The argument in a redacted version of Cablevision’s antitrust lawsuit at U.S. District Court in New York, released today (read it here), hits at a key part of Viacom’s defense. The entertainment company says that Cablevision could have licensed Viacom channels individually in the long term deal that they signed two months ago, and that businesses often provide discounts to customers who accept package deals. But the cable company says the “penalty” for not taking the package was so onerous that it “was no offer at all.” Indeed, the difference in prices over the life of the contract (undisclosed, although they typically run about six years) “exceeded Cablevision’s entire 2013 budget for programming.” Viacom has so much market power, the suit says, that it was able to raise its prices at a time when ratings fell for its most popular networks which include Nickelodeon and MTV. What’s more, national ratings show “substantial declines in the daytime and primetime ratings” for nearly all of Viacom’s networks with Logo and VH1 Classic ranking “among the 10 lowest-rated cable networks, for both prime-time and 24-hour average viewing.” If Cablevision wasn’t forced to carry the lower rated Viacom channels, it says that it could have offered “superior programming” from Ovation, GMC, Me-TV, ASPiRE, and Retirement Living TV.
Viacom says, in response, that Cablevision has ginned up “an inflated, irrelevant number manufactured to create artificial sticker shock.” It’s based on Viacom’s initial offers, not a fully negotiated price. Viacom adds that its 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.“