Cablevision head honcho James Dolan isn’t afraid of a little irony.
The Bethpage, NY, cable operator sued Viacom in Manhattan federal court yesterday, accusing it of strong arming Cablevision and other pay-TV providers into carrying 14 “lesser-watched” channels.
“The manner in which Viacom sells its programming is illegal, anti-consumer and wrong,” Cablevision said in a statement.
That’s rich coming from Cablevision, which has been called out for the same practice, known as “bundling.”
Cablevision claims that Viacom forces it to pay for cable castoffs like Palladia, MTV Hits and VH1 Classic in order to get more-popular cable channels like MTV, Comedy Central and Nickelodeon.
The out-of-left-field suit comes just two months after Cablevision renewed its carriage deal with Viacom.
The cable operator wants the court to toss that contract and bar Viacom from tying its networks together in future negotiations. The suit also seeks treble damages and legal fees.
Viacom defended the practice as good for the industry while dismissing the suit as a blatant attempt to renegotiate their existing deal.
“Viacom and other programmers have long offered discounts to those who agree to provide additional network distribution,” the company said in a statement.
Cablevision’s suit — which marks the first time a pay-TV provider has sued over cable bundling — struck critics as disingenuous at best and hypocritical at worst.
Dolan-controlled AMC Networks was accused of the same practice by satellite-TV provider Dish Networks, which claimed it had to carry low-rated IFC and WE in order to get popular AMC shows like “The Walking Dead.”
Lazard analyst Barton Crockett said Cablevision’s “provocative” suit singling out Viacom faces several challenges and is unlikely to hold up to legal scrutiny.
“We also, on initial reading, have substantial doubt that the lawsuit is credible, and instead see it highlighting the desperation of pay-TV companies to use any means possible to slow content cost growth,” he wrote in a note to clients yesterday.
Cable bundling has been standard industry practice for decades. In the past, programmers and distributors have generally agreed that it benefits both parties.
That model is coming under fire, however, as rising programming costs — in paticular sports — pressure cable providers.
Cablevision’s crusade won backing from Time Warner Cable, Charter Communications and DirecTV.
“There’s no question that the current all-or-nothing system dictated by programmers is completely broken,” said DirecTV in a statement. “For programmers to force this system on all pay-tv customers, just so they can line their pockets with extra profits, is shameful.”
Parts of the sealed suit may become public later this week, revealing some of the financial inner workings of such bundling deals, as Cablevision and Viacom are scheduled to appear in court tomorrow.