Viacom And Cablevision Settle Channel Bundling Antitrust Dispute

The companies don’t have a lot to say about their resolution of a suit that might have had a profound impact on cable channel bundling.

“We are pleased to have put these matters behind us in ways that benefit both of our companies and look forward to working together to benefit Cablevision’s customers,” they say in a joint statement.

The settlement comes at a time when both companies have little to gain from a continued fight.

Cablevision needs friends more than enemies after agreeing last month to sell itself for $10 billion (not including debt) to billionaire Patrick Drahi’s Altice — federal regulators will have to approve the transaction. And Viacom is struggling to revive ratings and ad sales after a painful restructuring earlier this year.

Cablevision had charged that Viacom violated antitrust 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.

The cable company alleged that Viacom threatened to “impose massive financial penalties unless Cablevision complied with Viacom’s demands.” Cablevision said the practice of selling channels as a package, instead of individually, is a “per se” tying arrangement that violates federal and New York state antitrust laws. It also charged that the practice violates laws against “block booking.”

Cablevision asked the court to require Viacom to pay treble damages and legal fees, to bar the network owner from continuing to demand carriage deals, and to let the cable operator have separate deals for the “core” and “ancillary” networks while they negotiate new agreements.

Viacom said that package deals are common in business generally, not just in cable. The entertainment giant and other programmers “have long offered discounts to those who agree to provide additional network distribution.” These are “win-win and pro-consumer arrangements” that “have been upheld by a number of federal courts and on appeal.”

The company added that Cablevision merely wanted to “use the courts to renegotiate our existing…agreement.”

If Cablevision had prevailed then it might have revolutionized the way pay TV services are sold: Distributors have long complained that programmers force them to lard their lineups with networks that few people watch but that raise everybody’s costs. The problem has become especially acute over the last few years as broadcasters have demanded rising retransmission consent payments, and major programmers have struck extravagant deals for sports rights with the expectation that they’ll recoup the outlays by raising the fees they charge distributors. Cablevision is one of the few operators that has advocated a la carte pricing.