Cablevision sues Viacom for channel-bundling coercion


In what could be the Lexington or Fort Sumter of the MVPD programming wars, Cablevision is taking Viacom to court on the contention that it is being coerced into carrying and paying for unpopular cable channels in order to secure the rights to Viacom’s must-have programming.

Cablevision listed the eight core Viacom channels it wants on its system, including:
TV Land
Comedy Central

It then listed 14 channels it feels it is being stuck with in order to get the eight, including:
MTV Hits
MTV Tr3s
Nick Jr.
Teen Nick
VH1 Classic
VH1 Soul
CMT Pure Country**
Nick 2**
MTV Jams**
*Optimum East Only
**Optimum West Only

Cablevision stated, “The manner in which Viacom sells its programming is illegal, anti-consumer, and wrong. Viacom effectively forces Cablevision’s customers to pay for and receive little-watched channels in order to get the channels they actually want. Viacom’s abuse of its market power is not only illegal, but also prevents Cablevision from delivering the programming that its customers want and that competes with Viacom’s less popular channels.”

The cable company says it is being coerced by Viacom “threatening to impose massive financial penalties unless Cablevision complied with Viacom’s demands,” and charged that the practice harms both Cablevision and its subscribers.

In a statement, Viacom said its arrangements with pay-TV distributors “have been upheld by a number of federal courts and on appeal. Viacom will vigorously defend this transparent attempt by Cablevision to use the courts to renegotiate our existing two month old agreement.”

ACA’s Matt Polka commented on the suit, saying, “The American Cable Association has been consistent in saying that the tying and bundling practices of the major cable content companies force cable operators to pay for channels they don’t want to offer to their customers. It’s a problem not just for Cablevision but also for hundreds of small and medium-sized cable operators. If the courts can address this problem, then we believe this would be a good outcome for consumers.”

RBR-TVBR observation: From a broadcast standpoint, this is refreshing news. Broadcasters may be forgiven if they have come to believe that MVPDs see local television as the sole source of their programming cost problems – it often seems that is all we hear about, other than the occasional squabble between MVPDs and cable-only program sources such as AMC lately.

However, the ACA, at least, has long complained about bundling – and it will be nice to see the cable network providers start taking some serious heat in this regard, if only to give broadcasters a little company if not some genuine relief.

The fact is that local broadcasters are still the most-watched programmers on MVPD channel lineups, so trying to cut costs by reducing what is paid for bundling tag-along channels is a far more sensible approach than going after broadcasters.

There are many more MVPDs and bundlers out there, so this could just be the beginning of an interesting struggle. Stay tuned.