May 15, 2013
Viacom Demands Dismissal of Cablevision's Antitrust Suit
By Amy Maclean
Viacom asked a federal court Wed (5/8) to dismiss Cablevision's antitrust lawsuit, which claims the programmer illegally tied lesser-watched nets to "must-have" channels such as Nick and MTV. In its court filing, Viacom said the lawsuit came just months "after being successful in having had dismissed a lawsuit challenging that same conduct by it and others brought by consumers of cable and satellite distributors."
Viacom is referring to the 9th Circuit Court of Appeals affirming the '09 Brantley decision that bundling channels in video packages does not hamper competition and unduly harm consumers. Viacom and Cablevision were listed as co-defendants along with several other MVPDs and programmers. That suit was brought by a group of cable and satellite customers trying to stop the industry from bundling expanded basic channels. In its lawsuit filed in Feb, Cablevision claimed Viacom tried to strong arm it into carrying a suite of nets by imposing a financial penalty if the MSO licensed only the core nets of Nick, MTV, BET and Comedy Central.
Cablevision said Wed that Viacom's interpretation of the bundling case is misleading and inappropriate, and it will respond to the court. "Viacom's assertions are predictable and do not change the fact that its all-or-nothing approach to selling programming is illegal and anti-consumer," Cablevision said in a statement Wed. "By forcing Cablevision's customers to pay for more than a dozen unpopular channels—or pay a penalty of more than $1bln—in order to receive the channels they actually want, Viacom is abusing its market power. Viacom is using our customers as pawns in its game to limit choice and competition and, ultimately, it is the consumer who suffers the consequences of Viacom's illegal actions."
The MSO went on to say it was "notable" that Viacom didn't contest Cablevision's claim that it was forced into negotiations for the less popular nets. "So, all of the claims Viacom made when we first filed suit about merely offering us a 'standard volume discount' if we took all their channels were not truthful," the MSO countered.
Viacom's dispute of Cablevision claims includes using the MSO's own words. Viacom's motion to dismiss cited numerous statements from CVC over the years to the FCC, SEC and courts, including this comment in '11 in an FCC docket on the RSN marketplace: "In a mature competitive marketplace, no single programming service—including an RSN—can make or break the competitive viability (or lack thereof) of an MVPD in any particular local market." The MSO has made similar statements over the years in arguing that the FCC should not restrict the ability of cable ops to enter into exclusive distribution agreements with programmers.
Viacom also focused on the assertion in Cablevision's lawsuit that it would be more likely to launch (or sooner launch) indie nets, such as Ovation and Outside TV, if other Viacom nets weren't tied to the core channels. In arguing that Cablevision failed to allege the essential elements of a tying claim, Viacom said the MSO just paid "lip service" to the foreclosure requirement by "merely identif[ying] a handful of independent programmers whose services Cablevision—a single customer in the tied product market—might consider purchasing." To show that a tying arrangement causes anticompetitive effects in the tied product market, a plaintiff must show market-wide foreclosure, not merely that a competitor is deprived of a single distribution outlet.
Viacom also alleged that the MSO waited too long to mount a challenge, as it has operated under the conditions as far back as 2008 and then entered into a similar agreement in the disputed Dec '12 contract "without even a hint that less than 2 months after signing it" Cablevision would seek to challenge the conduct.
EDITOR'S NOTE: This story originally appeared in CableFAX Daily. Go here to subscribe.