Cablevision sues Viacom in bid to unbundle channels
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Cablevision filed a lawsuit Tuesday against Viacom alleging antitrust violations tied to the industry's bundling of cable channels into subscriber packages, a practice that spurred a failed 2007 consumer antitrust lawsuit.
Cablevision, the fifth-largest U.S. cable company, said in the statement that it seeks an order voiding a December "carriage agreement," and a court order barring New York-based Viacom from requiring cable companies any of its channels to include its less popular channels. The programmer owns cable networks Nickelodeon, MTV and Comedy Central.
"Viacom and other programmers have long offered discounts to those who agree to provide additional network distribution," Jeremy Zweig, a spokesman for Viacom, said Tuesday in an emailed statement. Zweig said Viacom will fight what it contends is a "transparent attempt by Cablevision to use the courts to renegotiate our existing two-month-old agreement."
Cablevision said in its news release that it seeks a court order requiring Viacom to permit it to carry the core networks and ancillary products while negotiating a new agreement. The Bethpage-based company said in its statement that it also seeks triple damages and legal fees.
Charlie Schueler, a spokesman for Cablevision, which is the parent company of Newsday, declined to comment on why the complaint was filed under seal.
"There are serious problems with the current programming environment," said Alex Dudley, a spokesman for Time Warner Cable Inc., the second-largest cable company. "We think this lawsuit raises important issues, and we look forward to their resolution in the courts."
Prior bundling suits alleging antitrust violations have been brought by consumers: Comcast, DirecTV, Time Warner Cable, Walt Disney Co. and NBC Universal Inc. were among the cable and satellite-TV programmers and distributors named in the antitrust suit filed in federal court in Los Angeles in 2007 over claims their bundling of channels prevents competition among providers of televised content by offering only "prepackaged tiers" of programs and by refusing to allow customers to pay for only the channels they want.
In October 2009, Comcast, DirecTV Group Inc. and 11 other pay-TV providers won dismissal of the suit brought by consumers who said they were harmed by the industry practice of bundling programs in subscription packages that forced customers to pay for services they didn't want.
Matthew Cantor, a partner at Constantine Cannon LLP, who was a lead attorney for plaintiffs in several antitrust disputes concerning electronic payments systems, said the "illegal tying" issues in the Cablevision case aren't new.
"The issue of tying one less valuable network to a more valuable network has been one that has been dealt for years by programmers and distributors," he said. "Programmers have sought to launch more innovative programs by bundling them with more established brands. But there are some substantial defenses that can be made and no doubt the defense will have a number of arguments that will be thoroughly examined by the court."
He said the case raises an important question.
"Can Cablevision make a credible economic argument that they paid more for the bundling offerings than the individual offerings?" Cantor said.