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Cablevision Wants Its MTV – But Not For $1 Billion

Posted  March 11, 2013

Cablevision Systems Corp. is claiming that Viacom Inc. violated antitrust laws by threatening it with a $1 billion penalty if it refused to carry low-rated Viacom channels after obtaining access to Viacom’s more popular channels, such as MTV, Comedy Central and Nickelodeon.

Cablevision made the claim of strong-arm tactics last week, as it publicly revealed that it had filed an antitrust complaint against Viacom in the U.S. District Court for the Southern District of New York, alleging violations of Section 1 of the Sherman Act and of New York’s Donnelly Act.

The crux of the case is Cablevision’s claim that Viacom illegally tied several of its lesser-viewed networks to networks over which it allegedly possesses and exercises market power.  Cablevision’s complaint alleges that Viacom exercises market power through MTV, Comedy Central, Nickelodeon and BET (the “Tying Networks”).

The complaint alleges that a December 2012 agreement between the parties forced Cablevision to distribute Viacom’s entire suite of channels in return for gaining the right to carry the Tying Networks.  According to Cablevision, failure to carry the less popular networks would have resulted in Viacom imposing $1 billion in penalties on Cablevision.

Cablevision claims that Viacom’s forcing of Cablevision to distribute Viacom’s lesser-valued networks has foreclosed competitive programmers from getting access to Cablevision’s “pipes.”  According to Cablevision, it has scarce capacity to distribute programming and only limited dollars to spend on acquiring programming for viewers.

The complaint alleges that each of the Tying Networks is a relevant market.  Cablevision alleges that even if the relevant programming markets are defined more broadly (e.g., a market for “popular children’s programming”), each of these networks still wields market power.  But the complaint also alleges that Cablevision, itself, competes against various distributors of programming, including distributors that reach end viewers over the Internet.

Cablevision seeks treble damages for this alleged tying.  However, it would not be surprising if Cablevision eventually drops the suit for more advantageous carriage terms.

Notably, Cablevision states in the complaint that it bundles programming to end viewers in tiers, arguably acknowledging that certain bundles of programming may be procompetitive.

Tagged in: Antitrust Litigation,