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                            Before the
                Federal Communications Commission
                      Washington, D.C. 20554

In the Matter of:               )
                                )
ECHOSTAR COMMUNICATIONS         )
CORPORATION                     )
                                )
          v.                    )       CSR-5364-P
                                )
SPEEDVISION NETWORK, L.L.C.     )
                                )
OUTDOOR LIFE NETWORK, L.L.C.    )
                                )
                                )
Program Access Complaint        )


                  MEMORANDUM OPINION AND ORDER

   Adopted:  June 10, 1999              Released:  June 14, 1999  

By the Chief, Cable Services Bureau:

I.   INTRODUCTION

     1.   EchoStar Communications Corporation ("EchoStar") has filed a program access complaint
against Speedvision Network, L.L.C. and Outdoor Life Network, L.L.C. (collectively referred to as "the
Networks") alleging that the Networks are in violation of Section 628(c)(2)(B) of the Communications Act of
1934, as amended ("Communications Act"), and Section 76.1002(b) of the Commission's rules because the
Networks have unreasonably refused to offer programming to EchoStar on fair and  nondiscriminatory rates,
terms and conditions.  EchoStar also alleges that the Networks are in violation of Section 628(b) of the
Communications Act and Section 76.1001 of the Commission's rules because the Networks have engaged in
unfair practices by unreasonably refusing to sell their programming to EchoStar.

     2.   The Networks filed an answer arguing that Echostar failed to state any cognizable claim for
violation of the Commission's program access rules and, accordingly, its complaint should be dismissed with
prejudice.  EchoStar filed a reply pleading.  Because of the pendency of a breach of contract suit between the
parties in federal district court, the Networks filed a "Motion to Dismiss or, in the Alternative, to Hold
Proceeding in Abeyance Pending Resolution in Federal District Court."  EchoStar filed an opposition to the
motion.  For the reasons discussed below, EchoStar's program access complaint is denied.                          
 
     
II.  BACKGROUND

     3.   Congress enacted the Cable Television Consumer Protection and Competition Act of 1992
("1992 Cable Act") to promote competition, with the view that regulation would be transitional until the video
programming distribution market becomes competitive.  By enacting the program access provisions, which
are codified in Section 628 of the Communications Act, Congress sought to minimize the incentive and ability
of vertically integrated programming suppliers to favor affiliated cable operators over nonaffiliated cable
operators or other multichannel video programming distributors ("MVPDS") in the sale of satellite cable and
satellite broadcast programming.   

     4.    In Section 628(b) of the Communications Act, Congress states that:

          It shall be unlawful for a cable operator, a satellite cable programming vendor in which a
     cable operator has an attributable interest, or a satellite broadcast programming vendor to
     engage 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 from providing satellite cable programming or satellite broadcast programming to
     subscribers or consumers.      

          In Section 628(c)(2), Congress instructed the Commission to promulgate regulations that:

          (A) establish effective safeguards to prevent a cable operator which has an attributable
     interest in a satellite cable programming vendor or a satellite broadcast programming vendor
     from unduly or improperly influencing the decision of such vendor to sell, or the prices, terms,
     and conditions of sale of, satellite cable programming or satellite broadcast programming to
     any unaffiliated multichannel video programming distributor; [and]

          (B) prohibit discrimination by a satellite cable programming vendor in which a cable operator
     has an attributable interest or by a satellite broadcast programming vendor in the prices, terms
     and conditions of sale or delivery of satellite cable programming or satellite broadcast
     programming among or between cable systems, cable operators, or other MVPDs or their
     agents or buying groups . . . .   

