Cablevision Systems Corporation (NYSE:CVC) sued Viacom, Inc. (NASDAQ:VIAB) (NASDAQ:VIA) on antitrust grounds, saying that the programmer threatened it to impose a penalty of over $1 billion if it refused to pay for the rights to channels it didn’t want, according to the lawsuit.
Cablevision Systems Corporation (NYSE:CVC) only wanted popular channels such as Nickelodeon, MTV and Comedy Central.
The lawsuit was filed on Feb. 26, but wasn’t made public until yesterday. Though the dollar figure in the public version of the complaint was blacked out, Viacom confirmed it in a statement. According to the complaint, Viacom “strong-armed” Cablevision into distributing 14 low-rated channels known as Suite Networks along with the other popular channels,or else face a “10-figure” penalty.
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Viacom, Inc. (NASDAQ:VIAB) (NASDAQ:VIA) has many commercially critical networks that Cablevision must accept to avoid losing its subscribers. The complaint was filed in U.S. District Court, Manhattan. Cablevision Systems Corporation (NYSE:CVC) said this bundling arrangement of low rated channels with popular networks ate up bandwidth it could easily have used for the channels of other programmers.
The fifth-largest cable operator in the country said that the penalty it would have paid for refusing to take less popular networks such as Palladia and Logo, was much higher than its entire programming budget.
Responding to the complaint, Viacom, Inc. (NASDAQ:VIAB) (NASDAQ:VIA) said the suit was just a hypocritical attempt to void the deal they signed on December 26. It said the Bethpage, New York-based operator could have licensed the networks individually for the long-term under the agreement they signed a couple of months ago.
Viacom, Inc. (NASDAQ:VIAB) (NASDAQ:VIA) said it gives hefty discounts on bundled package deals, and Cablevision Systems Corporation too got “significant discount” by choosing all of Viacom’s channels. Viacom doesn’t consider it a penalty because it would charge the actual rate card price instead of discounted one in case Cablevision Systems Corporation (NYSE:CVC) refuses to accept the Suite Networks; it added that hundreds of other distributors have been paying its rate card prices, but never Cablevision Systems Corporation (NYSE:CVC) which has always received deep discounts.