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Cablevision Sues Viacom For Forced Channel Bundling
Accuses Company of Antitrust Violations
by Karl Bode Tuesday 26-Feb-2013 tags: legal · Video · competition · alternatives · content · consumers · Cablevision
In what's an interesting twist to the usual retransmission fee fisticuffs, Cablevision today sued Viacom, alleging that the company is violating antitrust law by force-bundling channels. The lawsuit is just the latest scuff up in an industry that utterly refuses to lower prices or offer channels a la carte -- and refuses to let anyone else do so, either.

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The lawsuit, filed in federal court in Manhattan, accuses Viacom of abusing its market power by forcing cable operators to buy a smattering of less-watched channels if they want to offer more popular content. Cablevision also accuses Viacom of hindering competition, given the forced bundling doesn't allow cable operators to differentiate their offerings.

"The manner in which Viacom sells its programming is illegal, anti-consumer, and wrong," Cablevision said in a statement. "Viacom effectively forces Cablevision's customers to pay for and receive little-watched channels in order to get the channels they actually want. 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."

Most regular readers will recall that the push for a la carte channel offerings peaked a few years back, but was shouted down by industry as something that would result in higher prices and the death of niche programming. Several years and dozens of rate hikes later, cable operators have now turned to culling niche channels from their lineups anyway to reduce costs.

While the lawsuit could result in a renewed push for a la carte offerings and some interesting discussion, many of these lawsuits wind up being the productivity equivalent of playing patty cake, resulting in small settlements but little to no actual change.

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NOCTech75
Premium
join:2009-06-29
Marietta, GA

So let me get this straight

Cablevision forcing you to take channels you don't watch just for the few you do... and that is acceptable while Viacom forcing Cablevision to take channels no one watches is not acceptable to them?

cdru
Go Colts
Premium,MVM
join:2003-05-14
Fort Wayne, IN
kudos:7

Re: So let me get this straight

It's the do-as-we-say-not-as-we-do approach.

Eddy120876

join:2009-02-16
Bronx, NY

Re: So let me get this straight

So right Cdru thats cablevisions slogan when they put and add on tv "It's the do-as-we-say-not-as-we-do approach."

Linklist
Premium
join:2002-03-03
Longport, NJ
kudos:5
said by NOCTech75:

Cablevision forcing you to take channels you don't watch just for the few you do.

And why do you think that is? Because Cablevision is forced in to that by the content companies. Viacom isn't the only content company that forces cable networks to buy lousy channels to get the few that are worth something.
--
I will be perfectly happy if the budget cuts specified in the Budget Control Act go into effect. 3 cheers for the sequester. Take the money from the drunken federal spenders.

cdru
Go Colts
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join:2003-05-14
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Re: So let me get this straight

said by Linklist:

And why do you think that is? Because Cablevision is forced in to that by the content companies. Viacom isn't the only content company that forces cable networks to buy lousy channels to get the few that are worth something.

They have the ability to offer say a Viacom package, a ESPN package, a Discovery package, etc. There is no requirement that they have to bundle Viacom packages with Discovery. The content companies though may price their per-subscriber rates though such that if they aren't in the base package their rate is going to be substantially higher.
boredsysadm

join:2012-01-11

Re: So let me get this straight

They have to offer ALL of Viacom channels in a single standard service level or get nothing at all - This is the cause for the law suit.

NOCTech75
Premium
join:2009-06-29
Marietta, GA
Reviews:
·Comcast

Re: So let me get this straight

said by boredsysadm:

They have to offer ALL of Viacom channels in a single standard service level or get nothing at all - This is the cause for the law suit.

Just like if I want ONE channel out of a bundle I have to get ALL of those channels.
silbaco

join:2009-08-03
USA
No, but it is very possible the licenses require Cablevision to pay per-subscriber, regardless of how Cablevision prices it for subscribers. That would not be unheard of. So spinning it off on its own package would be counter productive if they have to pay for each subscriber anyway.
Skippy25

join:2000-09-13
Hazelwood, MO
And when they are "forced" to include those channels on the basic or even extended basic tiers and not the pick a bundle tier, where does your argument go?

cdru
Go Colts
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join:2003-05-14
Fort Wayne, IN
kudos:7

Re: So let me get this straight

said by Skippy25:

And when they are "forced" to include those channels on the basic or even extended basic tiers and not the pick a bundle tier, where does your argument go?

No one is "forced". Viacom needs Cablevision for the number one market in the country, and Cablevision needs Viacom as they have some of the most popular basic cable channels. Because of this it's a standoff to see which side flinches first in the negotiations.

