MTV, Co-Op Settle Suit Over Rates

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Despite a prior agreement falling through five months ago,
the National Cable Television Cooperative Inc. and MTV Networks have finally reached an
out-of-court settlement of a lawsuit filed last June by the purchasing group.

In a brief, prepared statement last week, the Lenexa,
Kan.-based NCTC and MTVN announced their settlement and said the terms are confidential.
The agreement "establishes a new partnership between the two companies, allowing them
to strengthen the relationship," the statement said.

Last summer, the NCTC -- which acts as a purchasing agent
for smaller and midsized MSOs representing roughly 10 million subscribers -- filed a
breach-of-contract suit in federal court against MTVN parent Viacom International Inc.
over several issues.

In October, the co-op's and MTVN's efforts to reach an
out-of-court settlement derailed, and it looked like both sides would be forced to go to
trial. At that time, a settlement agreement had been reached, but MTVN came back and
wanted to change some of the terms, scuttling the effort.

In its lawsuit, the NCTC charged that a license-fee
increase that MTVN levied -- raising Nickelodeon's rate by 17 percent over a one-year
span, as well as increasing penetration requirements for license-fee discounts -- violated
its affiliation deal with the programmer.

In its suit, the NCTC also raised objections to MTVN's
practice of bundling, or tying rate discounts to operators' carrying several of their
programming services.

The NCTC negotiates affiliation deals with programmers on
behalf of its cable-system members, securing volume discounts for them by acting as if
they made up one large MSO.

The co-op wanted proof from MTVN that the programmer was
raising its license fees across the industry, hitting giant MSOs such as AT&T
Broadband & Internet Services (formerly Tele-Communications Inc.), and not just the
co-op members.

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