Cablevision’s Antitrust Case Hangs Over Viacom

MANHATTAN (CN) - Viacom must face claims that it made Cablevision take obscure channels along with the more popular ones it wanted, under threat of a multibillion-dollar penalty, a federal judge ruled.

Cablevision took aim at the "diabolical and coercive scheme" last year, claiming that Viacom pressures cable companies into paying for "suite networks" such as CMT, MTV Hits, Palladia and VH1 Classic by imposing a hefty fine for those purchasing only "core networks" such as Nickelodeon, Comedy Central, BET and MTV.

The redacted public version of the complaint, which was released more than a week after its filing in March 2013, blacked out how many billions of dollars Viacom allegedly charged those who opted for "core networks" alone.

U.S. District Judge Laura Taylor Swain found Friday that Cablevision "pleaded facts sufficient to support plausibly an inference of anticompetitive effects."

"For example, Cablevision alleges that if it were not forced to carry the suite networks, it 'would carry other networks on the numerous channel slots that Viacom's suite networks currently occupy,'" the seven-page opinion states. "Cablevision also alleges that Cablevision would buy other 'general programming networks' from Viacom's competitors absent the tying arrangement."

An alleged tying arrangement of that nature could run afoul of the Sherman Act and its New York state law analogue, the Donnelly Act, the court found.

Viacom also failed to dismiss claims that it engaged in "block-booking," a practice that got Paramount Pictures in trouble during the Golden Age of cinema.

"In a 1948 opinion outlawing movie production companies' practice of conditioning the sale and exhibition of popular movies on the exhibition of less desirable movies, the Supreme Court defined block-booking as 'the practice of licensing, or offering for license, one feature or group of features on condition that the exhibitor will also license another feature or group of features released by the distributors during a given period,'" Swain wrote.

Viacom spokesman Jeremy Zweig insisted in an email that the company's licensing arrangements were "flexible, competitive and the result of good-faith negotiations with distributors."

"Cablevision's action in this case is simply part of an ongoing effort to renege on a long-term business agreement, using arguments directly contrary to positions it has taken in other cases and to its own business practices," Zweig added. "Although we are disappointed that the court did not dismiss these claims at the outset, we are confident that Cablevision will fail to prove the facts required to prevail in their case."

Viacom also accused Cablevision of hypocrisy when the lawsuit first became public.

Cablevision said in a statement that it was "gratified" by the decision.

"We continue to believe that Viacom's tying of its popular networks to carriage of its lesser-watched ancillary networks is illegal, anti-consumer and wrong," Cablevision said. "We look forward to further pressing our case at the next stage of the proceeding."

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