In this case however, instead of dropping the channel(s) during the dispute, they are carrying them but taking them to court. Customers don't get angry, Cablevision looks like they are looking out for the consumer, and Viacom gets paid. The lawsuit will linger for a few weeks, then Cablevision and Viacom will kiss, make up, and laugh it off as they send out a increased bill to the consumer.

MovieLover76

join:2009-09-11
kudos:1
Reviews:
·Verizon FiOS
·DIRECTV
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Re: So let me get this straight

dropping channels during disputes have historically led to customer's leaving their current provider and switching to another provider, the playing field isn't as level as you indicate. to Viacom if the carrier refuses to pay and drops the channel during the dispute Viacom doesn't really care, customers get mad at their tv provider, not the channel itself and if the channel is popular enough, like for instance comedy central users while switch to another provider that hasn't dropped comedy central in the past. the cable companies always come back to Viacom because they need their programming more than Viacom needs them.

The smaller the cable company and the more competition in their area the less they care, Cablevision areas are most often areas that Verizon FiOS covers.
majortom1029

join:2006-10-19
Lindenhurst, NY
kudos:1
said by cdru:

said by Linklist:

And why do you think that is? Because Cablevision is forced in to that by the content companies. Viacom isn't the only content company that forces cable networks to buy lousy channels to get the few that are worth something.

They have the ability to offer say a Viacom package, a ESPN package, a Discovery package, etc. There is no requirement that they have to bundle Viacom packages with Discovery. The content companies though may price their per-subscriber rates though such that if they aren't in the base package their rate is going to be substantially higher.

No they do not. The content providers even go as far as to tell them which other packages, and which channels they can be packaged with. Some even state they have to be with competitors channels.

DeadSurvivor
Shattered Dreams

join:2006-07-24
Tampa, FL

Re: So let me get this straight

I hope this begins to catch on with content providers ... in actions, not just with words or complaints.
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Dude111
An Awesome Dude
Premium
join:2003-08-04
USA
kudos:11
Thats an interesting look at it!

Someone should ask cablevision this!

dare2be

@ju.edu
You don't get it.

Cablevision and other providers force you to take channels you don't watch because the channel owners force them into it with their bundling. (If you offer channel A in a package, you must also offer channels B and C as well). That is the point of the lawsuit. If they win, there will be more opportunities for ala carte for the consumer.

juilinsandar
Texas Gooner
Premium
join:2000-07-17
San Benito, TX
Reviews:
·RoadRunner Cable

It's more about reducing their own costs...

and increasing their profits.

It's not like Cablevision, or any other provider, would be generous to their customers and reduce the cost of their current packages if they managed to win.
--
An appeaser is one who feeds a crocodile, hoping it will eat him last. - Sir Winston Churchill
elray

join:2000-12-16
Santa Monica, CA

Re: It's more about reducing their own costs...

said by juilinsandar:

and increasing their profits.

It's not like Cablevision, or any other provider, would be generous to their customers and reduce the cost of their current packages if they managed to win.

What nonsense. Cablevision and every other MSO wants your business - and they would love to offer something for cheapskates like me, as well as offering more-expensive ala-carte packages for those with eclectic tastes.

But so far, they have been unable to challenge the content cartel.

Unless the courts have another Harold Greene, however, I don't expect this particular lawsuit to have any impact. Ala-carte is dead on arrival, and content bundling is here to stay.

Eddy120876

join:2009-02-16
Bronx, NY
So true and yet it this will keep on happening until somebody actually takes both of then to court.

ps Go Gunners

cdru
Go Colts
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join:2003-05-14
Fort Wayne, IN
kudos:7

In an alternate reality...

It would be interesting to see what the pricing would be on a purely a la carte basis for the channels people most commonly watch. Viacom may charge $X for Y channels, but the price per channel is not $X/Y. My guess is a couple of those channels are 90% of the cost and all the rest make up the other 10%.

I guess I also don't see how anti-trust issues come into play. Viacom isn't leveraging it's monopoly of content as it has no monopoly of content. It's no different than Comcast forcing me to subscribe to locals when I wanted internet-only, or Frontier to require me to have an emergency line service for my internet-only connection. Viacom has a portfolio of channels that they sell as a group. If cable companies don't want it, don't carry them.
ISurfTooMuch

join:2007-04-23
Tuscaloosa, AL

Re: In an alternate reality...

