Cablevision Files Bundling Lawsuit Against Viacom
Cablevision Systems Corp has filed an antitrust lawsuit against the television industry major Viacom, challenging the company’s policy of bundling cable networks. It is claimed that this practice has led to the steady increase in cable bills and the increasing number of channels.
Companies like Viacom, Time Warner Inc. and News Corp. have been packaging more popular networks with reduced fare for promoting new programs and increasing revenue. According to Viacom, the owner of MTV and Nickelodeon, this strategy is just like volume discount offers. However, Cablevision claims that it is anti-consumer and illegal to charge for obligatory bundles.
Cablevision has made an effort to use the antitrust law for unbundling networks. According to trade and consumer groups, this would help reduce the rate at which cable bills are being hiked steadily. According to an analyst, pay-TV companies are increasingly finding it difficult for moving along with the increasing program costs as an increasing number of viewers are taking to the web for their video needs.
While this continued to be the business model for a number of decades, while the pay-TV industry kept growing every year. Now the $170-billion industry has come to a saturation point.
According to Cablevision’s statement in its lawsuit, it was made to carry and pay Viacom for more than a dozen less popular secondary networks. This was done by tying the networks to obligatory networks like MTV, Comedy Central and Nickelodeon.
Comcast Corp. and DirecTV claim that the programming rates would be growing by around 10% this year. These are two of the largest pay-TV operators in the country. There are more than 100 million viewers of Viacom’s networks in the U.S. They need to pay up when signing-up for cable.
Cablevision is the 5th largest cable company in the country that signed a programming contract with Viacom two months ago. Cablevision said that the lawsuit seeks to annul that deal and enable the cable company to air Viacom’s programs until the two companies negotiate some fresh terms.
It is expected that the cable provider’s argument may focus on displaying Viacom working as a monopoly in the industry and trying to take advantage of its position to unlawfully forcing purchase of the less popular channels.
Keep in mind the earlier decisions of court, this antitrust argument may prove to be a challenge. In addition, the market is teeming with cable channels offered by a number of competitors. Disney Channel from Walt Disney Co. is one of the leading competitors of Nickelodeon.
The practice of bundling survived a similar antitrust lawsuit that was filed previously by consumers against both cable networks and pay-TV. The lawsuit of 2009 was won by the cable industry, when both Viacom and Cablevision were defendants fighting to protect bundling.