DIRECTV, holding a market
`
`share of approximately 25%, less than half of Comcast’s market share.
`
`3.
`
`In addition to providing cable television to its subscribers, Comcast, through its
`
`subsidiaries, also contracts with sports teams, leagues, conferences, and other entities to obtain
`
`the rights to produce and telecast sports programming. Comcast then distributes that
`
`programming to its own subscribers and to other MVPDs such as, for example, DIRECTV.
`
`
`1 According to Nielsen Holdings PLC, “DMA (Designated Market Area) regions are the
`geographic areas in the United States in which local television viewing is measured by Nielsen.
`A DMA region is a group of counties that form an exclusive geographic area in which the home
`market television stations hold a dominance of total hours viewed. There are 210 DMA regions,
`covering the entire continental United States, Hawaii, and parts of Alaska.”
`1
`
`
`
`
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`4.
`
`Comcast currently owns and distributes regional and national sports
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`programming through its subsidiaries, including the NBC Sports Network, in geographic areas
`
`around the country.
`
`5.
`
`Altitude produces and telecasts regional sports programming from its
`
`headquarters in Denver. Altitude’s business is known as a Regional Sports Network (“RSN”),
`
`and its programming is available throughout the ten state Rocky Mountain region that includes
`
`Colorado (the “Altitude Territory”). As an RSN, Altitude invests in licensing the rights to
`
`telecast games of regional professional sports teams—such as the National Hockey League’s
`
`Colorado Avalanche, the National Basketball Association’s Denver Nuggets, the National
`
`Lacrosse League’s Colorado Mammoth, and Major League Soccer’s Colorado Rapids. Altitude
`
`also telecasts local and regional college and high school games, as well as other sports-related
`
`content, such as talk shows and sports commentary. Though Altitude’s content is primarily
`
`focused on sports, it also telecasts other relevant, entertainment-related content, including
`
`NASCAR features, poker games, outdoor adventure shows, horseracing, performances by local
`
`and regional musicians, and more.
`
`6.
`
`The “regional” aspect of an RSN satisfies consumer demand for, and interest
`
`in, local and regional athletics, and enhances the quality of programming by focusing on the
`
`consumers’ home teams. By telecasting local and regional professional, college, and high
`
`school sports, Altitude contributes to the Denver community.
`
`7.
`
`Altitude is also an independent RSN. Altitude is not a subsidiary or affiliate of
`
`a television distribution company (such as Time Warner/AT&T), nor is it owned or operated by
`
`one.
`
`
`
`8.
`
`Comcast has carried the Altitude network for the past 15 years, until August 31,
`
`2
`
`
`
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`2019, when Comcast blacked out the network after Altitude refused to concede to Comcast’s
`
`predatory demands. Prior to this, for its entire existence, Altitude has enjoyed stable contractual
`
`relations with Comcast. Those relations are critical because Comcast’s cable systems and
`
`MVPD market share in the Denver DMA make it a monopsonist—that is, a purchaser with
`
`market power—over regional sports programming in the Denver DMA. Altitude both competes
`
`with Comcast to obtain and license telecast rights for sports programming, and is a direct seller
`
`of the programming it produces pursuant to those licenses.
`
`9.
`
`During the same fifteen years of the relationship between Comcast and
`
`Altitude, Comcast has acquired independent RSNs all over the country in order to reduce
`
`competition for the licensing of sports programming. Comcast has also engaged in a series of
`
`large mergers and acquisitions that strengthen its control over multichannel television
`
`distribution in the Denver DMA and around the country.
`
`10.
`
`Comcast now wants to extinguish competition from Altitude so that Comcast
`
`can pocket more of the money it takes from consumers each month for sports programming in
`
`the Denver DMA. In addition to charging its subscribers a monthly fee for the package of
`
`programming services that includes Altitude, Comcast also charges those customers an
`
`additional fee that Comcast calls a “Regional Sports Fee,” which is found as a line-item on each
`
`customer’s monthly bill. 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.
`
`11.
