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Comcast Faces Fights on Multiple Fronts as Cable Pie Shrinks

Altitude alleges that Comcast is “illegally using its monopoly power” in the Denver area to drive the network out of business.

Comcast Faces Fights on Multiple Fronts as Cable Pie Shrinks
Gregory Bryant, senior vice president and general manager of the Client Computing Group at Intel Corp., left, speaks to Tony Werner, president of technology and product experience at Comcast Corp., during an Intel event at the 2019 Consumer Electronics Show (CES) in Las Vegas, Nevada, U.S. (Photographer: David Paul Morris/Bloomberg)  

(Bloomberg) -- Comcast Corp. is battling a growing array of channel owners as the cable giant tries to rein in programming costs and squeeze profit out of the shrinking pay-TV business.

Its latest skirmish is with Altitude Sports & Entertainment, which filed an antitrust lawsuit Monday over Comcast’s refusal to carry its channel, the exclusive broadcaster of Denver’s basketball and hockey teams. The channel, owned by billionaire Stan Kroenke, has been unavailable to Comcast subscribers since the end of August.

Altitude alleges that Comcast, controlled by billionaire Brian Roberts, is “illegally using its monopoly power” in the Denver area to drive the network out of business, take over its license to broadcast those games and overcharge customers. Comcast reaches more than half of the television-watching market in the Denver region, Altitude says.

The cable service called Altitude’s lawsuit “meritless” in a statement, and said the sports broadcaster demanded “significant” price increases for the channel, even though most Comcast subscribers don’t watch it. Comcast said customers are getting a credit on their bills while the channel is blacked out.

Multifront Fight

It’s one of several fights Comcast is waging with programmers as the TV landscape undergoes seismic shifts. Last month, Starz, which is owned by Lions Gate Entertainment Corp., said Comcast plans to drop its channels starting Dec. 10. Last week, the U.S. Supreme Court heard oral arguments in a racial bias suit over Comcast’s refusal to carry channels owned by Entertainment Studios Inc., which is owned by media mogul Byron Allen.

Comcast has also been bumping channels to pricier tiers, where the audience is smaller, or replacing them. Last month, Comcast moved Turner Classic Movies, owned by AT&T Inc., from its basic package to its “sports entertainment” package. Over the summer, Comcast also replaced AT&T’s Cinemax with a new movie channel that it owns called Hitz. Comcast plans to swap Starz in its premium package with Epix, which features movies and TV shows and is owned by Metro-Goldwyn-Mayer Inc.

Industry Pressure

While the allegations in the cases vary, Comcast’s fights stem in part from the industrywide pressure caused by cord cutting. Channel owners are demanding more money to cover costs, including expensive TV sports rights, because their subscribers are declining.

Meanwhile, Comcast and other pay-TV distributors are trying to keep their costs in check, avoid passing on higher rates to consumers and prevent even more subscribers from canceling.

Last year, the Philadelphia-based company spent $13.2 billion on programming, up from $12.9 billion the year before. Comcast passes on those costs to customers in the form of higher bills. But at the same time, media companies are making their channels available online to non-cable subscribers. That makes the programming less valuable in Comcast’s eyes.

The company’s strategy poses risks. By dropping a channel, Comcast could anger subscribers who switch to other pay-TV services. The company lost 238,000 cable-TV customers last quarter, more than double the year-earlier decline. Comcast is making a calculated bet that it can gain more by dropping some programming, like games from Altitude Sports, than it will lose from customers who leave in protest.

“If they’re not getting the bang for buck in terms of subscribers and ratings, they’re willing to take the risk,” said Geetha Ranganathan, an analyst at Bloomberg Intelligence.

In 2014, Comcast and Bloomberg settled litigation over Comcast not putting Bloomberg TV in the same section of the channel lineup as other business channels, such as CNBC. Bloomberg LP owns Bloomberg TV and Bloomberg News.

To contact the reporter on this story: Gerry Smith in New York at gsmith233@bloomberg.net

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, John J. Edwards III

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