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Cablevision Systems Corporation
CVC filed an antitrust lawsuit today against Viacom
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:
o 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.
o Viacom coerced Cablevision by threatening to impose massive financial
penalties unless Cablevision complied with Viacom's demands.
o 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:
o Declaratory relief voiding the December 2012 carriage agreement.
o 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.
o 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
o 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
o Federal antitrust laws protect competition. By protecting competition,
antitrust laws secure lower prices, higher quality, and other benefits for
consumers.
o 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.
o 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.
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