Cablevision Files Antitrust Lawsuit Against Viacom for Illegally Forcing Purchase of Programming Services

Categories: Network TV Press Releases

Written By

February 26th, 2013

via press release:

CABLEVISION FILES FEDERAL ANTITRUST LAWSUIT AGAINST VIACOM FOR ILLEGALLY FORCING PURCHASE OF PROGRAMMING SERVICES

 

BETHPAGE, NY, February 26, 2013 – Cablevision Systems Corporation (NYSE: CVC) filed an antitrust lawsuit today against Viacom (NYSE: VIA), in federal court in Manhattan, for illegally forcing Cablevision to carry and pay for 14 lesser-watched ancillary networks its customers do not want, such as Palladia, MTV Hits and VH1 Classic, in order to carry must-have networks such as Nickelodeon, MTV and Comedy Central.

 

Commenting on the lawsuit and Viacom, Cablevision offered the following statement:

 

“The manner in which Viacom sells its programming is illegal, anti-consumer, and wrong.  Viacom effectively forces Cablevision’s customers to pay for and receive little-watched channels in order to get the channels they actually want.  Viacom’s abuse of its market power is not only illegal, but also prevents Cablevision from delivering the programming that its customers want and that competes with Viacom’s less popular channels.”

 

Cablevision’s suit contends that:

 

[-]  Viacom abused its market power over commercially critical networks, including must-have networks such as Nickelodeon, Comedy Central, and MTV, to coerce Cablevision into carrying the 14 far less popular ancillary channels.

 

[-]  Viacom coerced Cablevision by threatening to impose massive financial penalties unless Cablevision complied with Viacom’s demands.

 

[-]  Viacom’s conduct harms Cablevision and its customers, and impairs competition by making Cablevision pay for and carry networks that many subscribers do not want to watch, while other networks are excluded from distribution, preventing Cablevision from being able to differentiate its services and harming subscribers.

 

Cablevision’s complaint asserts that Viacom engaged in a “per se” illegal tying arrangement in violation of the federal antitrust laws.  Cablevision’s antitrust lawsuit also asserts that Viacom has engaged in unlawful “block booking,” which is a form of tying that conditions the sale of a package of rights on the purchaser’s taking of other rights.  Viacom’s conduct also violates the Donnelly Act in New York State Law, which parallels federal anti-trust laws.

 

The complaint was filed under seal and a public version is not yet available.

 

Cablevision is seeking a number of remedies including:

 

[-]  Declaratory relief voiding the December 2012 carriage agreement.

 

[-]  A permanent injunction barring Viacom from conditioning carriage of any or all of its Core networks on Cablevision’s licensing any or all of Viacom’s ancillary networks.

 

[-]  To effectuate the permanent relief, a requirement that Viacom permit Cablevision to carry the Core networks and ancillary products on terms pending negotiation of a new, lawful agreement

 

[-]  Treble damages and legal fees.

 

Viacom’s eight core networks:

 

MTV

MTV2

Nickelodeon

VH1

Spike

TV Land

Comedy Central

BET

 

Viacom’s 14 ancillary networks:

 

Centric

CMT

MTV Hits

MTV Tr3s

Nick Jr.

Nicktoons

Palladia

Teen Nick

VH1 Classic

VH1 Soul

Logo*

CMT Pure Country**

Nick 2**

MTV Jams**

 

*Optimum East Only

**Optimum West Only

 

Antitrust Legal Background

[-]  Federal antitrust laws protect competition.  By protecting competition, antitrust laws secure lower prices, higher quality, and other benefits for consumers.

 

 

[-]  The antitrust laws prohibit tying, where a powerful firm wields its leverage from a product in one market, called the “tying” product, to compel a customer to take another product, called the "tied" product, when that customer would have preferred instead to take a product that competes with the "tied" product.

 

[-]  The reason antitrust law prohibits such tie-ins is to protect competition and consumers.  If powerful firms can leverage their power from one market to another, they can insulate the tied product from competition.  Forcing customers such as Cablevision to take Viacom networks instead of competing networks, in turn, hurts consumers because they get less for what they pay for video services.

 

Cablevision officials indicated that there would be no immediate disruption in programming offerings pending the resolution of this matter.

 

 
  • Shepherd

    It seems like the exact same tactic/ marketing strategy that Cablevision and the other providers use; forcing their customers to pay for a bunch of channels they don’t watch/want in a huge package in order to get the ones they do want. It’s good to see a cable provider get a dose of its own medicine. Poetic justice at its finest.

  • Anna Bones Clarkwood

    I’m confused.

    Isn’t this common practice already?

    We’d all only want 20-30 channels but we have to pay for over a hundred to get all of them.

  • PurpleDrazi

    Sadly, I don’t see much coming of this. Still, I’m glad someone is raising the issue.

  • Paul

    @Anna Bones

    Exactly. All I need is CBS, NBC, ABC, FOX (for football), Bravo and AMC and I am good to go.

