Cablevision: Viacom Wanted $1B-Plus Premium to Carry Only Must-Haves

Viacom calls the number inflated and irrelevant

By John Eggerton -- Broadcasting & Cable, 3/7/2013 5:17:12 PM

Updated 5:45 pm ET

Cablevision released a redacted copy of its antitrust suit against Viacom for programming package deals, and it charges that the operator would have had to pay at least a $1 billion-plus penalty for not taking channels it didn't want.

"The complaint clearly demonstrates that in order to carry Viacom channels like MTV, Comedy Central and Nickelodeon, Cablevision also had to agree to carry more than a dozen lesser-watched Viacom channels - or pay Viacom a penalty of more than $1 billion," the company said in a statement. The redacted suit does not fill in the blank before that "billion," so it is unclear the exact figure. "This anti-consumer abuse of market power is a key reason cable bills continue to rise and programming choice remains limited."

Viacom calls it an inflated and irrelevant number, and the "penalty" simply the difference between the standard rate and the discount for carrying other nets as well.

Whatever the figure is, Cablevision said it was more than Cablevision's entire programming budget covering fees for hundreds of networks.

Cablevision says that its customers do not want networks such as Palladia, MTV Hits and VH1 Classic, but that it is forced to carry them in order to secure must-have nets like Nickelodeon, MTV and Comedy Central, which it says is illegal abuse of Viacom's market power that forecloses the addition of networks Cablevision actually wants to carry. The result, says Cablevision in the suit, is "concrete and ongoing harm" to Cablevision and consumers.

Cablevision said that absent the tying deal that it felt compelled to accept, it might have added, or added earlier, independents Ovation, GMC, Me-TV, Aspire, RLTV, or add HD versions of SD channels TV One, The Hub, the Military Channel, Fuel, Oxygen, the Home Shopping Network and the Hallmark Channel.

"This suit is nothing more than a hypocritical attempt by Cablevision to void a long term carriage deal they agreed to only two months ago," Viacom responded in a statement. "Cablevision is crying foul over a standard business practice that expands choice and lowers cost for consumers -- a practice they use extensively to sell their own services. Cablevision received significant discount on a package of networks that account for nearly 20% of the total viewing audience. Now they want the lower price without the obligation to offer our networks to their customers. "

As to the billion-dollar figure, which Viacom points out is over the life of a multiyear contract: "That figure is nothing more than rhetorical math, an inflated, irrelevant number manufactured to create artificial sticker shock.  As Cablevision admits in its own filing, these numbers 'do not concern actual deal terms, but only Viacom's initial offers' which were made at the request of Cablevision.  Viacom's 'rate card' prices are paid by hundreds of distributors -- but never by Cablevision, which has always exploited its market clout to extract deep discounts in every contract negotiation with Viacom and every other programmer."