CABLEVISION’S SUIT AGAINST VIACOM GOES TO COURT

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In a case with far-reaching implications for the future of the cable and satellite TV industries, Cablevision sued Viacom last February over its practice of requiring carriage of its unpopular channels as a condition for permission to carry its more popular ones. The plaintiff argued that this practice is a violation of antitrust law. The cable company objected to being required to carry more than a dozen channels, including Logo, Palladia, MTV Hits, and VH-1 Classics, as a condition for the right to carry Viacom’s four most popular networks. Cablevision said that Viacom imposes financial penalties for refusal to abide by this condition.

On Friday, June 20, U.S. District Judge Laura Taylor Swain denied Viacom’s motion to dismiss the case, clearing the way for it to go to trial.

Viacom, a spinoff of the CBS Corporation, is the world’s fourth largest media corporation. Viacom owns BET Networks, MTV Networks, Paramount Pictures, and about 170 networks with 700 million subscribers worldwide. Its more popular channels include Comedy Central, Spike, TV Land, Nickelodeon, BET, and MTV.

Viacom has said that Cablevision’s suit is simply an attempt to renege on a long-term agreement. Viacom also accuses the cable company of taking a position inconsistent with its positions in other court cases.

If Cablevision wins, cable and satellite TV companies may be able to reduce programming fees for consumers, since they won’t have to include large tiers of unpopular channels. Broadcasters dispute this, though. They argue that in selling their channels in large bundles, they are able to reduce fees, because the unpopular channels provide more advertising vehicles. The broadcasters also claim that the pay TV providers are just trying to shift the blame for rate increases stemming from their own management decisions.

 

 

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