     5.   In Implementation of Sections 12 and 19 of the Cable Television Consumer Protection and
Competition Act of 1992:  Development of Competition and Diversity in Video Programming Distribution
and Carriage, Report and Order, MM Docket No. 92-265 (Program Access Order), the Commission
concluded that non-price discrimination is included within the prohibition against discrimination set forth in
Section 628(c)(2)(B).  While the Commission did not attempt to identify all types of non-price discrimination
that could occur, the Commission stated that "one form of non-price discrimination could occur through a
vendor's `unreasonable refusal to sell,' or refusing to initiate discussions with a particular distributor when the
vendor has sold its programming to that distributor's competitor."  The Commission cautioned, however that
"`unreasonable' refusals to sell" should be distinguished from "certain legitimate reasons that could prevent a
contract between a vendor and a particular distributor."  Such legitimate reasons would include:

          (i) the possibility of parties reaching an impasse on particular terms, (ii) the distributor's
     history of defaulting on other programming contracts, or (iii) the vendor's preference not to
     sell a program package in a particular area for reasons unrelated to an existing exclusive
     arrangement or a specific distributor.

     6.   The term "satellite cable programming" is video programming which is transmitted via satellite
and which is primarily intended for the direct receipt by cable operators for their retransmission to cable
subscribers.  The term "satellite broadcast programming" is broadcast programming when such programming
is retransmitted by satellite and the entity retransmitting such programming is not the broadcaster or an entity
performing such retransmission on behalf of and with the specific consent of the broadcaster.   

III. THE FACTS

     7.   EchoStar is a direct broadcast satellite ("DBS") provider that offers multichannel video
programming distributor ("MVPD") service throughout the United States.  EchoStar operates four satellites
that allow it to offer hundreds of channels of digital television programming to its subscribers.  As an MVPD,
EchoStar competes against cable operators and other MVPDs in each and every cable franchise area, as well
as against other DBS providers.

     8.   The Networks are satellite cable programming vendors.  Speedvision is a network that
provides comprehensive coverage of the automotive, motorcycle, aviation and marine industries.   
Outdoor Life is a network that features outdoor recreational activities, including cycling, fly fishing, sailing,
skiing, snowboarding and windsurfing.  Speedvision is owned by TMJV, Inc. (affiliated with Cox
Communications, Inc.), Comcast Programming Ventures, Inc., Fostoria Communications, Inc. (affiliated with
MediaOne, Inc.), Daniels Properties, L.L.P., Fox/Liberty SV, L.L.C. (affiliated with AT&T, formerly Tele-
Communications, Inc.), and Roger Werner.  Outdoor Life is owned by TMJV, Inc., Comcast Programming
Ventures, Inc., Fostoria Communications, Inc., Fox/Liberty OL, L.L.C., and Roger Werner.  Fox/Liberty
Networks, which has a one-third ownership interest in the Speedvision and Outdoor Life Networks, is 50
percent owned by AT&T, one of the largest cable multiple system operators ("MSOs") in the United States. 
The Commission has determined previously that the ownership interests in the Networks constitute an
"attributable interest," as defined in Section 76.1000(b) of the Commission's rules, thereby making the
Networks vertically integrated satellite cable programming vendors subject to the Commission's program access
rules.    

     9.   On November 18, 1998, the Networks and EchoStar entered into an agreement for the carriage
of the Networks' programming.  While the agreement prohibited the carriage of the Networks on an a la carte
basis, it permitted EchoStar to carry the programming in one of three ways:  1) on EchoStar's expanded basic
package; 2) on a specialty tier of programming later known as EchoStar's "Action Plus" package; or, 3) on a
sports tier.  On December 2, 1998, EchoStar launched its "Action Plus" package which included both
Speedvision and Outdoor Life in its programming line-up.

     10.  On December 7, 1998, following the discovery of an alleged breach of the agreement regarding
the packaging of the Networks' programming, the Networks deauthorized EchoStar's reception of Speedvision
and Outdoor Life.  According to EchoStar, approximately 23,000 "Action Plus" package subscribers were
left without service.  The Networks alleged that EchoStar had not properly packaged 
its programming because in addition to the Networks, only one other programming service was included in the
package when EchoStar was to have included at least two other programming services other than Outdoor Life
and Speedvision.  The Networks also alleged that EchoStar violated the a la carte prohibition of the
agreement.  Also, on December 7, 1998, the Networks filed a complaint against EchoStar in the United States
District Court for the District of Connecticut alleging, inter alia, breach of contract, fraudulent inducement
and trademark infringement.

