This is the latest twist in the companies’ courtroom battle over pay TV channel bundling — a practice that infuriates consumers, but is essential to the finances of most Big Media companies. Cablevision says that Viacom violated anti-trust laws in a late 2012 carriage deal when it required the operator to take 14 channels it didn’t want (including Palladia and Tr3s) in order to offer eight that it did; Viacom says package deals are common in business. A U.S. District Court said in June that the case could proceed. But Viacom asked the court last week — in a filing made public today — to void the carriage agreement saying that Cablevision’s negotiations were “a complete sham.” That would yank channels including MTV, Nickelodeon, Comedy Central, and BET from the operator’s systems that serve nearly 2.8M video subscribers, mostly concentrated in the tri-state area around New York.
“Cablevision engaged in a bad-faith negotiation from the start, and made commitments and guarantees in its negotiations that it knew were fraudulent,” Viacom says. “We are entitled to full relief for the consequences of this deceptive and unlawful behavior.”
Cablevision counters that the filing is “a transparent attempt by Viacom to delay and distract attention from Cablevision’s valid antitrust claim against Viacom for illegal channel tying. Viacom’s practice of tying of its popular networks to carriage of its lesser-watched networks is anti-consumer and wrong, and we look forward to further pressing our case at the next stage of the proceeding.”
While there’s no formal timetable yet, Cablevision will have a chance to reply before the court decides what it will do. That process could take months.
The complaint says that Cablevision had a “secret plan” to negotiate a good deal and then “obtain all the benefits it had negotiated to obtain and ask the Court to void the rest.” Cablevision filed its suit less than three months after it signed the agreement. But during the talks, “At no time did anyone from Cablevision inform Viacom that Cablevision believed that any of Viacorn’s conduct in the negotiation of the 2012 Agreement was illegal” and that it intended to sue. Cablevision “knew that if it had told Viacom the truth…the negotiations would have come to a screeching halt.” Its executives “would not have negotiated through the night on New Year’s weekend had they known of Cablevision’s secret plan. And Viacom would never have signed the 2012 Agreement.”
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