Cablevision Suit Claims $1 Billion-Plus Threat From Viacom

The cable distributor releases a complaint alleging the threat of a "10-figure penalty" and says Viacom's alleged coercive tactics left no choice but to "surrender," then sue.

The lawsuit was filed under seal in late February and has now been made public, with certain redactions. It can be viewed below.

In making the case that Viacom has engaged in a “per se” illegal tying arrangement by bundling "must-have networks" such as Nickelodeon, Comedy Central and MTV with lesser-viewed ones including Palladia, MTV Hits and VH1 Classic, Cablevision must clear a host of legal hurdles.

Two questions in particular might shape the outcome: Why is Cablevision bringing the lawsuit just two months after agreeing to a carriage contract with Viacom? And how does Viacom's behavior threaten competition?

Cablevision presents Viacom's offer as a "10-figure penalty" if the bigger networks were licensed but not the smaller ones.

"Viacom's coercive tactics left Cablevision with only one viable economic choice: to accept a deal under which Cablevision would continue to carry both the core networks (which Cablevision wants to distribute) and the suite networks (which Cablevision wishes to replace with alternative networks). Cablevision accordingly surrendered..."

At a conference this week in Florida, Viacom CEO Philippe Dauman responded that Cablevision got a discount for taking its lesser networks. He said, "I guess their theory is: 'We got the discount. We got three suits for the price of two. Now we want just the two,' " he said. "That doesn't happen in our business."

Viacom further clarifies that the “penalty” is simply the difference between the standard rates and the significant "discount" Cablevision negotiated -- multiplied over the number of years in the deal.

And if there's going to be any fuss over whether Cablevision has standing to pursue such injuries, the cable distributor says later in its complaint that "absent Viacom's foreclosure of competing general programming networks, Cablevision would have greater flexibility to assemble its programming packages to meet consumer demand. Instead, Viacom's tie-in hinders Cablevision's ability to differentiate its service from rivals, thereby further depriving Cablevision of subscribers (and profits) it otherwise could obtain or retain."

Read More... http://www.hollywoodreporter.com/thr-esq/cablevision-viacom-lawsuit-1-billion-426663

New TV LAW 'STELA': Hollywood's Next Big Legislative Fight - various legal controversies over the future of television

An analyst suggests that the renewal of an obscure satellite TV law could command the attention of the major broadcasters, big pay-TV distributors and giant tech companies.

Although political gridlock provides cause for disbelief that big legislation concerning the media industry is imminent, there might be reason to think that next Wednesday will be the beginning of a furious lobbying campaign in the nation's capital.

The past year has featured various legal controversies over the future of television.

In particular, broadcasters have battled Dish Network over an ad-skipping DVR they believe is "a bootleg, commercial-free video-on-demand service" that's in alleged violation of their retrans agreements. In addition, broadcasters have gone to war against Aereo over TV signals picked up by antennae and then relayed to subscribers online. And then, there's been other disputes over broadcast TV signals distantly retransmitted by pay-TV distributors.

The skirmishes have taken place in courtrooms and around negotiating tables, but Washington D.C. lawmakers might soon be getting involved thanks to the expiration of an obscure law -- the Satellite Television Extension and Localism Act.

STELA provides statutory licenses that allow satellite TV companies to distantly retransmit broadcast signals to local subscribers who otherwise would be in the dark. Without the law, it's estimated that 1-to-1.5 million who don't live in broadcast areas would lose access to CBS, NBC, ABC and Fox. It's a law that needs to be renewed after five years, and the expiration date comes up in 2014.

On February 13, the House Communications Subcommittee is scheduled to hold a meeting on renewing STELA.

But according to Paul Gallant, an analyst at Guggenheim Securities who previously worked as a legal advisor to the FCC chairman, the pending legislation might be the impetus to go larger.

Gallant notes in a research report that at hearings last summer, "multiple members of Congress expressed unhappiness with signal blackouts during retrans disputes. That suggests Congress might use this satellite bill to ban signal blackouts and require arbitration to resolve pricing disputes."

That will be unsettling, he adds, for broadcasters like CBS, Sinclair, Gray, Hearst, LIN, Belo, Media General and Tribune. At the same time, companies he believes that would stand to benefit are Time Warner Cable, Charter, Cablevision, DirecTV and Dish.

Broadcasters certainly wouldn't want to undercut the deal-making leverage that comes with the prospect of blackouts, but in theory, there could be the possibility of bargaining for something else.

Last year, a federal judge denied the broadcasters' attempts to get an injunction that shut down Aereo. The 2nd Circuit Court of Appeals will imminently be issuing a ruling in the broadcasters' appeal.

"If broadcasters run into unfavorable court rulings in the next year, they may press Congress to require distributors like Aereo to pay for signals like cable/satellite do," writes Gallant.

Read More... http://www.hollywoodreporter.com/thr-esq/stela-hollywoods-next-big-legislative-419180