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CSN files suit against Orioles

By Eric Fisher
THE WASHINGTON TIMES

Comcast SportsNet (CSN) yesterday sued Major League Baseball and the Baltimore Orioles over their creation of the new Mid-Atlantic Sports Network (MASN), a move that will likely keep the Washington Nationals off any cable or satellite TV provider for the foreseeable future.
In a complaint filed in Montgomery County Circuit Court, CSN claims the formation of MASN violates the terms of its distribution agreement with the Orioles and more specifically does not allow CSN its contractual right to match the terms of any deal the Orioles strike to put their games on another local pay TV outlet.
CSN, which has a contract signed in 1996 to carry the Orioles through the 2006 season, said its lawsuit was prompted by the club announcing plans to shift its nonbroadcast games to MASN starting in 2007, even though CSN has an exclusive negotiating window with the Orioles lasting until Nov. 1.
CSN, claiming breach of contract and tortious interference, is seeking an unspecified amount of punitive and compensatory damages in excess of $100,000, as well as a formal halt to the Orioles and MLB "from taking any further steps to formalize or operate their joint venture."
MASN is currently 90 percent owned and operated by the Orioles, with the remaining equity held by the Nationals.
"We have some very clear contractual rights, and those rights are very valuable to us," said David L. Cohen, Comcast executive vice president. "Our desire is to protect those rights to their full extent. One thing I think we've established for ourselves is a reputation of protecting the interests of our customers, and that's what we're seeking to do here."
Cohen also said the arrival of MASN also threatens to raise monthly bills of cable and satellite TV subscribers by $2 to $3, creating a de facto "Angelos tax," referring to Orioles owner Peter Angelos.
The CSN lawsuit, according to industry sources, immediately halts a once-imminent deal between MASN and DirecTV to put about 70 Nationals games on the satellite TV provider to supplement the team's coverage on WDCA-TV (Channel 20) as well as blocking potential deals with other cable and satellite providers.
Comcast Corp., parent company of CSN and easily the most dominant cable provider in the Washington-Baltimore region, also will not pursue any deal to show the Nationals while the lawsuit is litigated.
MASN executives angrily responded to the lawsuit, and said it was motivated by Comcast's desire to obtain an equity stake in the new network.
"Comcast has been offered the opportunity to distribute the Nationals' games. Comcast has not accepted that offer but has outrageously demanded an ownership interest in MASN and has responded to our offer by filing a lawsuit against the Orioles, purposely designed to inflame the Washington fans," said Bob Whitelaw, MASN executive vice president and general manager. "That unfounded suit filed today will not deter MASN in its efforts to present the Nationals' games."
When the Orioles and MASN respond formally to the court, they will likely argue no third party was engaged for the team's local pay TV rights, because they are essentially being brought in house, and a result did not breach CSN's contractual rights.
The dispute, already quite bitter, will likely stay at a tense level until it is resolved. Angelos was believed to be enraged by the filing.
In a written statement, CSN said the lawsuit was not directed at the Nationals. But that notion may be a hard sell in Washington considering the Orioles enjoy full TV distribution on CSN, as well as WPXW-TV (Channel 66), while the Nationals still have no local TV carriage for about half their schedule.
MLB president Bob DuPuy said yesterday he was "disappointed" by the CSN lawsuit, a sentiment echoed by Nationals president Tony Tavares, but did not comment specifically comment on CSN's legal claims.
"Nothing in the litigation has any impact on the current television schedule of the Nationals or rights fees being paid to the Nationals," DuPuy said.
The Nationals are scheduled to receive a $20 million rights fee from MASN this season.
In the lawsuit, CSN claimed it neared a deal last fall with MLB, the current owner of the Nationals, to produce and televise Nationals games, only to see MLB exit negotiations. CSN claims that withdrawal was due primarily to legal pressure from Angelos, who according to industry sources, hinted at a lawsuit against MLB stemming from the relocation of the Montreal Expos to Washington.
The legal dispute also likely means yet another delay in the slow-moving process to sell the Nationals to one of nine groups bidding for the franchise. The sale was held up for months while MLB sought to establish clarity for the team's TV revenues and distribution, and that picture is once again clouded by the CSN lawsuit.

