VIACOM, MCA WAGE LEGAL FIGHT OVER USA

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USA Networks would have topped last year's $310 million in net ad sales if MCA had allowed Viacom's MTV Networks ad team to sell time on its cable channels. At least that's the allegation in the countersuit filed last week by Viacom against MCA; both suits were filed in Chancery Court in New Castle County, Delaware.

The media companies each own 50% of the USA Network and its sister, the Sci-Fi Channel, and are at loggerheads over Viacom's launch late last month of a new cable network, Nick at Nite's TV Land. USA Networks is the parent company of the two jointly owned channels.

MCA, citing the USA Networks partnership agreement, claims Viacom cannot launch the new channel without MCA's permission and wants Viacom to sell its share of USA Networks to MCA as legal relief for breaching the agreement.

In Viacom's countersuit, the company claims MCA "impaired" the value of the USA Networks channels by "refusal to permit Viacom to maximize USA Networks' advertising revenue."

BIONDI'S PUSH

According to a high-ranking Viacom executive, that allegation refers to "efforts by Frank [Biondi Jr., Viacom's former CEO] over the last two years to get MCA to agree to have MTV Networks oversee the selling of ad time on USA and Sci-Fi."

The MTV Networks sales force is known as one of the industry's most aggressive. While USA Network pulled in about $280 million last year, and Sci-Fi about $29.8 million, Nickelodeon had about $235.6 million, and MTV: Music Television about $240 million, according to estimates by analysts Paul Kagan Associates.

More importantly, according to the Viacom executive, MTV Networks is well-known for extracting higher than average cost-per-thousand increases year to year.

A top USA Networks sales executive countered that MTV Networks offers niche services, while USA's chief channel is broad-based.

With Mr. Biondi now CEO of MCA, if the MCA/Viacom suits are settled amicably and the USA Networks partnership continues, it is still possible for USA sales chores to shift to MTV.

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