`
`If Comcast is successful in its campaign against Altitude, Comcast will quickly
`
`and easily take over regional sports production in the Denver DMA. In economic and legal
`
`
`
`3
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`
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`Case 1:19-cv-03253-WJM Document 1 Filed 11/18/19 USDC Colorado Page 7 of 45
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`terms, that means that Comcast is a “rapid entrant” and is therefore considered a direct
`
`competitor to Altitude for antitrust purposes.
`
`12.
`
`Against this backdrop, in the past year, Comcast began making demands in
`
`negotiations with Altitude that Comcast knew made no economic sense and would drive
`
`Altitude out of business. The demands represent dramatic cuts in rates to be paid to Altitude.
`
`Comcast’s proposals would also require subscribers that want to receive Altitude’s
`
`programming to pay even more to Comcast each month by moving Altitude from one of
`
`Comcast’s more widely distributed packages of channels to a package of television
`
`programming services for which the customer would have to pay an additional fee. The latter
`
`practice—cutting mainstream consumer access to a channel—is known as reducing carriage by
`
`moving a channel to a package of programming services that has fewer subscribers and less
`
`distribution.
`
`13.
`
`Comcast has not made demands of or imposed drastic rate cuts or carriage
`
`reductions on its own affiliated RSNs throughout the country. For RSNs that it owns, Comcast
`
`continues to charge MVPDs per subscriber license fees (i.e., “rates”), and sign new contracts for
`
`rates, equal to or higher than what it previously paid to Altitude. Comcast has saved its demands
`
`of drastic rate cuts and carriage reductions, along with a blackout, for Altitude, an independent
`
`RSN.
`
`14.
`
`There can be no doubt that Comcast knows the proposals it has made would put
`
`Altitude out of business. Not only has Altitude told Comcast that, but Comcast already knows
`
`this because it operates its own RSNs. Comcast therefore understands that between paying
`
`rights fees and production costs, RSNs are expensive businesses to run. In FCC proceedings,
`
`Comcast has even admitted that the same carriage it would deny Altitude is necessary to the
`
`
`
`4
`
`
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`Case 1:19-cv-03253-WJM Document 1 Filed 11/18/19 USDC Colorado Page 8 of 45
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`financial viability of an RSN because of the significant cost of acquiring sports telecast rights in
`
`agreements that reflect the widespread popularity and value of this programming.
`
`15.
`
`The terms proposed by Comcast to Altitude make no economic sense unless
`
`Comcast’s aim is to use its monopsony power to eliminate Altitude so that Comcast will control
`
`sports programming—both regional and even some national coverage—in the Denver DMA,
`
`just as Comcast has done elsewhere. 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.
`
`16.
`
`Comcast’s near-term goal is to eliminate Altitude as a viable RSN or even
`
`purchase Altitude at a dramatically discounted rate. Comcast’s ultimate goal is to do to
`
`Altitude what Comcast has already done around the country: reduce or eliminate competition
`
`from independent RSNs as part of Comcast’s strategy to control television from top
`
`(consumers’ television service) to bottom (the production of sports programming).
`
`17.
`
`This conduct amounts to Comcast’s maintenance of its monopsony power and
`
`monopolization and attempted monopolization in violation of the federal Sherman Antitrust Act
`
`and Colorado Antitrust Act. Comcast’s conduct also constitutes tortious interference with
`
`Altitude’s actual contractual and prospective relations with its affiliated sports teams and
`
`advertisers.
`
`18.
`
`Comcast’s anticompetitive conduct harms consumers and competitors.
`
`Comcast is already reaping the benefits of its anticompetitive conduct, and one of the key
`
`consequences is evident on monthly bills that Comcast sends to its cable subscriber customers:
`
`the “Regional Sports Fee” that Comcast charges its subscribers is more than twice the amount
`
`that Comcast was paying every month to Altitude for each subscriber. But Comcast has paid
`
`
`
`5
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`
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`Case 1:19-cv-03253-WJM Document 1 Filed 11/18/19 USDC Colorado Page 9 of 45
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`nothing to Altitude since August, yet the fee that consumers pay to Comcast remained
`
`unchanged well after Comcast stopped paying Altitude and stopped providing Altitude
`
`programming to its customers. Only recently has Comcast begun issuing small monthly credits
`
`to its subscribers for an amount far below the monthly fee Comcast has avoided paying Altitude
`
`during the time Comcast has blacked out Altitude programming.
