November 03, 2011 8:35am PT by Eriq Gardner
Viacom, Time Warner Cable iPad Dispute Heats Up
The dispute between Viacom and Time Warner over streamed content of cable channels including MTV and Comedy Central on iPads is not over. Not by any stretch of the imagination.
Over the summer, the conflict seemed to be heading towards resolution after the parties reached a "standstill agreement" to pause litigation in an effort to come to a settlement, but talks broke down. In fact, the dispute has become so heated that Time Warner Cable is now threatening to cancel its affiliation agreement with Viacom, pull channels from its system, and cease paying significant license fees.
Here's how this controversy, which seemed on the edge of peace, has suddenly taken a sharp turn for the ugly.
In April, the two companies filed dueling lawsuits against each other after TWC launched an iPad app allowing its subscribers to watch TV on a mobile device. TWC pulled Viacom channels after getting a cease-and-desist letter, but went to New York federal court to seek a declaration that copyright law permitted a limited, more convenient way for its subscribers to enjoy television in the home on their iPad devices. Viacom claimed in its own lawsuit that TWC had broken a contract and committed copyright infringement.
For several months, the dispute was waged as much in public as in a courtroom.
TWC argued that by allowing customers to use its iPad device inside the home, the cable company was saving its customers the expense of leasing expensive cable boxes.
Viacom's top executives spoke up about concern that allowing fans to watch shows like Jersey Shore on their iPad device was "cannibalizing" audiences on traditional platforms. The company maintained it needed compensation.
In June, things started to become less heated. The two parties reached its "standstill agreement."
Then, in August, Viacom and another giant cable distributor, Cablevision, reached a settlement to resolve a similar lawsuit. The deal paved the way for Viacom programming to appear on Cablevision's Optimum app for the iPad.
The settlement agreement between Viacom and Cablevision might have suggested a roadmap for Viacom and TWC to resolve their own differences, but the opposite seems to have happened.
The parties came to no settlement, and last month, TWC filed new papers in court.
According to an amended answer to Viacom's lawsuit, TWC says that Viacom is required "to offer TWC identical rights to distribute the Viacom Services with respect to Internet or online services as Viacom has offered to third parties."
TWC goes on to state that "Viacom's grant of such rights to Cablevision without offering identical rights to TWC constitutes a breach of certain of the Viacom Affiliation Agreements, and entitles TWC to terminate its distribution of certain of the Viacom Services and accordingly cease paying significant license fees for those services."
Now, TWC is giving a New York federal judge something to think about.
TWC is still seeking a declaration that distributing Viacom programming on the TWCable TV iPad App doesn't constitute copyright infringement..
But if the judge agrees with Viacom, then TWC says the Cablevision deal (as well as others such as a licensing arrangement with DISH Network) constitutes a breach of several agreements, including the "Suite Services Agreement" (MTV, VH1, MTV2, VH1 Classic...), the "Core Services Agreement," and the "Comedy Agreement" (Comedy Central). TWC says it would be entitled to terminate those agreements or demand identical Internet distribution rights.
In addition to new counterclaims for breaching the above agreements, TWC also seeking a declaration that it performed its obligations under an agreement to distribute Country Music Television -- a Viacom station. The move seems to be in reaction to a lawsuit filed by Viacom in June that TWC breached a distribution contract and tortiously interfered with Country Music Television's relationship with advertisers.
On Wednesday, Viacom responded in court.
For now, Viacom largely ignores TWC's new claims that it breached its obligations by making iPad licensing agreements with third parties and focuses heavily why a judge should throw out the dispute over Country Music Television. According to Viacom, this counterclaim should be dismissed because it does not share "a common nucleus of operative fact" with the iPad dispute.
We've reached out to Viacom whether networks such as Comedy Central and MTV on Time Warner Cable are threatened by the litigation, and we'll update if we hear anything.