A Federal Court denied Viacom’s request to dismiss a suit by Cablevision Systems that charges the programming for antitrust violations in the way it bundles its cable networks.
In the suit, filed in February 2013, Cablevision charged that Viacom was forcing it to carry and pay for 14 low-rated networks in order to carry popular channels like Nickelodeon, MTV and Comedy Central. The cable operator also claims Viacom is unlawfully block-booking in the way it sells its channels.
“We are gratified the Court has ruled that Cablevision has stated a valid antitrust claim against Viacom for illegal channel tying,” Cablevision said in a statement. “We continue to believe that Viacom’s tying of its popular networks to carriage of its lesser-watched ancillary networks is illegal, anti-consumer, and wrong. We look forward to further pressing our case at the next stage of the proceeding.”
The ruling was made by the U.S. District Court for the Southern District of New York.
"Cablevision has pleaded facts sufficient to support plausibly an inference of anticompetitive effects," the court said. "For example, Cablevision alleges that if it were not forced to carry the Suite Networks, it 'would carry other networks on the numerous channel slots that Viacom’s Suite Networks currently occupy.' Cablevision also alleges that Cablevision would buy other 'general programming networks' from Viacom’s competitors absent the tying arrangement. Viacom’s motion is therefore denied to the extent it seeks dismissal of Cablevision’s per se tying claim for failure to allege anticompetitive effects."
That means the court agrees that those are at least potentially anticompetitive effects.
In response, Viacom said in a statement: "Viacom’s programming licensing arrangements are flexible, competitive and the result of good-faith negotiations with distributors. Cablevision’s action in this case is simply part of an ongoing effort to renege on a long-term business agreement, using arguments directly contrary to positions it has taken in other cases and to its own business practices. Although we are disappointed that the court did not dismiss these claims at the outset, we are confident that Cablevision will fail to prove the facts required to prevail in their case.”
Cablevision also asked for an injunction to prevent Viacom from conditioning the licensing of the core networks on licensing the other nets. Viacom said that demand was unfounded and unfair. The court said it was too early in the process to address that Cablevision demand, but did not rule it out down the line.
John Eggerton contributed to this report.