  • Harma

    Cabletown has got mean since Jack took over

  • Anna Bones Clarkwood

    Exactly Paul, while all I personally need is my internet, by way of Time Warner Cable (Road Runner Internet), my shows in the U.S. air on CBS, ABC, USA, NBC, FOX, TNT, AMC, HBO, SHO, FX, CW, BBCAmerica, PBS, SyFy, TBS & if I was actually paying for TV, I would include ESPN & any other channel that airs MLB plus I’d probably add in Discovery/History & Nick/Disney & I guess GSN. I don’t need any of those reality networks (MTV/VH1/ET/Bravo) nor any that are basically syndication only channels, nor other language channels, public access, music etc. In fact, I only watch Primetime shows. No News, Soaps, Talk Shows & the like. While I have caught clips of John Stewart/Conan/Jimmy Kimmel & even Rachel Maddow or some other News ppl, I don’t care that I’m missing them every day. Which means, even though I have over 100 shows that are currently airing that I am either watching (50ish) or plan to watch, it might be simpler to have a pay per show type system. That is if internet & I’m not talking Netflix/Amazon/Hulu/Itunes/channel website but the “other” non torrent type viewing, is no longer an option.

  • Meanie

    I agree with @Paul & @AnnaBones but the reason why Media companies package there stations is because most minority, ethnic or special networks would go out of business and be hard to make money. And plus the more channels under a Media ownes the more they make.

    Example: Personally i dont watch BET, TV1, Logo, Fusion(A New Hispanic Network). But how Networks like Logo that target gays or BET/Fusions etc how will they stay afloat if people get to chose what they want.

    I believe cable companies should only pay for channels that have good ratings and other networks that do poor should be carried for free(Like Logo, SpikeTv etc)Like a Thank God package lol….. Thank God we offer you for free.

  • Anthony

    It seems like the exact same tactic/ marketing strategy that Cablevision and the other providers use; forcing their customers to pay for a bunch of channels they don’t watch/want in a huge package in order to get the ones they do want. It’s good to see a cable provider get a dose of its own medicine. Poetic justice at its finest.

    What? Did you even read the article? The reason Cablevision has to make you pay for all the channels you don’t want is because Viacom, and other Cable Channel operators force the cable companies (Cablevision, et al) to include ALL their channels into the bundle or not get any of them. That is why Cablevision is suing them to put an end to it.

  • D

    Cablevision uses this same tactic. MSG/Fuse (same owners as Cablevision: Jim Dolan) withheld MSG Network from Time Warner Cable in an attempt to get Fuse on the air just a year ago. If Linsanity handn’t forced TWC to cave in to get the Knicks back on the air, they might still be fighting over it. Cable providers are dirty and hopefully as things continue to develop with other delivery methods we can one day only pay for what we want, instead of what these huge corporations are forcing on us.

  • Anna Bones Clarkwood

    Meanie, I understand what you are saying & in the “non/not for profit” world that makes sense. If @ a charity dinner I donate $100 a plate for a charity & I could easily have made that dinner myself for $5-10, in a sense, I am paying $90 for something I don’t directly benefit from. Which in a sense means, TV companies are telling us to donate money to their whole lineup which includes a lot of “charity channels” in order to get access to their “for profit channels” which include some that any specific individual doesn’t want as well.

    Now, if I had a reliable income with money left over, I would feel free to donate my money to causes I want, which might include tv channels. But, I don’t want to be forced which charities I must donate to.

    Personally, I would want to revolutionize the tax system. For those inclined, not only could we choose which government programs to fund via our tax dollars but also some % of our tax would actually be a “charity” tax. There are thousands of charities out there, I’m sure everyone can find one or more they would be willing to be forced to fund esp if the tax rate doesn’t increase. In this case, if those previously mentioned “charity channels” redesignated themselves as a charity then ppl could choose to support them.

    However, the Media Companies are not running a charity but a business. So, unless the Government is telling them they have to force the consumer to pay for their charity channels, the way the Government forces us to pay for such programs we don’t like or at least overpay, then we shouldn’t be forced to pay for something we don’t want & if those charity channels go out of business then that’s unfortunate. And, in my case, I only pay for Internet & have cut the tv cord long ago. Not only does it make a lot of $ savings but I can have no worries about missing a show/clogging up the dvr & of course 0 commercials. That doesn’t mean I don’t heavily appreciate those who do put the shows online for me & those who watch the commercials Live+SD+C3 b/c I really do. However, right now, supply outweighs demand. There are way too many shows both new & old out there so if Media Companies go out of business no biggie for me. I can’t afford to pay to keep the lowly actors/stagehands etc working on my non existent, even if I was working, salary. In fact, at this juncture, I’d rather make going to the library a bigger deal & read a lot of books.

    While, I’m a good person who wishes we all could have jobs that contribute to society that allows us to also donate to good causes & enjoy life etc, we don’t live in that world & a lot of us view tv as an extra expense that push come to shove goes away over basic food/rent/gas to work. TV is an entertainment expense & by no means a necessity to live, not even in a enjoyment way, as there are lots of cheaper & more fulfilling joys in life than the TV.

    Bottom line, Media Companies are Forcing us to pay for what we don’t want, even if those channels are making money, like in my case MTV/non Prime time hours, & while IMO, they should only make us pay for what we want, they are a business & unless the Government has laws in place telling them they can’t do that, then they are free to do just that and ppl like me can cut the tv cord which I have.

  • Joseph

    If Cablevision wins this suit, it may well mean rate relief for tens of millions of cable and satellite subscribers.

    But it might also force several cable/satellite networks out of business.

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