`
`19.
`
`By this conduct, Comcast has demonstrated that it will not pass along any
`
`savings it obtains from eliminating Altitude. Instead, Comcast will use its market power to
`
`keep consumer prices high. At the same time, by not carrying Altitude, Comcast will reduce
`
`the quality of regional sports programming available to consumers in the Denver DMA.
`
`JURISDICTION AND VENUE
`
`20.
`
`Plaintiff brings this action to recover damages, including treble damages, costs of
`
`this suit, and reasonable attorney’s fees, as well as injunctive relief, arising from Defendants’
`
`violation of Section 2 of the Sherman Antitrust Act, 15 U.S.C. § 2, and the Colorado Antitrust
`
`Act, Colo. Rev. Stat. § 6-4-105.
`
`21.
`
`This Court has subject matter jurisdiction over Plaintiff’s federal claims pursuant
`
`to 28 U.S.C. § 1331 (federal question) and 28 U.S.C. § 1337 (commerce and antitrust
`
`regulation).
`
`22.
`
`This Court has subject matter jurisdiction over Plaintiff’s pendent state law
`
`claims pursuant to 28 U.S.C. § 1367. Each of Plaintiff’s state law claims arises out of the same
`
`factual nucleus as Plaintiff’s federal antitrust claims.
`
`23.
`
`Venue is proper in this district pursuant to 15 U.S.C. §§ 15, 22, and 26, and 28
`
`U.S.C. § 1391. Plaintiff resides in this district, and Defendants transact business and are
`
`otherwise found in this district. Further, the events giving rise to these claims occurred in this
`
`
`
`6
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`Case 1:19-cv-03253-WJM Document 1 Filed 11/18/19 USDC Colorado Page 10 of 45
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`district, and Defendants are subject to personal jurisdiction before this Court. Fed. R. Civ. P. 4;
`
`Colo. Rev. Stat. § 13-1-124.
`
`THE PARTIES
`
`24.
`
`Plaintiff Altitude Sports & Entertainment, LLC, f/k/a KSE Media Ventures, LLC,
`
`(“Altitude”) is a limited liability company organized and existing under the laws of Colorado
`
`with its principal place of business at 1000 Chopper Circle, Denver, Colorado 80204. Altitude is
`
`a regional sports network that holds the telecast rights for professional sports teams Denver
`
`Nuggets (National Basketball Association), Colorado Avalanche (National Hockey League),
`
`Colorado Mammoth (National Lacrosse League), and Colorado Rapids (Major League Soccer),
`
`and telecasts those teams’ games on its regional sports network. Altitude also telecasts a range
`
`of other regional and local sports programming, including, without limitation, University of
`
`Denver sports and local high school sports.
`
`25.
`
`Defendant Comcast Corporation is incorporated in the state of Pennsylvania with
`
`its principal place of business at One Comcast Center, 1701 John F. Kennedy Blvd.,
`
`Philadelphia, Pennsylvania 19103. Comcast Corporation, itself and acting through its
`
`subsidiaries and its affiliates, provides “Comcast”- and “Xfinity”-branded services, including
`
`multichannel video programming distribution (“MVPD”).
`
`26.
`
`Defendant Comcast Cable Communications, LLC (together with Comcast Corp.,
`
`“Comcast”) is a limited liability company organized and existing under the laws of Delaware
`
`with its principal place of business at One Comcast Center, 1701 John F. Kennedy Blvd.,
`
`Philadelphia, Pennsylvania 19103. Comcast Cable Communications, LLC is a subsidiary of
`
`Comcast Corporation and is responsible for providing cable television, broadband internet, and
`
`landline telephone services under the Xfinity brand. Comcast is the largest MVPD/cable
`
`operator in the nation.
