Viacom Calls Fox Sports Suit a Legal Ploy

By LINDA MOSS and R. THOMAS UMSTEAD -- Multichannel News, 7/31/2000

Viacom Inc. claimed last week that Fox Sports Net was suing it as part of a legal ploy to grab full ownership of Home Team Sports, which Comcast Corp. is trying to buy.

Fox Sports filed a breach-of-contract lawsuit July 21 seeking to block Viacom from completing the sale of its majority stake in Bethesda, Md.-based HTS, as well as all of Midwest Sports Channel, to Comcast, the No. 3 MSO.

A trial has been set to start Oct. 16 in Chancery Court in Wilmington, Del., if the parties don't settle before then.

Fox, which owns one-third of HTS, claimed in legal papers that its bid for Viacom's stake in HTS surpassed Comcast's offer by $100 million, but it was nonetheless turned down. The suit also claimed that Viacom and Comcast "secretly" conducted their negotiations.

Viacom last week characterized the suit as strategic maneuvering on the part of Fox, which filed suit under the corporate name of Affiliated Regional Communications.

"Having lost its bid, Fox is now attempting, through this suit, to convert its right to sell into a right to buy," a Viacom spokesman said.

Comcast officials last week declined to comment on the lawsuit, which alleged that the MSO will drop some networks and replace them with Viacom programming services as a result of its acquisition of HTS and MSC.

Fox Sports, part of Fox Cable Networks, claimed that its so-called tag-along rights were violated when Viacom agreed to sell its stake in HTS to Comcast. That's because, the suit alleged, HTS and MSC are bundled together in the sale, with Comcast compensating Viacom by agreeing to launch or increase distribution for cable networks that are part of Viacom's MTV Networks unit.

The suit said the value of that noncash "consideration"-increased distribution for MTVN-was between $150 million and $160 million. According to the suit, on June 14, Fox offered Viacom $250 million to buy the HTS stake, but that bid didn't prevail.

Under the Viacom-Comcast deal, the suit said, "The consideration for the purchase of Viacom's interest is not cash but, among other things," distribution for Viacom-owned cable networks.

Other sources maintained that Comcast is paying Viacom some small cash sum, in addition to distribution for MTVN, as part of its purchase of the two regional sports channels.

The suit alleged that as part of the sale, Comcast "is required" to carry Viacom's MTV: Music Television, VH1, Nickelodeon, TV Land, Country Music Television and The Nashville Network on its cable systems.

Sources have also said the deal includes Comcast rollouts of Viacom's digital services, such as MTV2.

"In addition, Comcast is required to discontinue carriage of certain existing programming and replace it with other Viacom programming," according to the lawsuit. The suit didn't specify what programming Comcast will have to drop to add Viacom networks.

Following its acquisition of Jones Intercable Inc., Comcast had been switching out CMT for its rival, Great American Country. GAC is part of Jones International Networks, which, like Jones Intercable, was founded by Glenn Jones.

GAC president Jeff Wayne said Comcast is his network's No. 1 affiliate, comprising 5 million of its 14 million subscribers.

"They have been real supportive, and I expect them to continue to be real supportive of the network," he added.