Cablevision Sues Viacom for Making It Run Second-Tier Channels

Cable Provider Takes Potshot at VH1 Classic, Palladia

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Cablevision Systems Corp. is suing Viacom Inc., alleging the distributor of MTV, Comedy Central and Nickelodeon is forcing it to carry and pay for 14 lower-rated networks such as Palladia and VH1 Classic.

"The manner in which Viacom sells its programming is illegal, anti-consumer, and wrong," the cable-systems operator said in a prepared statement. "Viacom effectively forces Cablevision's customers to pay for and receive little-watched channels in order to get the channels they actually want." The company added: "Viacom's abuse of its market power is not only illegal, but also prevents Cablevision from delivering the programming that its customers want and that competes with Viacom's less-popular channels."

Cablevision called out networks like Palladia, MTV Hits and VH1 Classic, describing them as being less popular among its' subscribers.

The cable provider, which filed an antitrust lawsuit in federal court in Manhattan on Tuesday, alleges that Viacom has threatened to impose massive financial penalties unless Cablevision complied with Viacom's demands.

"Viacom's conduct harms Cablevision and its customers, and impairs competition by making Cablevision pay for and carry networks that many subscribers do not want to watch, while other networks are excluded from distribution, preventing Cablevision from being able to differentiate its services and harming subscribers," the company said.

"At the request of distributors, Viacom and other programmers have long offered discounts to those who agree to provide additional network distribution," a Viacom spokeswoman said. "Many distributors take advantage of these win-win and pro-consumer arrangements. Reflecting the highly competitive cable-programming business, these arrangements have been upheld by a number of federal courts and on appeal. Viacom will vigorously defend this transparent attempt by Cablevision to use the courts to renegotiate our existing two month old agreement."

This comes as cable and satellite operators have begun re-evaluating low-rated networks as a way to mitigate costs. Time Warner Cable and Dish Network have been vocal about looking at the cost of each network relative to viewership.

To this end, Time Warner Cable dropped the independent channel, Ovation, on Jan. 1.

"We frequently have pointed out that there are serious problems with the current programming environment," a Time Warner Cable spokeswoman said. "We think this lawsuit raises important issues, and we look forward to their resolution in the courts."

"It's about time this is given some attention," said Ovation Chief Operating Officer Chad Gutstein. "It's not a free market and small independents like Ovation are not afforded an equal playing field."

"The aggressive stance taken by large media conglomerates leaves less room and money to go around for independent, vibrant programmers that serve smaller, but passionate audiences that love and want the family-friendly programming offered on GMC and Aspire," GMC Vice Chairman Brad Siegel. "We have raised this issue to Washington D.C. lawmakers for years; however it is one that continues to plague independent programmers. This is another concrete example of how this problem that has not been addressed continues to play out, ultimately hurting the consumer."

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