Cablevision filed an antitrust lawsuit against Viacom on Tuesday, alleging that the media giant has forced the cable provider to carry 14 little-watched Viacom networks in order to carry the more popular Viacom networks.
The suit, filed in federal court in Manhattan, contends that Viacom abused its market power to compel Cablevision to carry ancillary networks such as MTV Hits, CMT, Nick Jr., VH1 Classic and Logo if they wanted to also carry the company's core networks, including MTV, Nickelodeon, VH1 and Comedy Central.
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Cablevision also claims that it was coerced with the threat of massive financial penalties unless it agreed to Viacom's terms.
The suit alleges that Viacom has impaired competition by forcing Cablevision to carry networks that many of its subscribers have no interest in, while excluding other networks from distribution. The result, Cablevision says, is that it can't differentiate its services, and that its subscribers are being harmed.
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According to the suit, Viacom's actions amount to a "per se" illegal tying arrangement and unlawful "block booking," which makes the sale of a package of rights conditional on the purchaser's taking of other rights. Cablevision alleges that Viacom has violated both federal antitrust laws and New York's Donnelly Act, which parallels the federal antitrust laws.
“The manner in which Viacom sells its programming is illegal, anti-consumer, and wrong," Cablevision said in a statement. "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.”
Viacom, meanwhile, contends that its practices are well within the law, and common within the cable industry.
“At the request of distributors, Viacom and other programmers have long offered discounts to those who agree to provide additional network distribution. Many distributors take advantage of these win-win and pro-consumer arrangements," the company told TheWrap in a statement Tuesday. "Reflecting the highly competitive cable programming business, these arrangements have been upheld by a number of federal courts and on appeal."
Cablevision, which according to the National Cable & Telecommunications Association [6]ranks as the ninth largest multichannel video programming distributor, entered a carriage deal with Viacom in December. The suit is seeking to void that an agreement -- a move that Viacom calls a "transparent attempt by Cablevision to use the courts to renegotiate our existing two month old agreement."
Cablevision is also seeking a permanent injunction against Viacom preventing the company from making carriage of its core networks dependent on carriage of its ancillary networks, along with a requirement "that Viacom permit Cablevision to carry the Core networks and ancillary products on terms pending negotiation of a new, lawful agreement." The company also wants treble damages and legal fees from the suit.