The only thing I can think of is if they are going to claim that several programmers, including Viacom, have gotten together and agreed to all bundle their channels. While Viacom is getting sued right now, there may be other suits yet to be filed.

But the cynical part of me thinks that this is just a way for Cablevision to get some leverage with the programmers. What they want to do is either lose the niche channels or move them to a separate tier. As for us poor slobs, we'll be paying the same price for fewer channels.

cdru
Go Colts
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join:2003-05-14
Fort Wayne, IN
kudos:7

Re: In an alternate reality...

said by ISurfTooMuch:

The only thing I can think of is if they are going to claim that several programmers, including Viacom, have gotten together and agreed to all bundle their channels. While Viacom is getting sued right now, there may be other suits yet to be filed.

If that was the case then the other programmers would be party to the collusion and would be named in the suit. You can't have collusion if there's only one party.

Even if it was just a industry practice to bundle your channels, it's not like it's a new practice. Network bundles have been around since BUD were the way to get channels. Other industries also have requirements that if you carry a particular brand, you need to carry an entire brand. You don't see Corvette-only dealerships, you see Chevy dealerships where the Corvette is one of many available models.

But the cynical part of me thinks that this is just a way for Cablevision to get some leverage with the programmers. What they want to do is either lose the niche channels or move them to a separate tier.

Of course it's about the money. It always is about the money ultimately.

As for us poor slobs, we'll be paying a higher price for fewer channels.

FTFY
Joe12345678

join:2003-07-22
Des Plaines, IL

Re: In an alternate reality...

said by cdru:

said by ISurfTooMuch:

The only thing I can think of is if they are going to claim that several programmers, including Viacom, have gotten together and agreed to all bundle their channels. While Viacom is getting sued right now, there may be other suits yet to be filed.

If that was the case then the other programmers would be party to the collusion and would be named in the suit. You can't have collusion if there's only one party.

Even if it was just a industry practice to bundle your channels, it's not like it's a new practice. Network bundles have been around since BUD were the way to get channels. Other industries also have requirements that if you carry a particular brand, you need to carry an entire brand. You don't see Corvette-only dealerships, you see Chevy dealerships where the Corvette is one of many available models.

but they don't force you to buy all the models as the end user.

Linklist
Premium
join:2002-03-03
Longport, NJ
kudos:5

If Cablevision can get lucky & win, could cause more suits

I hope Cablevision gets lucky and wins. It might trigger a cable company revolt against the real cause of higher cable bills - the content companies and their bundling deals.

Jim Gurd
Premium
join:2000-07-08
Plymouth, MI

Re: If Cablevision can get lucky & win, could cause more suits

said by Linklist:

I hope Cablevision gets lucky and wins. It might trigger a cable company revolt against the real cause of higher cable bills - the content companies and their bundling deals.

IANAL but I think they have a good case. It sounds like the content providers are engaging in illegal product tying.

Time
Premium
join:2003-07-05
I hope Disney is next, I'm tired of paying for sports channels that I don't watch.
osravens

join:2011-01-26
Cumberland, MD

Irony

But don't AMC Networks force you to bundle WE, IFC and Fuse with AMC?

cdru
Go Colts
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join:2003-05-14
Fort Wayne, IN
kudos:7

Re: Irony

AMC Networks was spunoff from Cablevision mid 2011. So while they may require the bundling, it's not nearly as ironic as if they still had a direct relationship to Cablevision.
TuxRaiderPen

join:2009-09-19

Re: Irony

said by cdru:
AMC Networks was spunoff from Cablevision mid 2011. So while they may require the bundling, it's not nearly as ironic as if they still had a direct relationship to Cablevision.
Spin that much??? Spun off and WHO is the majority stakeholder in the the shell/holdings company? ? ? "Through supervoting shares, Dolan today controls Cablevision, AMC Networks, and Madison Square Garden, Inc., which at one point were all part of Cablevision itself" Thought so... next..
--
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cdru
Go Colts
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join:2003-05-14
Fort Wayne, IN
kudos:7

Re: Irony

said by TuxRaiderPen:

Spin that much??? Spun off and WHO is the majority stakeholder in the the shell/holdings company? ? ? "Through supervoting shares, Dolan today controls Cablevision, AMC Networks, and Madison Square Garden, Inc., which at one point were all part of Cablevision itself" Thought so... next..

I didn't say they they had no relationship. They just don't have a direct relationship as a subsidiary any longer. Cablevision isn't telling AMC Networks how to bundle their channels.
itguy05

join:2005-06-17
Carlisle, PA

Since

Since I watch nothing on Viacom channels when can I get a package without them?

