Heightened tensions between cable companies and content providers came to a head today, as Cablevision announced it has filed an antitrust suit against Viacom, alleging that Viacom forced the company to carry and pay for 14 less popular “ancillary” networks in order to carry popular networks.
“The manner in which Viacom sells its programming is illegal, anti-consumer, and wrong,” said Cablevision in the announcement of the filing. “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.”
If Cablevision is successful in its suit, it could have its current carriage agreement with Viacom voided and could receive treble damages, as well as a permanent injunction barring Viacom from making similar requirements in the future.
According to Cablevision, Viacom’s “core networks” – apparently the ones Cablevision wants to carry – include MTV, MTV2, Nickelodeon, VH1, Spike, TV Land, Comedy Central and BET. “Ancillary networks” – apparently the ones Cablevision doesn’t want to carry – include Centric, CMT, MTV Hits, MTV Tr3s, Nick Jr., Nicktoons, Palladia, Teen Nick, VH1 Classic, VH1 Soul, and others.
In the release Cablevision notes that federal anti-trust 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.”
Cablevision argued that Viacom’s policy harms consumers because “they get less for what they pay for video services.”
This is not the first time Viacom has been involved in a high-profile dispute with a video service provider. Last summer Viacom pulled its programming from DirecTV when the two companies initially were unable to reach a new agreement when a previous contract expired.
That time DirecTV’s concern was about the cost of programming rather than the requirement to carry unwanted networks – and when an agreement ultimately was reached, DirecTV found itself carrying all of Viacom’s channels.
If Cablevision is successful in its suit against Viacom, it could set an important precedent and dramatically alter the relationship between content providers and video service providers. It’s a development that stakeholders on both sides will be following closely.