`
`
`
`7
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`Case 1:19-cv-03253-WJM Document 1 Filed 11/18/19 USDC Colorado Page 11 of 45
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`
`
`THE ROLE OF SPORTS NETWORKS AND HOW THEY OPERATE
`
`27.
`
`RSNs telecast sports programming to and from a specific geographic region. To
`
`obtain the sports programming, RSNs enter into licensing agreements with professional,
`
`collegiate, and high school sports teams, leagues, and conferences. Since games between
`
`professional sports teams draw substantial audiences, the right to telecast these games has
`
`become the most attractive—and most expensive—sports programming.
`
`28.
`
`Professional sports teams charge a high fee, generally on an annual basis, for such
`
`licensing rights (the “rights fee”). On occasion, the professional league to which the sports team
`
`belongs performs a market analysis. In addition, various analysts and experts may perform
`
`similar services for the sports team. The sports team then negotiates the rights fee based on the
`
`market analysis and its historic fees and relationships with RSNs. Teams’ fees tend to vary
`
`based on a number of factors, including historic team popularity, relevant market size,
`
`geographic reach, team success, and competition for the teams’ telecast rights.
`
`29.
`
`Once an RSN pays the rights fee, it gains the right to telecast the team’s games in
`
`that region (the “licensing agreement”).
`
`30.
`
`The rights fees for NBA, NHL, and MLB games are an RSN’s largest expense;
`
`however, RSNs also must spend significant sums to produce the high quality television coverage
`
`of those games demanded by the RSN’s MVPD customers. To offset these costs, RSNs have
`
`two primary sources of revenue: per subscriber fees and advertising. Comcast’s exclusionary
`
`and unlawful conduct extends into both of these areas.
`
`31. MVPDs contract with RSNs to purchase sports programming that they will
`
`distribute on their cable and other systems to end-users on a regional basis (the “affiliation
`
`agreement”). In every instance, in order to maximize its two primary sources of revenue, RSN
`
`
`
`8
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`
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`Case 1:19-cv-03253-WJM Document 1 Filed 11/18/19 USDC Colorado Page 12 of 45
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`affiliation agreements require MVPDs to carry the RSN in one of the MVPD’s most widely-
`
`distributed packages of channels (the “carriage requirements”).
`
`32.
`
`The MVPD pays the RSN a monthly per subscriber fee for each household that
`
`receives the RSN programming. This fee varies depending on how close the subscriber is to the
`
`core market (i.e., the closer the subscriber is to the home venues of the teams, the higher the per
`
`subscriber fee).
`
`33.
`
`As a result of the industry concentration, MVPDs already charge consumers
`
`monopoly prices (that is, they take a “monopoly rent” from consumers), and will not
`
`meaningfully lower consumer prices if their own costs go down. Comcast’s refusal to stop
`
`charging the Regional Sports Fee demonstrates this. The fees Comcast pays for regional sports
`
`programming in the Denver DMA dropped dramatically, but Comcast offered only a token bill
`
`reduction (as a public relations move after consumer outcry). Thus, disputes about RSN fees are
`
`not about how much consumers will pay Comcast. They are about what programming
`
`consumers can access and about how much money Comcast will pocket for itself each month.
`
`34.
`
`To maximize its advertising revenue, each RSN seeks distribution by the MVPD
`
`on one of its most widely distributed levels or packages of service. For example, with an
`
`“expanded basic” package, among the most widely distributed packages a consumer could
`
`purchase from an MVPD, an RSN would most likely reach between 70% to 85% of the MVPD’s
`
`subscribers in the applicable market. The broad audience that can be reached on an expanded
`
`basic package leads to a broad range of advertising opportunities and revenues.
`
`35.
`
`If an RSN is moved to a less widely distributed package (e.g., one that requires an
`
`additional fee from the customer and contains less popular services, like a “sports tier”), the
`
`RSN’s market penetration for such a package would be about 15% to 20%, or even less
`
`
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`9
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`Case 1:19-cv-03253-WJM Document 1 Filed 11/18/19 USDC Colorado Page 13 of 45
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`depending on the services included in the package. This drop in penetration dramatically shrinks
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`the RSN’s per subscriber fees.
