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Cablevision: Viacom Wanted $1B-Plus Premium to Carry Only Must-Haves

Updated 5:45 pm ET

Cablevision released a redacted copy of its antitrustsuit against Viacom for programming package deals, and it charges that the
operator would have had to pay at least a $1 billion-plus penalty for not
taking channels it didn't want.

"The complaint clearly demonstrates that in order to
carry Viacom channels like MTV, Comedy Central and Nickelodeon, Cablevision
also had to agree to carry more than a dozen lesser-watched Viacom channels -
or pay Viacom a penalty of more than $1 billion," the company said in a
statement. The redacted suit does not fill in the blank before that
"billion," so it is unclear the exact figure. "This
anti-consumer abuse of market power is a key reason cable bills continue to
rise and programming choice remains limited."

Viacom calls it an inflated and irrelevant number, and the
"penalty" simply the difference between the standard rate and the
discount for carrying other nets as well.

Whatever the figure is, Cablevision said it was more than
Cablevision's entire programming budget covering fees for hundreds of networks.

Cablevision says that its customers do not want networks
such as Palladia, MTV Hits and VH1 Classic, but that it is forced to carry them
in order to secure must-have nets like Nickelodeon, MTV and Comedy Central,
which it says is illegal abuse of Viacom's market power that forecloses the
addition of networks Cablevision actually wants to carry. The result, says
Cablevision in the suit, is "concrete and ongoing harm" to
Cablevision and consumers.

Cablevision said that absent the tying deal that it felt
compelled to accept, it might have added, or added earlier, independents
Ovation, GMC, Me-TV, Aspire, RLTV, or add HD versions of SD channels TV One,
The Hub, the Military Channel, Fuel, Oxygen, the Home Shopping Network and the
Hallmark Channel.

"This suit is nothing more than a hypocritical attempt by
Cablevision to void a long term carriage deal they agreed to only two months
ago," Viacom responded in a statement. "Cablevision is crying foul over a
standard business practice that expands choice and lowers cost for consumers --
a practice they use extensively to sell their own services. Cablevision
received significant discount on a package of networks that account for nearly
20% of the total viewing audience. Now they want the lower price without the
obligation to offer our networks to their customers. "

As to the billion-dollar figure, which Viacom points out is
over the life of a multiyear contract: "That figure is nothing more than
rhetorical math, an inflated, irrelevant number manufactured to create
artificial sticker shock.  As Cablevision admits in its own filing, these
numbers 'do not concern actual deal terms, but only Viacom's initial offers'
which were made at the request of Cablevision.  Viacom's '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."