Viacom says Cablevision bundling lawsuit should be tossed

Wed May 8, 2013 4:35pm EDT

A woman exits the Viacom Inc. headquarters in New York April 30, 2013. REUTERS/Lucas Jackson

A woman exits the Viacom Inc. headquarters in New York April 30, 2013.

Credit: Reuters/Lucas Jackson

(Reuters) - Viacom Inc said on Wednesday an antitrust lawsuit by Cablevision Systems Corp accusing it of forcing cable providers and subscribers to buy channels they don't want, should be thrown out.

The owner of MTV and Nickelodeon contended that Cablevision should be bound by its contract, and should not be allowed to take a legal position it had recently opposed in a similar case.

Viacom made its argument in a Wednesday filing in Manhattan federal court, in response to Cablevision's February 26 lawsuit accusing it of violating antitrust law over its "bundling" of channels.

Cablevision accused Viacom of coercing it into paying for 14 low-rated or obscure "Suite Networks" channels such as Palladia and Tr3s if it also wanted eight "Core Networks" channels such as Comedy Central, TV Land and VH1. According to Cablevision, the alternative would have been a roughly $1 billion "penalty."

The Bethpage, New York-based cable TV provider said Viacom's bundling, also known as "tying," sapped bandwidth it could have used for other channels from other programmers.

The case is closely watched in the media industry as being a potential benchmark in the relationship between programmers such as Viacom and distributors such as Cablevision.

In Wednesday's filing, New York-based Viacom said its licensing agreement did not entitle Cablevision to pick and choose channels, an "a la carte" approach favored by Cablevision founder Charles Dolan. It also said Cablevision waited too long to object, having operated under similar conditions since 2008.

In addition, Viacom said Cablevision was taking the opposite position it had taken when both companies, and other content providers and distributors, persuaded a federal appeals court in California in March 2012 to throw out a similar lawsuit.

That court rejected a claim by retail cable and satellite TV subscribers that they be allowed to buy only the specific individual channels they wanted.

"Cablevision has not plausibly alleged how Viacom's 'forcing' it to carry a trivial and insignificant number of Suite Networks among its 550 channels" thwarts competition or keeps rival channels out of the market, Viacom said in Wednesday's filing.

In a statement, Cablevision maintained that Viacom's "all-or-nothing approach" to program offerings is illegal and harms consumers.

"By forcing Cablevision's customers to pay for more than a dozen unpopular channels - or pay a penalty of more than $1 billion - in order to receive the channels they actually want, Viacom is abusing its market power," it said.

Comcast Corp, DirecTV, Walt Disney Co, News Corp's Fox Entertainment Group, Time Warner Inc and Time Warner Cable Inc were among the other defendants in the California case. The U.S. Supreme Court in November refused to accept the subscribers' appeal.

The case is Cablevision Systems Corp et al. v. Viacom International Inc et al., U.S. District Court, Southern District of New York, 13-01278.

(Reporting by Jonathan Stempel in New York; editing by Chris Reese and Matthew Lewis)

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