`
`36.
`
`That drop in penetration also dramatically shrinks the audience for advertising.
`
`Moving an RSN to a tier with lower penetration means losing many advertising opportunities
`
`and revenue currently available to it on basic and expanded basic packages.
`
`37.
`
`National sports networks owned or operated by MVPDs (“MVPD National Sports
`
`Networks”) operate in much the same way. They too enter into licensing agreements to telecast
`
`sports content. MVPD National Sports Networks telecast nationally and not regionally. Instead
`
`of telecasting all of a single team’s games, MVPD National Sports Networks generally telecast a
`
`set number of the league’s games a week with varying and rotating teams. Like RSNs, MVPD
`
`National Sports Networks rely on advertising and subscriber revenue to cover their costs. In
`
`addition, RSNs may be owned partially or completely by an MVPD (each, an “MVPD Affiliated
`
`RSN”), and MVPD Affiliated RSNs operate identically to the way independent RSNs, like
`
`Altitude, operate.
`
`
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`SPORTS PROGAMMING IN THE DENVER DMA
`
`38.
`
`Altitude has obtained the exclusive regional rights to telecast the vast majority of
`
`games for the National Hockey League’s Colorado Avalanche, the National Basketball
`
`Association’s Denver Nuggets, the National Lacrosse League’s Colorado Mammoth, and Major
`
`League Soccer’s Colorado Rapids, with national networks paying the applicable professional
`
`sports league for the right to telecast nationally only a few of each team’s games.
`
`39.
`
`In 2006, Comcast teamed with the Mountain West Conference of the National
`
`Collegiate Athletic Association to form the MountainWest Sports Network (informally known as
`
`
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`10
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`Case 1:19-cv-03253-WJM Document 1 Filed 11/18/19 USDC Colorado Page 14 of 45
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`“The Mountain”). The Mountain televised many of the conference’s sporting events, including
`
`college football, basketball, and hockey.
`
`40.
`
`Comcast operated The Mountain out of its Comcast Media Center in Centennial,
`
`Colorado, which is located in the Denver metropolitan area. This Center is less than six miles
`
`from Altitude’s network operations center and is the largest television and film studio in
`
`Colorado.
`
`41.
`
`In 2012, The Mountain stopped operating due, in part, to the Mountain West
`
`Conference’s ongoing conference realignment. Since then, AT&T SportsNet Rocky Mountain, a
`
`Denver RSN owned by AT&T, has telecast many of the Mountain West Conference’s games.
`
`Comcast maintains its studio, now rebranded as WestWorks, which recently announced it would
`
`focus on Comcast-specific programming.
`
`42.
`
`By 2011, Comcast had acquired a majority stake in NBCUniversal and its sports
`
`programming subsidiary, NBC Sports Group. That same year, Comcast used NBC Sports Group
`
`to secure the right to nationally broadcast over one hundred regular-season NHL games, as well
`
`as over eighty Stanley Cup matchups. Comcast finalized its acquisition of NBCUniversal in
`
`2013, and now broadcasts the NHL games through its subsidiary, NBC Sports Group (comprised
`
`of NBC Sports Network and NBC Sports). Comcast also has minority rights to the NHL
`
`Network, the other cable and satellite network with national rights to NHL games.
`
`43.
`
`NBC Sports Group also airs primetime National Football League games every
`
`week.
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`44.
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`NBC Sports Group also operates eight RSNs, making it the largest owner of
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`MVPD Affiliated RSNs.
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`Case 1:19-cv-03253-WJM Document 1 Filed 11/18/19 USDC Colorado Page 15 of 45
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`45.
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`Comcast continues to expand NBC Sports Group’s presence in sports
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`programming with license agreements for professional sports teams, college football, and
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`international soccer.
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`46.
