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Cablevision: Viacom Wanted $1B-Plus Premium To Carry Only Must-Haves (Updated)

MSO Releases Redacted Copy of Antitrust Suit; Viacom Calls Figure Inflated, 'Rhetorical Math' 3/07/2013 12:34 PM Eastern

Cablevision released a redacted copy of the antitrust suit against Viacom for programming package deals, charging that it would have had to pay at least a $1 billion-plus premium for taking channels it didn't want.

"The complaint clearly demonstrates that in order to carry Viacom channels like MTV, Comedy Central and Nickelodeon, Cablevision also had to agree to carry more than a dozen lesser-watched Viacom channels - or pay Viacom a penalty of more than $1 billion," the company said in a statement. The redacted suit does not fill in the blank before that "billion," so the exact figure is unclear. "This anti-consumer abuse of market power is a key reason cable bills continue to rise and programming choice remains limited."

Whatever the figure, a source said it was more than Cablevision's entire programming budget covering fees for hundreds of networks.

Cablevision says that its customers do not want networks such as Palladia, MTV Hits and VH1 Classic, but that it is forced to carry them in order to secure must-have channels Nickelodeon, MTV and Comedy Central. The MSO claims that it's the illegal abuse of Viacom's market power that forecloses the addition of networks Cablevision actually wants to carry. The result, according to the suit, is "concrete and ongoing harm" to Cablevision and consumers.

Cablevision said that absent the tying deal that it felt compelled to accept, it might have carried, or added earlier, independents Ovation, GMC, Me-TV, Aspire, RLTV, and/or HD versions of SD channels TV One, The Hub, the Military Channel, Fuel, Oxygen, the Home Shopping Network, and the Hallmark Channel.

Viacom has defended its programming policy, maintaining it aided cable operators and other distributors. "At the request of distributors, Viacom and other programmers have long offered discounts to those who agree to provide additional network distribution," the company said in a statement when the suit was filed. "Many distributors take advantage of these win-win and pro-consumer arrangements. Reflecting the highly competitive cable programming business, these arrangements 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."

Today, Viacom added: “This suit is nothing more than a hypocritical attempt by Cablevision to void a long term carriage deal they agreed to only two months ago. Cablevision is crying foul over a standard business practice that expands choice and lowers cost for consumers – a practice they use extensively to sell their own services. Cablevision received significant discount on a package of networks that account for nearly 20% of the total viewing audience. Now they want the lower price without the obligation to offer our networks to their customers.”

As to the billion-dollar figure, which Viacom points out is over the life of a multi-year contract: "That figure is nothing more than rhetorical math, an inflated, irrelevant number manufactured to create artificial sticker shock. As Cablevision admits in its own filing, these numbers do not concern actual 'deal' terms, but only Viacom’s initial offers, which were made at the request of Cablevision. Viacom’s 'rate card' prices are paid by hundreds of distributors -- but never by Cablevision, which has always exploited its market clout to extract deep discounts in every contract negotiation with Viacom and every other programmer.”

(Pictured: images from a Divas Weekend on Palladia promotion on DirecTV.com.)

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