     11.  On December 9, 1998, in a letter sent to the Networks, EchoStar offered to add another
programming service to the "Action Plus" package.  In a letter dated December 11, 1998, the Networks
rejected EchoStar's offer by stating its position that the agreement was breached and therefore void, and that
it was too late to remedy EchoStar's noncompliance by adding another programming service to the package. 
After providing the Networks with the requisite ten days notice of its intent to file a program access complaint,
EchoStar filed the instant complaint on January 14, 1999.

IV.  ARGUMENTS OF THE PARTIES

     12.  EchoStar alleges that the Networks have unreasonably refused to offer their programming to
EchoStar on fair and nondiscriminatory rates, terms and conditions in violation of Section 628(c)(2)(B) of the
Communications Act and Section 76.1002(b) of the Commission's rules.  EchoStar argues that the
Networks' unilateral termination of their programming and their continuing refusal to provide it to EchoStar
constitutes an unreasonable refusal to deal which is recognized by the Commission as a form of non-price
discrimination.  According to Echostar, the Networks' allegations of contractual breach do not excuse cable-
affiliated programming vendors, such as the Networks, from the obligation to provide their programming to
a MVPD, such as EchoStar, in a fair and non-discriminatory manner.  EchoStar contends that the Networks
have the option of pursuing their legal claims for alleged breach of contract in court while still allowing
EchoStar to carry the Networks' programming.

     13.  Although EchoStar denies the alleged breach of contract, EchoStar states that, in a spirit of
compromise, it has offered to carry the Networks' programming in a manner that is indisputably consistent with
the Networks' interpretation of the contract.  In that regard, EchoStar states that it has offered to include one
more programming service -- the WingSpan aviation channel -- in the "Action Plus" package.  However, the
Networks have rejected EchoStar's offer and EchoStar claims that the Networks' refusal to provide its
programming even on the terms that the Networks maintain is required by the contract evidences lack of good
faith on the part of the Networks.  Furthermore, EchoStar contends that as a matter of industry practice in
the programming distribution area, a programmer does not terminate its relationship with an allegedly
breaching distributor before giving the distributor an opportunity to conform its conduct to the programming
vendor's reading of the programming agreement.

     14.  EchoStar also alleges that the Networks have engaged in unfair practices in violation of
Section 628(b) of the Communications Act and Section 76.1001 of the Commission's rules because they have
terminated distribution of their programming to EchoStar and since that termination consistently have refused
to allow EchoStar access to their programming.  EchoStar notes that Section 628(b) of the Communications
Act was intended to be a repository of "Commission jurisdiction to adopt additional rules or to take additional
actions to accomplish statutory objectives should additional types of conduct emerge as barriers to competition
and obstacles to the broader distribution of satellite cable and broadcast video programming."  Thus, with
regard to the distribution of the Networks' programming, EchoStar alleges that the Networks' unfair conduct
has prevented EchoStar from serving consumers which EchoStar argues is the core constituency intended to
be protected by the program access laws.  EchoStar argues that because of the Networks' conduct, EchoStar's
subscribers were deprived of the Networks' programming five days after they purchased it and started to receive
it, and as a result EchoStar was inundated with complaints that it was powerless to resolve.    

     15.  EchoStar further argues that the Networks' unfair conduct has prevented it from launching the
specialty tier that it planned to build around the Networks' programming.  EchoStar argues that the Networks'
programming is important for the purpose of attracting large categories of consumers with special interests. 
For instance, EchoStar notes that the NASCAR races covered by Speedvision are among the nation's most
watched and fastest growing sports events on television.  In addition, EchoStar asserts that Outdoor Life
Network is a leader in outdoor adventure programming.  Therefore, without the Networks' programming,
EchoStar argues that it is at a competitive disadvantage with competing MVPDs that carry the Networks'
programming in "digital cable" and other tiers outside their expanded basic package.

