Dauman Calls Cablevision Bundling Suit 'Frivolous'

Cable operator got several bargains in recent negotiations

By Jon Lafayette -- Broadcasting & Cable, 3/4/2013 1:27:28 PM

Viacom CEO Philippe Dauman called Cablevision Systems' lawsuit over bundling cable channels "ill-advised and frivolous."

Speaking at Deutsche Bank's Media, Internet & Telecom Conference on Monday, Dauman said that Viacom networks get high ratings and cost less than the MSG group of networks controlled by Cablevision's founding Dolan family.

Cablevision sued Viacom in federal court earlier last week, asking the court to halt the practice of wholesale bundling of channels. During the cable operator's earnings call, CEO James Dolan said that "Viacom's practice of forcing distributors to carry more than a dozen lesser-watched networks in order to carry its must-have networks is an abuse of its market power and is a violation of federal antitrust laws."

But Dauman said that Cablevision and Viacom negotiated their new carriage deal two months ago. During those talks, Dauman said, Viacom made a number of concessions, lowering the cost from its asking price and giving Cablevision benefits like TV Everywhere. He said Cablevision even wanted the agreement to have a longer term than Viacom wanted-and that Cablevision got its longer term.

Under the new agreement, Cablevision agreed to carry no more additional networks than it carried under its previous long term arrangement, Dauman added.

Dauman said that Cablevision got a discount for carrying multiple Viacom networks. "So having done this deal, I guess their theory is we got the discount, we got the three suits for the price of two. Now we want one suit for that price. It doesn't happen in our industry. That's the nature of providing a discount for all these services," he said. He noted that AMC Networks, also controlled by the Dolan family, likely offers discounts so that operators who take AMC also take sister networks WE tv, IFC and Sundance Channel.

Dauman said that on Cablevision, Viacom networks account for 20% of the viewing, while the percentage of program expense they represent is in the single digits. "So we provide great value."

He added that 11 of Viacom's networks get higher ratings the MSG Networks, even though MSG charges more.

"The bottom line is the lawyers will get rich on this," Dauman said. That money would "be better spent to provide better service to Cablevision customers."

In response to Dauman's comments, Cablevision issued the following statement:

"The tactics employed by Viacom are illegal, anti-consumer, and wrong, and force Cablevision's customers to take and pay for more than a dozen channels they don't want in order to receive the Viacom channels they want.  Viacom's abuse of its market power prevents Cablevision from delivering more programming choice, particularly among networks that compete with Viacom's less popular channels."