Dolan: Viacom 'Abusing Its Market Power'CEO Adds That Sports Surcharge is 'Appropriate' 2/28/2013 7:26 AM Eastern
Cablevision Systems CEO James Dolan tried to briefly explain the MSO’s recent lawsuit against Viacom, on a conference call to discuss its fourth quarter results, noting that the programming giant is “abusing its market power,” by forcing retailers to accept channels they don’t want.
Cablevision sued Viacom in federal court earlier this week, asking the court to halt the practice of wholesale bundling of channels.
“Viacom’s practice of forcing distributors to carry more than a dozen lesser-watched networks in order to carry its must-have networks is an abuse of its market power and is a violation of federal anti-trust laws,” Dolan said on a conference call with analysts to discuss fourth- quarter results. “Importantly this practice, it impairs programming competition and causes our customers’ prices to rise and we believe it needs to be stopped.”
Asked later on the call about the timing of the suit – two months after it had signed a carriage agreement with Viacom – and what if anything has changed recently in an industry that has commonly bundled channels for years to prompt the litigation, Dolan said there is a stark difference between retail and wholesale bundling.
“Retail bundling has been going on for quite some time – [Cablevision founder and chairman] Charles Dolan was one of the first to ever do it,” Dolan said on the call. “It was really designed to provide more value to the customer by giving them a lot more product at a better price. That is not what this lawsuit is about. This is about wholesalers forcing in product into retailers, taking up shelf-space and stopping the retailer from the ability to add other products and forcing the price up.”
When pressed by analysts to offer an explanation about the change of heart, especially since its former programming unit AMC Networks – spun off from Cablevision in 2011 but of which Charles Dolan serves as executive chairman – had been accused of the same practice about a year ago, the Cablevision CEO declined to comment.
“I don’t think I’m going to try the case here during our fourth-quarter call,” Dolan said. “I think I’ll leave it at what I said.”
Dolan also offered more insight into Cablevision’s decision to implement a $2.98 per month sports network surcharge. Cablevision has been a pioneer of regional sports network, launching one of the first – Madison Square Garden Network – decades ago. MSG was spun off into a separate company in 2010.
“Madison Square Garden is not the only RSN in New York,” Dolan said. “RSN fees are going up pretty much across the board. It’s a very key product but it is very expensive. I think it is appropriate to associate the rate increase with the higher cost of regional sports. We are separate companies and so [at] Cablevision we do the right things for Cablevision.”