     16.  Finally, EchoStar requests damages for the harm it alleges to have suffered because of the
Networks' alleged unfair and discriminatory conduct in this matter.  EchoStar states that it has suffered
damages in the form of refunds and credits that it had to pay the 23,000 customers that subscribed to the
"Action Plus" package at the time of its termination.  EchoStar also claims loss of profits for the program
package from these customers, as well as for additional subscribers that EchoStar states that it would have
secured with this programming.  In addition, EchoStar also claims loss of profit from disgruntled subscribers
who EchoStar believes may have abandoned its programming altogether because of the termination of the
Networks' programming.  EchoStar also requests damages for marketing costs, both out-of-pocket and
overhead that were incurred to promote the Networks' programming; overhead expenses incurred for handling
the consequences of the Networks' conduct, such as the cost of processing phone calls from affected customers;
and, the loss of goodwill.                            

     17.  The Networks respond by asserting that their decision to deauthorize EchoStar's carriage of
the Networks' programming does not constitute an unreasonable refusal to deal in a nondiscriminatory manner
or constitute an unfair practice under the Commission's program access rules.  The Networks argue that their
decision was lawful and an appropriate business response to what they allege to be EchoStar's breach of the
clear and express terms of the parties' contract.  Moreover, the Networks contend that the action they took
was necessary to protect their reputation and the good will that they have earned with viewers, advertisers,
program suppliers and other distributors.  The Networks also note that they have pursued carriage on
EchoStar for over three years and that throughout that period they made at least 14 formal offers of carriage
to Echostar until the parties finally signed a mutually acceptable agreement on November 18, 1998.

     18.  Specifically, the Networks argue that their actions in this matter do not constitute an
unreasonable refusal to deal because the deauthorization of EchoStar's receipt of their signals occurred after
EchoStar breached a crucial packaging condition of their agreement.  The Networks note that in adopting the
program access rules, the Commission recognized that there are certain situations in which a vertically
integrated programming vendor would be justified in refusing to deal with a distributor, such as when parties
reach an "impasse on particular terms."  In this case, the Networks argue that where a programming
distributor, such as EchoStar, breaches the express, material terms of a distribution agreement and federal court
litigation ensues, an impasse has clearly occurred and the Networks' refusal to deal with such a distributor is
reasonable.

     19.  The Networks argue further that their signal deauthorization is reasonable after the breach of
such an important condition under general principles of contract and antitrust law.  The Networks assert that
under contract law, a contracting party's failure to abide by a condition or material term of that contract is
grounds for non-performance by the other party to the contract.  In addition, the Networks contend that breach
of contract has been found to constitute a reasonable ground upon which vertically integrated programming
vendors may refuse to distribute programming to DBS providers.  Specifically, the Networks refer to the
Primestar Consent Decree, approved by the United States District Court for the Southern District of New York,
as an example where breach of contract was considered a reasonable basis upon which PrimeStar Partners,
L.P. could refuse to distribute programming to DBS or MMDS providers.  The Networks also assert that
under antitrust law, a party may refuse to deal with another entity where a valid business justification exists.

     20.  The Networks also contend that their decision to deauthorize EchoStar's receipt of their
programming after a contractual breach does not constitute an unfair practice under the Communications Act
and the Commission's rules.  The Networks argue that their refusal to provide programming after EchoStar's
alleged breach was reasonable and if the Commission agrees, it cannot find that the Networks acted unfairly
in violation of the prohibition on unfair acts or practices.  The Networks assert that Section 628(b) of the Act
was not intended as a mechanism to declare unfair that which is permitted under the Act's specific provisions. 
The Networks argue that the Commission has ruled that actions that are legal under one section of the program
access rules should not be considered illegal under the broad unfair practices language of Section 628(b). 
In that regard, the Networks contend that EchoStar has not alleged any facts or circumstances in their unfair
practices allegation that are not encompassed by their unreasonable refusal to deal or non-price discrimination
allegation.  Accordingly, the Networks argue that if the Commission finds that the Networks' refusal to
provide programming to EchoStar was not unreasonable, then consequently the Commission cannot find that
the Networks acted unfairly in this matter.
     