FCC Asked by O's To Rule on Nats TV Stalemate
Comcast Struggle Continues

By Thomas Heath
Washington Post Staff Writer
Wednesday, June 15, 2005; Page E01

The Baltimore Orioles yesterday asked the Federal Communications Commission to order Comcast cable company to begin carrying Washington Nationals games immediately and break a deadlock that has kept millions of fans in the Mid-Atlantic region from seeing Nationals games on television.

"We hope the commission will appreciate the urgency for Nationals fans of having these games available as quickly as possible," said attorney David C. Frederick of Kellogg, Huber, Hansen, Todd, Evans & Figel, who is representing the Orioles. "We want the games on now and the payment or conditions can be worked out later."

The move by the Orioles, who control baseball's rights to the entire Baltimore-Washington television market through the Mid-Atlantic Sports Network, escalates the war between the Baltimore club and Comcast over who will dominate cable television sports in the region.

Comcast fired back, saying MASN, which is co-owned by the Orioles and Major League Baseball, is unlawfully trying to take the rights to televise the Orioles from Comcast SportsNet, Comcast's regional network. Comcast also said it is willing to pay the Nationals more than the $20 million that MASN is paying for the team's TV rights.

"We have always expressed an interest in carrying Nationals games," said D'Arcy Rudnay, vice president of corporate communications for Comcast. "We are not carrying MASN games because the network was created as a result of breach of contract with CSN. MASN is now making the argument that we should be forced to carry a network that was created as a result of breach of contract with us. What MASN really wants is a permission slip to walk away from its contracts."

Rudnay would not say how much money Comcast is willing to pay for the rights to televise the Nationals, but Executive Vice President David L. Cohen said in an e-mail that "in the discussions between Major League Baseball and Comcast SportsNet, more money was offered by Comcast to Major League Baseball for the Nationals cable television rights than what is reportedly being paid by MASN."

Baseball officials did not respond to telephone messages and e-mails seeking comment.

The FCC complaint alleges that Comcast is refusing to carry Nationals games "unless it receives a financial interest in the regional sports network that carries those games."

The Orioles' filing says Steve Greenberg of the Allen & Company investment firm acted as an agent for Comcast. Greenberg advised the Orioles and baseball to give Comcast equity in a regional sports network, while at the same time Allen & Company was involved in Comcast's acquisition of Adelphia cable systems, according to the complaint.

"It was apparent to the Orioles that Greenberg was acting as the agent of Comcast," according to the filing. However, Allen & Company did not represent Comcast; it handled the sale of Adelphia's cable assets, according to a source at Allen & Company.

Greenberg dismissed the Orioles' assertions. "These allegations regarding Allen and Company are as ridiculous as they are factually inaccurate," Greenberg said.

A spokesman for Comcast said Greenberg did not represent the cable company in any discussions with MLB, the Nationals or the Orioles.

Comcast is the largest cable provider in the United States with 22 million subscribers as well as the dominant provider in the Baltimore-Washington region, servicing about two-thirds of the households. Comcast sued the Orioles and MLB two months ago in Montgomery County Circuit Court over the fledgling MASN, which Comcast views as a threat to Comcast SportsNet.

Baseball allowed MASN to maintain control over the baseball television rights to the Washington-Baltimore region to offset the financial impact of putting the Nationals, formerly known as the Montreal Expos, in Washington. Baseball bought 10 percent of MASN, with that share increasing to around 33 percent over the next three decades. The Orioles own the rest.

MASN has been scrambling to get the Nationals games distributed throughout the region, with varying results. Comcast does not carry MASN-produced Nationals games; however, it does carry Nationals games that are televised on UPN's WDCA-20 and beginning in July, Fox's WTTG-5. It also carries Nationals games on ESPN. Satellite provider DirecTV and RCN cable also carry MASN-produced Nationals games, as well as the over-the-air stations, but without Comcast, Cox and other big companies, MASN will have a difficult time getting wide distribution for the Nationals.

John Manfreda wrote:This is why I hate the Orioles more than any franchise in sports.