BF69
Premium
join:2004-07-28
Camden, TN

Re: Since

no Viacom won't anyone to do that allow that. hence the lawsuit

spewak
R.I.P Dadkins
Premium
join:2001-08-07
Elk Grove, CA
kudos:1

?

It's about f---ing time somebody put their iron in the fire! A-La Carte might be soon approaching. One can wish!
elray

join:2000-12-16
Santa Monica, CA

Re: ?

Wish all you want.

Unless ala-carte makes more money for all the players, not just a select self-appointed few, it ain't gonna happen.
ISurfTooMuch

join:2007-04-23
Tuscaloosa, AL

Re: ?

Unfortunately, this is true. These companies aren't going to voluntarily do anything that will reduce revenue.

A-la-carte will only happen under one of three scenarios:

1. The companies involved believe they can make more money with it than with the current model.
2. People start ditching cable/satellite/telco TV in droves, and the providers see a-la-carte as the only way to stop the losses.
3. The government mandates it.

Otherwise, it ain't gonna happen.

As much as we all hate the current system, the programmers and providers love it because it's working wonderfully for them. Oh, there are disputes over programming costs, but all that amounts to is squabbling over how the money is divided up. Some people are ditching pay TV, and that's encouraging because it puts pressure on these companies, but there needs to be lots more pressure brought to bear for them to really change.

spewak
R.I.P Dadkins
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said by elray:

Wish all you want.

Unless ala-carte makes more money for all the players, not just a select self-appointed few, it ain't gonna happen.

what part of "on can wish" sarcasm do you not understand?

n2jtx

join:2001-01-13
Glen Head, NY

Disney

They need to take on Disney and their bundling of ESPN, ESPN2 and all the other overly priced sports channels I have less than zero interest in watching. Granted it will hurt me as a Disney shareholder but it is a small price to pay in the savings one would reap from unbundling.
--
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hello123454
Delaware FIOS
Premium
join:2002-02-02
Wilmington, DE
kudos:1

Forced?

Seems like these issues come up all the time. Why doesn't Cablevision say NO to Viacom if they think they're being screwed? Every business wants to agree to terms they don't like because they know they can sue later.
ISurfTooMuch

join:2007-04-23
Tuscaloosa, AL

Re: Forced?

DirecTV tried that last year.

The sad fact is that, although people talk about being overcharged by the cable companies, they still want their favorite channels, and many will consider switching providers if those channels go away.
nfotiu

join:2009-01-25

Perfect

I really hope cablevision wins. Content providers forced to sell their channels a la carte to the cable operators would be a game changer. There is no need to force a la carte at the mso level. If the MSOs are free to bundle or not bundle their offerings as they see fit, you'd see much more consumer friendly offerings where consumers can choose if they want the $20 a month sports channels they are forced to pay for whether they watch them or not, so they can get the channels they do watch.

IowaCowboy
Want to go back to Iowa
Premium
join:2010-10-16
Springfield, MA

Sue Disney

They should sue Disney so those of us who don't watch ESPN don't have to pay to receive ESPN.
Joe12345678

join:2003-07-22
Des Plaines, IL

Re: Sue Disney

Disney should be a pay channel like it used to be and then it can go 100% ad free and they can dump the fatty food ad's.
zefie

join:2007-07-18
Hudson, NY
Reviews:
·DSL EXTREME
·Verizon Online DSL

So now its not okay?

If you modify their statement a tiny bit, you get what consumers have been saying for YEARS.

"The manner in which {insert your local cable company} sells its programming is anti-consumer, wrong, and should be illegal." Consumers said in a statement. "{insert your local cable company} effectively forces customers to pay for and receive little-watched channels in order to get the channels they actually want. {insert your local cable company}'s abuse of its market power should be illegal."
BiggA

join:2005-11-23
EARTH
Reviews:
·Comcast

This could be really good

If they are successful, it will cause de-bundling, which will then have the effect of killing off a lot of worthless channels. In the process, cable will get cheaper, or at least someone like DISH will offer an alternative pricing model. In the process of all that, losing a lot of channels will free up bandwidth, and maybe, just maybe, providers can stop triple-channeling, and even have enough bandwidth for a few 38mbps HEVC UHD channels.

NOYB
St. John 3.16
Premium
join:2005-12-15
Forest Grove, OR
kudos:1

It's Not Bundling


It's product tying.

Product channel A has nothing to do with product channel B and no need of product channel B for use of product channel A exists.

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