V.   DISCUSSION      

     21.  For the reasons discussed below, we deny EchoStar's program access complaint against the
Networks.  The Commission recognizes that Section 628(c)'s prohibition against discrimination also
encompasses forms of non-price discrimination.  In that regard, the Commission has stated:

          [W]e believe that one form of non-price discrimination could occur through a vendor's
     "unreasonable refusal to sell," including refusing to sell programming to a class of
     distributors, or refusing to initiate discussions with a particular distributor when the vendor
     has sold its programming to that distributor's competitor.  We believe that the Commission
     should distinguish "unreasonable" refusals to sell from certain legitimate reasons that could
     prevent a contract between a vendor and a particular distributor, including (i) the possibility
     of parties reaching an impasse on particular terms, (ii) the distributor's history of defaulting
     on other contracts, or (iii) the vendor's preference not to sell a program package in a particular
     area for reasons unrelated to an existing exclusive arrangement or a specific distributor.

     22.  We note at the outset that this is not the usual "refusal to deal" or "refusal to sell" case.  This
is not a matter where programming vendors, such as the Networks, refused to sell their programming to a
distributor, such as EchoStar, or refused to initiate discussions about the sale of programming when the
vendors have sold their programming to that distributor's competitor.  Instead, in the instant case, after three
years of negotiations between the parties and 14 formal offer of carriage made from the Networks to EchoStar,
the parties entered into a mutually acceptable agreement on November 18, 1998.  Thus, despite the length
of negotiations, the Networks did deal with EchoStar and ultimately sold both Speedvision and Outdoor Life
programming to EchoStar on terms agreed to by both parties.  If not for the alleged breach of contract on the
part of EchoStar, the Networks would still be providing their programming to EchoStar.
  
     23.  Nonetheless, EchoStar argues that the Networks' unilateral termination of their programming
and their continuing refusal to provide that programming, even after an alleged breach of contract, constitutes
an unreasonable refusal to deal which is recognized by the Commission as a form of non-price discrimination. 
The record reveals that the Networks' breach of contract action was filed more than a month before EchoStar's
program access complaint.  While the Commission's jurisdiction to resolve program access disputes is not
subject to question, the resolution of EchoStar's program access complaint is inextricably intertwined with the
reasonableness of the Networks' actions resulting from EchoStar's alleged breach of contract.  The Commission
cannot resolve EchoStar's program access complaint without making factual determinations related to the
actions of the parties under the programming contract.  Where, as here, a court of competent jurisdiction first
has been presented with the same set of operative facts that constitute a program access case which involves
a material breach and is not evidently interposed for purposes of evading or delaying the Commission's exercise
of jurisdiction, we will not substitute our judgment on these issues for that of the court.  The federal court has
jurisdiction to examine the parties' contractual dispute and determine whether EchoStar breached a material
term of the November 18, 1998 agreement.  While we understand EchoStar's concern that during the time when
this dispute is pending in federal court some of EchoStar's subscribers will be denied access to the Networks'
programming, we do not believe that our program access rules were designed to force a programming vendor
to continue to provide its programming to a distributor during the pendency of a non-frivolous breach of
contract action on an underlying programming contract.  Our decision is without prejudice to EchoStar filing
a program access complaint after the contractual dispute between the parties is resolved by the federal district
court.

     24.  With regard to EchoStar's allegation that the Networks engaged in unfair practices, we agree
with the Networks that EchoStar has not alleged any facts or circumstances in connection with that allegation
that are not encompassed by their unreasonable refusal to sell or non-price discrimination allegation.  In view
of our decision on EchoStar's non-price discrimination claim, we find it unnecessary to address this allegation.
VI.  ORDERING CLAUSES

     25.  Accordingly, IT IS ORDERED that the program access complaint filed by EchoStar against
Speedvision Network, L.L.C. and Outdoor Life Network, L.L.C. IS DENIED WITHOUT PREJUDICE.

     26.  IT IS FURTHER ORDERED that the Motion to Dismiss or, in the Alternative, to Hold
Proceeding in Abeyance Pending Resolution in Federal District Court filed by Speedvision Network, L.L.C.
and Outdoor Life Network, L.L.C. IS DISMISSED AS MOOT.

     27.  This action is taken by the Chief, Cable Services Bureau, pursuant to authority delegated by
Section 0.321 of the Commission's rules.


                         FEDERAL COMMUNICATIONS COMMISSION                     
 


                         Deborah A. Lathen
                         Chief, Cable Services Bureau