Cablevision Sues Viacom for Forcing it to Purchase Networks it Doesn't Want
February 26, 2013 9:00 PM
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Cablevision filed the antitrust lawsuit against Viacom in federal court in Manhattan today
Cablevision Systems Corporation is
for making it pay extra for less popular ancillary networks in order to receive the more preferred networks.
According to Cablevision, Viacom made it pay for 14 ancillary networks like MTV Hits, VH1 Classic and Palladia in order to obtain popular networks that customers love, like MTV, Comedy Central and Nickelodeon.
Cablevision went on to say that Viacom abused its market power by doing this, and even coerced Cablevision with threats of large financial penalties if it didn't comply.
"The manner in which Viacom sells its programming is illegal, anti-consumer, and wrong," said Cablevision. "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."
Cablevision, which filed an antitrust lawsuit against Viacom in federal court in Manhattan today, said that it is seeking many solutions, including a permanent injunction barring Viacom from conditioning carriage of any or all of its core networks on Cablevision's licensing any or all of Viacom's ancillary networks; declaratory relief voiding the December 2012 carriage agreement; to effectuate the permanent relief, a requirement that Viacom permit Cablevision to carry the core networks and ancillary products on terms pending negotiation of a new, lawful agreement, and treble damages and legal fees.
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Saying this for years...
2/27/2013 10:16:44 AM
I, and of course lots of other people, have been saying this industry needed a major change for years.
What other industry will refuse to sell you what you want unless you buy other things you don't want...and have it be legal? Imagine walking into a McDonald's and ordering a cheeseburger, only to be told you must also buy an order of fries and a milkshake in order to get a cheeseburger. Regardless of whether or not you want or can afford the fries and milkshake.
But in the paid TV business? Somehow this has been legal.
There is no technical reason why all TV channels, whether from the producer or service provider, can't be offered on a cafeteria plan. Never has been. The "issue" has always been one of corporate policy.
They've always been forcing consumers to subsidize channels that they don't watch, in order to get channels they do watch. Which is the primary reason why you get 150 channels from your provider.
And, probably, ~130 of those you never watch at all. And maybe another 10 you barely ever even notice. And if you're lucky, maybe the last 10 channels you would actually miss if they weren't there. Those are the 10 channels you would be willing to pay for in a cafeteria plan. The next 10, maybe you would or wouldn't, depending on what they cost. But the initial 130? You have no interest in at all, and given the choice, you'd not pay a penny for them.
So...going cafeteria would mean that *lots* of channels would likely just die. Without the subsidies being unwillingly contributed by all the consumers, there won't be any funding to keep these unpopular channels afloat.
Which is fine. There's no other industry in which you're given funds to keep you afloat when your services aren't actually wanted. We'll go from 150 channels to maybe 30 or so right quick...
...and no one will care.
RE: Saying this for years...
2/27/2013 11:50:48 AM
Not illegal to bundle a product with other products. It's illegal to abuse market position (ie if McDonald's was the only place you could buy a burger, or if McDonald's, Hardee's, Burger King, and Wendy's colluded together to bundle things together in order drive up prices).
RE: Saying this for years...
2/27/2013 6:03:16 PM
So it wouldn't be illegal for mcdonalds remove everything except the combo menu and charge full price for the combos so you are paying the same amount as if you bought them individually. From what I know and read this is exactly what Viacom is doing except with television channels.
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