According to the suit, filed today in a federal court in New York City, if Cablevision wants to carry Viacom’s popular offerings — MTV, Comedy Central, Nickelodeon — it’s it must also pay for more than a dozen smaller, niche networks like Palladia and MTV Hits. Regardless of whether subscribers ever watch these channels (and most of them don’t), the added cost for picking up all the channels in the bundle gets passed on to the customer in the form of higher rates.
“The manner in which Viacom sells its programming is illegal, anti-consumer, and wrong,” reads a statement from Cablevision. “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.”
Them’s fighting words.
The lawsuit seeks to invalidate the latest carriage fee agreement, which is only two months old, between Cablevision and Viacom. It accuses the broadcaster of violating federal antitrust law by engaging in a “per se” illegal tying arrangement. Cablevision also alleges unlawful “block booking,” a form of tying that conditions the sale of a package of rights on the purchaser’s taking of other rights.
In addition to voiding the existing carriage agreement, Cablevision seeks 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.”
The carrier considers the following 14 stations to be “ancillary” — Centric, CMT, MTV Hits, MTV Tr3s, Nick Jr., Nicktoons, Palladia, Teen Nick, VH1 Classic, VH1 Soul, Logo, CMT Pure Country, Nick 2, MTV Jams. Not all of these channels are currently available nationwide via Cablevision.
Viacom defends its bundling practice in a statement [via PaidContent]:
“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. Reflecting the highly competitive cable programming business, these arrangements have been upheld by a number of federal courts and on appeal. Viacom will vigorously defend this transparent attempt by Cablevision to use the courts to renegotiate our existing two month old agreement.”
If we were betting people (which we’re not… well, not always), we would have put our money on Time Warner Cable filing a lawsuit like this. TWC’s CEO Glenn “Two Ns, Two Ts” Britt has been quite vocal of his distaste for broadcaster bundles, recently telling investors, “We’ve accumulated networks that hardly anybody watches… We can’t keep carrying these giant packages… with services that don’t carry their weight.”