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`Though Comcast does not currently own or operate an RSN in the Denver DMA,
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`its current MVPD Affiliated RSN infrastructure, in addition to the remaining infrastructure from
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`The Mountain coupled with its national sports programming presence, means Comcast could
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`enter the RSN market in the Denver area quickly. Comcast is what the Department of Justice
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`Horizontal Merger Guidelines calls a “rapid entrant” that is considered a direct competitor with
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`Altitude for purposes of antitrust analysis.
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`COMCAST’S STRATEGY TO INCREASE ITS DOMINANCE
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`47.
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`Comcast’s ability to rapidly enter as an RSN in the Denver DMA—as well as its
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`market power and strategy—are also demonstrated by Comcast’s successful execution of a long-
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`term strategy to consolidate its power throughout the chain of production and distribution over
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`the past twenty years. A critical part of Comcast’s consolidation strategy is acquiring RSNs.
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`48.
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`Comcast’s mergers and acquisitions over the past twenty years include:
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`a. 2001: Comcast acquired AT&T Broadband and became the largest cable
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`television company in the United States.
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`b. 2005: Comcast continued to accumulate market power by purchasing
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`Susquehanna Communications.
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`c. 2005: Comcast teamed with Time Warner Cable to purchase the assets of
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`another competitor, Adelphia Cable.
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`d. 2011: Comcast began purchasing shares in NBCUniversal and had
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`complete ownership of all of NBCUniversal and its subsidiaries by 2013.
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`Case 1:19-cv-03253-WJM Document 1 Filed 11/18/19 USDC Colorado Page 16 of 45
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`49.
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`Notwithstanding the existence of various FCC rules, the FCC previously has
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`found it necessary to impose additional transaction-related safeguards as conditions for
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`approving vertical transactions between Comcast and video programming networks.
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`50.
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`The FCC has expressed concern over Comcast’s ability to strong-arm independent
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`RSNs. When Comcast purchased assets from Adelphia, the FCC issued an order requiring
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`Comcast to engage in arbitration over carriage disputes with unaffiliated RSNs. Although the
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`FCC’s order has expired, the competitive concerns that the FCC identified in connection with the
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`Adelphia transaction persist.
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`51.
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`After Comcast sought to purchase Timer Warner Cable, the FCC expressed its
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`concerns over not just the consolidation of video subscribers, but also a consolidation of those
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`subscribers alongside the ownership of significant programming interests as harmful to
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`consumers.
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`52. When Comcast purchased NBCUniversal, both the FCC and the DOJ imposed
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`restrictions on Comcast, in the latter case via a consent decree, to protect against the
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`anticompetitive effects of its increasing monopsony power in the Programming Market, among
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`others.
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`53.
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`Comcast has engaged in anticompetitive behavior with regards to its national
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`sports programming. In 2008, the Big Ten Network reported that Comcast would not resolve a
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`deal for the network’s programming because Comcast did not own at least part of the new
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`network, and it was treating the new network differently than Comcast's own sports networks,
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`NBC SportsNet and the Golf Channel, which have limited audiences and low ratings. That same
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`year, the NFL’s former commissioner recounted that when the NFL decided to sell certain games
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`to its own network, instead of Comcast, Comcast’s chief executive, Brian Roberts told the
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`13
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`Case 1:19-cv-03253-WJM Document 1 Filed 11/18/19 USDC Colorado Page 17 of 45
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`league: “Your relationships with the cable industry are going to get very interesting.” As an act
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`of retaliation, Comcast then moved the NFL network to its digital sports tier.
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`54.
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`As a result of its growth, Comcast is incentivized to further maximize its
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`consolidated ownership by taking over the entire chain of regional sports programming
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`production, and distribution. As one market commenter has noted: “The cable companies don’t
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`want sports teams to own their own channels. They want everything under one nice big
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`corporate umbrella. This is why they are playing such hardball with Altitude.” Adrian Dater,
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`Colorado Hockey Now (Sept. 1, 2019). Altitude goes dark in Denver,
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`https://coloradohockeynow.com/2019/09/01/altitude-goes-dark-