Cablevision Wants Judge to Order Viacom Into Short-Term License
The cable giant wants to convince a court that its 2012 deal was illegal -- but also doesn't want to lose Nickelodeon, Comedy Central, BET and MTV.
In February, Cablevision brought an antitrust lawsuit against Viacom for tying its "must-have networks" such as Nickelodeon, Comedy Central, BET and MTV with lesser-viewed ones like Palladia, MTV Hits and VH1 Classic. The cable company says it only agreed in December to license the noncore networks from Viacom after the programmer threatened to impose a "10-figure penalty" for a contract that didn't include those lesser networks. Viacom says it was entirely appropriate to offer a "discount."
As the parties continue to fight each in a New York federal court, they are addressing what would happen in the event that Cablevision ultimately prevails in the antitrust lawsuit. Viacom wants a judge to strike Cablevision's proposed remedy that it be allowed to take the core networks on existing terms without any obligations on the noncore networks.
On Friday, Cablevision defended that plan, telling a New York judge that a "short-term mandatory injunction compelling Viacom to license" is within the court's discretion.
The plaintiff says it seeks to avoid the "same 'Hobson's choice' that led it to succumb to Viacom's tie: accept the tie or leave its customers without the commercially critical Tying Networks."
In Viacom's own motion submitted in August, the defendant argued that the judge didn't have the power to "reform" a contract to only contain the terms that Cablevision liked. "Courts have rejected attempts by antitrust plaintiffs to avoid their contractual obligations selectively," the company's lawyers said at the time.
In response, Cablevision submits that it is not asking for a reformation of the contract. "Rather, Cablevision requests that the Court use the existing Core Network terms as a baseline for fashioning a new short-term license imposed as a remedy for a proven antitrust violation."
The companies are also disputing the standard of proof in this antitrust case.
Cablevision claims Viacom has engaged in a "per se" illegal tying arrangement, which led to Viacom's rebuttal that the plaintiff hadn't alleged in enough specificity "market-wide foreclosure of competition" from Cablevision being allegedly forced into taking networks like Palladia. The cable company argues that Viacom misinterprets the per se rule, saying, "The anticompetitive effects are presumed from denying competitors access …"
The plaintiff doesn't like Viacom's attempt to apply a standard called the "rule of reason." Cablevision also points to the industry harm it has already alleged. For one, there are the alternative networks -- Ovation, GMC, Me-TV, ASPiRE, Retirement Living TV and Lifetime Movie Network were mentioned in a previous filing -- that Cablevision would allegedly be carrying if not for devoting its limited bandwidth to Viacom's networks. "Viacom strong-armed not only Cablevision, but also other top 15 video distributors into carrying Suite Networks," says the opposition to the motion to dismiss. "Cablevision details the 'chicken and egg' problem programmers confront: limited distribution makes it harder to convince distributors to carry their networks."
Viacom responds, telling THR in a statement that "Cablevision's action is simply part of an ongoing effort to renege on a long-term business agreement reached with Viacom only two months before filing litigation, and their opposition to our motion puts forth the same series of unsupported and unpersuasive legal arguments that appear in the complaint itself. We remain fully confident that the court will recognize Cablevision's lawsuit as a blatant attempt to misapply antitrust law for its own benefit."