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Dauman: Cablevision Suit 'Ill-Advised, Frivolous'

Viacom Honcho Says Networks Offered MSO Numerous Concessions in Old Deal 3/04/2013 10:14 AM Eastern

In speaking about the recent anti-trust lawsuit hurled at his company by Cablevision Systems, Viacom CEO Philippe Dauman said his networks offered several concessions to the MSO in its two-month old carriage deal, but in the end it still wasn’t enough.

At the Deutsche Bank Media, Internet and Telecom conference in Palm Beach, Fla., Monday, Dauman said Cablevision’s Feb. 26 lawsuit  was “ill-advised” and “frivolous,” adding that the two had negotiated a multi-year carriage agreement just two months prior that was the “result of a vigorous negotiation in which we made a number of concessions.”

Among those concessions: Viacom lowered the final price from what it had originally asked, offered consumer-friendly products like TV Everywhere to help drive its business and it lengthened the term of the deal at Cablevision’s request.

He added Viacom offered a discount to Cablevision for taking the full suite of channels, the same number of channels the MSO had agreed to carry in its previous carriage agreement.

“Having done this deal, I guess their theory would be, ‘OK, we got the discount; we got the three suits for the price of two, now we want just one suit for the same price,’” Dauman said. “That doesn’t happen in this business or anywhere in industry.”

Dauman also noted that Viacom channels represent about 20% of all ad-supported cable viewing on Cablevision yet represent less than 10% of their total programming cost. In addition, he pointed out that 11 Viacom networks – including Teen Nick and Nick, Jr., among those Cablevision characterized as less-watched and therefore less wanted – have higher ratings than sports channel MSG, which was spun off from Cablevision in 2010 (Cablevision CEO James Dolan still serves as MSG executive chairman).

Dauman added that the MSG family of networks – MSG, MSG Plus – charge more than all of Viacom’s networks combined. As far as the practice of bundling channels in carriage negotiations, a key part of Cablevision’s suit, Dauman pointed to another former Cablevision unit, AMC Networks. Cablevision spun off AMC in 2011 as a separate entity.

“AMC provides discounts for people to carry along with AMC WeTV, IFC and IFC Films,” Dauman said. “Presumably MSG offers a discount for people to carry MSG 2, MSG Plus and Fuse. The bottom line is the lawyers will get rich on this and the tens of millions of dollars Cablevision will spend over the next many years if they pursue this lawsuit will be better spent to provide better customer service to Cablevision’s customers.”

In a statement, Cablevision stuck to its guns.

“The tactics employed by Viacom are illegal, anti-consumer, and wrong, and force Cablevision’s customers to take and pay for more than a dozen channels they don't want in order to receive the Viacom channels they want,” Cablevision said in a statement. “Viacom’s abuse of its market power prevents Cablevision from delivering more programming choice, particularly among networks that compete with Viacom’s less popular channels.”

 

September