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Cablevision Sues Viacom Over Unpopular TV Channels

6 Mar, 2013 By: Doug McPherson

BETHPAGE, N.Y. – Cablevision sued Viacom last week, alleging it violated antitrust law by bundling more popular channels with lesser known ones. That move, Cablevision says, forces cable companies and their customers to pay for channels that few people watch.

Analysts say the lawsuit could be a turning point in the debate over “bundling” (selling channels to cable and satellite providers in a package) that has been normal practice so distributors like Cablevision and programmers like Viacom could avoid “a la carte”-style offerings public interest groups have been advocating.

But now the two sides are butting heads because many consumers are quitting cable and turning to the Web for entertainment.

To succeed, insiders say Cablevision would have to prove that bundling harmed customers and hindered competition by prohibiting smaller media companies from getting carriage for their channels.

Cablevision says, “Viacom effectively forces Cablevision’s customers to pay for and receive little-watched channels in order to get the channels they actually want.” Other distributors including DirecTV, Time Warner Cable and Charter have sided with Cablevision.

Viacom says it doesn’t require distributors to bundle all of its channels together and that it provides financial incentives to bundle by offering lower prices when smaller channels are grouped together with bigger ones. If a cable operator wants to buy only MTV or Nickelodeon, for example, it can – at a higher cost per channel.

Viacom adds it has “long offered discounts to those who agree to provide additional network distribution” and that most distributors viewed these arrangements as “a win-win and pro-consumer.” Federal courts have previously upheld the legality of these arrangements, Viacom said.

MediaPost reports that a person close to Viacom said distributors are making large profits and called support for Cablevision a public relations stunt.

Cablevision says the dispute wouldn’t result in an immediate disruption in programming, the kind that has become all too familiar to viewers over the years. The company said the lawsuit was filed under seal. A public complaint is expected to be released this week.

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