CSN files suit against Orioles

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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.